SMALL BUSINESS 

ADMINISTRATION

Leadership Attention 

Needed to Overcome 

Management 

Challenges

Report to Congressional Requesters

September 2015

GAO-15-347

United States Government Accountability Office
Highlights of GAO-15-347, a report to 

congressional requesters

September 2015

SMALL BUSINESS ADMINISTRATION

Leadership Attention Needed to Overcome 

Management Challenges

Why GAO Did This Study

SBA has provided billions of dollars in 

loans and guarantees to small 

businesses. As of March 31, 2015, 

SBA’s total loan portfolio was about 

$116.9 billion, including $110.3 billion 

in direct and guaranteed loans and 

$6.6 billion in disaster loans. GAO has 

previously reported on management 

challenges at SBA. GAO was asked to 

review SBA management, including 

whether those challenges were 

ongoing. 

This report discusses SBA’s efforts to 

address management challenges 

related to specific programs and 

internal controls. It also looks at 

challenges in strategic planning, 

human capital, organizational 

structure, enterprise risk, procedural 

guidance, and IT. To do this work, 

GAO reviewed SBA policies and 

compared them with federal 

requirements, key principles for human 

capital management, and internal 

control standards. GAO also 

interviewed officials at SBA 

headquarters, all 10 regional offices, 

and 10 of 68 district offices selected on 

the basis of location and size.

What GAO Recommends

GAO makes eight new 

recommendations designed to improve 

SBA’s program evaluations, strategic 

and workforce planning, training, 

organizational structure, ERM, 

procedural guidance, and oversight of 

IT investments. SBA generally agreed 

with these recommendations and 

provided additional context. In 

response, GAO clarified one of its 

recommendations. GAO also maintains 

that 69 recommendations it made in 

prior work have merit and should be 

fully implemented. 

What GAO Found

The Small Business Administration (SBA) has not resolved many of its longstanding management challenges due to a lack of sustained priority attention 

over time. Frequent turnover of political leadership in the federal government, 

including at SBA, has often made sustaining attention to needed changes difficult

(see figure below). Senior SBA leaders have not prioritized long-term 

organizational transformation in areas such as human capital and information 

technology (IT). For example, at a 2013 hearing on SBA’s budget, the committee 

Chairman stated that SBA’s proposed budget focused on the agency’s priorities 

but ignored some long-standing management deficits. This raises questions 

about SBA’s sustained commitment to addressing management challenges that 

could keep it from effectively assisting small businesses. 

Turnover in Senior-Level Positions at SBA, 2005 through 2015

Many of the management challenges that GAO and the SBA Office of Inspector 

General (OIG) have identified over the years remain, including some related to 

program implementation and oversight, contracting, human capital, and IT (see 

figure below). SBA has generally agreed with prior GAO recommendations that 

were designed to address these issues and other challenges related to the lack 

of program evaluations. The agency has made limited progress in addressing

most of these recommendations but has recently begun taking some steps. A 

senior SBA official told us that improving human capital management, IT, and the 

8(a) program (a business development program) were priorities for the new 

administrator. For example, he stated that SBA was exploring creative ways to 

recruit staff and plans to expand SBA One—a database currently used to 

process loan applications—to include the 8(a) program. Also, SBA has begun 

addressing some internal control weaknesses that GAO and the SBA OIG 

identified as contributing to the agency’s management challenges. SBA officials 

noted that the agency had begun to update its standard operating procedure 

(SOP) on internal controls and planned more revisions after the Office of 

Management and Budget (OMB) updated its Circular A-123, which is expected to 

include guidance on implementing GAO’s 2014 revisions to federal internal 

control standards. OMB issued a draft of the revised circular in June 2015 and is 

reviewing comments it received.

View GAO-15-347. For more information, 

contact William Shear at (202) 512-8678 or 

shearw.gao.gov. 

United States Government Accountability Office
Duration of SBA Management Challenges Identified by the SBA OIG, as of Fiscal Year 2015

Note: Loan guarantee purchases occur when SBA purchases guarantees from lenders following loan liquidations or delinquencies. Loan agents are

sometimes used to prepare documentation for an SBA loan application and refer borrowers to lenders. The Loan Management and Accounting System 

is a project to upgrade existing financial software and application modules and remove them from the mainframe environment.

GAO identified management areas in which SBA had not 

incorporated key principles or made other improvements. 

• Strategic planning and program evaluation: The 

strategic planning activities that GAO reviewed met most 

federal requirements. But SBA did not describe how it

used results from the few program evaluations it had 

completed to help develop its current strategic plan, as 

required by the Government Performance and Results 

Act Modernization Act of 2010. OMB has encouraged 

agencies to increase their use of program evaluations, 

but SBA has not routinely conducted them and still lacks 

evaluations for 10 of 19 programs GAO reported on in 

2012. Without evaluations, SBA lacks critical information 

for ensuring the validity and effectiveness of (1) its goals, 

objectives, and strategies and (2) both new and existing 

programs.

• Human capital management: SBA improved its human 

capital plan by developing goals and objectives. SBA 

also conducted early retirement programs in fiscal years 

2012 and 2014 to begin addressing long-standing skill 

imbalances, but fewer people than expected retired. SBA 

risked compromising these efforts because it did not first 

conduct a skills assessment or develop a workforce plan 

that would allow it to target its hiring and retention efforts. 

As of May 2015, SBA had not yet developed a workforce 

plan, and as of June 2015 it had not conducted a skills 

assessment or determined training goals. As a result, 

SBA cannot provide reasonable assurance that its 

workforce has the skills the agency requires.

• Organizational structure: SBA’s organizational 

structure has created complex overlapping relationships 

among offices that have contributed to challenges in 

program oversight. Although a contractor assessed

SBA’s organizational structure in March 2015, SBA has 

not documented its assessment of the contractor’s work. 

Until SBA documents its assessment, it will not have an 

institutional record of its actions, and it will be difficult for 

SBA or a third party to validate that SBA’s current 

organizational structure is contributing effectively to its 

mission objectives and programmatic goals. 

• Enterprise risk management: Given the range of 

programs SBA manages and oversees, having a robust 

enterprise risk management (ERM) system is critical to 

effectively managing risks. SBA initiated efforts to 

implement ERM in 2009 and developed a framework to 

guide its ERM approach in 2012. But the agency has not 

incorporated elements of a risk management framework, 

such as goals and specific actions. Without incorporating 

these elements, SBA cannot reasonably ensure that its 

ERM efforts fully identify, assess, and manage risks.

• Procedural guidance: As of March 2015, SBA had 

determined that 74 of its 165 SOPs needed to be 

revised, 31 needed to be canceled, and 60 required no 

revision. An additional 9 needed to be issued. Federal 

internal control standards state that documentation must 

be properly managed and maintained, yet SBA has 

generally not set time frames for periodically reviewing 

and completing needed revisions or updates. Without 

such time frames, SBA staff and their partners may lack

the guidance they need to effectively deliver program 

services in accordance with laws and regulations.

• Information technology: SBA has not implemented 

more than 30 SBA OIG recommendations related to IT 

security but has recently increased its emphasis on 

improvements, according to a senior official. Further, 

SBA has only partially implemented several required IT 

management initiatives. For instance, SBA established 

policies to consolidate the number of its data centers and 

manage software licenses for IT investments. However, 

contrary to OMB guidance SBA has not conducted 

regular reviews of its operational IT investments to 

ensure that they continue to meet agency needs. Until 

SBA fully implements all of the required IT management 

initiatives, the agency cannot provide reasonable 

assurance that its IT investments are cost-effective, meet 

agency goals, or are effectively managed. 

United States Government Accountability Office
Letter 1

Background 6

SBA Has Not Resolved Many of Its Long-Standing Management 

Challenges 13

SBA Met Most Statutory Requirements for Strategic Planning but 

Did Not Use Program Evaluations 35

SBA Planning and Oversight Are Limited in Several Management 

Areas 42

SBA Has Partially Implemented Several IT Management Initiatives 80

Conclusions 88

Recommendations for Executive Action 90

Agency Comments and Our Evaluation 91

Appendix I Objectives, Scope, and Methodology 93

Appendix II Additional Information on SBA’s Recent Budget Obligations, 

Outlays, and Authority 100

Appendix III Open GAO Recommendations for the Small Business

Administration, as of July 2015 103

Appendix IV Results of the Small Business Administration’s Internal Review of 

Its Standard Operating Procedures, as of March 2015 115

Appendix V Comments from the Small Business Administration 122

Appendix VI GAO Contact and Staff Acknowledgments 126

Contents

Page i GAO-15-347 Small Business Administration
Tables 

Table 1: Extent to Which the Small Business Administration (SBA) 

Met Federal Strategic Planning Requirements for Its 

Fiscal Years 2014-2018 Strategic Plan 36

Table 2: Extent to Which the Small Business Administration (SBA) 

Follows Key Principles for Workforce Planning 47

Table 3: Extent to Which the Small Business Administration (SBA) 

Follows Key Principles for Training and Development 

Programs 52

Table 4: Extent to Which the Small Business Administration (SBA) 

Follows GAO Risk Management Framework 69

Table 5: Percentage of Small Business Administration (SBA) 

Contract Dollars Awarded to Small Businesses by 

Socioeconomic Category, Fiscal Years 2011-2013 74

Table 6: Small Business Administration (SBA) Total Obligations, 

Net Outlays, and Gross Budget Authority, Fiscal Years 

2004 through 2016 (dollars in millions) 100

Table 7: Small Business Administration (SBA) Total Obligations, 

Net Outlays, and Gross Budget Authority by Appropriation 

Account, Fiscal Years 2004 through 2016 (dollars in 

millions) 100

Table 8: Open GAO Recommendations to the Small Business 

Administration (SBA) by Subject Area, as of July 2015 103

Table 9: Standard Operating Procedures (SOP) to Be Revised 115

Table 10: Standard Operating Procedures (SOP) to be Canceled 117

Table 11: Standard Operating Procedures (SOP) That Required 

No Revisions 118

Table 12: New Standard Operating Procedures (SOP) to Be 

Issued 120

Figures

Figure 1: Small Business Administration (SBA) Organizational 

Chart, as of April 2015 7

Figure 2: Small Business Administration (SBA) New Budget 

Authority, Fiscal Years 2004 through 2016 (requested) 11

Figure 3: Small Business Administration Information Technology 

Spending from Fiscal Year 2005 through Fiscal Year 

2015 12

Figure 4: Duration of Small Business Administration Management 

Challenges Identified by the SBA OIG, as of Fiscal Year 

2015 14

Page ii GAO-15-347 Small Business Administration
Figure 5: Turnover in Senior Leadership Positions at SBA from 

Calendar Years 2005 to 2015 34

Figure 6: Small Business Administration’s Headquarters and Field 

Organizational Relationships, April 2015 60

Figure 7: Small Business Administration’s Enterprise Risk 

Management Process 68

Figure 8: Small Business Administration Gross Budget Authority 

by Appropriation Account, Fiscal Years 2004 through 

2014 102

Abbreviations

ALP Accredited Lenders Program 

CDC certified development company

CIO chief information officer

CMR commercial market representative

ERM enterprise risk management

FEVS Federal Employee Viewpoint Survey

FMFIA Federal Managers’ Financial Integrity Act

FTE full-time equivalent

GCAR Government Contracting Area Report

GPRA Government Performance and Results Act of 1993

GPRAMA GPRA Modernization Act of 2010

HCAAF Human Capital Assessment and Accountability Framework

HSPD Homeland Security Presidential Directive

HUBZone Historically Underutilized Business Zone

IDAP Immediate Disaster Assistance Program

IIP Incremental Improvement Projects

IT information technology

LMAS Loan Management and Accounting System

OIG Office of Inspector General

OMB Office of Management and Budget

OPM Office of Personnel Management

PCR procurement center representative

R&D research and development

SBA U. S. Small Business Administration

SBDC Small Business Development Center

Page iii GAO-15-347 Small Business Administration
SBIC Small Business Investment Company

SBIR Small Business Innovation Research

SOP standard operating procedure

STTR Small Business Technology Transfer

VERA Voluntary Early Retirement Authority

VSIP Voluntary Separation Incentive Payments

WOSB women-owned small business

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Page iv GAO-15-347 Small Business Administration
441 G St. N.W.

Washington, DC 20548

September 22, 2015

The Honorable Nydia M. Velázquez

Ranking Member

Committee on Small Business

House of Representatives

The Honorable Sam Graves

Member

House of Representatives

The U.S. Small Business Administration’s (SBA) mission is to help 

Americans start, build, and grow businesses. Specifically, SBA oversees 

a number of programs that are designed to provide small businesses with 

resources and tools, including access to capital, help with federal 

contracting opportunities, entrepreneurial counseling and training, and 

disaster assistance.1 According to SBA, in fiscal year 2015 its programs 

were to support more than $32.5 billion in small business financing and 

nearly $4 billion in long-term investment capital and provide access to 

over $80 billion in federal contracting, among other things.2 Through a 

network of field offices and partnerships with public and private 

organizations, SBA delivers its services to businesses throughout the 

United States, Puerto Rico, the U. S. Virgin Islands, and Guam. For fiscal 

year 2015, SBA’s appropriation was just under $888 million.

In recent years, we and SBA’s Office of Inspector General (OIG) have 

identified a number of long-standing management challenges at SBA that 

have resulted in inefficient program operations. For example, SBA has 

not had effective human capital strategies and has not effectively 

managed acquisition and information technology. In addition, we and the 

1

SBA provides low-interest rate disaster loans to businesses of all sizes, private nonprofit 

organizations, homeowners, and renters to repair or replace real estate, personal 

property, machinery and equipment, and inventory and business assets that have been 

damaged or destroyed in a declared disaster.

2

Small Business Administration, Fiscal Year 2015 Congressional Budget Justification and 

Fiscal Year 2013 Annual Performance Report (Washington, D.C.: 2014). As of March 31, 

2015, SBA’s total loan portfolio was about $116.9 billion, including $110.3 billion in direct 

and guaranteed loans and $6.6 billion in disaster loans.

Letter

Page 1 GAO-15-347 Small Business Administration

 
OIG have found deficiencies across several SBA program areas. For 

example, recent reports found that SBA needed to improve oversight of 

its (1) contracting programs that are to help eligible economically 

disadvantaged small businesses obtain federal contracts and (2) 

lenders.3

You asked us to conduct a comprehensive assessment of SBA’s 

structure, processes, and systems, including its efforts to address its 

management challenges. This report examines the extent to which SBA 

(1) has addressed previously identified management challenges related 

to specific programs, including those related to internal controls; (2) is 

following federal requirements for strategic planning; (3) is following key 

principles or internal controls for human capital management, 

organizational structure, enterprise risk management, acquisition 

management, and procedural guidance; and (4) is making progress in 

implementing the Office of Management and Budget’s (OMB) high-priority 

management practices for information technology (IT).4

To address our objectives, we reviewed relevant federal laws and 

regulations and interviewed SBA officials, including program officials, all

10 regional administrators, management and nonmanagement staff at 10 

3

See GAO, Small Business Contracting: Opportunities Exist to Further Improve HUBZone 

Oversight, GAO-15-234 (Washington, D.C.: Feb. 12, 2015) and Small Business 

Administration, Office of Inspector General, The SBA’s Portfolio Risk Management 

Program Can be Strengthened, Report No. 13-17 (Washington, D.C.: July 2, 2013). These 

reports’ findings and recommendations and SBA’s responses are discussed later in this 

report.

4

OMB’s IT initiatives include accountability reviews for investments that are at risk and 

examinations of the performance of existing investments.

Page 2 GAO-15-347 Small Business Administration

 
district offices, and union representatives.5 To assess the status of SBA’s 

programmatic challenges, we reviewed prior GAO and SBA OIG reports 

on SBA programs and interviewed SBA officials and reviewed 

documentation to determine the status of any related recommendations.6

To assess SBA’s strategic planning efforts, we reviewed relevant SBA 

documents and compared SBA’s strategic planning and reporting 

practices with requirements in the Government Performance and Results 

Act of 1993 (GPRA), as updated by the GPRA Modernization Act of 2010 

(GPRAMA).

To evaluate SBA’s human capital management practices, we reviewed 

relevant SBA documents such as its most recent human capital and 

training plans and SBA’s 2014 Federal Employee Viewpoint Survey 

results.7 We then compared SBA’s human capital practices related to 

workforce planning and training with key principles identified in our 

5

We visited one district office in each region. The 10 SBA district offices in the sample 

were selected purposively based on location and office size to ensure we included offices 

of varying size and geography. They are located in Atlanta, Georgia; Boise, Idaho; Boston, 

Massachusetts; Denver, Colorado; Detroit, Michigan; Fresno, California; New Orleans, 

Louisiana; New York City, New York; Omaha, Nebraska; and Washington, D.C. The 

results of our interviews cannot be generalized to the population of all district offices. We 

interviewed a total of 19 managers and 28 nonmanagement staff. The managers were 

district directors or deputy district directors. For our interviews with nonmanagement staff, 

district office management invited any interested nonmanagement staff to meet with us. At 

4 of the 10 offices, no nonmanagement staff participated in the interviews. SBA required 

inclusion of district counsel in the nonmanagement interviews as a condition for holding 

the meetings. Because participation by such staff members was limited, we sent an e-mail 

to nonmanagement staff at all 10 offices again inviting them to share their thoughts on 

specific topics with us. Nine staff members from six of these offices responded to our email, three of whom also attended our interviews. The e-mails were used as additional 

information sources and to corroborate what we heard in the interviews. The group of 

union representatives we interviewed were from headquarters and the field.

6

See, for example, GAO, Major Management Challenges and Program Risks: Small 

Business Administration, GAO-03-116 (Washington, D.C.: January 2003) and Small 

Business Administration, Office of Inspector General, The Most Serious Management and 

Performance Challenges Facing the Small Business Administration in Fiscal Year 2015, 

Report No. 15-01 (Washington, D.C.: Oct. 17, 2014).

7

The Federal Employee Viewpoint Survey is an annual survey administered by the Office 

of Personnel Management (OPM), and the response rate for SBA in 2014 was 63.4 

percent.

Page 3 GAO-15-347 Small Business Administration

 
previous work.8 To assess SBA’s organizational structure, we reviewed 

documentation on changes to SBA’s organizational structure from fiscal 

years 2005 through 2014 (the period after SBA’s last major reorganization 

in 2004). We also reviewed SBA’s planned efforts to assess its 

organizational structure and compared these efforts to federal internal 

control standards related to organizational structure.9 To assess SBA’s 

risk management, we compared SBA’s enterprise risk management 

practices with federal internal control standards related to documentation 

and criteria on elements of risk management.10 For acquisition 

management, we reviewed data on SBA contracts awarded to small 

businesses in fiscal years 2011 through 2013 to assess whether SBA met 

contracting goals in the last 3 years; recent SBA OIG reports on SBA’s 

acquisition management; and documentation on SBA’s efforts to improve 

its acquisition management. We reviewed documentation on and 

conducted testing of the data we used and determined they were 

sufficiently reliable for the purpose of reporting on small business 

contracting. For procedural guidance, we reviewed an inventory of SBA’s 

current standard operating procedures (SOP) to determine when they 

were last updated and documentation on SBA’s efforts to update its 

8

See GAO, Human Capital: Key Principles for Effective Strategic Workforce Planning, 

GAO-04-39 (Washington, D.C.: Dec. 11, 2003); and Human Capital: A Guide for 

Assessing Strategic Training and Development Efforts in the Federal Government, 

GAO-04-546G (Washington, D.C.: March 2004). We developed the key principles for 

workforce planning by synthesizing information from meetings with organizations with 

government-wide responsibilities for or expertise in workforce planning; our own guidance, 

reports, and testimonies on federal agencies’ workforce planning and human capital 

management efforts; leading human capital periodicals; and our own experiences in 

human capital management. We developed the key principles for training through 

consultations with government officials and experts in the private sector, academia, and 

nonprofit organizations; examinations of laws and regulations related to training and

development in the federal government; and reviews of the sizeable body of literature on 

training and development issues, including our previous products on a range of human 

capital topics.

9

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).

10GAO/AIMD-00-21.3.1 and GAO, Risk Management: Further Refinements Needed to 

Assess Risks and Prioritize Protective Measures at Ports and Other Critical Infrastructure, 

GAO-06-91 (Washington, D.C.: Dec. 15, 2005). We developed our risk management 

framework by reviewing, analyzing, and synthesizing several sources of information, 

including risk literature and our previous reports and testimonies; experts in the fields of 

risk management, risk modeling, and terrorism; and numerous frameworks from industry, 

government, and academic sources.

Page 4 GAO-15-347 Small Business Administration

 
SOPs and compared these documents to federal internal control 

standards related to documentation.11

To assess SBA’s progress in implementing high-priority management 

practices for IT, we evaluated its progress on six OMB IT initiatives. We 

used the relevant sections of recent work to report on SBA’s efforts on the 

initiatives, interviewed SBA officials about recent steps that they have 

taken to implement them, and analyzed SBA TechStat documentation to 

determine when past TechStat reviews had been held and to identify the 

outcomes of the reviews.12 We reviewed SBA’s ratings on the Federal IT 

Dashboard to determine if SBA had held a TechStat for the at-risk 

investments.13 To corroborate the data reliability of those ratings, we 

interviewed SBA officials to determine their process for collecting, 

updating, and maintaining the data and asked them to verify the data’s 

completeness and accuracy. We determined that the data were 

sufficiently reliable for the purposes of reporting on TechStat reviews of 

at-risk investments. We analyzed SBA’s operational analyses to 

determine if, within the past year, the agency had performed such 

analyses on all of its major IT investments in the operations and 

maintenance phase. (See app. I for a detailed description of our scope 

and methodology.)

We conducted this performance audit from March 2014 through 

September 2015 in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform the 

11GAO/AIMD-00-21.3.1. 

12GAO, Data Center Consolidation: Agencies Need to Complete Inventories and Plans to 

Achieve Expected Savings, GAO-11-565 (Washington, D.C.: July 19, 2011); Data Center 

Consolidation: Agencies Making Progress on Efforts, but Inventories and Plans Need to 

Be Completed, GAO-12-742 (Washington, D.C.: July 19, 2012); Information Technology: 

Additional OMB and Agency Actions Are Needed to Achieve Portfolio Savings, 

GAO-14-65 (Washington, D.C.: Nov. 6, 2013); Information Technology Reform: Progress 

Made but Future Cloud Computing Efforts Should be Better Planned, GAO-12-756

(Washington, D.C.: July 11, 2012); Cloud Computing: Additional Opportunities and 

Savings Need to Be Pursued, GAO-14-753 (Washington, D.C.: Sept. 25, 2014); and 

Federal Software Licenses: Better Management Needed to Achieve Significant Savings 

Government-Wide, GAO-14-413 (Washington, D.C.: May 22, 2014). A TechStat is a faceto-face, evidence-based accountability review of an IT investment that is failing or not 

meeting goals.

13The Federal IT Dashboard is a public website established by OMB to provide detailed 

information on approximately 700 major IT investments at 27 federal agencies, including 

ratings of their performance against cost and schedule targets.

Page 5 GAO-15-347 Small Business Administration

 
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.

SBA’s organizational structure comprises headquarters and both regional 

and district field offices. At the headquarters level, SBA is divided into 

several key functional areas that manage and set policy for the agency’s 

programs. As shown in figure 1, 17 headquarters offices report to the 

Office of the Administrator.

Background

Organizational Structure

Page 6 GAO-15-347 Small Business Administration
Figure 1: Small Business Administration (SBA) Organizational Chart, as of April 2015

Note: The Offices of Advocacy and Inspector General are independent offices within SBA.

a

The acquisition function is located within the Denver Finance Center.

b

The Office of Field Operations includes branch offices and alternative work sites that report to the 

district offices.

In fiscal year 2014, the agency employed 2,137 regular funded full-time 

equivalent (FTE) staff (excluding staff in the Office of Advocacy, the 

Page 7 GAO-15-347 Small Business Administration
Office of Inspector General, and the Office of Disaster Assistance) to 

carry out its mission of supporting small businesses.14 Four program 

offices manage the agency’s programs that provide capital, contracting, 

counseling, and disaster assistance services to small businesses:

• The Office of Capital Access administers, among other things, the 

7(a) loan program. The 7(a) program is SBA’s largest loan program 

and guarantees a portion of loans for establishing new businesses, 

operating or expanding existing businesses, or acquiring businesses. 

The Office of Capital Access also administers the development 

company (504) loan program, which provides businesses with longterm, fixed-rate financing for major assets such as real estate and 

equipment. In fiscal year 2014, the office had 569 FTEs.

• The Office of Government Contracting and Business Development 

promotes small business participation in federal contracting through a 

variety of programs such as the 8(a) business development, 

Historically Underutilized Business Zone (HUBZone), and womenowned small business (WOSB) programs.15 In fiscal year 2014, the 

office had 180 FTEs.

• The Office of Entrepreneurial Development, which had 50 FTEs in 

fiscal year 2014, oversees a nationwide network of public and private 

“resource partners” that offer small business counseling and technical 

assistance. These include small business development centers, 

women’s business centers, and SCORE chapters.16

14SBA’s regular-funded FTEs are those supported by the agency’s regular salaries and 

expenses fund. The FTEs for the Office of Disaster Assistance are funded out of an 

account specific to that office. As previously mentioned, the Offices of Advocacy and 

Inspector General are independent offices within SBA. 

15The 8(a) business development program helps small, disadvantaged businesses to 

participate in the federal contracting market through sole-source and set-aside contracts. 

The HUBZone program aids urban and rural small businesses that are located in 

designated economically distressed areas in accessing federal procurement opportunities. 

The WOSB program helps women-owned small businesses acquire federal contracts. 

16Small business development centers provide technical assistance to small businesses 

and aspiring entrepreneurs. Women’s business centers assist women in starting and 

growing small businesses. The SCORE Association is a nonprofit association comprised 

of over 13,000 volunteer business counselors located in 348 chapters throughout the U.S. 

and its territories. SCORE members are trained to serve as counselors, advisors, and 

mentors to aspiring entrepreneurs and business owners.

Page 8 GAO-15-347 Small Business Administration

 
• The Office of Disaster Assistance, which had 991 FTEs in fiscal year 

2014, makes loans to businesses and families to rebuild and recover 

after a disaster.

SBA provides its services through a network of 10 regional offices and 68 

district offices that are led by the Office of Field Operations.17 In fiscal 

year 2014, there were 802 FTEs in the regional and district offices. 

Regional offices, whose administrators are political appointees, oversee 

the district offices and promote the President’s and SBA Administrator’s 

messages throughout the region. Considered by officials as SBA’s “boots 

on the ground,” district offices serve as the point of delivery for most SBA 

programs and services. Some district office staff work directly with SBA 

clients, including business opportunity, lender relations, and economic 

development specialists.18 These employees provide counseling and 

training services that aid in the formation, management, financing, or 

operation of a small business enterprise. They also provide information 

on and promote SBA products to lenders, the small business community, 

and groups such as chambers of commerce and trade associations. 

Additionally, district offices are charged with completing statutorily 

mandated reviews, such as program participant reviews that ensure 

participants continue to qualify and are meeting program requirements.19

SBA’s field structure has been revised over the years. In response to 

budget reductions, SBA streamlined its field structure during the 1990s by 

downsizing regional and district offices and shifting oversight 

17Other field offices include disaster offices, branch offices, alternate work sites, veterans 

business outreach centers, and loan processing centers. When a disaster is declared, 

officials from one of SBA’s disaster offices arrive at the disaster site and begin assisting 

victims. According to SBA, its branch offices and alternative work sites have fewer staff 

than a district office and are strategically located to access markets that the district office 

cannot reach. Veterans business outreach centers provide entrepreneurial development 

services for eligible veterans. SBA’s loan processing centers evaluate and issue 

guarantee commitments for loan applications, process guarantee purchase requests, and 

liquidate defaulted loans. 

18Business opportunity specialists engage in the recruitment, training, education, and 

development of small businesses interested in SBA’s contracting programs. Economic 

development specialists market SBA programs and conduct outreach, training, and 

education for small businesses and organizations. Lender relations specialists interact 

with lenders for the purpose of delivering SBA loan programs and services within the 

district. 

19For example, district staff are to conduct annual reviews of 8(a) businesses.

Page 9 GAO-15-347 Small Business Administration

 
responsibilities to headquarters. Since the early 2000s, SBA has further 

restructured and centralized some key agency functions. For example, 

from 2003 through 2006, SBA completed the centralization of its 7(a) loan 

processing, servicing, and liquidation functions from 68 district offices to 1 

loan processing center, 2 commercial loan servicing centers, and 1 loan 

liquidation and guarantee purchase center.20

Since fiscal year 2013, SBA’s annual budget appropriation has declined. 

For fiscal year 2014, SBA’s appropriation was $928,975,000, 

approximately $116 million less than in fiscal year 2013 (see fig. 2). 

SBA’s fiscal year 2016 congressional budget request of $860,130,000 

was approximately $27 million less than the amount enacted for fiscal 

year 2015. (See app. II for more information on recent trends in SBA’s 

budget obligations, outlays, and authority.)

20The two commercial loan servicing centers also carry out loan liquidation and guarantee 

purchases for SBAExpress loans (loans that feature an accelerated turnaround time for 

SBA review). The loan liquidation and guarantee purchase center carries out the 

liquidation and guarantee purchase functions for all other 7(a) loans. When a borrower 

with an SBA-guaranteed loan defaults and the loan has been liquidated, the lender has 

the option of submitting a purchase request to SBA to honor the guaranteed portion of the 

loan.

Page 10 GAO-15-347 Small Business Administration

 
Figure 2: Small Business Administration (SBA) New Budget Authority, Fiscal Years 2004 through 2016 (requested)

Note: SBA’s fiscal year 2008 appropriation was significantly higher than for other fiscal years to 

address necessary expenses related to the agency’s disaster loan program. The increase in funding 

was related to Hurricane Katrina and other disasters.

SBA’s spending on IT fluctuated from 2005 through 2008, as shown in 

figure 3. The sharp rise in spending in 2006 is attributed to increased 

amounts for IT investments for disaster credit management, loan and 

lender monitoring, and IT infrastructure. Since fiscal year 2008, the 

agency’s yearly IT spending has remained fairly stable at about $100 

million.

SBA IT Spending

Page 11 GAO-15-347 Small Business Administration
Figure 3: Small Business Administration Information Technology Spending from Fiscal Year 2005 through Fiscal Year 2015

Note: The number for fiscal year 2015 is an estimate.

For fiscal year 2015, SBA estimates that it will spend approximately $109 

million for IT. Of that amount, $83 million (77 percent) is to be spent on 

mission-critical systems to, among other things, support agency financial 

operations and the disaster loan assistance program. In addition, it plans 

to spend $21 million (19 percent) on developing, modernizing, and 

enhancing IT investments, while the rest is to be spent on operations and 

maintenance of existing systems.

Government-wide, federal agencies spend more than $80 billion annually 

to meet their increasing demands for IT. In a 2014 report, we found that 

duplicative, wasteful, and low-value investments had proliferated over the 

years, highlighting the need for agencies to avoid such investments 

whenever possible.21 OMB has made a similar observation in its 

21GAO, 2014 Annual Report: Additional Opportunities to Reduce Fragmentation, Overlap, 

and Duplication and Achieve Other Financial Benefits, GAO-14-343SP (Washington, D.C.: 

Apr. 8, 2014). 

Page 12 GAO-15-347 Small Business Administration

 
guidance.22 To help address their management of federal IT dollars, OMB 

has implemented a series of initiatives for federal agencies to use to, 

among other things, consolidate the growing number of federal data 

centers, shift to increased use of cloud computing, and promote the use 

of shared services.23 In a June 2014 report, we found that OMB’s IT 

reform initiatives could help to improve the efficiency and effectiveness of 

federal agencies and save billions of dollars.24

In the last 15 years, we and the SBA OIG have identified management 

challenges at SBA, many of which are related to specific programs. In 

accordance with the Reports Consolidation Act of 2000, the SBA OIG 

issues annual reports in which it identifies SBA’s most serious 

management challenges—programs or activities that it has determined 

pose significant risks.25 These annual reports represent the SBA OIG’s 

current assessment of SBA programs and activities that pose significant 

risks, including those that are particularly vulnerable to fraud, waste, 

error, mismanagement, or inefficiencies. The OIG’s most recent report for 

fiscal year 2015 identified 11 such challenges, 7 of which are issues that 

have persisted for 10 years or longer.26 These 7 long-standing challenge 

areas are loan guarantee purchases, the 8(a) business development 

program, IT security, loan agent fraud, human capital, lender oversight, 

and small business contracting (see fig. 4).27 The other challenge areas 

22Office of Management and Budget, Implementing PortfolioStat, Memorandum M-12-10 

(Washington, D.C.: Mar. 30, 2012). 

23Cloud computing is a form of computing that relies on Internet-based services and 

resources to provide computing services to customers, while freeing them from the burden 

and costs of maintaining the underlying infrastructure. According to OMB, a shared 

service is an IT function that is provided for consumption by multiple organizations within 

or between federal agencies.

24GAO, Information Technology: Reform Initiatives Can Help Improve Efficiency and 

Effectiveness, GAO-14-671T (Washington, D.C.: June 10, 2014).

25Reports Consolidation Act of 2000, Pub. L. No. 106-531, 114 Stat. 2537 (2000). 

26Small Business Administration, Office of Inspector General, Report No. 15-01.

27Loan guarantee purchases occur when lenders request that SBA purchase the 

guarantee following loan liquidation or delinquency. A prospective borrower or a lender 

sometimes pays a loan agent (e.g., a loan broker or packager) to prepare documentation 

for an SBA loan application and/or refer the borrower to a lender. Loan agents can bring 

borrowers and lenders together and facilitate loan transactions. 

SBA Has Not 

Resolved Many of Its 

Long-Standing 

Management 

Challenges

Page 13 GAO-15-347 Small Business Administration

 
are: improper payments, the Loan Management and Accounting System, 

and acquisition management.28

Figure 4: Duration of Small Business Administration Management Challenges Identified by the SBA OIG, as of Fiscal Year 

2015

Note: According to the SBA OIG, its fiscal year 2015 report on SBA’s management challenges was 

based on OIG, GAO, and other official reports and generally considered those accomplishments that 

SBA had reported as of September 30, 2014.

a

The loan guarantee purchase challenge area includes challenges related to loan guarantee 

requirements and controls cited from fiscal year 2000 to 2005. Loan guarantee purchases occur when 

SBA purchases guarantees from lenders following loan liquidations or delinquencies.

b

The 8(a) business development program challenge area includes the 8(a) eligibility challenge 

included in reports from fiscal years 2000-2002.

c

Loan agents are sometimes used to prepare documentation for an SBA loan application and refer 

borrowers to lenders.

d

The challenge area on improper payments combines separate challenges on improper payments in 

the 7(a) and disaster loan programs. Improper payments in the 7(a) and disaster loan programs were 

first cited as challenges in fiscal years 2010 and 2012, respectively.

e

The Loan Management and Accounting System is a project to upgrade existing financial software 

and application modules and remove them from the mainframe environment.

28The challenge area on improper payments combines separate challenges on improper 

payments in the 7(a) and disaster loan programs.

Page 14 GAO-15-347 Small Business Administration

 
Our past reports have identified some of the same long-standing 

management challenges that SBA needs to address, particularly in the 

areas of contracting, lender oversight, and the Loan Management and 

Accounting System (and other IT management issues). We and the SBA 

OIG have also identified problems in SBA’s disaster loan processing that, 

while not long-standing, also pose risks to the agency. To address SBA’s 

challenges, we and the SBA OIG have made various recommendations. 

While SBA has made some progress in addressing these challenge 

areas, many of our recommendations remain unimplemented. As of July 

2015, 53 percent of the recommendations (32 of 60) we made to SBA 

across all subject areas in fiscal years 2010 through 2013 had not been 

fully addressed.29 See appendix III for a list of all 69 recommendations we 

have made to SBA since fiscal year 2000 that remain open.30 We 

maintain that these recommendations continue to have merit and should 

be fully implemented.

• Loan guarantee purchases. Loan guarantee purchases occur when 

lenders request that SBA purchase the guarantee following loan 

liquidation or delinquency. The SBA OIG has cited issues related to 

loan guarantee purchases as a serious management challenge since 

fiscal year 2000.31 For example, in its fiscal year 2011 management 

challenges report, the OIG stated that its audits of defaulted loans and 

SBA’s guarantee purchase and liquidation processes showed that 

reviews performed by the agency’s loan centers did not consistently 

detect lenders’ failures to administer loans in full compliance with SBA 

requirements and prudent lending practices, resulting in improper 

payments.32 In its fiscal year 2012 management challenges report, the 

OIG stated that in the last decade, the agency had made significant 

29Recommendations we have made to SBA’s Office of Advocacy, an independent office 

with SBA, are not included in this analysis.

30We did not include four recommendations—from reports GAO-14-233 and GAO-10-

353—that had been addressed by SBA and were in the process of being closed as 

implemented as of July 2015.

31The SBA OIG identified issues related to loan guarantee purchases as a serious 

management challenge prior to fiscal year 2000, but fiscal year 2000 was the first year of 

our analysis. This challenge area includes challenges related to loan guarantee 

requirements, controls, and quality assurance. 

32Small Business Administration, Office of Inspector General, Fiscal Year 2011 Report on 

the Most Serious Management and Performance Challenges Facing the Small Business 

Administration, Report No. 11-01 (Washington, D.C.: Oct. 15, 2010).

Page 15 GAO-15-347 Small Business Administration

 
progress in improving deficiencies identified in SBA loan liquidation 

and guarantee purchase processes but that a significant deficiency 

continued to exist in the area of quality assurance.33 The report noted 

that while SBA had developed a quality assurance program, additional 

work remained before the agency could demonstrate that all elements 

of the program had been completed and followed. In its fiscal year 

2015 report on management challenges, the SBA OIG found that SBA 

had made significant progress in developing and implementing a 

quality control program for all of its loan centers to verify and 

document compliance with the loan process, from origination to closeout, and to identify where material deficiencies might exist so that 

remedial action could be taken.34 Further, the OIG stated that SBA 

had (1) developed and documented quality program manuals and 

review checklists for each center; (2) assessed center functions by 

risk to prioritize required quality control reviews; (3) refined feedback, 

training, and reporting processes; and (4) developed new systems to 

improve the tracking of quality control deficiencies and corrective 

actions. However, the SBA OIG noted that SBA would need to 

continue monitoring the quality control program during fiscal year 

2015 to verify that (1) required quality control reviews were being 

completed, (2) quality control activities provided adequate coverage 

over loan center operations, and (3) quality control reviews were 

effective at identifying and correcting material deficiencies.

• 8(a) business development program. The 8(a) business 

development program is a business assistance program for small 

disadvantaged businesses.35 The SBA OIG has identified issues 

related to this program as a serious management challenge since 

fiscal year 2000.36 For example, in its fiscal year 2003 report on 

management challenges (and in every report since), the OIG noted 

that SBA needed to modify the 8(a) business development program 

33Small Business Administration, Office of Inspector General, Fiscal Year 2012 Report on 

the Most Serious Management and Performance Challenges Facing the Small Business 

Administration, Report No. 12-01 (Washington, D.C.: Oct. 21, 2011).

34Small Business Administration, Office of Inspector General, Report No. 15-01.

35The 8(a) program offers a broad range of assistance to firms that are owned and 

controlled by socially and economically disadvantaged individuals.

36The SBA OIG identified issues related to the 8(a) business development program as a 

serious management challenge prior to fiscal year 2000, but fiscal year 2000 was the first 

year of our analysis.

Page 16 GAO-15-347 Small Business Administration

 
so more firms received business development assistance, standards 

for determining economic disadvantage were justifiable, and SBA 

ensured that firms followed 8(a) regulations when completing 

contracts.37 In a 2003 report on management challenges, we found 

related problems with the 8(a) program.38 For instance, SBA had 

begun to implement short- and long-term strategies to address 

problems in the 8(a) program, but data suggested that only a few 

firms continued to receive the bulk of 8(a) funding and that the volume 

of federal procurement funding awarded to 8(a) firms had not 

increased.

Further, in a March 2010 report on the 8(a) program, we found that 

although SBA had implemented new procedures for the program, 

there were inconsistencies and weaknesses in internal controls that 

increased the potential for abuse by ineligible firms.39 Specifically, we 

found that monitoring of district staff needed to be improved and 

district staff needed better guidance, training, and criteria to follow the 

required annual review procedures for determining continued 

eligibility. We made six recommendations that individually and 

collectively could improve procedures used in assessing and 

monitoring the continuing eligibility of firms to participate in and benefit 

from the 8(a) program. SBA agreed with the six recommendations 

when the report was issued. As of July 2015, SBA had taken actions 

responsive to four of the recommendations. Specifically, it had 

assessed the workload of business development specialists, updated 

its 8(a) regulations to include more specificity on the criteria for the 

continuing eligibility reviews, developed a centralized process to 

collect and maintain data on 8(a) firms participating in the MentorProtégé Program, and implemented a standard process for 

documenting and analyzing complaint data.40 The two remaining 

37Small Business Administration, Office of Inspector General, FY 2003 Agency 

Management Challenges, Report No. 3-04 (Washington, D.C.: Jan. 17, 2003). In fiscal 

years 2000 through 2002, the SBA OIG cited slightly different challenges related to the 

8(a) business development program. 

38GAO-03-116. 

39GAO, Small Business Administration: Steps Have Been Taken to Improve 

Administration of the 8(a) Program, but Key Controls for Continued Eligibility Need 

Strengthening, GAO-10-353 (Washington, D.C.: Mar. 30, 2010). 

40Under the Mentor-Protégé Program, experienced firms mentor 8(a) firms to enhance the 

capabilities of the protégé, provide various forms of business developmental assistance, 

and improve the protégé’s ability to successfully compete for contracts. 

Page 17 GAO-15-347 Small Business Administration

 
recommendations yet to be fully implemented as of July 2015 focus 

on (1) procedures to ensure that appropriate actions are taken for 

firms subject to early graduation from the program and (2) taking 

actions against firms that fail to submit required documentation.41 In 

its fiscal year 2015 report on management challenges, the SBA OIG 

found that SBA had made progress towards addressing issues that 

hindered its ability to deliver an effective 8(a) business development 

program.42 For example, it found that SBA had expanded its ability to 

provide assistance to program participants through its resource 

partners. In addition, it noted that SBA had taken steps to ensure that 

business opportunity specialists assessed program participants’ 

business development needs during site visits. The OIG also found 

that SBA had revised its regulations, effective March 2011, to ensure 

that companies deemed “business successes” graduated from the 

program. However, for the second consecutive year the SBA OIG 

noted that SBA had not finished updating the SOP for the 8(a) 

business development program to reflect the March 2011 regulatory 

changes. In addition, the OIG continued to maintain that SBA’s 

standards for determining economic disadvantage were not justified or 

objective based on the absence of economic analysis.

According to a senior SBA official, improving the 8(a) program is a 

priority for the new Administrator. For example, he stated that the 

agency was considering how to expand SBA One—an initiative 

designed to create a single application for most SBA loans and allow 

borrowers and lenders to populate forms from secure information 

storage—to include the 8(a) program. He noted that the goal would be 

to make it easier and less costly for small businesses to participate in 

the program. In addition, he stated that the agency was considering 

focusing its oversight on those 8(a) businesses that receive federal 

contracts.

• IT security. The SBA OIG has identified weaknesses in information 

systems security controls as a serious management challenge since 

41In May 2015, we met with SBA officials to help them gain an understanding of our 

recommendations.

42Small Business Administration, Office of Inspector General, Report No. 15-01.

Page 18 GAO-15-347 Small Business Administration

 
fiscal year 2000.43 In its fiscal year 2015 management challenges 

report, it noted that SBA’s computer security program operates in a 

dynamic and highly decentralized environment and requires 

management attention and resources as weaknesses are identified.44

The OIG stated that SBA had shown progress in establishing an 

entity-wide incident management and response program and had

improved network port security access controls, but found that SBA 

still needed to address long-standing security weaknesses identified 

in 35 open IT audit recommendations. In addition, the SBA OIG noted 

that SBA’s Office of the Chief Information Officer, in conjunction with 

SBA’s program offices, needed to implement tools and capabilities to 

provide effective oversight and continuously monitor computer 

security controls. According to a senior SBA official, the agency has 

recently placed an even greater emphasis on improving its IT security 

at the direction of the White House. He stated that one focus was 

increasing the use of personal identification verification cards, which 

are smart cards that govern access to federally controlled facilities 

and information systems.45

• Loan agent fraud. A prospective borrower or a lender sometimes 

pays a loan agent (e.g., a loan broker or packager) to prepare 

documentation for an SBA loan application or find a lender. The SBA 

OIG has identified loan agent fraud as a serious management 

challenge since fiscal year 2000. Its fiscal year 2015 management 

challenges report stated that for years its investigations had revealed 

a pattern of fraud by loan packagers and other for-fee agents in the 

7(a) loan program involving hundreds of millions of dollars.46 The 

report noted that SBA’s oversight of loan agents had been limited, 

putting taxpayer dollars at risk. It added that SBA could reduce this 

risk by developing a database or equivalent means to track loan agent 

activity, updating regulations on loan agent enforcement, issuing new 

43The SBA OIG identified IT security as a serious management challenge prior to fiscal 

year 2000, but fiscal year 2000 was the first year of our analysis.

44Small Business Administration, Office of Inspector General, Report No. 15-01. 

45To meet requirements in Homeland Security Presidential Directive (HSPD)-12, SBA is 

investing in a system to implement a new government-wide standard for secure and 

reliable forms of identification for employees and contractors who access governmentcontrolled facilities and information systems. We discuss this system in more detail later in 

the report.

46Small Business Administration, Office of Inspector General, Report No. 15-01.

Page 19 GAO-15-347 Small Business Administration

 
guidance for lenders on not doing business with loan agents subject 

to enforcement actions, and implementing a loan agent registration 

system (including the issuance of a unique identifying number for 

each agent). Finally, the report noted that SBA had made substantial 

progress on tracking loan agency data, limited progress on updating 

its regulations and issuing new guidance to lenders, and had not yet 

started on its recent recommendation to implement a registration 

system. 

• Human capital. The SBA OIG has included human capital as one of 

the most serious management challenges at SBA since fiscal year 

2001, noting that SBA needs effective human capital strategies to 

carry out its mission successfully and become a high-performing 

organization. Problems that the SBA OIG cited in its management 

challenges reports over the years included the lack of a 

comprehensive human capital strategy that identified SBA’s current 

and future human capital needs, including workforce capacity and skill 

gaps; failure to clarify the role of or appropriately staff district offices 

when key program functions were transferred to service centers; and 

failure to adequately analyze priorities and allocate resources 

consistent with them.47 In our 2003 report on SBA’s management 

challenges, we also found that SBA needed to strengthen its human 

capital management.48 For example, we stated that SBA’s 

organizational structure had weaknesses that contributed to the 

challenges it faced in delivering services to the small business 

community. We discuss the status of SBA’s human capital 

management and additional challenges we identified as part of our 

current review later in this report.

• Lender oversight. SBA’s major loan programs (7(a) and 504) require 

effective lender oversight because the agency generally relies on the 

lenders that make 7(a) loans and certified development companies 

(CDC) that make 504 loans to process and service the loans and to 

ensure that borrowers meet the programs’ eligibility requirements. The 

SBA OIG has identified lender oversight as a serious management 

47See Small Business Administration, Office of Inspector General, Report No. 3-04; FY 

2007 Report on the Most Serious Management Challenges Facing the Small Business 

Administration, Report No. 7-01 (Washington, D.C.: Oct. 16, 2006); and Fiscal Year 2009 

Report on the Most Serious Management and Performance Challenges Facing the Small 

Business Administration, Report No. 09-02 (Washington, D.C.: Oct. 20, 2008).

48GAO-03-116. 

Page 20 GAO-15-347 Small Business Administration

 
challenge for SBA since fiscal year 2001. We also identified SBA’s 

lender oversight as a challenge in our 2003 report on management 

challenges.49 More recently, we and the OIG found the following 

weaknesses in SBA’s lender oversight:

• In a July 2013 report, the SBA OIG found that SBA had not 

implemented procedures and policies to monitor risk across its 

loan portfolio and that SBA had not developed a process for 

ensuring that identified risks were addressed.50 The SBA OIG 

recommended that SBA implement a portfolio risk management 

system, use data from that system to support risk-based decisions 

in its loan programs, and implement additional controls to mitigate 

identified risks where necessary. SBA agreed with the 

recommendations. According to the SBA OIG, while SBA has 

implemented a portfolio risk-management program in accordance 

with its recommendations, it has not yet used data from the 

program to support risk-based decisions in loan programs or 

develop additional internal controls to manage identified risks.

• In a September 2013 report, we found that internal controls over 

lenders participating in the Patriot Express pilot program may not 

have provided the agency with reasonable assurance that loans 

were made only to eligible borrowers.51 For example, we found 

that SBA had not developed procedures for lenders to provide 

reasonable assurance that borrowers maintained their eligibility 

after the loans were disbursed. We recommended, among other 

things, that SBA enhance internal controls over borrower eligibility 

requirements. SBA subsequently decided to allow the program to 

expire in December 2013.

• In a March 2014 report, we found that although SBA had initiated 

actions to improve its reviews under the 504 loan program, its 

guidance for conducting risk-based reviews of the CDCs that 

49GAO-03-116. 

50Small Business Administration, Office of Inspector General, Report No. 13-17.

51GAO, Patriot Express: SBA Should Evaluate the Program and Enhance Eligibility 

Controls, GAO-13-727 (Washington, D.C.: Sept. 12, 2013). The Patriot Express program 

assisted veterans and spouses of veterans by issuing loans to start or expand a small 

business and was offered by SBA’s network of participating lenders, featuring SBA’s 

lowest interest rates for business loans.

Page 21 GAO-15-347 Small Business Administration

 
make 504 loans did not require SBA staff to review supporting 

documentation on the number of jobs created or retained, a key 

requirement of the program.52 Among other things, we 

recommended that SBA require examiners to review such 

documentation. SBA generally agreed with our recommendation 

and subsequently revised its review procedures. Specifically, the 

agency incorporated steps in the worksheet examiners use to 

review loan files during risk-based reviews that require the review 

of documentation supporting the number of jobs created or 

retained.

SBA has recently revised its procedures for conducting risk-based 

reviews of lenders and CDCs. A senior SBA official stated that he 

expected these changes to greatly improve SBA’s lender oversight. 

Specifically, SBA developed a new risk measurement methodology to 

assign risk ratings to both 7(a) lenders and CDCs and new lender 

risk-based review protocols for using these ratings to determine the 

scope of lender reviews. Those lenders with composite risk ratings 

above an established threshold are to undergo a targeted review of 

specific identified risks or a full review if risks are more pervasive. In 

its fiscal year 2015 report on management challenges, the SBA OIG 

noted that SBA also had improved its monitoring and verification of 

corrective actions by lenders by (1) developing corrective action 

assessment procedures, (2) finalizing a system to facilitate the 

corrective action process, and (3) populating the system with lender 

oversight results requiring corrective action.53 However, the OIG 

stated that in order for SBA to fully resolve this management 

challenge, the agency would need to demonstrate the effectiveness of 

the process for monitoring and verifying lenders’ implementation of 

corrective actions.

• Small business contracting. SBA’s contracting programs help 

eligible socially and economically disadvantaged small businesses 

52GAO, Small Business Administration: Actions Needed to Ensure Planned Improvements 

Address Key Requirements of the Development Company (504) Loan Program, 

GAO-14-233 (Washington, D.C.: Mar. 6, 2014). CDCs are nonprofit corporations certified 

and regulated by SBA that work with participating lenders to provide financing to small 

businesses. SBA oversees the 504 loan program, and about 270 CDCs issue “504 loans” 

that generally cover up to 40 percent of project costs.

53Small Business Administration, Office of Inspector General, Report No. 15-01. 

Page 22 GAO-15-347 Small Business Administration

 
obtain federal contracts on a set-aside basis. The agency has several 

such programs, including the HUBZone and WOSB contracting 

programs. The SBA OIG has identified small business contracting as 

a serious management challenge since fiscal year 2005. Its fiscal year 

2015 management challenges report stated that SBA’s procurement 

flaws allowed large firms to obtain small business awards and 

agencies to count contracts performed by large firms toward their 

small business goals.54 In a September 2014 report, the OIG 

identified over $400 million in contract actions that were awarded to 

ineligible 8(a) and HUBZone firms, which may have contributed to the 

overstatement of small business goaling dollars reported to Congress 

in fiscal year 2013.55

In addition, we and the SBA OIG have identified internal control 

weaknesses in individual contracting programs, as the following 

examples illustrate.

• In a June 2008 report, we found that many firms were in the 

HUBZone program for more than 3 years without being recertified 

as required, resulting in potentially ineligible firms participating in 

the program.56 We recommended, among other things, that SBA 

eliminate the backlog using either SBA or contract staff and take 

the necessary steps to ensure that recertifications were completed 

in a more timely fashion in the future. SBA agreed, and in a 2009 

testimony we found that the agency had eliminated the backlog of 

recertifications by hiring additional contract staff.57 However, we 

found in a February 2015 report that SBA did not replace the 

contract staff with FTE staff because, according to SBA, part of its 

54Small Business Administration, Office of Inspector General, Report No. 15-01. 

55Small Business Administration, Office of Inspector General, Agencies Are Overstating 

Small Disadvantaged Business and HUBZone Goaling Credit by Including Contracts 

Performed by Ineligible Firms, Report No. 14-18 (Washington, D.C.: Sept. 24, 2014). 

56GAO, Small Business Administration: Additional Actions are Needed to Certify and 

Monitor HUBZone Businesses and Assess Program Results, GAO-08-643 (Washington, 

D.C.: June 17, 2008). According to HUBZone regulations, HUBZone firms must recertify 

their continued eligibility every 3 years to remain in the program. (13 CFR § 126.500).

57GAO, Small Business Administration: Status of Efforts to Address Previous 

Recommendations on the HUBZone Program, GAO-09-532T (Washington, D.C.: Mar. 25, 

2009).

Page 23 GAO-15-347 Small Business Administration

 
funding authority was rescinded in 2013.58 As a result, we found 

that SBA once again had a backlog in recertifying firms. 

Therefore, we recommended that SBA assess the recertification 

process and implement additional controls, such as ensuring that 

sufficient staff were dedicated to the effort so that a significant 

backlog in recertifications did not recur. SBA agreed with the 

recommendation. According to SBA, it has since completed an 

evaluation of the current recertification procedures and plans to 

implement improved processes by September 30, 2015.

• In an October 2014 report on SBA’s WOSB program, we found 

that SBA performed minimal oversight of third-party certifiers and 

had not developed procedures to provide reasonable assurance 

that only eligible businesses obtained WOSB set-aside 

contracts.59 We recommended that SBA develop and implement 

comprehensive procedures to monitor and assess the 

performance of certifiers and enhance the examination of 

businesses that registered to participate in the WOSB program. 

SBA generally agreed with the recommendations and stated that 

the agency was in the process of implementing many of them. In 

June 2015, SBA officials told us that the agency was in the 

process of publishing a proposed rulemaking on how to proceed 

with certification in light of recent legislative changes to the 

program and planned to update its procedures for examining firms 

by the end of fiscal year 2015.

• In a May 2015 report, the SBA OIG found that federal agencies’ 

contracting officers awarded 15 of 34 set-aside awards without 

meeting the WOSB program’s set-aside requirements.60 These 

firms received approximately $7.1 million of fiscal year 2014 setaside awards that may have been improper. It also found that of 

58GAO, Small Business Contracting: Opportunities Exist to Further Improve HUBZone 

Oversight, GAO-15-234 (Washington, D.C.: Feb. 12, 2015).

59GAO, Women-Owned Small Business Program: Certifier Oversight and Additional 

Eligibility Controls Are Needed, GAO-15-54 (Washington, D.C.: Oct. 8, 2014).

60Small Business Administration, Office of Inspector General, Improvements Needed in 

SBA’s Management and Administration of the Women-Owned Small Business Federal 

Contracting Program, Report No. 15-10 (Washington, D.C.: May 14, 2015). Contract setasides restrict the competition for a contract award to certain classes of firms, such as 

women-owned small businesses, whose members might not otherwise be considered for 

award in full and open competition.

Page 24 GAO-15-347 Small Business Administration

 
the 34 awards reviewed, only 25 had documentation of program 

eligibility in the WOSB program repository. Of those, 13 did not 

provide all of the required documentation, and 12 did not provide 

sufficient documentation to prove that the firm was controlled by 

women.

According to a senior SBA official, SBA plans to improve small 

business contracting by extending SBA One to the 8(a) and HUBZone 

programs and creating a more dynamic small business search engine 

so that agencies can more readily identify small businesses that are 

eligible for contracts.

• Improper payments. The Improper Payments Information Act of 

2002 requires agencies to review and identify those programs 

susceptible to significant improper payments, report on the amount 

and causes of improper payments, and develop plans for reducing 

improper payments.61 The SBA OIG has identified improper payments 

in SBA’s 7(a) and disaster loan programs as serious management 

challenges since fiscal year 2010 and fiscal year 2012, respectively. 

Its fiscal year 2015 report on management challenges stated that 

previous OIG audits had determined that reported improper payment 

rates for 7(a) loan approvals and purchases and disaster loans were 

significantly understated because SBA had not adequately reviewed 

loans, had used flawed sampling methodologies, and did not 

accurately project review findings.62 The OIG noted that SBA had 

taken actions to correct many of these deficiencies for the 7(a) 

program, including formalizing its improper payment sampling and its 

process for reviewing disputed cases and developing appropriate 

corrective action plans for the program. However, the OIG stated that 

SBA still needed to demonstrate that its process over disputed cases 

was ensuring adequate and timely resolution, that it was adhering to 

recovery time standards, and that corrective action plans for the 7(a) 

loan program were effective in reducing improper payments. The OIG 

also noted that SBA had implemented an improved corrective action 

plan for the disaster loan program that if properly implemented, should 

effectively reduce the improper payment rate in future years.

61Improper Payments Information Act of 2002, Pub. L. No. 107-300, as amended (31 

U.S.C. § 3321 note). An “improper payment” is any payment that should not have been 

made or that was made in an incorrect amount under statutory, contractual, 

administrative, or other legally applicable requirements.

62Small Business Administration, Office of Inspector General, Report No. 15-01.

Page 25 GAO-15-347 Small Business Administration

 
In a February 2015 report on improper payments related to Disaster 

Relief Appropriations Act, 2013 funding, we found that SBA did not 

have policies and procedures for estimating improper payments for 

the Office of Entrepreneurial Development Grants program, one of its 

two programs that received funding under the act.63 We also found 

that SBA’s policies and procedures for its Disaster Assistance Loans 

program, the other program that received funding, did not cover many 

of the key requirements for estimating improper payments. For 

example, they did not define improper payments consistent with OMB 

guidance. SBA’s internal guidance defines an improper payment as a 

loan approval that does not meet the eligibility requirements in its 

SOP for the program. However, OMB guidance clarifies that improper 

payments can include certain payments to eligible recipients, such as 

payments that are for the incorrect amount and duplicate payments. 

Such types of improper payments were not captured or addressed in 

SBA’s policies and procedures. We recommended that SBA take 

eight actions to develop policies and procedures for the Office of 

Entrepreneurial Development Grants program and six actions to 

revise its Disaster Assistance Loans program policies and procedures 

for estimating improper payments. SBA did not explicitly concur with 

our recommendations but stated that it would address them by 

including a chapter on improper payments as it updates its SOP for 

internal controls. In June 2015, SBA officials told us that they planned 

to issue a policy notice containing additional guidance until the SOP 

could be updated.

In a May 2015 report on SBA’s progress in complying with the 

Improper Payments Elimination and Recovery Act of 2010, the SBA 

OIG found that SBA continued to make progress in its efforts to 

prevent and reduce improper payments.64 For example, the reported 

improper payment rate for disaster assistance loan disbursements 

had decreased from 18.4 percent in fiscal year 2013 to 12 percent in 

fiscal year 2014, exceeding SBA’s goal of 15 percent. However, the 

OIG also found that SBA needed to make some improvements to 

63GAO, Disaster Relief: Agencies Need to Improve Policies and Procedures for Estimating 

Improper Payments, GAO-15-209 (Washington, D.C.: Feb. 27, 2015).

64Pub. L. No. 111-204, 124 Stat. 2224 (codified at 31 U.S.C. § 3321 note). See Small 

Business Administration, Office of Inspector General, SBA’s FY 2014 Compliance with the 

Improper Payments Elimination and Recovery Act, Report No. 15-11 (Washington, D.C.: 

May 15, 2015).

Page 26 GAO-15-347 Small Business Administration

 
effectively develop its improper payment controls and processes for 

Hurricane Sandy disaster relief grants and 7(a) loan guarantee 

purchases. Specifically, it found that the reported improper payment 

rate for Hurricane Sandy disaster relief grants of 3 percent might have 

been understated because reviewing personnel did not identify 

payment errors and related opportunities for correcting those errors. 

The OIG also noted that the reported improper payment rate of 1.33 

percent for 7(a) loan guarantee purchases was slightly understated. 

The OIG made six recommendations to improve the effectiveness of 

improper payment controls over Hurricane Sandy technical assistance 

grants and Section 7(a) loan guarantee purchases.

A senior SBA official noted that SBA’s improper payment rates were 

decreasing and that SBA One would help decrease them further 

because it included editing features designed to reduce the number of 

technical errors.

• Loan Management and Accounting System (and other aspects of 

IT management). SBA’s Loan Management and Accounting System 

(LMAS) is one in a series of attempts by SBA during the past several 

years to upgrade existing financial software and application modules 

and remove them from the mainframe environment. The SBA OIG has 

identified this project as a serious management challenge since fiscal 

year 2010 on the basis of reviews that we and it conducted, as the 

following examples show.

• In a 2012 report, we found inconsistencies in SBA’s application of 

IT management practices (including IT risk management) resulting 

in part from inadequate executive oversight of the LMAS 

modernization project.65 For example, we found that SBA had not 

fully prioritized risks related to one project or developed plans to 

mitigate them. Consequently, this modernization effort was

severely delayed, and costs were well above initial estimates. We 

recommended that SBA ensure that appropriate IT management 

practices were applied to LMAS projects and that the executive 

bodies responsible for project oversight provide appropriate and 

65GAO, Information Technology: SBA Needs to Strengthen Oversight of its Loan 

Management and Accounting System Modernization, GAO-12-295 (Washington, D.C.: 

Jan. 25, 2012). The Loan Management and Accounting System remained in the planning 

phase until September 2008, when SBA awarded three blanket purchase agreements to 

get projects under way. 

Page 27 GAO-15-347 Small Business Administration

 
ongoing reviews. SBA generally concurred with the 

recommendations and has taken some actions to address them 

as discussed below.

• In a series of reports in 2010, 2013, and 2014 on the LMAS 

project, the SBA OIG found that SBA did not follow federal 

regulations and internal guidance on IT acquisitions, leading to 

delays and weaknesses in project oversight.66 For example, in 

2014 the OIG found that SBA did not identify a plan for full user 

acceptance testing according to the requirements outlined in its 

own SOPs for IT system development.67 The OIG also noted that 

SBA had made some progress but recommended that the agency 

adhere to internal guidelines in performing project oversight, 

approve and revise project baselines, and affirm the viability of 

project milestones. SBA agreed with the findings and 

recommendations and has taken actions to address them.

SBA has recently completed its LMAS projects. In response to our 

2012 recommendation, SBA told us that it had instituted changes to 

provide consistent project management, including appropriate 

oversight of requirements, the engagement of an independent 

contractor, and the establishment of risk management processes. As 

of March 2015, SBA reported that development activities for these 

projects had been successfully completed and all projects had 

entered the operations and maintenance phase.

The SBA OIG has identified problems with other aspects of SBA’s IT 

management. In a February 2014 report, the OIG found that SBA had 

not followed federal regulations and guidance in the acquisition of the 

OneTrack system, a system that the Office of Government 

Contracting and Business Development planned to use to track 8(a) 

66Small Business Administration, Office of Inspector General, Adequacy of Quality 

Assurance Oversight of the Loan Management and Accounting System Project, Report 

No. 10-14 (Washington, D.C.: Sept. 13, 2010); Briefing Report: The SBA’s Loan 

Management and Accounting System-Incremental Improvement Projects, Report No. 13-

11 (Washington, D.C.: Mar. 12, 2013); and Evaluation Report: Review of the LMAS 

Incremental Improvement Projects, Report No. 14-21 (Washington, D.C.: Sept. 30, 2014).

67Small Business Administration, Office of Inspector General, Report No. 14-21.

Page 28 GAO-15-347 Small Business Administration

 
and HUBZone program participants.68 The SBA OIG reported that 

SBA had failed to perform market research or use a modular 

contracting strategy intended to reduce acquisition risks.69 As a result, 

SBA did not receive a system with the full capabilities originally 

designed. The OIG recommended, among other things, that SBA 

conduct a requirements analysis and cost assessment of the system 

and ensure that all appropriate provisions of internal guidance on IT 

system development were met prior to placing OneTrack into 

production. SBA concurred with the recommendations, but according 

to the SBA OIG, the agency did not deploy the OneTrack system. 

Instead, as noted previously, a senior SBA official told us that the 

agency planned to use SBA One for the 8(a) and HUBZone programs 

as well as its loan programs. He further noted that improving IT was a 

priority for the Administrator and that she was devoting additional 

resources to IT to meet deferred needs.

• Acquisition management. The SBA OIG has identified SBA’s 

acquisition management as a serious management challenge since 

fiscal year 2013. Although SBA had taken steps to improve its 

acquisition process—such as realigning its acquisition program within 

the organization, hiring new staff, and providing additional training to 

its acquisition personnel, the SBA OIG noted in its 2015 report on 

SBA’s management challenges that challenges remained.70 These 

challenges included (1) poorly defined requirements, (2) internal 

control deficiencies, (3) inadequate oversight of contractor 

performance, and (4) an incomplete acquisition SOP. We discuss 

SBA’s efforts to address these challenges and the results of a 

contractor review that found additional areas in need of improvement 

later in this report.

• Disaster loan processing. Both we and the OIG have reported that 

SBA needs to further strengthen planning for and controls over its 

disaster loan program to improve its ability to respond effectively to 

68Small Business Administration, Office of Inspector General, The SBA Did Not Follow 

Regulations and Guidance in the Acquisition of the OneTrack System, Report No. 14-10 

(Washington, D.C.: Feb. 12, 2014).

69Modular contracting is the acquisition of a major IT system through smaller, successive 

increments of interoperable modules. 

70Small Business Administration, Office of Inspector General, Report No. 15-01.

Page 29 GAO-15-347 Small Business Administration

 
future disasters. SBA provides funding and assistance to individuals 

and businesses after disasters declared by either the President or 

SBA. SBA’s disaster loan program is the primary federal program for 

funding long-range recovery for nonfarm businesses that are victims 

of disasters and is the only form of SBA assistance not limited to small 

businesses. After the 2005 Gulf Coast hurricanes (Katrina, Rita, and 

Wilma), SBA faced an unprecedented demand for disaster loans, 

while also being confronted with a significant backlog of applications. 

As a result, hundreds of thousands of loans were not dispersed in a 

timely way. In June 2008, Congress enacted the Small Business 

Disaster Response and Loan Improvements Act of 2008 (2008 Act), 

which placed new requirements on SBA to help ensure that it is 

prepared to respond to catastrophic disasters.71 Since Hurricane 

Katrina, SBA has implemented reforms intended to improve disaster 

loan processing by increasing the capacity of the electronic loan 

processing platform and addressing requirements in the 2008 Act.72

However, continued attention on efforts to strengthen internal controls 

in the disaster loan program is needed, as the following examples 

illustrate.

• In a September 2014 report, we found that SBA did not 

adequately respond to the higher volume of physical business 

disaster loans and economic injury loans early in its response to 

Hurricane Sandy and as a result did not meet its timeliness goal 

for processing applications.73 We further found that the agency did 

not revise its disaster planning documents—the Disaster 

71Pub. L. No. 110-246, title XII, subtitle B, 122 Stat. 2168 (2008). The requirements in the 

Small Business Disaster Response and Loan Improvements Act of 2008 included the 

issuance of regulations by SBA to implement new guaranteed disaster programs using 

private sector lenders.

72For example, per requirements in the Small Business Disaster Response and Loan 

Improvements Act of 2008 on disaster planning and response, SBA began updating 

disaster planning documents. 

73GAO, Small Business Administration: Additional Steps Needed to Help Ensure More 

Timely Disaster Assistance, GAO-14-760 (Washington, D.C.: Sept. 29, 2014). On October 

29, 2012, Hurricane Sandy made landfall, causing an estimated $65 billion in damage. 

SBA’s disaster loan program provides physical disaster loans (used to rebuild or replace 

damaged property) and economic injury disaster loans (used for working capital until 

normal operations resume) to help businesses and individual homeowners recover from 

disasters. In the aftermath of Hurricane Sandy, Congress passed the Disaster Relief 

Appropriations Act of 2013, which appropriated $779 million to SBA for disaster loans and 

administrative expenses.

Page 30 GAO-15-347 Small Business Administration

 
Preparedness and Recovery Plan and the Disaster Playbook—to 

reflect the effects that loan application volume and timing could 

have on staffing, resources, and forecasting models for future 

disasters. We concluded that without accounting for its recent 

experience in its planning documents, SBA may be unprepared for 

future disasters. We recommended that SBA revise its disaster 

planning documents. SBA generally agreed with the 

recommendation and provided us in June 2015 with an updated 

Disaster Playbook—one of its two key disaster planning 

documents—that includes explicit recognition of the effects that 

high volumes of loan applications early in the response period 

could have on staffing and loan processing.

• Also in our September 2014 report on disaster assistance, we 

found that SBA had not developed an implementation plan for 

addressing the 2008 Act’s requirements, as GAO recommended 

in 2009.74 This plan was to include, among other things, 

challenges the agency faces in implementing the 2008 Act’s 

requirements, including those to implement three new guaranteed 

disaster programs using private sector lenders. SBA had made a 

decision to focus attention first on implementing a pilot program 

for one of the requirements, the Immediate Disaster Assistance 

Program (IDAP). We found that SBA had not conducted a formal 

documented evaluation of lenders’ feedback or taken other 

actions needed to establish the basis for proposed changes to 

requirements for Congress to consider. In order to provide 

Congress with reliable information on challenges SBA has faced 

in implementing IDAP, we recommended that SBA (1) conduct a 

formal documented evaluation of lenders’ feedback that can 

inform SBA and Congress about statutory changes that may be 

necessary to encourage lenders’ participation in IDAP and (2) 

report to Congress on the challenges SBA has faced in 

implementing IDAP and on statutory changes that may be 

necessary to facilitate SBA’s implementation of the program. SBA 

generally agreed with the recommendations. While SBA has 

solicited some lender feedback, it has not adopted a plan for the 

steps the agency will take to implement IDAP (and by implication, 

the other two loan programs) or to reach a determination on 

74GAO, Small Business Administration: Additional Steps Should Be Taken to Address 

Reforms to the Disaster Loan Program and Improve the Application Process for Future 

Disasters, GAO-09-755 (Washington, D.C.: July 29, 2009).

Page 31 GAO-15-347 Small Business Administration

 
whether IDAP or the other loan programs should be implemented.

• In a February 2015 report, the SBA OIG found that loan officers 

did not have guidance for performing the financial analysis to 

determine whether Hurricane Sandy business loan applicants had 

repayment ability.75 It noted that because there was no guidance, 

loan officers used inconsistent methodologies when evaluating 

Hurricane Sandy business loans for repayment ability. The OIG 

estimated that SBA approved at least 537 Hurricane Sandy 

disaster business loans, totaling at least $17.9 million, without 

sufficiently considering principals’ living expenses when 

determining repayment ability and that as a result, these loans 

were at a higher risk of default.

As this discussion of SBA’s management challenges indicates, we and 

the SBA OIG have identified a number of internal control weaknesses that 

have contributed to programmatic challenges. We have made a number 

of related recommendations, many of which SBA has begun to address. 

SBA also has a process in place to help ensure that internal controls are 

in place for financial reporting, an effort that is overseen by a Senior 

Assessment Team.76 Among other things, this team is responsible for 

determining the scope of the assessment; monitoring the assessment to 

confirm that it is carried out in a thorough, effective, and timely manner; 

and analyzing the results of the assessment. SBA’s Office of Internal 

Controls within the Office of the Chief Financial Officer carries out each 

year’s assessment of internal controls over financial reporting. These 

efforts are guided by federal internal control standards, which we updated 

75Small Business Administration, Office of Inspector General, SBA’s Evaluation of 

Principal’s Repayment Ability for Hurricane Sandy Business Loans, Report No. 15-05 

(Washington, D.C.: Feb. 24, 2015).

76The Senior Assessment Team is chaired by the Chief Financial Officer and includes, 

among others, the Deputy Associate Administrator for Capital Access, Deputy Associate 

Administrator for Disaster Assistance, Deputy Associate Administrator for Government 

Contracting and Business Development, Deputy Associate Administrator for Field 

Operations, Deputy Chief Operating Officer/Chief Administrative Officer, Deputy Chief 

Operating Officer/Chief Human Capital Officer, Deputy Chief Financial Officer, Deputy 

General Counsel, Chief Information Officer, and Deputy Chief Information Officer.

Page 32 GAO-15-347 Small Business Administration

 
in September 2014.77 The new standards are effective beginning with 

fiscal year 2016. To prepare for the implementation of these new 

standards, the Office of Internal Controls presented the new guidelines at 

a Senior Assessment Team meeting in fiscal year 2013 and at fiscal year 

2014 FMFIA training provided to senior managers. SBA officials said that 

the agency had also begun to update its SOP on internal control and 

plans additional revisions after OMB has updated its Circular A-123, 

which is expected to include guidance on implementing the new 

standards.78

SBA has not resolved many of these long-standing management 

challenges due to a lack of sustained priority attention over time. In a 

September 2008 report, we noted that frequent turnover of political 

leadership in the federal government, including at SBA, often made it 

difficult to sustain and inspire attention to needed changes.79 SBA has 

undergone turnover in its leadership positions (see fig. 5). Senior SBA 

leaders have not prioritized long-term organizational transformation in 

management challenge areas such as human capital and information 

technology. For example, since 2008 SBA has published three strategic 

plans, each signed by a different Administrator. The overview from the 

Administrator in SBA’s 2008-2013 strategic plan acknowledged some of 

77GAO, Standards for Internal Control in the Federal Government, GAO-14-704G

(Washington, D.C.: Sept. 2014). The Federal Managers’ Financial Integrity Act (FMFIA) 

requires the Comptroller General to issue standards for internal control in the federal 

government. Standards for Internal Control in the Federal Government (known as the 

Green Book) provide the overall framework for establishing and maintaining an effective 

internal control system. The Committee of Sponsoring Organizations of the Treadway 

Commission updated its internal control guidance in 2013 with the issuance of a revised 

Internal Control - Integrated Framework. The Green Book adapts these principles for a 

government environment. See Committee of Sponsoring Organizations of the Treadway 

Commission, Internal Control - Integrated Framework (New York: American Institute of 

Certified Public Accountants, 2013).

78OMB issued a draft of the revised Circular A-123 in June 2015 and is reviewing 

comments it received.

79GAO, Small Business Administration: Opportunities Exist to Build on Leadership’s 

Efforts to Improve Agency Performance and Employee Morale, GAO-08-995 (Washington, 

D.C.: Sept. 24, 2008). For example, in our September 2008 report, we found that one of 

the actions SBA took to improve the agency was creating SBA University, an initiative to 

provide core training to field employees and address concerns about training expressed in 

employee surveys. For that report, employees told us that they appreciated SBA 

University because it showed that the agency recognized that employees needed training 

for their new roles and responsibilities. However, SBA University no longer exists, and as 

discussed in more detail later in this report, training continues to be a challenge for SBA.

Page 33 GAO-15-347 Small Business Administration

 
the internal management challenges the agency faced and noted that the 

plan reflected SBA’s efforts to address them. However, the overviews 

from the Administrators in the two subsequent plans did not do so. 

Furthermore, in an April 2013 House committee hearing on SBA’s 

proposed fiscal year 2014 budget, the committee Chairman stated that 

SBA’s proposed budget focused on the agency’s priorities but ignored 

some long-standing management deficits.80 For example, the Chairman 

noted that SBA included initiatives in the budget to increase the 

availability of loans to small businesses, but reduced resources that 

would be devoted to LMAS.81 These examples raise questions about 

SBA’s sustained commitment to addressing management challenges that 

could keep it from effectively assisting small businesses.

Figure 5: Turnover in Senior Leadership Positions at SBA from Calendar Years 2005 to 2015

Note: The number of permanent and acting officials may not add up to the total because in some 

cases the acting official became the permanent official.

80The Budget Outlook for the Small Business Administration, hearing before the House 

Committee on Small Business, 113th Cong. 2 (2013).

81As noted previously, the LMAS projects had not been completed at the time of the 

hearing.

Page 34 GAO-15-347 Small Business Administration

 
As well as examining long-standing management challenges, we 

reviewed SBA’s strategic plan for fiscal years 2014 to 2018 to determine 

whether it met federal requirements. We found that the plan met all the 

requirements for planning and all but one of the content requirements. It 

partly met the content requirement that it describe how program 

evaluations were used in developing the plan and that it include a 

schedule of evaluations planned for the next 4 years (see table 1). 

Strategic planning at federal agencies, including SBA, is subject to a 

variety of statutory requirements. First, in 1993 Congress passed GPRA, 

which established strategic planning, performance planning, and 

performance reporting as the components of a framework for agencies to 

communicate progress in achieving their missions.82 Next, GPRAMA 

made some important changes to existing requirements by placing a 

heightened emphasis on priority setting, cross-organizational 

collaboration to achieve shared goals, and the use and analysis of goals 

and measures to improve outcomes.83 GPRAMA enhanced agency-level 

planning and reporting requirements and required agencies to increase 

leadership involvement and accountability. OMB has published guidance 

for federal agencies on the implementation of GPRAMA, including 

guidance on strategic planning.84 The statutes and guidance describe the 

elements agencies must include in their strategic plans and the planning 

process they must follow when developing them.

82Pub. L. No. 103-62, 107 Stat. 285 (1993). 

83Pub. L. No. 111-352, 124 Stat. 3866 (2011). 

84Office of Management and Budget, Strategic Plans, Annual Performance Plans, 

Performance Reviews, and Annual Program Performance Reports, OMB Circular A-11 

Part 6 (Washington, D.C.: July 2013). Although OMB updated this guidance in 2014, we 

refer to the 2013 guidance in this report because it was in effect when SBA developed its 

strategic plan for fiscal years 2014-2018. 

SBA Met Most 

Statutory 

Requirements for 

Strategic Planning but 

Did Not Use Program 

Evaluations

Page 35 GAO-15-347 Small Business Administration

 
Table 1: Extent to Which the Small Business Administration (SBA) Met Federal Strategic Planning Requirements for Its Fiscal 

Years 2014-2018 Strategic Plan 

Requirements: strategic planning process

Extent SBA met 

requirement

Cover at least a 4-year period ●

Issued approximately 1 year after a presidential term begins ●

Solicit stakeholder input when developing or adjusting the plan ●

Consult with appropriations, authorizing, and oversight congressional committees, both majority and minority, 

at least every 2 years

●

Made available online and notify the President and Congress of its availability ●

Drafted by federal employees ●

Ensure performance plan is consistent with the agency’s strategic plan ●

Requirements: contents of strategic plan

Extent SBA met 

requirement

Contains a comprehensive mission statement ●

Contains strategic goals and objectives ●

Describes how goals and objectives contribute to federal government priority goals ●

Describes how goals and objectives will be achieved ●

Describes how goals and objectives incorporate views obtained from congressional consultations ●

Describes how performance goals contribute to strategic goals and objectives ●

Identifies key external factors that could affect achievement of strategic goals and objectives ●

Describes program evaluations used in establishing or revising strategic goals and objectives and includes a 

schedule for future evaluations

◓

Legend: ● Met ◓ Partially met ○ Not met

Source: GAO analysis of Government Performance and Results Act Modernization Act and Office of Management and Budget guidance, SBA’s fiscal years 2014-2018 strategic plan, SBA’s 2016 

Congressional Budget Justification and Performance Plan and 2014 Performance Report, and interviews with SBA officials. | GAO-15-347

• Planning process. SBA’s process for developing its fiscal years 

2014-2018 strategic plan met all federal requirements, such as 

gathering input from stakeholders.85 For example, officials from SBA’s 

Office of Performance Management, which took the lead in 

developing the strategic plan, told us that they had met with the 

Associate Administrator and Deputy Associate Administrator from 

each program office as well as with senior staff to discuss the 

85Per OMB guidance, agencies should consider the views of other interested and 

potentially affected parties, including nonfederal stakeholders and delivery partners, when 

preparing a strategic plan. Additionally, in a June 1996 report, we found that stakeholder 

involvement was an important aspect of an effective strategic planning process. See GAO, 

Executive Guide: Effectively Implementing the Government Performance and Results Act, 

GAO/GGD-96-118 (Washington, D.C.: June 1996).

Page 36 GAO-15-347 Small Business Administration

 
strategic objectives, the strategies the offices planned to use to 

achieve the objectives, and metrics for the objectives.86 This office 

also met with the Associate Administrator of the Office of Field 

Operations to obtain input and published a notice in the SBA Daily, a 

daily e-mail communication sent to all SBA employees, to inform SBA 

employees that the draft strategic plan had been posted on SBA’s 

website and to encourage them to review the plan and provide 

comments.

Externally, SBA officials met with relevant authorizing and oversight 

committees early on in the planning process to discuss a high-level 

outline of the plan.87 According to SBA officials, these meetings 

allowed SBA to obtain some congressional input before it committed 

to specific strategic goals and objectives. SBA also consulted with 

OMB, which provided comments on SBA’s priority goals and the 

structure and framing of its strategic plan, requested input from 

numerous stakeholder groups, and sought public comments by 

posting a notice in the Federal Register and making a draft strategic 

plan publicly available on its website.

• Contents of strategic plan. As shown in table 1, SBA’s fiscal years 

2014-2018 strategic plan met all but one of the content requirements, 

partly meeting the requirement on program evaluations. For example, 

the plan has a comprehensive mission statement that covers the 

agency’s major functions and includes outcome-oriented, long-term 

strategic goals and objectives that reflect the results SBA is trying to 

achieve.88 It also contains specific strategies to achieve the agency’s 

86In addition to SBA’s agency-wide strategic plan, SBA’s regional and district offices and 

some program offices have developed their own strategic plans that outline the strategies 

they will use to meet office-level performance goals and measures. The goals and 

measures for the regional and district offices were developed by the Office of Field 

Operations. The program offices we interviewed that had their own plans stated that they 

had developed their own performance goals and measures.

87For purposes of GPRAMA, SBA’s authorizing and oversight committees are the House 

Small Business and the Senate Small Business and Entrepreneurship Committees. SBA 

officials told us they reached out to these committees and the House and Senate 

Appropriations Committees, but only the authorizing/oversight committees requested 

meetings to discuss the draft plan.

88For example, one of SBA’s strategic goals is to grow businesses and create jobs. The 

strategic objectives under this goal include expanding access to capital and ensuring that 

federal contracting goals are met or exceeded. 

Page 37 GAO-15-347 Small Business Administration

 
goals and objectives.89 In addition, SBA’s strategic plan includes a list 

of external parties that have evaluated SBA’s programs, describes 

SBA’s efforts to build its capacity to conduct more program 

evaluations, and discusses two evaluations it plans to conduct in 

2015.90 But it does not describe how program evaluations were used 

in developing the strategic goals and objectives or include a schedule 

of evaluations planned for the full 4 years. According to OMB, 

program evaluation is among the most important analytical tools for 

agency decision making. It can help agency managers, such as those 

at SBA, determine how best to spend taxpayer dollars effectively and 

efficiently, identify appropriate goals, and address questions about the 

effectiveness of strategies.91 Per OMB guidance, a strategic plan 

should describe how information from program evaluations and 

research was used to develop the strategic plan, including in 

establishing or revising the agency’s strategic objectives and 

identifying evidence-based approaches to meeting objectives. The 

plan should also (1) describe efforts to support high-quality 

evaluations, (2) discuss efforts to increase capacity for conducting 

them and using their findings, and (3) include a schedule of 

evaluations planned for the next 4 years. SBA officials stated that 

SBA did not use program evaluations to develop or revise its strategic 

objectives because the agency had conducted a limited number of 

them. SBA officials also told us that the agency had limited financial 

resources available for independent program evaluations but was 

89For example, one of the strategies SBA plans to use to expand access to capital is to 

offer loan guarantee products to assist small businesses in obtaining financing when they 

do not qualify for conventional credit. 

90On May 27, 2015, we found an updated version of SBA’s strategic plan for fiscal years 

2014-2018 on its website that contained additional information on program evaluations. 

Specifically, the prior version of the plan did not include information on SBA’s efforts to 

build its capacity to conduct more program evaluations and discussion of two evaluations 

it plans to conduct in 2015.

91In a May 1997 report, we similarly found that program evaluations can be a potentially 

critical source of information for Congress and others in ensuring the validity and 

reasonableness of goals and strategies; can be useful in explaining results in the agency’s 

annual performance reports, including, when applicable, the reasons annual performance 

goals were not met; and can help identify appropriate strategies to meet unmet goals. See 

GAO, Agencies’ Strategic Plans Under GPRA: Key Questions to Facilitate Congressional 

Review, GAO/GGD-10.1.16 (Washington, D.C.: May 1997). 

Page 38 GAO-15-347 Small Business Administration

 
working on three and considering some in other areas.92 SBA officials 

said that it thought the information included in the plan would be 

sufficient to meet GPRAMA’s requirements on program evaluations.

Because SBA has not routinely conducted program evaluations, we 

have questions about whether the agency will have program 

evaluations on which to rely when developing its next strategic plan. 

GPRAMA aims to ensure that agencies use performance information 

in decision making and holds them accountable for achieving results 

and improving government performance. OMB has also encouraged 

agencies to improve government effectiveness by increasing their use 

of evidence and rigorous program evaluation in making budget, 

management, and policy decisions. In addition, in a June 2013 report 

we concluded that evaluations helped in assessing program 

effectiveness or value, explaining program results, implementing 

changes to improve program management or performance, 

developing or revising performance goals, designing or supporting 

program reforms, and sharing what works with others.93 We and the 

SBA OIG have in the past found instances in which SBA did not 

evaluate the effectiveness of new or existing programs, and the 

agency has not yet fully addressed our recommendations in this area, 

as the following examples show.

• In an August 2010 report, the SBA OIG found that SBA had not 

assessed the Community Express pilot loan program’s 

effectiveness.94 The OIG recommended, among other things, that 

SBA not extend the program after its expiration in December 2010 

but instead evaluate the need for it. Rather than evaluate the 

92According to SBA officials, the agency’s Office of Entrepreneurial Development plans to 

evaluate the impact of Scale Up America, which is an initiative designed to help small 

firms with high potential grow their businesses. SBA’s Office of Native American Affairs 

also plans to conduct an evaluation on Native American outreach, and SBA’s Office of 

Veterans Business Development has initiated an impact evaluation to assess its services 

and help analyze its economic impact.

93GAO, Program Evaluation: Strategies to Facilitate Agencies’ Use of Evaluation in 

Program Management and Policy Making, GAO-13-570 (Washington, D.C.: June 2013).

94Small Business Administration, Office of Inspector General, Assessment of the 

Community Express Pilot Loan Program, Report No. 10-12 (Washington, D.C.: Aug. 25, 

2010). The Community Express program authorized approved lenders to adopt 

streamlined and expedited loan procedures to provide financial and technical assistance 

to borrowers in the nation’s underserved communities.

Page 39 GAO-15-347 Small Business Administration

 
program, SBA ended it in April 2011 and replaced it with the new 

Small Loan Advantage and Community Advantage 

programs.95 SBA officials told us that while the agency annually 

publishes loan program measures that incorporate initiatives such 

as these, it had not evaluated the initiatives.

• In an August 2012 report, we found that SBA lacked program 

evaluations for 10 of the 19 entrepreneurial assistance programs 

we reviewed.96 We recommended that SBA conduct more 

program evaluations to better understand the reasons the 

programs were not meeting their performance goals and to 

determine the programs’ overall effectiveness. SBA did not say 

whether it agreed or disagreed with the recommendation but did 

take some steps to begin to address it. For example, SBA has 

begun meeting monthly with other agencies as part of an OMB-led 

interagency working group that shares best practices in program 

evaluation and has started pilot programs to test evaluation 

methods. However, we are unsure of SBA’s commitment to 

conducting more program evaluations because as of May 2015, 

the agency had not completed evaluations of any of the programs 

covered by our recommendation. Therefore, we continue to 

maintain that our recommendation has merit and should be fully 

implemented.

• In a September 2013 report, we found that SBA lacked an 

evaluation plan to assess the performance of the Patriot Express 

pilot loan program.97 As a result, we concluded that SBA was 

unable to determine if the program was achieving its intended 

95According to SBA, the Small Loan Advantage program was a pilot initiative under the 

Office of Capital Access that aimed to increase the number of low-dollar loans (less than 

$350,000) in underserved communities. The initiative ended in fiscal year 2014. The 

Community Advantage program, also under the Office of Capital Access, is an ongoing 

pilot program focused on increasing the number of community-based financial institutions 

that are approved SBA 7(a) lenders in order to expand credit access to underserved 

communities. 

96GAO, Entrepreneurial Assistance: Opportunities Exist to Improve Programs’ 

Collaboration, Data-Tracking, and Performance Management, GAO-12-819 (Washington, 

D.C.: Aug. 23, 2012).

97GAO, Patriot Express: SBA Should Evaluate the Program and Enhance Eligibility 

Controls, GAO-13-727 (Washington, D.C.: Sept. 12, 2013). The Patriot Express program 

assisted veterans and spouses of veterans by issuing loans to start or expand a small 

business.

Page 40 GAO-15-347 Small Business Administration

 
goals. We recommended, among other things, that SBA design an 

evaluation plan for pilot programs prior to implementation and 

consider the results of such an evaluation before extending any 

pilot. SBA responded to the report by stating that the agency 

would consider our findings as it determined whether to extend the 

program. Subsequently, SBA did not conduct a performance 

evaluation of the program and instead decided to terminate the 

program by allowing it to expire in December 2013. SBA replaced 

the Patriot Express program with the Veterans Advantage initiative 

in 2014.98 Although SBA officials told us the agency tracks 

performance measures for its loan programs and keeps raw data 

for each of the loan types (including veterans fee relief), the 

agency had not evaluated the initiative as of May 2015 and had no 

plans to do so.

• In April 2014, the House Committee on Small Business held a 

hearing on initiatives that SBA had created. The hearing explored 

the committee’s concerns that SBA had requested funding for 

potentially duplicative new programs while lacking adequate 

performance metrics to measure their success or failure.99 While 

they did not specifically address the lack of performance metrics 

for all the programs discussed during the hearing, two SBA 

witnesses cited the agency’s legislative authority for the new 

initiatives. Our August 2012 report on entrepreneurial assistance 

98The Veterans Advantage program, which was originally to operate from January 1, 

2014, through September 30, 2014, reduced the upfront guarantee fee from 3 percent to 0 

percent for SBAExpress loans over $150,000 approved to small businesses owned by 

qualified veterans. Through September 20, 2014, SBA had guaranteed 153 such loans 

totaling $38,861,900. Fee relief for these loans resulted in savings to borrowers of about 

$571,000. SBA subsequently extended the program through September 30, 2015.

99SBA-created Initiatives: Necessary or Redundant Spending, hearing before the House 

Committee on Small Business, 113th Cong. (2014). Specifically, the committee was 

concerned about the Entrepreneurial Education program, the Growth Accelerators 

program, the Boots to Business program, and the Regional Innovation Clusters program. 

According to SBA, the Entrepreneurial Education initiative, which began in 2009, provides 

high-growth small businesses in underserved communities with a 7-month executive 

leader education series. The Growth Accelerators program, which SBA requested funding 

for in 2014, is a mentorship program that provides startups with the resources to support 

their product and customer development. The Boots to Business program, launched in 

2012, is an entrepreneurial development program for transitioning service members and 

veterans with curriculum delivered through the Department of Defense’s Transition 

Assistance Program. SBA’s Regional Innovative Cluster initiative, which began in fiscal 

year 2010, awards grants to nonfederal entities that help create geographically defined 

groups of firms in similar industries.

Page 41 GAO-15-347 Small Business Administration

 
raised similar concerns about overlap in programs and stressed 

the importance of program evaluations.100

A senior SBA official acknowledged the agency’s challenges in 

conducting program evaluations and stated that it was developing a 

more systematic approach to conducting them, including determining 

how to collect needed data. While he identified two ongoing studies, 

he did not provide detailed information on the systematic approach, 

an expected completion date, or whether the agency would prioritize 

additional resources to conduct evaluations.

Without prioritizing resources to conduct more evaluations of its programs 

and incorporating the results into its strategic planning process, SBA 

lacks a critical source of information for ensuring the validity and 

effectiveness of its goals, objectives, and strategies. In addition, SBA 

lacks pertinent information that would help in determining the 

effectiveness of both new and existing programs.

SBA needs better planning and oversight in several key management 

areas. We reviewed SBA’s management of its (1) human capital, (2) 

organizational structure, (3) enterprise risk, (4) acquisition, and (5) 

procedural guidance. We found that SBA continued to face long-standing 

human capital challenges and had not completed development of a 

workforce plan or training goals to help address them. We also found that 

SBA faced a skill gap resulting from a 2004 reorganization, and as of 

June 2015 SBA officials told us the agency had not completed an 

assessment of its organizational structure. Further, SBA initiated in 2009 

efforts to implement enterprise risk management but had only recently 

begun assessing agency-wide risks and lacked adequate documentation 

of its progress and future plans. In the area of acquisition management, 

SBA hired a contractor to assess its acquisition operations and, as of May 

2015, was in the process of finalizing its action plan in response to the 

contractor’s findings. Finally, we found that SBA had not updated many of 

its guidance documents that it had identified as outdated.

100GAO-12-819. 

SBA Planning and 

Oversight Are Limited 

in Several 

Management Areas

Page 42 GAO-15-347 Small Business Administration

 
As previously noted, SBA’s OIG has identified SBA’s need for effective 

human capital strategies—the programs, policies, and processes that 

agencies use to build and manage their workforces—as one of the most 

significant management challenges facing the agency since 2001.101 We 

have also identified challenges to SBA’s human capital management. For 

example, in our January 2003 report on SBA’s management challenges, 

we found that SBA needed to strengthen its human capital management 

by, among other things, getting properly trained people into the right 

places, identifying the knowledge and skills requirements of its 

employees, and providing professional development opportunities as 

needed.102

According to SBA documents, the agency faces programmatic, 

demographic, and budgetary challenges that have had an effect on its 

workforce. To begin to address these challenges, SBA requested 

Voluntary Early Retirement Authority and Voluntary Separation Incentive 

Payments (VERA/VSIP) programs for fiscal years 2012 and 2014.103

Agency officials said that the VERA/VSIP programs were intended to 

allow SBA to begin reshaping its workforce to meet its ongoing needs in 

light of its evolving mission. In its applications for these programs, SBA 

identified the following challenges it faced.

101In addition, a 2011 OPM report found a number of weaknesses in SBA’s human capital 

management, including a lack of metrics for goals in the strategic human capital plan, 

which also was not aligned with the agency’s strategic plan. Further, OPM found that SBA 

did not have a comprehensive human capital accountability system to assess its progress 

and had not done any recent agency-wide workforce planning. SBA addressed the actions 

required by OPM and the evaluation was closed in 2013. See Office of Personnel 

Management, Small Business Administration Human Capital Management Evaluation 

Report Quarter 1 FY 2012 (Washington, D.C.: 2011).

102GAO-03-116. At the time of that report, SBA had developed a draft workforce 

transformation plan designed to help address some of its human capital management 

issues. However, SBA came under new leadership in 2006, and with the appointment of a 

new Administrator, SBA’s draft transformation plan was never approved. 

103VERA/VSIP authority is administered by OPM. VERA provides agencies the option to 

offer voluntary early retirement to their employees when restructuring and downsizing, 

while VSIP allows agencies that are downsizing or restructuring to offer employees lumpsum payments as an incentive to voluntarily separate. Agencies can request an agencywide VERA, which would open the early retirement option to all employees, or can request 

a targeted VERA, which would open the option to specific positions. SBA requested and 

received authority to conduct targeted VERA programs and described its programmatic, 

demographic, and budgetary challenges in its requests for fiscal years 2012 and 2014 

VERA/VSIP authority that it submitted to OPM. SBA officials stated that each program 

office was consulted to determine which positions were eligible for VERA/VSIP. 

SBA Has Not Completed 

Its Workforce Plan or 

Developed Training Goals

Page 43 GAO-15-347 Small Business Administration

 
• Programmatic. SBA stated that its workforce faced an ongoing skill

gap resulting from the 2004 centralization of its loan processing 

function.104 SBA noted that this organizational change resulted in a 

gap between the competency mix of employees who had been hired 

for one mission and the competency mix needed to accomplish a new 

mission. Specifically, after loan processing was moved from the 

district offices to loan processing centers, the district offices were 

given new responsibilities, including business development and 

outreach. These new responsibilities created a skill gap because 

employees who were originally required to have a financial 

background for loan processing were now required to have different 

skills, such as a marketing background and interpersonal skills. SBA 

stated that the skill gap was particularly pronounced among 885 

employees in two job series—GS-1101 and GS-1102. These 

employees include business opportunity specialists, economic 

development specialists, and procurement staff. According to SBA, 

despite its efforts during the last several years to address this skills 

imbalance through training and the fiscal year 2012 VERA/VSIP, 

among other things, the competency gap remains. SBA also noted 

that the skill gap had been compounded by recent changes in job 

requirements and new initiatives that required new skill sets for its 

employees.105

• Demographic. SBA has stated that it has a high number of 

employees who will retire or will become eligible to retire in the next 5 

years. As of June 24, 2014, about 25 percent of SBA employees were 

eligible to retire, and 50 percent will be eligible in 2019. According to 

SBA, its aging workforce presents two issues. First, 43 percent of 

those fully eligible to retire work in two mission-critical job series—GS104SBA officials stated that SBA identified this gap based on a competency and skill gap 

assessment conducted in 2006, the most recent agency-wide assessment it had 

completed.

105For example, the National Defense Authorization Act for Fiscal Year 2014 now requires 

business opportunity specialists to obtain federal acquisition certification in contracting as 

a prerequisite for employment. SBA stated that although it had worked with its business 

opportunity specialists to ensure proper training and preparation for certification, a number 

of its current employees might not be able to pass the certification test. In addition, other 

job titles within the 1101 series have similar new job requirements, such as being able to 

address new risk compliance issues in SBA’s lender oversight function. SBA said that it 

anticipated that many employees would be motivated to take on these new challenges, 

but that employees in the GS-1101 and GS-1102 series had found it difficult to accept 

changes or major shifts in their duties and responsibilities.

Page 44 GAO-15-347 Small Business Administration

 
1101 and GS-1102—that have a significant competency gap, but SBA 

noted that using attrition to obtain a better competency mix in the GS1101 job series would be slow. SBA thought that offering VERA/VSIP 

programs would give it an opportunity to more quickly reshape its 

workforce to obtain the needed competencies and skill set.106 Second, 

SBA stated that the high number of retirement-eligible employees 

meant that the agency needed a pipeline of new leaders. Creating this 

pipeline could mean increasing the number of employees who were at 

the early stages of their careers.

• Budgetary. SBA has also stated that current economic challenges 

mean that the agency cannot afford to retain staff with skills that do 

not support its mission. SBA noted that the fiscal years 2012 and 

2014 VERA/VSIP programs kept the agency from having to 

implement a reduction in force in order to meet budgetary constraints, 

which would have exacerbated the skills imbalance. Specifically, SBA 

stated that under reduction-in-force procedures, the agency would 

lose the types of employees it had recently been recruiting—those 

with the needed mix of competencies to better ensure SBA’s mission 

success.107

SBA has recently developed goals and objectives for its strategic human 

capital plan and has developed an accountability policy, steps that should 

help improve its human capital management. It also obtained authority for 

the two VERA/VSIP programs that it believed would help reshape its 

workforce.

• Strategic human capital plan. OPM requires agencies to have 

documented evidence of a current agency human capital plan that 

includes human capital goals, objectives, and performance 

106According to SBA, the attrition rates over the past 4 fiscal years have been low. 

Specifically, in the GS-1101 job series, the attrition rate has been approximately 5 percent, 

of which 2.9 percent were from retirements. In comparison, the attrition rate for SBA as a 

whole was 11 percent, but the retirement rate was the same. In fiscal year 2012, the 

retirement rate jumped to 9 percent due to the VERA/VSIP offering, or more than 3 years 

of normal attrition. 

107OPM regulations govern reduction-in-force actions in federal agencies. These 

regulations determine whether an employee keeps his or her present position, or whether 

the employee has a right to a different position. Per OPM regulations, the following four 

factors are used to determine which employees will lose their positions as a result of a 

reduction in force: (1) tenure of employment, (2) veterans’ preference, (3) total creditable 

years of federal civilian and uniformed service, and (4) performance ratings. 

Page 45 GAO-15-347 Small Business Administration

 
measures.108 Additionally, in our 2003 report on strategic workforce 

planning we concluded that periodic measurement of an agency’s 

progress toward human capital goals provided information for 

effective oversight by identifying performance shortfalls and 

appropriate corrective actions.109 SBA’s fiscal years 2013-2016 

strategic human capital plan incorporates these practices. For 

example, the plan identifies human capital goals and objectives, such 

as building strategic partnerships and incorporating human capital 

flexibilities, and is designed to support SBA’s agency-wide strategic 

plan, particularly SBA’s strategic objective to invest in its employees. 

The plan also includes action items and performance measures that 

SBA tracks annually and demographic information about SBA’s 

workforce.110

• Human capital accountability policy. OPM requires agencies to 

have documented evidence of a human capital accountability system 

that provides for an annual assessment of agency human capital 

management progress and results. SBA has developed a human 

capital accountability policy that outlines SBA’s processes for 

evaluating its human capital systems and a multiyear schedule for 

conducting human resource program assessments.111

• VERA/VSIP programs. As discussed previously, SBA requested 

VERA/VSIP authority for fiscal years 2012 and 2014 in hopes that 

these initiatives would enable the agency to begin reshaping its 

workforce to meet its ongoing needs. In both years, OPM authorized 

SBA to offer this authority to 300 employees.

SBA has taken several other steps to begin addressing its human capital 

management challenges, including working toward a workforce plan and 

identifying mission-critical competencies. According to federal internal 

108Office of Personnel Management, The Human Capital Assessment and Accountability 

Framework (HCAAF): Systems, Standards, and Metrics (Washington, D.C.: September 

2005).

109GAO-04-39. 

110Examples of action items and performance measures in SBA’s strategic human capital 

plan include recruiting, hiring, and retaining people with critical skills; implementing a new 

on-boarding program for new hires; and ensuring training records are maintained and 

accurate.

111These assessments are discussed in more detail later in this report.

Workforce Planning

Page 46 GAO-15-347 Small Business Administration

 
control standards, workforce planning is a key internal control that allows 

agency management to ensure that skill needs are continually assessed 

and that the organization is able to obtain and maintain a workforce with 

the skills necessary to achieve organizational goals.112 Although agencies 

may take various approaches to workforce planning, in a December 2003 

report we identified key principles they should address.113 SBA has taken 

some recent actions to incorporate these principles but has not completed 

a formal workforce plan that fully incorporates them (see table 2).

Table 2: Extent to Which the Small Business Administration (SBA) Follows Key Principles for Workforce Planning 

Key principle Extent SBA follows

Workforce plan: Involve top management, employees, and other stakeholders in developing, communicating, 

and implementing the strategic workforce plan

◓

Critical skills and competencies: Determine the critical skills and competencies that will be needed to 

achieve current and future programmatic results; making this determination can involve collecting qualitative 

information and identifying skill gaps

◓

Gap-closure strategies: Develop strategies, including programs, policies, and practices, which will enable 

the agency to recruit, develop, and retain the critical staff needed to achieve program goals

◓

Support capacity: Build the capability needed to address administrative, educational, and other requirements 

important to support workforce planning strategies, such as providing guidance on the availability and use of 

human capital flexibilities 

◓

Evaluation: Monitor and evaluate the agency’s progress toward its human capital goals and the contribution 

that human capital results have made toward achieving programmatic results ◓

Legend: ● Follows ◓ Partially follows ○ Does not follow

Source: GAO analysis of GAO-04-39, SBA documents, and interviews with SBA officials. | GAO-15-347

• Workforce plan. SBA indicated in its fiscal years 2013-2016 strategic 

human capital plan that it was working on a separate workforce plan. 

SBA officials said that they had taken steps to develop the plan but as 

of May 2015 had not completed it.114 SBA officials told us that they 

112GAO/AIMD-00-21.3.1. 

113GAO-04-39. 

114SBA developed an eight-step action plan to develop a workforce plan. The steps are: 

(1) identify strategic direction; (2) understand the current workforce; (3) determine how the 

mission-critical occupations perform within the current organization; (4) understand how 

mission-critical occupations fit into the organization in the future; (5) identify competencies 

for the mission-critical occupations; (6) identify competency gaps; (7) identify strategies to 

close gaps; and (8) finalize the multiyear workforce plan. SBA officials told us that they 

have completed steps one through five. SBA officials stated that they had reached out to 

program office leadership to obtain input on the workforce plan. They also told us that they 

had worked with the union as required by the Master Labor Agreement signed January 

2013. 

Page 47 GAO-15-347 Small Business Administration

 
had been unable to complete the workforce plan because a current 

agency-wide competency and skill gap assessment was necessary to 

develop it.115 As discussed in more detail later, they have not yet 

completed this assessment because of a delay in deploying the 

system needed to conduct it. As stated earlier, SBA has faced a longstanding skills imbalance resulting from organizational changes dating 

to 2004.

• Critical skills and competencies. SBA has taken steps to identify 

competencies for its mission-critical occupations. For example, in 

2011 SBA conducted competency assessments for its human 

resources staff and its managers and supervisors.116 In addition, in 

fiscal year 2013 SBA’s Office of Human Resources Solutions 

reviewed 31 of SBA’s mission-critical position descriptions, developed 

competency lists, and requested that program offices review and 

make adjustments to those lists. SBA’s Office of Disaster Assistance 

has also taken steps to identify competencies for its employees by 

developing a baseline competency framework based on OPMrecommended competencies, current position descriptions, 

performance goals, and organizational strategic goals.

However, SBA has not completed an agency-wide competency and 

skill gap assessment since 2006, and an up-to-date assessment is 

critical for determining whether there are additional skill gaps in its 

current workforce. In 2012, SBA began using an electronic system 

called the Talent Management Center to manage employee training 

and performance. The system consists of two components—a 

learning management module and a performance management 

module. The learning management module is a software application 

that provides SBA employees with access to online training courses 

and allows employees to track their training. The performance 

management module allows employees to track their performance 

goals and evaluations. According to SBA officials, the contractor that 

implemented the Talent Management Center was also going to 

115This assessment would allow the agency to evaluate an observable, measureable 

pattern of skills, knowledge, abilities, behaviors, and other characteristics needed to 

perform work roles and identify gaps in those skills. As discussed earlier, SBA has not 

conducted an agency-wide competency and skill gap assessment since 2006. 

116These assessments provided SBA with information about the current skill levels of 

these staff. 

Page 48 GAO-15-347 Small Business Administration

 
implement a tool as part of the learning management module that 

would allow SBA to conduct a competency and skill gap assessment. 

However, SBA was unable to conduct the assessment because the 

contractor did not deploy the tool on time as planned. SBA officials 

told us the agency had contracted with another vendor to conduct the 

assessment during fiscal year 2015 and had held several meetings

with the vendor to discuss the methodology and process for the 

assessment as of June 2015.

• Gap-closure strategies. As discussed earlier, SBA has taken initial 

steps aimed at addressing the skills imbalance in its workforce that 

resulted from its 2004 organizational change. SBA’s VERA/VSIP 

programs in fiscal years 2012 and 2014 were intended to provide the 

agency needed flexibility to address this skills imbalance by creating 

vacancies that would allow it to strategically recruit new employees 

who have the needed competencies and skills. Under the VERA/VSIP 

programs, a total of 327 employees left the agency, but this number 

was lower than SBA expected.117 In addition, SBA has developed a 

Leadership Succession Plan. The purpose of the plan is to strengthen 

current and future agency leadership capacity by creating leadership 

readiness programs and adopting a succession planning model to 

develop pools of potential leaders. The plan also outlines other 

succession strategies, such as job rotations to broaden employees’ 

understanding across different functional areas of the agency and a 

mentoring program to help employees clarify career goals and 

analyze strengths and developmental needs. In addition, a senior 

SBA official stated that improving human capital management was a 

priority for the Administrator and that SBA was focused on developing 

different ways to recruit a younger and more diverse workforce. For 

example, SBA has revised its Presidential Management Fellows 

program with the goal of improving retention and is working with the 

Peace Corps to identify returning volunteers who may be interested in 

a career in public service.

Despite these steps, SBA does not have a current agency-wide 

competency and skill gap assessment and as a result cannot develop 

117OPM authorized up to 300 employees for SBA’s fiscal year 2012 VERA/VSIP program, 

but only 180 retired under the program. SBA stated that as a result of this smaller-thanexpected number of retirees in its fiscal year 2012 VERA/VSIP program, it was not able to 

complete its skill set recomposition goal. Similarly, OPM authorized up to 300 employees 

for SBA’s fiscal year 2014 VERA/VSIP program, but only 147 took advantage of the 

program.

Page 49 GAO-15-347 Small Business Administration

 
and document an effective long-term strategy to fully address its 

previously identified skill gaps and any additional skill gaps that may 

exist. SBA officials told us they had not developed a long-term plan 

because they were relying in part on their VERA/VSIP programs to 

help reshape SBA’s workforce to address its long-standing skills 

imbalance. SBA developed guidance outlining how vacancies were to 

be filled after the fiscal year 2014 VERA/VSIP program, and SBA 

officials stated that options for restructuring and related hiring 

following this program were still being considered as of May 2015. 

However, because both the fiscal year 2012 and fiscal year 2014 

VERA/VSIP programs resulted in a smaller-than-expected number of 

retirees, whether these efforts will ultimately allow SBA to reshape its 

workforce to achieve its needed skill mix is unclear.118

• Support capacity. Although SBA has policies in place that enable the 

use of human capital flexibilities to support its workforce, such as a 

recruitment and retention incentives policy, the use of these 

flexibilities is not directly tied to a workforce plan.

• Evaluation. SBA has taken steps to monitor and evaluate its progress 

toward its human capital goals through its human capital 

accountability policy and tracking progress of the measures in its 

strategic human capital plan. However, because SBA has not 

established a strategic workforce plan, the agency has not monitored 

and evaluated the results of its workforce planning efforts.

Without a workforce plan that fully addresses key principles, including a 

current agency-wide competency and skill gap assessment and a longterm strategy to close skill gaps, SBA cannot provide reasonable 

assurance that its workforce has the skills needed to meet the agency’s 

mission. For example, having a current assessment and completed 

workforce plan prior to its early retirement programs would have helped 

SBA target its hiring and retention efforts. Without having first taken these 

steps, SBA risked compromising its efforts to reshape the agency.

118Of the 180 employees who retired under SBA’s fiscal year 2012 VERA/VSIP program, 

105 were employees from the two job series where the skill gap was pronounced. Of the 

147 employees who retired under SBA’s fiscal year 2014 VERA/VSIP program, 72 were 

employees from the two job series where the skill gap was pronounced. 

Page 50 GAO-15-347 Small Business Administration

 
In a 2004 report, we concluded that effective training and development 

programs are an integral part of a learning environment that can enhance 

an agency’s ability to attract and retain employees with the skills and 

competencies needed to achieve results.119 We also noted that training 

and development programs help an agency achieve its mission and meet 

its goals by improving individual and ultimately organizational 

performance.

In the same 2004 report, we identified key principles that could help 

federal agencies produce a strategic approach to their training and 

development efforts. SBA has taken steps to incorporate these principles 

but has only partly incorporated them (see table 3).

119GAO-04-546G. 

Training and Development

Page 51 GAO-15-347 Small Business Administration

 
Table 3: Extent to Which the Small Business Administration (SBA) Follows Key Principles for Training and Development 

Programs 

Key principle Extent SBA follows

Planning: Develop a strategic approach that establishes priorities and leverages investments in training 

and development to achieve agency results

• Establishes training goals and related performance measures that are consistent with the agency’s 

overall mission, goals, and culture

• Determines the skills and competencies its workforce needs to achieve current, emerging, and future 

agency goals and missions and identify gaps

• Incorporates employees’ developmental goals in its planning processes 

◓

Design and Development: Identify specific training and development initiatives that, in conjunction with 

other strategies, improve individual and agency performance

• Compares the merits of different delivery mechanisms (such as classroom or computer-based 

training) and determines what mix of mechanisms ensure efficient and cost-effective delivery

• Takes steps to ensure that training is connected to improving individual and agency performance in 

achieving specific results

◓

Implementation: Ensure effective and efficient delivery of training and development opportunities in an 

environment that supports learning and change

• Communicates the importance of training and developing employees, and their expectations for 

training and development programs to achieve results

• Takes actions to foster an environment conducive to effective training and development and 

encourages employees to buy into the goals of training and development efforts

◓

Evaluation: Demonstrate how training and development efforts contribute to improved performance and 

results

• Systematically plans for and evaluates the effectiveness of its training and development efforts

• Uses performance data to assess the results achieved through training and development efforts

◓

Legend: ● Follows ◓ Partially follows ○ Does not follow

Source: GAO analysis of GAO-04-546G, SBA documents, and interviews with SBA officials. | GAO-15-347

• Planning. SBA officials told us that SBA had conducted a training 

needs assessment in the summer of 2014, which helped the agency 

identify a list of top training courses for its employees. SBA also 

developed a fiscal years 2014-2015 training plan that outlines SBA’s 

major training programs and activities. However, the plan does not 

fully establish a strategic approach to training that would help achieve 

agency results. First, it does not establish training goals and related 

performance measures to help SBA determine whether its training 

and development programs are achieving their intended results.120

120Training goals can be either short term or long term. Examples include defining the 

scope of training activities, supporting the rollout of training initiatives, and developing 

supervisors who can effectively lead. 

Page 52 GAO-15-347 Small Business Administration

 
SBA officials told us that they had not developed these goals and 

measures because the employees developing the plan had left the 

agency, but that they planned to develop them for the next iteration of 

the training plan. However, as of June 2015, SBA did not have an 

expected completion date for the revised plan. Second, as previously 

discussed, SBA has not conducted a competency and skill gap 

assessment since 2006.121 Third, SBA officials told us that the training 

plan incorporated input from supervisors but did not directly 

incorporate employee development goals because the agency was 

not required to have individual development plans for its staff. 

However, while SBA is not required to have individual development 

plans, it could choose to require them or to obtain employee 

development goals through other means.122

• Design and development. SBA has also taken steps to identify 

specific training and development initiatives. For example, as 

discussed earlier SBA recently began using an electronic system 

called the Talent Management Center which, among other things, 

allows employees to take certain training courses online. SBA officials 

stated that SBA is currently developing the curriculum for its online 

courses in consultation with program office management, supervisors, 

and hiring managers. SBA officials told us that they decided to use 

this system due to its cost-effectiveness and flexibility. The training 

plan also identifies a number of other training initiatives, such as a 

leadership development program. However, whether these training 

and development initiatives are directly connected to improving 

individual and agency performance is unclear. For example, although 

SBA launched an electronic learning module and is developing a 

curriculum for it, the lack of a completed competency assessment 

makes it difficult to specifically design the curriculum to improve 

individual performance. Furthermore, while SBA offers a mix of 

centralized and decentralized training programs, a recent training 

assessment it conducted found that the decentralized training that 

program offices provide receives no review or oversight to detect 

duplicative offerings or identify opportunities to provide training more 

121In its most recent training plan, SBA stated that the competency and skills gap 

assessment would allow it to determine the skills, knowledge, abilities, behaviors, and 

other characteristics needed to perform work roles and help identify gaps in those skills. 

122For example, agencies can survey or interview employees to determine their views on 

the agency’s support for their developmental needs and identify particular training and 

development programs that may be needed. 

Page 53 GAO-15-347 Small Business Administration

 
effectively and efficiently. According to SBA officials, its new electronic 

learning module will enable the agency to track and monitor both 

decentralized and centralized training. In addition, a senior SBA 

official stated that SBA was considering ways to offer more systematic 

training and mentorship programs.

• Implementation. SBA officials told us that they had taken steps to 

communicate information about training efforts to employees by, for 

example, publishing notices about upcoming training opportunities in 

the SBA Daily. SBA officials also told us that they had provided 

employees with training on how to use SBA’s new electronic learning 

module and training for each staff member on their positions as part of 

their professional development. However, whether SBA has taken 

actions to foster an environment conducive to effective training and 

development is unclear. For example, results from SBA’s 2014 

Federal Employee Viewpoint Survey (FEVS) showed that just over 

one-third of employees felt that their training needs had been 

assessed.123 Specifically, in response to a question asking whether 

their training needs were assessed, 39.22 percent (537 employees) 

agreed or strongly agreed, 24.82 percent (341 employees) neither 

agreed nor disagreed, and 35.96 percent (489 employees) disagreed 

or strongly disagreed.124 In addition, about 40 percent indicated that 

they were satisfied with the training they had received. Specifically, in 

response to a question asking whether they were satisfied with the 

training they had received for their present job, 39.93 percent (533 

employees) were satisfied or very satisfied, 25.48 percent (343 

employees) were neither satisfied nor dissatisfied, and 34.59 percent 

(457 employees) were dissatisfied or very dissatisfied.125 The SBA 

district office employees we interviewed also expressed mixed views 

about the training provided by SBA. For example, three employees 

stated that they received helpful training related to their positions. 

123The FEVS measures employees’ perceptions of whether, and to what extent, 

conditions characterizing successful organizations are present in their agencies. The 

survey results provide insight into the challenges agency leaders face in ensuring the 

federal government has an effective civilian workforce and how well they are responding 

to those challenges. 

124A total of 1,367 employees out of 1,395 who completed the survey responded to this 

question. The percentages reported from the FEVS results are weighted to represent 

SBA’s population. The number of responses is unweighted. 

125A total of 1,333 employees out of 1,395 who completed the survey responded to this 

question. 

Page 54 GAO-15-347 Small Business Administration

 
However, 15 employees described difficulties obtaining the training 

they needed.126 For example, 9 of these employees—including 4 

lender relations specialists, 2 economic development specialists, and 

1 business opportunity specialist—stated that they did not receive any 

formal training related to their positions.127 Two employees stated that 

they had multiple job responsibilities but did not receive the training 

needed to perform them all.128 The other 4 employees stated that the 

training they did receive was not helpful or relevant to meeting their 

job responsibilities.

• Evaluation. In fiscal year 2012, SBA’s Office of Human Resources 

Solutions established an accountability function in its Strategy, Policy, 

and Accountability Division with responsibility for conducting internal 

assessments. The program assessment schedule calls for reviewing 

SBA’s training programs annually, and SBA conducted its first 

assessment of the centralized training program under this schedule in 

2013.129 SBA found significant weaknesses and areas of 

noncompliance with regulatory requirements, including not having 

evaluated its training programs on a regular basis, not maintaining 

records of training and expenditures, and not addressing federally 

mandated training requirements in written policies. The assessment 

contained 14 required actions designed to strengthen SBA’s training 

and development programs and ensure regulatory compliance. In 

April 2015, SBA completed its fiscal year 2014 assessment of its 

training program to determine the agency’s progress on correcting 

these deficiencies and found that 10 of the 14 required actions 

126Because this was a nonprobability sample, findings from our sample cannot be 

generalized to all SBA employees, but the sample provides illustrative examples of the 

difficulties some of the employees we interviewed experienced.

127Five of these employees stated that they learned to do their job through either informal 

training from their peers or by reviewing SOPs. However, one employee noted that it was 

not practical to read SOPs to understand her duties. In addition, as discussed later in this 

report, many of SBA’s SOPs need to be updated.

128For example, one employee said she held two positions but had not received any 

formal training that would help her fulfill her responsibilities in one of the two positions. To 

get a better understanding of those job responsibilities, she asked a colleague for informal 

training because relevant, formal training was not offered to her. 

129Per OPM regulations, federal agencies, including SBA, must evaluate their training 

programs annually to determine whether the programs operate effectively and efficiently, 

contribute to mission accomplishment, and meet organizational goals. 

Page 55 GAO-15-347 Small Business Administration

 
remained incomplete.130 SBA stated that it planned to assess its 

training program again at the end of fiscal year 2015.

Without a more strategic approach to its training and development 

programs, including incorporating training goals and measures and input 

on employee development goals in its training plan, it will be difficult for 

SBA to effectively establish priorities in its training initiatives or address 

skill gaps.

In our 2003 report on results-oriented cultures, we identified key 

principles in employee performance management.131 We concluded that 

an effective employee performance management system can be a 

strategic tool to drive internal change and achieve desired results. 

Specifically, we concluded that employee performance management 

systems must show how team, unit, and individual performance can 

contribute to overall organizational results and that the system serves as 

the basis for setting employee expectations and for evaluating individual 

performance.

In 2011, SBA updated critical elements and performance standards for its 

employees in the field, and in 2012 began using a new electronic system 

to manage performance (the Talent Management Center). But it did not 

update its March 15, 2000, SOP before the new system and standards 

were implemented. According to a recent SBA assessment of its 

performance appraisal program, the existing SOP does not reflect the 

agency’s current practices.132 SBA officials stated that as of August 2015 

130For example, SBA has completed actions to track consolidated training and has 

established one or more programs to ensure the continuing development of its senior 

executives. However, SBA has taken partial actions to, among other things, assess the 

agency’s training needs annually, ensure employees receive mandatory training, and 

maintain records of mandatory training data. 

131GAO, Results-Oriented Cultures: Creating a Clear Linkage between Individual 

Performance and Organizational Success, GAO-03-488 (Washington, D.C.: Mar. 14, 

2003). As discussed later in this report, SBA is in the process of updating its SOP on its 

employee performance management system, and we were therefore unable to conduct a 

full assessment to determine whether it was consistent with these key principles.

132SBA assessed its performance appraisal program against OPM requirements. The 

assessment identified strengths and weaknesses with regard to whether procedures and 

requirements for planning, monitoring, and rating performance complied with legal and 

regulatory requirements and whether employees were effectively evaluated and rated. 

SBA has completed all required actions based on the assessment findings, except for 

updating and finalizing its SOP.

Employee Performance 

Management

Page 56 GAO-15-347 Small Business Administration

 
they had revised the SOP, it had been signed by the Administrator, and it 

was in the process of being published. Prior to finalizing its SOP, SBA 

officials stated that the agency had provided employees with guidance on 

using the new electronic system and on new performance standards for 

the field. 

Our review of a set of critical elements and performance standards that 

we received from SBA indicated that field office employees are primarily 

evaluated on the basis of quantitative measures.133 For example, 

business opportunity specialists are evaluated in part on their 

participation in outreach events and procurement visits to assigned 

entities. In order to receive the highest rating of five for these activities, 

these specialists must conduct or participate in more than 65 events 

annually. According to the elements and standards, supervisors are 

responsible for monitoring the quality of employee activities. The 

elements and standards do not describe what criteria supervisors should 

apply to make that determination, but SBA officials stated that SBA 

provides program offices with guidance on incorporating qualitative 

measures.

Some of the 58 SBA managers and employees we spoke with in SBA’s 

regional and district offices expressed mixed views about SBA’s new 

employee performance management system. For example, 11 (10 

managers and 1 nonmanager) said the system clearly laid out employee 

performance expectations. However, some managers and employees 

criticized certain aspects of SBA’s employee performance management 

system. Specifically, 5 (2 managers and 3 nonmanagers) said the 

performance appraisal elements and standards focused primarily on 

quantitative measures and did not account for quality. As discussed 

earlier, our review of a set of critical elements and performance standards 

133We reviewed critical elements and performance standards for the following managers 

and employees in the field: regional administrators, district directors, deputy district 

directors, economic development specialists, business opportunity specialists, and lender 

relations specialists. These are the elements and standards for the staff whom we 

interviewed during our site visits. In addition, we reviewed one set of generic critical 

elements and performance standards for SBA employees and one set for SBA managers. 

SBA officials stated that they could not provide data on the total number of critical 

elements because the elements are tracked on an individual basis and not across the 

agency. SBA officials said that nonsupervisory employees are typically evaluated against 

2 generic elements and 1-3 additional elements for a total of 3-5 elements. Supervisory 

employees are typically evaluated against 3 generic critical elements and 1-2 additional 

elements for a total of 5 elements.

Page 57 GAO-15-347 Small Business Administration

 
also indicated a lack of qualitative measures. In addition, 6 (3 managers 

and 3 nonmanagers) stated that there were problems with technical 

aspects of the electronic performance system. For example, 4 (1 

manager and 3 nonmanagers) said that they had to track their 

performance activities in separate systems that did not communicate with 

one another. Employees responding to SBA’s 2014 FEVS also expressed 

mixed views about SBA’s employee performance management system. 

For example, in response to a question asking whether SBA employees 

understood what they had to do to be rated at different performance 

levels, 71.87 percent (986 employees) agreed or strongly agreed, 11.20 

percent (158 employees) neither agreed nor disagreed, and 16.92 

percent (229 employees) either disagreed or strongly disagreed.134 In 

response to another question asking employees whether they believed 

their performance appraisal was a fair reflection of their performance, 

68.06 percent (938 employees) agreed or strongly agreed, 13.03 percent 

(180 employees) neither agreed nor disagreed, and 18.91 percent (254 

employees) either disagreed or strongly disagreed.135 However, in 

response to a question asking whether differences in performance were 

recognized in a meaningful way, 36.09 percent (472 employees) agreed 

or strongly agreed, 24.90 percent (324 employees) neither agreed nor 

disagreed, and 39.01 percent (509 employees) disagreed or strongly 

disagreed.136 SBA officials told us that a committee of district directors 

was working with the Office of Human Resources Solutions to bring 

qualitative components back into the performance appraisal elements and 

standards for the field offices and resolving technical problems with the 

system. SBA officials stated that these efforts were ongoing, but the 

agency does not have an expected completion date.

Despite long-standing organizational challenges affecting program 

oversight and human capital management, SBA officials told us that as of 

June 2015, SBA had not completed an assessment of its structure or 

made any needed changes to determine how to address the challenges.

134A total of 1,373 employees out of 1,395 who completed the survey responded to this 

question. 

135A total of 1,372 employees out of 1,395 who completed the survey responded to this 

question.

136A total of 1,305 employees out of 1,395 who completed the survey responded to this 

question. 

SBA Also Faces Ongoing 

Organizational Challenges

Page 58 GAO-15-347 Small Business Administration

 
In a January 2003 report on SBA’s management challenges, we found 

that the agency’s organizational structure created complex overlapping 

relationships among offices that contributed to challenges in delivering 

services to small businesses.137 In 2004, SBA centralized its loan 

functions by moving responsibilities from district offices to loan processing 

centers. However, some of the complex overlapping relationships we 

identified in 2003 still exist (see fig. 6).138 Specifically, SBA’s 

organizational structure often results in working relationships between 

headquarters and field offices that differ from reporting relationships, 

potentially posing programmatic challenges. District officials work with 

program offices at SBA’s headquarters to implement the agency’s 

programs, but these officials report to regional administrators, who 

themselves report to the Office of Field Operations. For example, the 

lender relations specialists in the district offices work with the Office of 

Capital Access at SBA headquarters to deliver programs but report to 

district office management. Similarly, the business opportunity specialists 

in the district offices work with the Office of Government Contracting and 

Business Development at SBA headquarters to assist small businesses 

with securing government contracts but report to district office 

management. Further, some officials have the same duties. The public 

affairs specialists at the district offices and the regional communications 

directors both handle media relations. In addition, district directors and 

regional administrators both are to conduct outreach to maintain 

partnerships with small business stakeholders such as chambers of 

commerce; lending institutions; economic development organizations; 

and federal, state, regional, and local governments. They also participate 

in media activities and speak at public events.

137GAO-03-116. 

138We did not find evidence that some other organizational challenges we identified in 

2003—confusion over the mission of district offices and a field structure that did not 

consistently match mission requirements—still exist.

Page 59 GAO-15-347 Small Business Administration

 
Figure 6: Small Business Administration’s Headquarters and Field Organizational Relationships, April 2015

In later reports, we and others—including SBA itself—identified 

organizational challenges that affected SBA’s program oversight and 

human capital management.

• In a March 2010 report on the 8(a) business development program, 

we found a breakdown in communication between SBA district offices 

and headquarters (due in part to the agency’s organizational 

structure) that resulted in inconsistencies in the way district offices 

delivered the program.139 For example, in about half of the 8(a) files 

we reviewed, we found that district staff did not follow the required 

139GAO-10-353. 

Page 60 GAO-15-347 Small Business Administration

 
annual review procedures for determining continued eligibility for the 

program. This was due in part to the lack of clear guidance from 

headquarters. In addition, we found that confusion over roles and 

responsibilities led to district staff being unaware of the types and 

frequency of complaints across the agency on the eligibility of firms 

participating in the 8(a) program. As a result, district staff lacked 

information that could be used to help identify issues relating to 

program integrity. As discussed earlier, we made six 

recommendations, including that SBA provide more guidance to help 

ensure staff more consistently follow procedures, and SBA agreed 

with them. As of July 2015, SBA had taken actions responsive to four 

of the recommendations.140

• In addition, in 2013 the SBA OIG found that communication from a 

headquarters program office to field offices about conducting 

examinations for a specific program had been limited.141 The report 

noted that this lack of communication could have not only inhibited the 

sharing of crucial information but also caused inconsistencies in the 

examinations across field offices. It concluded that these weaknesses 

in the examination process had diminished the agency’s ability to 

identify regulator violations and other noncompliance issues in the 

operation of the program. The OIG recommended that SBA create 

and execute a plan to improve the internal operations of the 

examination function, including a plan for better communication. 

Although SBA disagreed with the recommendation, the agency issued

examination guidelines that the OIG in 2015 deemed satisfactory to 

close the recommendation.

• In documentation requesting fiscal years 2012 and 2014 VERA/VISP 

programs, SBA said that long-standing skill gaps, primarily in field 

offices, which had resulted from the 2004 reorganization and 

centralization of the loan processing function, still existed. SBA 

140The two recommendations that SBA had not fully implemented at that time focused on 

(1) procedures to ensure that appropriate actions are taken for firms subject to early 

graduation from the program and (2) taking actions against firms that fail to submit 

required documentation. We maintain that these recommendations continue to have merit 

and should be fully implemented.

141Small Business Administration, Office of Inspector General, Improved Examination 

Quality Can Strengthen SBA’s Oversight of Small Business Investment Companies, 

Report No.13-22 (Washington, D.C.: Sept. 30, 2013). The staff who conduct these 

examinations are program office officials assigned to regional offices.

Page 61 GAO-15-347 Small Business Administration

 
determined that its organizational changes had resulted in a 

programmatic challenge because employees hired for a former 

mission did not have the skills to meet the new mission. Specifically, 

before the centralization effort field offices had primarily needed staff 

with a financial background to process individual loans. But the new 

mission required staff who could develop socially and economically 

disadvantaged businesses and conduct annual financial reviews of 

them, engage with lenders, and conduct outreach to small 

businesses.

Despite the organizational and managerial challenges it has faced, SBA’s 

changes to its organizational structure since fiscal year 2005 have been 

incremental (piecemeal), as the following examples illustrate:

• In 2007, SBA reorganized five program offices and four administrative 

support functions in order to clearly delineate reporting levels, among 

other things.142 The agency also eliminated the Chief Operating 

Officer as a separate office and integrated its functions into the Office 

of the Administrator.

• In 2008, the Office of Equal Employment Opportunity and Civil Rights 

Compliance began reporting directly to the Associate Administrator for 

Management and Administration to facilitate better oversight, 

planning, coordination, and budgeting for all of the agency’s 

administrative management operations.143

• In 2010, SBA consolidated financial management by moving its 

procurement function to the Office of the Chief Financial Officer and 

transferring day-to-day procurement operations from headquarters to 

the agency’s Denver Finance Center. This change was intended to 

improve the efficiency and effectiveness of SBA’s acquisition 

142The Offices of Entrepreneurial Development, Government Contracting and Business 

Development, Capital Access, Disaster Assistance, and Field Operations became 

equivalent organizational units, each with an Associate Administrator. (The Offices of 

Disaster Assistance and Field Operations previously were not denoted as major program 

offices, although they contained over half of SBA’s staff.) The Offices of Management and 

Administration, Chief Information Officer, Chief Financial Officer, and General Counsel 

were grouped together to reflect the broad agency administrative support they provide.

143The Office of Equal Employment Opportunity and Civil Rights Compliance previously 

reported to the Chief of Staff in the Office of the Administrator.

Page 62 GAO-15-347 Small Business Administration

 
programs.

• In 2011, SBA restructured the Office of Human Capital Management 

in response to significant turnover that had a serious effect on the 

level and scope of services. The reorganization streamlined the office, 

which was renamed the Office of Human Resources Solutions, by 

reducing the number of branches and divisions.

• In 2012, new offices were created in the Office of Capital Access to 

respond to, among other things, growth in small business lending 

programs and increased servicing and oversight responsibilities 

following the 2007-2009 financial crisis.144 The changes sought to 

help the agency become a better partner with lending institutions and 

nonprofit financial organizations to increase access to capital for small 

businesses.

• In 2012, SBA established a headquarters unit within the Office of 

Government Contracting and Business Development and made it 

responsible for processing the continued eligibility portion of the 

annual review required for participants in the 8(a) program.145 Prior to 

this change, district officials, who are also responsible for providing 

business development assistance to 8(a) firms, were tasked with 

conducting exams of continued eligibility. While district officials have 

continued to perform other components of the annual review, shifting 

the responsibility for processing continued eligibility to headquarters 

was designed to eliminate the conflict of interest for district officials 

associated with performing both assistance and oversight roles.

• In 2012, the Office of Field Operations revamped field office 

operations following a 2010 review of all position descriptions to 

ensure that they aligned with SBA’s strategic plan and district office 

strategic plans. Many position descriptions were rewritten, although 

there were no changes in grade or series. Before the review, district 

offices had two principal program delivery positions—lender relations 

specialist and business development specialist. As a result of the 

144Among other things, SBA established the Offices of Economic Opportunity and 

Performance and System Management within the Office of Capital Access, and created a 

second Deputy Associate Administrator position to be held by a career employee to help 

ensure a greater level of continuity during transitional periods.

145The Small Business Act requires SBA to conduct exams of initial and continued 

eligibility of 8(a) program participants.

Page 63 GAO-15-347 Small Business Administration

 
review, descriptions for both positions were rewritten, and the 

business development specialist position became two—economic 

development specialist and business opportunity specialist. The skills 

and competencies for the new position descriptions focused on the 

change in the district offices’ function from loan processing to 

compliance and community outreach in an effort to address skill gaps. 

As a result, staff were retrained for the rewritten positions.

• In 2013, SBA reestablished the Office of the Chief Operating Officer 

(formerly the Office of Management and Administration) to improve 

operating efficiency.146 Among other things, this change transferred 

Office of Management and Administration staff to the reestablished

office, along with the Office of the Chief Information Officer and the 

Office of Disaster Planning, which saw its mission expanded to 

include enterprise risk management.

While SBA has made incremental changes, SBA officials told us that as 

of June 2015, the agency had not completed an evaluation of its 

organizational structure and made changes as necessary in response to 

changing conditions. According to federal internal control standards, 

organizational structure affects the agency’s control environment by 

providing management’s framework for planning, directing, and 

controlling operations to achieve agency objectives.147 A good internal 

control environment requires that the agency’s organizational structure 

clearly define key areas of authority and responsibility and establish 

appropriate lines of reporting. Further, internal control guidance suggests 

that management periodically evaluate the organizational structure and 

make changes as necessary in response to changing conditions.148 Since 

its last major reorganization in 2004, SBA has seen significant changes, 

including decreases in budget and an increase in the number of 

employees eligible to retire.

146In 2007, SBA had eliminated the Office of the Chief Operating Officer and made the 

Offices of Management and Administration and Chief Information Officer equivalent 

offices. 

147GAO/AIMD-00-21.3.1. 

148GAO, Internal Control Management and Evaluation Tool, GAO-01-1008G (Washington, 

D.C.: August 2001).

Page 64 GAO-15-347 Small Business Administration

 
In 2012, the agency committed to assessing and revising its 

organizational structure to meet current and future SBA mission 

objectives.149 However, the contractor that SBA hired to assess its 

organizational structure did not begin its assessment until November 

2014. SBA officials told us that the effort was delayed because in 

February 2013 SBA’s Administrator announced she was leaving the 

agency and the position was vacant from August 2013 until April 2014. In 

August 2015, SBA told us that after the new administrator reviewed 

business delivery models and became acclimated to the agency, the 

agency procured a contractor and work began on the organizational 

assessment in November 2014. According to the statement of work, the 

contractor was to assist the chief human capital officer by making 

recommendations regarding an agency-wide realignment to improve 

service delivery models, modernize systems and processes, and realign 

personnel, among other things. During the course of our review, SBA 

officials told us the contractor completed its assessment in March 2015, 

but SBA had not finished analyzing the results and determining what 

organizational changes, if any, to make. In its August 2015 comments on 

a draft of this report, SBA noted that the agency had recently completed 

that review and determined that major restructuring was not warranted at 

the time. However, SBA did not provide us with any documentation that 

shows when the assessment was completed or that supports its 

conclusions that major changes were not warranted. Until SBA 

documents its assessment, it will not have an institutional record of its 

actions.

Instead of conducting its planned assessment and subsequent 

reorganization when initially scheduled, SBA used two VERA/VSIP 

programs to attempt to address workforce challenges resulting from the 

2004 reorganization. SBA’s plans in the aftermath of the fiscal year 2014 

VERA/VSIP program include restructuring. Specifically, an October 2014 

guidance memorandum on staffing the agency-wide vacancies after the 

fiscal year 2014 VERA/VSIP stated that an Administrator’s Executive 

Steering Committee for SBA’s Restructuring would make decisions about 

149SBA committed to revising its organizational structure in its Strategic Human Capital 

Plan for fiscal years 2013-2016. 

Page 65 GAO-15-347 Small Business Administration

 
restructuring.150 The memorandum also stated that the Chief Human 

Capital Officer had been tasked with identifying vacant FTEs for new 

positions that would support any new functions or initiatives envisioned by 

the Administrator’s restructuring efforts. For example, the memorandum 

noted that 82 of the 147 new vacancies from the VERA/VISP would be 

used to support the Administrator’s restructuring. The memorandum 

added that the remaining 65 vacancies would remain in their respective 

program offices and that the position descriptions would be modified or 

positions relocated to meet internal needs. According to SBA, options for 

restructuring and related hiring were still being considered as of May 

2015.

Although SBA told us that it has recently completed an assessment of its 

organizational structure, it had not documented this effort as of August 

2015. Until it documents its efforts to examine its structure and any 

findings, it will be difficult for SBA to provide reasonable assurance, or for 

a third party to validate, that SBA’s current organizational structure is 

contributing effectively to its mission objectives and programmatic goals. 

Given the range of programs SBA manages and oversees, having a 

robust enterprise risk management system is critical to effectively 

managing risks.151 SBA initiated efforts to implement enterprise risk 

management in 2009, noting the importance of managing the range of 

cross-agency risks it faces. However, it could not provide us with 

adequate documentation on the progress of these efforts or on any future 

plans and had only recently begun assessing agency-wide risks. SBA 

began its enterprise risk management efforts in 2009 with the designation 

of an unofficial chief risk officer but considers itself to be in the “early 

150The committee is composed of the Associate Administrators and Deputy Associate 

Administrators of the Offices of Field Operations, Capital Access, Government Contracting 

and Business Development, and Entrepreneurial Development; the Associate 

Administrator for the Office of Diversity, Inclusion, and Civil Rights; the Chief Financial 

Officer and Deputy Chief Financial Officer; the Chief Operating Officer; and the Chief 

Human Capital Officer. 

151For purposes of this report, enterprise risk management is defined as a process 

established by an entity’s board of directors, management, and other personnel and used 

to set strategy across the enterprise. It is designed to identify potential events that may 

affect the entity, manage risk within the entity’s risk appetite, and provide reasonable 

assurance on the achievement of entity objectives.

SBA Lacks Documentation 

on and Has Made Limited 

Progress in Implementing 

an Effective Enterprise 

Risk Management 

Process

Page 66 GAO-15-347 Small Business Administration

 
stages” of implementation.152 In 2013, SBA established an Office of 

Enterprise Risk Management under the chief operating officer and 

developed a process to guide its approach. SBA officials told us that they 

had developed this process based in part on recommendations made by 

Deloitte & Touche as part of that organization’s review of the risk 

management practices within SBA’s Office of Capital Access.153 In the 

course of our work, SBA provided a graphic depicting the five phases of 

its enterprise risk management process: (1) identify risk; (2) assess risk; 

(3) strategize response; (4) implement; and (5) monitor and report (see 

fig. 7).154 The agency also provided a brief summary of the progress it 

had made in implementing these phases. However, the agency could not 

elaborate on and did not provide any other documentation of its process, 

including on the goals it hoped to achieve or the specific actions it 

planned to take during each phase. Federal internal control standards 

require that significant actions be clearly documented in, for example, 

management directives, administrative policies, or operating manuals.155

152In 2009, the SBA Administrator designated the then general counsel as the unofficial 

chief risk officer charged with reducing fraud, waste, and abuse in the agency’s lending 

and government contracting programs. SBA officially appointed a chief risk officer in 

November 2014. According to the position description, which was approved in October 

2014, the responsibilities include managing enterprise risk, implementing an enterprise 

risk management framework and strategy for the agency, and overseeing the coordination 

of an annual high-level risk assessment at SBA. In June 2015, a senior SBA official 

informed us that the chief risk officer’s duties would be taken over by the Enterprise Risk 

Management Board, discussed later in this report.

153In 2010-2011, Deloitte & Touche LLP assessed the risk management practices within 

SBA’s Office of Capital Access in the following areas: organizational alignment and 

interactions; governance and oversight, to include quality assurance; business process 

improvement; and risk analytics. Deloitte & Touche LLP made several recommendations 

to improve SBA’s risk management practices. Specifically, Deloitte recommended that 

SBA define key risks; design targeted training to strengthen officials’ understanding of 

credit analysis; and integrate data sources into a central repository, among other things.

154According to SBA officials, the agency developed this process in 2012.

155GAO/AIMD-00-21.3.1. 

Page 67 GAO-15-347 Small Business Administration

 
Figure 7: Small Business Administration’s Enterprise Risk Management Process

Although SBA’s enterprise risk management plans and efforts to date are 

not fully documented, we used available information to compare SBA’s 

process to our risk management framework (see table 4). GAO’s risk 

management framework calls for the following five phases and lays out 

key elements for each: (1) defining strategic goals, objectives, and 

constraints: (2) assessing risk; (3) evaluating alternatives; (4) selecting 

responses; and (5) implementing and monitoring.156 As table 4 shows, 

SBA has partially implemented two phases of its risk management 

process and those phases partially align with one phase of our 

framework. Specifically, SBA has begun to identify and assess risks, 

which partially aligns with our risk assessment phase. However, we rated 

SBA as not following the other four phases of our framework, as it had not 

yet made progress on implementing the remaining phases of its process.

156GAO-06-91. We developed our risk management framework by reviewing, analyzing, 

and synthesizing several sources of information, including risk literature and our previous 

reports and testimonies; experts in the fields of risk management, risk modeling, and 

terrorism; and numerous frameworks from industry, government, and academic sources.

Page 68 GAO-15-347 Small Business Administration

 
Table 4: Extent to Which the Small Business Administration (SBA) Follows GAO Risk Management Framework

GAO risk 

management 

framework stages Description Key elements

Comparable 

stages in SBA’s 

process

Extent to which 

SBA’s process 

aligns with GAO’s 

framework

Strategic goals, 

objectives, and 

constraints

Addresses what the strategic

goals and objectives are 

attempting to achieve and the 

steps needed to attain these 

results, and considers the 

constraints under which an 

agency operates such as statute, 

higher level policy, budget, or 

other factors beyond 

management’s control that may 

affect an agency’s risk 

management plans. 

An agency’s risk management 

program should:

• Require mission-based 

strategic goals and 

objectives, which are clearly 

articulated and measurable, 

to be set as a pre-condition 

for effective risk 

management. Without clearly 

identified strategic goals and 

objectives, an agency cannot 

effectively identify and 

address potential risks to its 

mission, prioritize risk, or 

identify criteria against which 

to measure performance.

• Require agencies to identify 

constraints (e.g., legislative 

requirements or resources) 

that may limit effective risk 

management.

N/A ○

Risk assessment Addresses the identification and 

evaluation of potential risks to an 

agency’s ability to achieve its 

goals and objectives so that 

management can design and 

implement responses to prevent 

or manage identified risks.

An agency’s risk management 

program should:

• Identify potential events 

which may adversely affect 

the agency, called risks, and 

evaluate the events based on 

likelihood of occurrence and 

impact. For example, an 

agency may identify and 

evaluate potential risks 

associated with economic 

and legislative changes, 

natural disasters, and criminal 

or terrorist activities.

• Require continuous 

identification and evaluation 

of potential risks since 

governmental, economic, 

industry, legislative, and 

operating conditions 

continually change.

Identify risk

Assess risk

◓

Page 69 GAO-15-347 Small Business Administration
GAO risk 

management 

framework stages Description Key elements

Comparable 

stages in SBA’s 

process

Extent to which 

SBA’s process 

aligns with GAO’s 

framework

Alternatives 

evaluation

Addresses the identification and 

evaluation of alternative ways in 

which the agency can act to alter 

either the likelihood of occurrence 

or the impact of a potential risk. 

An agency’s risk management 

program should:

• Identify alternative ways the 

agency can respond to 

prevent or manage an 

identified risk. For example, 

to comply with new 

legislation, an agency may 

need to revise existing policy 

and procedures or develop 

new policies and procedures.

• Evaluate the alternatives 

identified to consider the 

effect on likelihood of 

occurrence and impact of a 

potential risk.

• Evaluate the alternatives 

identified to consider the 

costs and benefits.

Strategize 

response 

○

Management 

selection

Addresses the selection of a 

response to manage an identified 

risk based on the alternatives 

evaluated and management 

priorities, such as management’s 

attitude towards risk and how 

limited resources will be targeted.

An agency’s risk management 

program should:

• Require management to 

select and document an 

alternative, such as revising 

or creating a policy or 

procedure for addressing an 

identified risk.

• Require management to 

document the rationale for 

selecting the alternative.

Strategize 

response

○

Implementation and 

monitoring

Addresses how risk responses 

will be applied and assessed to 

improve efficiency and 

effectiveness. In addition, 

addresses how the risk 

management program will be 

assessed to determine whether 

changes are needed to improve 

efficiency and effectiveness.

An agency’s risk management 

program should:

• Implement management’s 

selected alternative to 

address risk.

• Periodically assess 

management’s selected 

alternative to address risk.

• Periodically assess the 

efficiency and effectiveness 

of the entire risk management 

program.

Implement

Monitor and 

report

○

Legend: ● Follows ◓ Partially follows ○ Does not follow

Sources: GAO-06-91; The Committee of Sponsoring Organizations of the Treadway Commission, Enterprise Risk Management—Integrated Framework (Jersey City, N.J.: American Institute of Certified 

Public Accountants, September 2004); and GAO analysis of SBA documents and interviews with SBA officials. | GAO-15-347

Page 70 GAO-15-347 Small Business Administration
• Strategic goals, objectives, and constraints. Our risk assessment 

framework calls for fully documenting strategic goals and objectives, 

which should be clearly articulated and measurable, as well as any 

limitations or constraints that may limit effective risk management. In 

October 2014, the SBA Administrator approved the formation of an 

Enterprise Risk Management Board to ensure that the greatest risks 

to the agency are regularly identified, assessed, and monitored. The 

Administrator approved the membership of the board on April 24, 

2015.157 According to officials, the board plans to develop a charter by

September 2015. However, because the board met for the first time 

on April 30, 2015, SBA had not yet documented the strategic goals 

and objectives it is attempting to achieve, the steps needed to attain 

these results, or the constraints under which the agency operates, as 

of May 2015.

• Risk assessment. Our framework calls for identifying potential events 

that can adversely affect the agency and evaluating them based on 

the likelihood of occurrence and impact. SBA officials told us that as 

of November 2014, officials in SBA’s risk management office had 

interviewed program office leaders and reviewed agency processes to 

draft an inventory of risks and complete an initial assessment. The 

officials explained that they needed to further refine this assessment 

and that the Enterprise Risk Management Board would determine 

additional steps. However, because the board was still reviewing the 

draft risks as of May 2015, SBA has not completed the risk inventory 

or developed procedures to identify and evaluate the potential risks to 

the agency’s ability to achieve its goals and objectives.

• Alternatives evaluation. Our framework calls for identifying 

alternative ways the agency can prevent or manage an identified risk 

while taking into consideration the costs and benefits of the 

alternatives. However, to date, SBA has not been able to consider 

managing risks because it has not completed the risk assessment 

process. According to SBA, risk responses will be guided by the 

157The Enterprise Risk Management Board is facilitated by the Director of Disaster 

Planning and Risk Management and includes the Deputy Administrator (Chair); Chief of 

Staff (Vice Chair); General Counsel; Chief Operating Officer; Deputy Chief Operating 

Officer and Chief Human Capital Officer; Chief Information Officer; Chief Financial Officer; 

and the Associate Administrators of Capital Access, Government Contracting and 

Business Development, Entrepreneurial Development, Field Operations, Investment and 

Innovation, and Disaster Assistance. 

Page 71 GAO-15-347 Small Business Administration

 
Enterprise Risk Management Board.

• Management selection. Our framework requires management to 

select and document responses to potential risks and provide a 

rationale for its selections. To date, SBA has not proceeded to this 

step. As noted earlier, SBA told us that the Enterprise Risk 

Management Board would guide risk responses.

• Implementation and monitoring. Our framework includes 

implementing management’s selected alternatives to address risks 

and periodically assessing the efficiency and effectiveness of the 

entire risk management program. Because it has not identified risks 

and possible responses to them, SBA cannot proceed to this step. 

According to SBA officials, the Office of Risk Management will 

maintain records of the Enterprise Risk Management Board’s 

decisions and follow up with the chief risk officer to ensure that the 

steps the board decides on are implemented.

According to a senior SBA official, the Enterprise Risk Management 

Board will be assessing SBA’s risks in the near future, and he plans to 

ask the Board to consider our risk management framework at that time.

Given the long-standing management challenges related to specific SBA 

programs discussed earlier, it may be challenging for SBA to establish an 

agency-wide system. However, until SBA identifies and fully documents 

the steps that it plans to take to implement its enterprise risk management 

process and incorporates the elements of our risk management 

framework, it will not be able to provide reasonable assurance that its 

enterprise risk management efforts effectively identify, assess, and 

manage risks before they can adversely affect SBA’s ability to achieve its 

mission.

Page 72 GAO-15-347 Small Business Administration
SBA has met its small business contracting goals and taken steps to 

address acquisition management challenges. Contracting represents a 

small portion of SBA’s obligations.158 SBA’s total contract obligations for 

fiscal year 2014 were approximately $116.6 million, compared with total 

obligations for fiscal year 2014 of about $845.8 million. But the agency in 

recent years has exceeded its primary goals for awarding contracts to 

small businesses.159 By statute, federal agencies are to award 23 percent 

of their prime contract funds to small businesses.160 To help meet this 

government-wide goal, each agency has its own individual goal. In fiscal 

year 2013, of approximately $106.7 million in total small business-eligible 

contracting dollars, SBA awarded $76.8 million to small businesses, 

exceeding the agency’s goal of 67 percent (see table 5).161

158An obligation is a binding agreement that will result in outlays, immediately or in the 

future.

159SBA’s total contract obligations for fiscal year 2014 were approximately $116.6 million, 

the majority of which were used for information technology and telecommunications 

products and services ($53.7 million) and professional, administrative, and management 

support services ($55.4 million). The remaining funds were primarily used for education 

and training.

160A prime contract is any direct contract between the government and a contractor.

161Small business-eligible contract dollars were the funds available for SBA to award via 

contracts to small businesses. An award means any oral or written action that resulted in 

the purchase, rental, or lease of supplies or equipment, services, or construction.

SBA Has Met Its 

Contracting Goals and 

Taken Steps to Address 

Acquisition Management 

Challenges

Page 73 GAO-15-347 Small Business Administration

 
Table 5: Percentage of Small Business Administration (SBA) Contract Dollars Awarded to Small Businesses by 

Socioeconomic Category, Fiscal Years 2011-2013

Socioeconomic category

Fiscal year 2011 

achievement

Fiscal year 2012 

achievement 

Fiscal year 2013 

goal 

Fiscal year 2013 

achievement 

Small business 67.07% 70.92% 67.00% 72.01% 

Women-owned small business 19.62 13.46 5.00 15.82 

Small disadvantaged business 47.39 44.93 5.00 47.34 

Service-disabled veteran-owned small business 6.57 6.45 3.00 7.18 

HUBZone small business 3.78 5.21 3.00 8.98 

Source: Small Business Goaling Reports for fiscal years 2011-2013. | GAO-15-347

Note: The federal government has the following statutory goals for small business procurement: 23 

percent of prime contracts for small businesses; 5 percent of prime and subcontracts for womenowned small businesses; 5 percent of prime and subcontracts for small disadvantaged businesses; 3 

percent of prime and subcontracts for service-disabled veteran-owned small businesses; and 3 

percent of prime and subcontracts for HUBZone-certified small businesses. These goals are tracked 

based on the dollar amount of contracts awarded. A business may qualify for more than one 

socioeconomic category.

Despite these successes, over the last several years the SBA OIG has 

identified deficiencies in several areas of SBA’s acquisition management, 

including

• lack of compliance with laws and regulations, such as the Improper 

Payments Information Act requirements for planning, execution, and 

reporting of improper payments for its contracting activities;162

• inadequate application of funding principles, including obligating funds 

by issuing contract modifications without identifying specific 

162See Small Business Administration, Office of Inspector General, The SBA’s Improper 

Payment Review and Reporting for its Contracting Activities did not Comply with IPERA 

and IPIA Requirements During FY 2011, Report No. 12-07 (Washington, D.C.: Mar. 8, 

2012). The OIG recommended that SBA take actions such as (1) developing and 

implementing a more robust test plan that provided reasonable assurance of detecting 

improper payments within the program during fiscal year 2012 and (2) providing contract 

training to the SBA personnel responsible for developing the test plan and performing the 

agency’s improper payment review to ensure the detection of improper payments. SBA 

did not specifically state whether it agreed or disagreed with the recommendations.

Page 74 GAO-15-347 Small Business Administration

 
requirements for IT hardware and software;163 and

• turnover in key contracting staff, resulting in a workforce insufficient to 

effectively award, administer, and oversee contracts.164

SBA has taken steps to address some of these deficiencies. In October 

2010, SBA realigned its acquisition program by transferring its 

procurement function and operations to the Office of the Chief Financial 

Officer’s Denver Finance Center and rebranding it the Acquisition 

Division. This redesign was intended to improve the efficiency and 

effectiveness of the acquisition program by integrating acquisition and 

procurement activities. Since this realignment, SBA has taken further 

steps to improve the acquisition process, including hiring new staff and 

providing training to its acquisition personnel. Specifically, according to its 

fiscal year 2014 Acquisition Human Capital Plan, in fiscal year 2011 SBA 

hired 17 new employees in the acquisition office. Each employee was 

given a plan with measureable outcomes and over 50 hours of individual 

job-specific training. In addition, in fiscal year 2011 SBA reinstituted its 

Contract Review Board, giving greater oversight to high-risk contracts. 

Members of the board include the chief acquisition officer, senior 

procurement executive, and director of procurement law. 

However, in its most recent report on SBA’s management challenges, the 

SBA OIG noted that while SBA had made some progress in its acquisition 

program, the program continued to face challenges, including (1) poorly 

defined requirements, (2) internal control deficiencies, (3) inadequate 

oversight of contractor performance, and (4) an incomplete acquisition 

163See Small Business Administration, Office of Inspector General, Small Business 

Administration’s Funding of Information Technology Contracts Awarded to Isika 

Technologies, Inc., Report No. 11-14 (Washington, D.C.: June 2, 2011). The OIG 

recommended that SBA take actions such as (1) establishing procedures to discontinue 

SBA’s practice of inappropriately obligating funds on contracts in anticipation of future 

needs and (2) developing and providing training to the Office of the Chief Information 

Officer, current contracting personnel, and newly hired staff regarding the establishment of 

a bona fide need. SBA did not state whether it agreed or disagreed with the 

recommendations.

164See Small Business Administration, Office of Inspector General, Adequacy of 

Procurement Staffing and Oversight of Contractors Supporting the Procurement Function, 

ROM 10-13 (Washington, D.C.: Apr. 9, 2010). The OIG recommended that SBA identify 

and implement an interim solution to augment its acquisition workforce until permanent 

staff were hired to ensure that the agency had adequate oversight of the procurement 

function and the contracting personnel that support it. SBA agreed with the 

recommendation. 

Page 75 GAO-15-347 Small Business Administration

 
SOP.165 Specifically, the fiscal year 2015 report noted that SBA, among 

other things,

• had inadequately monitored contract performance and did not provide 

assurance that products and services were delivered according to 

contract requirements;

• updated its acquisition SOP but did not include elements such as the 

use of interagency acquisitions or define postaward contract 

administration requirements, among other things; and

• did not complete the acquisition assessment required in OMB’s 

Memorandum for Chief Acquisition Officers: Conducting Acquisition 

Assessments under OMB Circular A-123.

166

The OIG made recommendations to SBA to address these issues, 

including (1) completing an assessment of the agency’s acquisition 

activities using OMB guidance; and (2) creating and implementing a 

comprehensive improvement plan—based on the results of the 

acquisition function assessment—that has measurable goals, objectives, 

prioritized actions, and time frames to address any identified deficiencies. 

In response to these recommendations, SBA awarded a contract for an 

assessment of its acquisition function. This assessment—completed at 

the end of March 2015—included a functional assessment of SBA 

acquisition operations using OMB Circular A-123, Appendix 1, 

“Guidelines for Assessing the Acquisition Function,” which describes the 

four cornerstones of acquisition management: organizational alignment 

and leadership, policies and processes, human capital, and information 

165Small Business Administration, Office of Inspector General, Report No. 15-01.

166In the fiscal year 2015 report on management challenges, the SBA OIG also noted that 

SBA had reported an increase in the improper payment rate for disbursements of goods 

and services from 9.6 percent in fiscal year 2012 to 11.6 percent in fiscal year 2013. 

However, in a later report, the SBA OIG found that SBA had made substantial progress in 

reducing improper payments related to disbursements for goods and services, noting that 

the improper payment rate had decreased from 11.6 percent in fiscal year 2013 to 8.46 

percent in fiscal year 2014. The OIG stated that continued efforts by SBA to train staff may 

have led to the decrease and noted that SBA had fully implemented four unresolved, prioryear recommendations. See Small Business Administration, Office of Inspector General, 

Report No. 15-11.

Page 76 GAO-15-347 Small Business Administration

 
management and stewardship.167 In its final report, the contractor noted 

that SBA’s decision to realign acquisition and procurement functions 

under the direction of the chief financial officer was consistent with the 

practices of many of the Chief Financial Officers Act agencies and other 

small independent agencies.168 However, the contractor found several 

shortcomings with the agency’s internal controls in each of the four 

cornerstones. For example, the contractor noted a lack of clarity on the 

roles and responsibilities of the various stakeholders in the acquisition 

process. While most people understood their general role in the 

acquisition lifecycle, their specific responsibilities were not clearly defined. 

The contractor noted that this lack of clarity lead to gaps and 

inconsistencies in the acquisition process. Similarly, while the contractor 

found that SBA had SOP documents for its acquisition process, for the 

most part they restated the Federal Acquisition Regulation guidelines and 

did not describe the processes as they exist or should exist at SBA. As 

such, these SOPs had limited value in creating operational consistency 

and did not serve as useful training tools for new members of the 

acquisition team. Further, the contractor noted that performance 

standards, while incorporated into all procurements, were generic and 

lacked the specificity to guide desired outcomes. The contractor made 

several recommendations to SBA to support the establishment, 

assessment, and correction of internal controls in these four areas.169

Using the findings and recommendations identified from the functional 

assessment, the contractor was to develop a formal plan that addressed 

each cornerstone and would serve as an action plan to implement the 

contractor’s recommendations for SBA’s acquisition operations. 

According to SBA officials, the contractor had delivered this plan to SBA 

as of May 2015, but the Office of the Chief Financial Officer had not 

finalized its plan and had no time frame for doing so.

167These cornerstones mirror those within our own framework for assessing federal 

acquisition functions. See GAO, Framework for Assessing the Acquisition Function at 

Federal Agencies, GAO-05-218G (Washington, D.C.: Sept. 2005).

168Pub. L. No. 101-576, 104 Stat. 2838 (1990).

169SBA has not publicly disclosed the contractor’s report.

Page 77 GAO-15-347 Small Business Administration

 
We found that SBA’s inventory of SOPs—guidance for its staff and 

external parties—included outdated SOPs that did not align with current 

program requirements as well as SOPs that the agency had previously 

canceled. Federal internal control standards state that documentation—

which helps managers control their processes and is essential for 

evaluating and analyzing operations—must be properly managed and 

maintained to ensure proper stewardship of and accountability for 

government resources and effective and efficient program results.170

Based on our review of an inventory of 153 internal and external SOPs, 

we found that nearly half (71) had not been updated in the last 10 

years.171 Furthermore, 36 of these 71 had not been updated since the 

1990s, and 19 had not been updated since the 1980s. These SOPs 

covered a number of programs and organizational processes. While not 

all SOPs may need to be updated on a regular basis, federal internal 

control standards state that internal controls and all transactions and 

other significant events need to be clearly documented and that all 

documentation and records should be properly managed and 

maintained.172

We and the SBA OIG have found that some of the SOPs that SBA 

updated in the last few years did not align with current program 

requirements. For example, we found in a February 2015 report that SBA 

had updated its SOP for the HUBZone program in 2007 but that the 

program subsequently underwent significant changes that the updated 

document did not reflect.173 Similarly, as noted earlier, SBA overhauled its 

employee performance standards in 2011 but did not update its 

Performance Management and Appraisal System SOP from 2000. 

170GAO/AIMD-00-21.3.1. Documentation refers to the policies and procedures, including 

SOPs, which staff need to perform their duties and management needs to effectively 

monitor program operations.

171During our review, we asked SBA to provide us with an inventory of all current SOPs, 

including the dates of the most recent revisions. In July 2014, SBA provided a list of SOPs 

maintained on the agency’s internal website. We also reviewed the agency’s external 

website and found additional SOPs, identifying a total inventory of 153 internal and 

external SOPs.

172GAO/AIMD-00-21.3.1. Federal internal control guidance suggests that all 

documentation and records be properly managed, maintained, and periodically updated. 

See GAO-01-1008G. 

173GAO-15-234. 

Many Guidance 

Documents Were 

Outdated

Page 78 GAO-15-347 Small Business Administration

 
Finally, in a March 2011 report the SBA OIG found that the disaster loan 

servicing centers lacked a clearly defined records management and 

documentation process and therefore did not consistently make and 

preserve records containing adequate and proper documentation.174 

Records that should have been preserved because they contained 

evidence of agency activities or information of value to the agency were 

not systematically maintained. As a result, the SBA OIG recommended 

that SBA make and preserve records containing adequate and proper 

documentation of procedures for its oversight of its loan servicing 

programs, including incorporating these procedures into the relevant 

SOPs. As of February 2015, SBA had not implemented the SBA OIG’s 

2011 recommendations on updating the SOPs for its loan servicing 

procedures.

In fiscal year 2014, SBA’s Office of the Chief Operating Officer, Office of 

Administrative Services began a review of the status of all SOPs, working 

with the program offices to determine whether any updates were needed. 

Specifically, SBA issued a notice requiring all office heads to certify in 

writing the status of their SOPs. For each SOP, the cognizant office was 

to note whether (1) it did not require any revision, (2) it was under review, 

(3) it was being revised, or (4) it was being canceled. If an SOP was 

deemed to fall within one of the last three categories, the office was to 

provide the date by which the action would be completed. As a result of 

that review, SBA created a spreadsheet that flagged some SOPs as 

outdated and some for cancelation. Of the 165 SOPs reviewed as of 

March 2015, SBA determined that 74 needed to be revised, 31 needed to 

be canceled, and 60 required no revision.175 SBA also determined that it 

needed to issue an additional 9 new SOPs (see app. IV for a list of all 

SOPs and their status). However, many of these outdated and canceled 

SOPs were still on SBA’s internal website in March 2015 when we 

requested an updated list, raising questions as to whether SBA staff and 

partners may be using outdated or canceled SOPs. Further, in most 

cases SBA’s spreadsheet did not include projected completion dates for 

revising or canceling old SOPs or creating new ones. SBA officials told us 

174Small Business Administration, Office of Inspector General, Management Advisory 

Report on the Records Management and Documentation Process at the Disaster Loan 

Servicing Centers, Report No. 11-10 (Washington, D.C.: Mar. 29, 2011).

175The inventory SBA reviewed sometimes listed multiple versions of the same SOP or 

listed parts of the same SOP individually.

Page 79 GAO-15-347 Small Business Administration

 
that they lacked resources to update their SOP inventory but were in the 

process of revising those that had been flagged for revision. They also 

told us that they planned to revise the SOP for the entire Records 

Management Program and send it to the administrator for approval in 

fiscal year 2015. In addition, a senior SBA official noted that several 

SOPs had been updated and were undergoing final review. Without 

setting time frames to help ensure that SOPs are properly maintained and 

periodically updated, it will be difficult for SBA to hold staff accountable for 

updating the SOPs as intended and to illustrate its progress in doing so. 

Moreover, without updated SOPs, agency staff and their partners may not 

have clear guidance on how to most effectively deliver program services 

in accordance with laws and regulations.

In a February 2015 report, we identified the management of information 

technology acquisitions and operations as an area that presents a high 

risk to the federal government.176 We reported that too frequently agency 

IT efforts failed or incurred cost overruns and schedule slippages and did 

not meet mission goals due to challenges in managing the investments. 

The federal government has undertaken several initiatives to better 

manage its IT investments, with the goal of increasing efficiency and 

reducing costs. However, agencies continue to have poorly performing 

projects, such as SBA’s LMAS project, which we discussed earlier. While 

SBA has taken steps to implement six IT initiatives set out by OMB, it has 

not fully completed all of them.

• TechStat reviews. As part of the Federal Chief Information Officer’s 

(CIO) 25 Point Implementation Plan, in December 2010, OMB 

empowered agency CIOs to hold agency-level TechStat accountability 

reviews for investments that are at risk.177 According to OMB’s 

instructions, agency CIOs are to report the status of risk of their 

investments on the Federal IT Dashboard. Using the ratings (high, 

medium, or low risk), agencies determine whether or not to hold a 

TechStat review of an investment and decide, based on the evidence 

presented, whether to intervene to turnaround, halt, or terminate a 

project. OMB also required federal agencies to hold at least one 

176GAO, High-Risk Series: An Update, GAO-15-290 (Washington, D.C.: February 2015).

177Office of Management and Budget, 25 Point Implementation Plan to Reform Federal 

Information Technology Management (Washington, D.C.: Dec. 9, 2010).

SBA Has Partially 

Implemented Several 

IT Management 

Initiatives

Page 80 GAO-15-347 Small Business Administration

 
TechStat review by March 2011. Based on the success of the 

TechStat initiative, OMB issued a requirement in August 2011 that 

agency CIOs continue holding such reviews.178

From December 2010 through February 2015, SBA reported three 

investments on the Federal IT Dashboard that exhibited moderately 

high risk. In March 2011, SBA held a TechStat session for one of 

those investments—the Homeland Security Presidential Directive 

(HSPD)-12, a system to implement a new government-wide standard 

for secure and reliable forms of identification for employees and 

contractors who access government-controlled facilities and 

information systems. As of February 2015, SBA’s HSPD-12 system 

was still considered to be at moderately high risk. SBA officials stated 

that this investment was rated moderately high risk because they had 

not yet implemented the requirements that would allow the 

identification card readers to work properly in the field.

SBA did not hold a TechStat for the second investment rated 

moderately high risk—the Loan Accounting System—from July 2011 

through February 2012. SBA changed the investment’s rating several 

times, from medium to low risk, and it has been rated low risk since 

June 2014. SBA officials attributed the low risk rating to the 

completion of associated projects in November 2014 that previously 

had not performed as expected. They added that the investments 

were being continually reviewed by SBA’s CIO and the Executive 

Steering Committee.

The third investment rated moderately high risk from September 2014 

through February 2015 was the Office of the CIO IT Infrastructure 

investment. SBA officials said that the moderately high-risk rating of 

this investment was due to a delay in data center consolidation efforts 

that resulted from a lack of funding. SBA officials stated that they had 

not conducted any additional TechStat reviews since the one held in 

2011, explaining that under the previous CIO’s management, it had 

been decided that the agency would leverage other oversight and 

governance efforts for all of its IT investments. These efforts included 

discussing the overall performance of investments and prescribing 

action items when warranted to help ensure investments were on 

178Office of Management and Budget, Chief Information Officer Authorities, Memorandum 

M-11-29 (Washington, D.C.: Aug. 8, 2011).

Page 81 GAO-15-347 Small Business Administration

 
schedule, within budget, and meeting defined metrics. SBA said that 

as warranted, it would hold formal TechStat sessions in the future for 

underperforming IT investments.

• Operational analysis of IT investments. OMB guidance calls for

agencies to develop a policy for examining the ongoing performance 

of existing IT investments to measure, among other things, whether 

the investment is continuing to meet business and customer needs 

and is contributing to meeting the agency’s strategic goals.179 The 

policy is to require annual operational analyses of the agency’s 

investments that address costs, schedules, customer satisfaction, 

strategic and business results, financial goals, and innovation.

SBA officials said that operational analysis reports had not been 

prepared but that the CIO reviewed the investments in SBA’s portfolio 

every month. They added that the agency had focused on ensuring 

that investments were up-to-date and providing the accurate risk 

status, schedule, cost, and performance metrics for each. Although 

SBA officials told us that the agency’s operational investments were 

reviewed periodically, the 2014 reviews were not documented 

according to OMB guidance. As a result, we could not evaluate the 

extent to which the reviews followed OMB guidance for operational 

analyses. Agency officials also said that they planned to conduct an 

analysis on each investment in fiscal year 2015. However, as of July 

2015, no such analyses had been documented. Until SBA ensures 

that all its existing investments are fully assessed and that all reviews 

are appropriately documented, it will not be able to determine whether 

its IT investments are meeting their intended objectives, increasing 

the risk of inefficient spending.

• Federal data center consolidation. In February 2010, the Federal 

CIO established the Federal Data Center Consolidation Initiative to 

address the growing number of federal data centers. This initiative’s 

four high-level goals were to reduce the overall energy consumption 

and real estate footprint of government data centers; reduce the cost 

179Office of Management and Budget, Capital Programming Guide, Supplement to OMB 

Circular A-11, Part 7 (Washington, D.C.: July 2012) and Information Technology 

Investment Baseline Management Policy, Memorandum M-10-27 (Washington, D.C.: June 

28, 2010). Memorandum M-10-27 requires agencies to establish a policy for performing 

operational analyses on steady state investments as a part of managing and monitoring 

investment baselines.

Page 82 GAO-15-347 Small Business Administration

 
of data center hardware, software, and operations; increase the 

overall IT security posture of the government; and shift IT investments 

to more efficient computing platforms and technologies. OMB 

guidance requires SBA and other federal agencies to submit an 

updated data center inventory that includes 4 elements and a 

consolidation plan with 13 elements.180

In July 2011 and July 2012 reports, we found that SBA had developed 

plans to consolidate its large data centers from four to two by 

December 2015 but that its inventory and plans for its data centers did 

not address all the elements required by OMB guidance.181

Furthermore, OMB guidance required agencies to describe year-byyear investments and cost savings in their 2010 and 2011 

consolidation plans. Beginning in August 2013, agencies were to 

identify and report all cost savings and avoidances related to data 

center consolidation, among other areas, as part of a quarterly data 

collection process.182 In the 2012 report, we found that SBA’s June 

2011 update to its inventory and plans included some inventory 

elements that had been completed and others that had not.183

Specifically, the update included 2 completed inventory elements (of 

4) and 6 plan elements (of 13); 2 partially completed inventory 

elements and 2 plan elements, and 5 plan elements with no 

information. SBA officials stated that several missing elements, such 

as performance metrics, a schedule, and a risk management strategy, 

had been developed after the plan’s completion. We emphasized the 

importance of fully implementing the recommendation from our 2011 

report that SBA complete the missing elements from its inventories 

180Elements of the inventory were to include, for each data center, IT software assets; IT 

hardware and utilization information; IT facilities, energy, and storage; and geographic 

location. Elements of the 2011 updated plan were to include quantitative goals, qualitative 

impacts, consolidation approach, consolidation scope, high-level timeline, performance 

metrics, master program schedule, cost-benefit analysis, risk management, consideration 

of a communications plan, inventory and plan verification, consolidation progress, and 

cost savings.

181GAO-11-565 and GAO-12-742. 

182OMB budget guidance defines cost savings as a reduction in actual expenditures below 

the projected level of costs to achieve a specific objective and defines cost avoidances as 

results from an action taken in the immediate time frame that will decrease costs in the 

future.

183GAO-12-742. 

Page 83 GAO-15-347 Small Business Administration

 
and plans. SBA neither agreed nor disagreed with our 

recommendation, but has since taken the steps necessary to 

implement it.

• PortfolioStat. In March 2012, OMB launched the PortfolioStat 

initiative, which requires SBA and other federal agencies to conduct 

an annual agency-wide portfolio review of all their IT investments to, 

among other things, reduce commodity IT spending and demonstrate 

how IT investments align with the agency missions and business 

functions.184 PortfolioStat is designed to assist agencies in assessing 

the current maturity of their IT portfolio management process, making 

decisions on eliminating duplication, and moving to shared services in 

order to maximize the return on IT investments across the portfolio. 

OMB established several requirements for agencies in implementing 

PortfolioStat, including reporting estimated savings and cost 

avoidances associated with consolidation and shared services 

initiatives through fiscal year 2015 and completing a final action plan 

that addressed additional elements.185

In a November 2013 report on the progress SBA and other agencies 

had made in conducting PortfolioStat reviews, we found that SBA had 

held a PortfolioStat review for some IT investments but completed 

only some of the OMB requirements for conducting the reviews.186

Specifically, SBA had designated a PortfolioStat lead, completed an 

IT portfolio survey, held a PortfolioStat meeting, completed two 

184Office of Management and Budget, Memorandum M-12-10. According to OMB, 

commodity IT includes services such as IT infrastructure (data centers, networks, desktop 

computers, and mobile devices); enterprise IT systems (e-mail, collaboration tools, identity 

and access management, security, and web infrastructure); and business systems 

(finance, human resources, and other administrative functions). 

185Office of Management and Budget, Memorandum M-12-10. Agencies were required by 

OMB to complete a final action plan that addressed eight specific elements to: (1) 

consolidate commodity IT spending under the agency CIO; (2) establish targets and 

deadlines for commodity IT spending reductions; (3) outline plans to migrate at least two 

commodity IT areas to shared services; (4) target duplicative systems or contracts that 

support common business functions for consolidation; (5) illustrate how investments within 

the IT portfolio align with the agency’s mission and business functions; (6) establish 

criteria for identifying wasteful, “low-value,” or duplicative investments; (7) establish a 

process to identify these potential investments and a schedule for eliminating them from 

the portfolio; and (8) improve governance and program management using best practices 

and, where possible, benchmarks.

186GAO-14-65. 

Page 84 GAO-15-347 Small Business Administration

 
migration efforts, and reported lessons learned. The agency reported 

that it had identified six PortfolioStat initiatives, of which four had 

resulted in cost savings of about $800,000.187 However, SBA had not 

completed its commodity IT baseline because it had not identified a 

process for ensuring the completeness of the baseline information. 

Additionally, SBA had not completed an action plan with all the 

required elements. Specifically, while its plan fully addressed four 

elements, it partially addressed three, and did not address one.188 We 

recommended that the agency take two actions: (1) develop a 

complete commodity IT baseline and (2) fully describe the required 

PortfolioStat action plan elements in future reporting to OMB. SBA did 

not agree nor disagree with our recommendations, but SBA officials 

told us that as of May 2015, they had begun to take steps to address 

them. For example, SBA officials told us that the agency had procured 

tools that would help it develop its commodity IT baseline and that it 

was reporting to OMB quarterly on the status of its implementation of 

action plan elements.

• Cloud computing strategy. In order to accelerate the adoption of 

cloud computing services across the government, OMB’s 25 Point

Plan included a “Cloud First” policy. This policy requires each agency 

CIO to fully migrate three services by June 2012 to an Internet-based 

cloud service providing computing services and resources, and 

implement cloud services whenever a secure, reliable, and costeffective cloud option is available. Building on this requirement, in 

February 2011, OMB issued the Federal Cloud Computing Strategy, 

which provided definitions of cloud computing services; benefits of the 

services, such as accelerating data center consolidations; case 

studies to support agencies’ migration to cloud computing; and roles 

187The four initiatives that resulted in cost savings included SBA Mobility, Learning 

Management System, Workforce Analytics, and eCPIC Portfolio Management Tool. SBA 

reported a fiscal year 2013 cost savings and avoidance of $430,000, a fiscal year 2014 

cost savings and avoidance of $370,000, and no fiscal year 2015 cost savings and 

avoidance.

188The four elements that were fully addressed were (1) migrate at least two commodity IT 

areas to shared services; (2) mission and business function alignment; (3) criteria for 

wasteful, low-value, or duplicative investments; and (4) improve governance and program 

management. The three partially addressed elements were (1) consolidate commodity IT 

spending under the CIO; (2) target duplicative systems or contracts for consolidation; and 

(3) process to identify and schedule to eliminate wasteful, low-value, or duplicative 

investments. The one component that SBA did not address was to establish targets and 

deadlines for commodity IT spending reductions.

Page 85 GAO-15-347 Small Business Administration

 
and responsibilities for federal agencies.189

In a July 2012 report, we found that SBA had implemented one cloudbased computing service by OMB’s deadline of June 2012, and an 

additional two by the end of 2012, but that the agency’s plans for 

doing so lacked estimated costs and performance goals.190 In 

addition, the agency had not developed any plans for additional cloudbased services. We recommended that SBA establish estimated cost 

and performance goals for additional cloud-based services and that it 

develop, at a minimum, estimated costs, milestones, performance 

goals, and plans for retiring legacy systems, as applicable, for 

additional cloud-based services. SBA officials responded that the 

agency would work to implement the recommendations. In May 2015, 

SBA officials told us that they were continuing to implement the 

agency’s cloud computing strategy and that they were in the early 

stages of implementing a cloud e-mail solution to replace the agency’s 

legacy e-mail system.

In addition, in September 2014, we evaluated SBA’s progress in 

implementing cloud services and the extent to which it had 

experienced cost savings in light of OMB guidance that called for 

agencies to assess all IT services for migration to a cloud service 

irrespective of the investment’s age.191 SBA had not assessed a 

majority of its IT investments for cloud computing services. We 

recommended that SBA direct its CIO to ensure that all IT 

investments be assessed for suitability for migration to a cloud 

computing service and establish evaluation dates for each investment. 

SBA officials concurred. In June 2015, SBA officials told us that they 

had revised their SOP in response to the recommendation and that 

they discussed cloud computing options at each investment review. 

However, SBA did not document these discussions, so it is not clear 

the extent to which they addressed the factors required by OMB.

189Office of Management and Budget, Federal Cloud Computing Strategy (Washington, 

D.C.: Feb. 8, 2011).

190GAO-12-756. 

191GAO-14-753. 

Page 86 GAO-15-347 Small Business Administration

 
• Software licensing management. Two executive orders address the 

effective management of agency software licenses.192 Executive 

Order 13103 requires that federal agencies adopt policies and 

procedures to ensure that only computer software not in violation of 

copyright laws is being used.193 In addition, Executive Order 13589

promotes efficient spending at federal agencies to include 

assessments of inventories of current devices and their usage and the 

establishment of controls to ensure that agencies are not paying for 

unused or underused IT equipment, installed software, or services.194

In our May 2014 report on the management of software licenses 

across the federal government, including the extent to which SBA and 

other federal agencies had developed appropriate policies on 

software management licensing and were adequately managing 

licenses for their software, we found that SBA had not addressed all 

of the seven elements of a comprehensive license policy and had not 

implemented all five of the leading initiatives for managing software 

licenses.195 Specifically, SBA did not have any SOPs or a general 

policy to manage all software licenses agency-wide and had only 

partially addressed two out of the five leading initiatives for managing 

software licenses.196 We recommended that SBA implement six 

actions to ensure the effective management of its software licenses. 

SBA neither agreed nor disagreed with our recommendations, but 

SBA officials told us that as of June 2015, they had started taking 

actions to address some of them. For example, SBA officials told us 

that they had drafted a software licensing policy that was under review 

and were working on a software license inventory. While these are 

positive initial steps, until SBA fully implements our recommendations 

on software management, it lacks assurance that it can costeffectively manage its software.

192According to the Information Technology Infrastructure Library’s Guide to Software 

Asset Management, a software license is a legal right to use a software service in 

accordance with the terms and conditions specified by the software copyright owner.

193Executive Order 13103, Computer Software Piracy (Washington, D.C.: Sept. 30, 1998).

194Executive Order 13589, Promoting Efficient Spending (Washington, D.C.: Nov. 9, 

2011).

195GAO-14-413. 

196The two initiatives that were partially implemented were identifying a centralized 

software licensing management approach and establishing a comprehensive inventory.

Page 87 GAO-15-347 Small Business Administration

 
SBA is a relatively small agency with a large mission—to help Americans 

start, build, and grow small businesses by overseeing programs that 

provide tens of billions of dollars in support to these enterprises. To fulfill 

this important role, it is essential that SBA better plan and oversee 

several of its key management areas across the agency. For example, 

SBA has developed an agency-wide strategic plan that meets all 

GPRAMA requirements on the process used to develop the plan and all 

but one requirement on the contents of the plan. SBA’s plan only partially 

meets the requirement that the agency describe how it used program 

evaluations in setting strategic goals and include a schedule of 

evaluations planned. In addition, although GPRAMA aims to ensure that 

agencies use performance information in decision making and OMB has 

encouraged agencies to improve government effectiveness by increasing 

their use of evidence and rigorous program evaluation in making budget, 

management, and policy decisions, SBA has a poor track record of 

conducting program evaluations and told us it has limited resources to 

conduct them. However, conducting more program evaluations could help 

SBA assess program effectiveness and learn how to improve program 

performance. In addition, relying on program evaluations to help set 

strategic objectives could better enable SBA to assess the 

appropriateness and reasonableness of its goals and objectives and the 

effectiveness of the strategies used to meet them.

Further, SBA faces ongoing challenges in several key management 

areas, including workforce planning and training and development. SBA 

currently does not have a workforce plan that fully addresses key 

principles—including conducting and acting upon a competency and skill 

gap assessment and developing a long-term strategy to address its skills 

imbalance. As a result, it cannot provide reasonable assurance that its 

workforce has the skills needed to effectively administer the agency’s 

programs and meet the agency’s mission and strategic goals. Similarly, 

SBA lacks a strategic approach to its training and development programs, 

such as incorporating goals and measures and input on employee 

development goals in its training plan. Without such an approach, SBA 

cannot establish priorities in its training initiatives or address skill gaps to 

help ensure that employees can effectively deliver programs and meet 

SBA’s strategic objectives.

Changes to SBA’s organizational structure have contributed to the 

agency’s skill gaps and, in some cases, have affected program oversight. 

Federal internal control standards state that an agency’s organizational 

structure should clearly define key areas of authority and responsibility 

and establish appropriate lines of reporting. SBA committed in 2012 to 

Conclusions

Page 88 GAO-15-347 Small Business Administration
revising its organizational structure and planned some workforce 

restructuring related to its most recent voluntary retirement program. 

However, SBA had not documented efforts to assess its organizational 

structure as of August 2015 or completed its workforce restructuring as of 

June 2015. Until it documents its examination of its structure and any 

findings, SBA will not have an institutional record of its actions. Thus, it 

will be difficult for SBA to provide reasonable assurance, or for a third 

party to validate, that SBA’s current organizational structure contributes 

effectively to its mission objectives and programmatic goals. 

SBA has initiated efforts to identify and manage risks facing the agency at 

an enterprise level. However, SBA lacks documentation on its progress 

and future plans required by federal internal control standards and has 

not incorporated elements of our risk management framework, such as 

including goals or specific actions. Without identifying and documenting 

the steps that it plans to take to implement its risk management process 

and incorporating the elements of our framework, SBA cannot provide 

reasonable assurance that its efforts effectively identify, assess, and 

manage risks before they adversely affect SBA’s ability to achieve its 

mission.

SBA also faces challenges in managing and maintaining adequate 

records. We found that many of its SOPs were outdated and did not 

reflect program and operating changes. The lack of up-to-date guidance 

can affect program delivery. Internal control activities, such as 

establishing the policies, procedures, and techniques for SBA programs 

and maintaining them through periodic updates, are essential 

mechanisms that help ensure that management’s directives are carried 

out. Without setting time frames to help ensure that SOPs are properly 

maintained and periodically updated, it will be difficult for SBA to hold 

managers accountable for completing them as intended and to 

demonstrate progress in doing so. Moreover, without updated SOPs, 

agency staff may lack clear guidance and therefore may not effectively 

deliver program services in accordance with laws and regulations.

Finally, SBA has taken steps to implement aspects of several key IT 

management initiatives. However, the agency has not developed a policy 

for conducting regular operational analyses of all of its investments. SBA 

officials told us that all IT investments were reviewed regularly but could 

not provide documentation of recent assessments. Without these 

analyses, SBA cannot provide reasonable assurance that it is effectively 

managing its IT investments so that they meet the agency’s mission and 

goals, increasing the risk of inefficient spending on IT investments. In 

Page 89 GAO-15-347 Small Business Administration
addition, as SBA begins to implement new systems intended to improve 

agency operations such as SBA One, fully applying accepted IT 

management initiatives to its efforts will be important. Otherwise, SBA 

risks them not meeting cost, schedule, or capability goals.

We make the following eight recommendations to improve management 

of the Small Business Administration.

1. To ensure that SBA assesses the effectiveness of its programs, we 

recommend that the SBA Administrator prioritize resources to conduct 

additional program evaluations.

2. To ensure that SBA fully meets GPRAMA requirements, we 

recommend that the SBA Administrator use the results of additional 

evaluations it conducts in its strategic planning process and ensure 

the agency’s next strategic plan includes required information on 

program evaluations, including a schedule of future evaluations.

3. To improve SBA’s human capital management, we recommend that 

the SBA Administrator complete a workforce plan that includes key 

principles such as a competency and skill gap assessment and longterm strategies to address its skill imbalances. 

4. To improve SBA’s human capital management, we recommend that 

the SBA Administrator incorporate into its next training plan key 

principles such as goals and measures for its training programs and 

input on employee development goals.

5. To ensure that SBA’s organizational structure helps the agency meet 

its mission, we recommend that the SBA Administrator document the 

assessment of the agency’s organizational structure, including any 

necessary changes to, for example, better ensure areas of authority, 

responsibility, and lines of reporting are clear and defined.

6. To ensure that SBA can effectively identify, assess, and manage 

risks, we recommend that the SBA Administrator develop its 

enterprise risk management consistent with GAO’s risk management 

framework and document the specific steps that the agency plans to 

take to implement its enterprise risk management process.

7. To improve SBA’s program and management guidance, we 

recommend that the SBA Administrator set time frames for 

periodically reviewing and updating its SOPs as appropriate.

8. To help ensure that SBA’s IT operations and maintenance 

investments are continuing to meet business and customer needs and 

Recommendations for 

Executive Action

Page 90 GAO-15-347 Small Business Administration
the agency’s strategic goals, we recommend that the SBA 

Administrator direct the appropriate officials to perform an annual 

operational analysis on all SBA investments in accordance with OMB 

guidance.

We requested comments from SBA on a draft of this report, and the 

agency provided written comments that are presented in appendix V. 

SBA stated that overall it generally agreed with our recommendations. 

In response to our recommendation that the SBA administrator complete 

the assessment of the agency's organizational structure and make any 

necessary changes, SBA concurred but noted that the agency had 

initiated a full review of its organizational structure shortly after the current 

administrator was confirmed in April 2014. SBA noted that the agency 

had recently completed that review and determined that major 

restructuring was not warranted at the time. However, SBA has not 

provided us with any documentation of its assessment, either during the 

course of our review or when it provided comments on a draft of this 

report. Therefore, we revised the recommendation to clarify that SBA 

document its assessment, including the results and any changes. 

In response to our two recommendations that SBA conduct additional 

program evaluations and use the results in its strategic planning process, 

SBA generally agreed with our recommendations but noted that it would 

face challenges in implementing them. Specifically, SBA stated that it was 

currently restricted from collecting data on small businesses from some 

resource partners. Further, SBA said that it did not have adequate 

information collection systems for some programs that could house and 

assess the data needed for evaluations. SBA also noted that independent 

evaluation studies consistent with OMB and GAO preferred 

methodologies would be costly. As a result, SBA said its ability to satisfy 

the recommendations would depend, at least in part, on the agency's 

ability to receive funding for them or find other viable evaluation methods. 

SBA stated that in prior years the agency had requested additional 

funding to conduct independent evaluations but had not received it.

The agency agreed with our two recommendations related to SBA’s 

human capital management, adding that a workforce plan was under 

development that would address the need for competency and skills gap 

analysis and that contained strategies to address skill imbalances through 

recruitment and training. SBA also noted that its projected analyses would 

include goals and measures for training and development. SBA added 

Agency Comments 

and Our Evaluation

Page 91 GAO-15-347 Small Business Administration
that it had procured a contractor to perform a competency gap analysis 

and that additional contractor support would allow for a final draft of a 

workforce plan in early fiscal year 2016. 

SBA agreed with our recommendation regarding the agency’s enterprise 

risk management process. SBA said that the agency was working to 

document its process, which is to include aspects of various available 

frameworks, including those published by GAO, the Committee of 

Sponsoring Organizations of the Treadway Commission, and the 

International Organization for Standardization. Further, SBA agreed with 

our recommendation on updating SOPs. In its comment letter, SBA noted 

that the agency was conducting annual reviews of SOPs and working to 

streamline the clearance process for the publication of new and updated 

SOPs. However, as we stated in the report, SBA’s most recent effort to 

review its SOPs began in fiscal year 2014, and in most cases the results 

did not include projected completion dates for revising or canceling old 

SOPs or creating new ones. SBA also concurred with our 

recommendation on performing an annual operational analysis on all SBA 

IT investments in accordance with OMB guidance. 

SBA also provided several technical comments, which we incorporated as 

appropriate.

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies of this report to SBA and 

appropriate congressional committees. This report also will be available 

at no charge on our website at http://www.gao.gov. 

If you or your staffs have any questions about this report, please contact 

me at (202) 512-8678 or shearw@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made major contributions to this report 

are listed in appendix VI.

William B. Shear

Director, Financial Markets and

 Community Investment

Page 92 GAO-15-347 Small Business Administration
Appendix I: Objectives, Scope, and 

Methodology

This report examines the extent to which the U.S. Small Business 

Administration (SBA) (1) has addressed previously identified 

management challenges related to specific programs, including those 

related to internal controls; (2) is following federal requirements for 

strategic planning; (3) is following key principles or internal controls for 

human capital management, organizational structure, enterprise risk 

management, acquisition management, and procedural guidance; and (4) 

is making progress in implementing the Office of Management and 

Budget’s (OMB) high-priority management practices for information 

technology.

For the background, we analyzed data on staffing levels at headquarters, 

regional, and district offices in fiscal year 2014. To assess the reliability of 

these data, we interviewed SBA officials from the Office of Human 

Resources Solutions to gather information on the completeness and 

accuracy of the full-time equivalent database and examined the data for 

logical inconsistencies and completeness. We determined that the data 

were sufficiently reliable for the purposes of reporting on staffing levels.

To address our objectives, we reviewed relevant federal laws and 

regulations and interviewed SBA officials, including headquarters officials, 

all 10 regional administrators, management and nonmanagement staff at 

10 district offices, and union representatives.1 We interviewed 

headquarters officials within the following SBA offices: Capital Access, 

Entrepreneurial Development, Government Contracting and Business 

Development, Disaster Assistance, Performance Management and Chief 

Financial Officer, Field Operations, and Human Resources Solutions. To 

obtain perspectives from SBA district office officials on our objectives, we 

selected a purposive sample of 10 of the 68 district offices, 1 from each 

SBA region to provide national coverage. We randomly selected 7 of the 

10 district offices from those offices located within the continental United 

States. We selected the Washington, D.C., and Georgia district offices to 

pre-test our interview questions because of proximity to GAO offices. We 

selected the New York district office to include an additional large office to 

ensure a variety of offices with both a larger and smaller number of 

employees. During our on-site meetings at the 10 district offices, we 

interviewed managers such as district directors and deputy district 

1

The 10 SBA district offices we visited are located in Atlanta, Georgia; Boise, Idaho; 

Boston, Massachusetts; Denver, Colorado; Detroit, Michigan; Fresno, California; New 

Orleans, Louisiana; New York City, New York; Omaha, Nebraska; and Washington, D.C. 

Appendix I: Objectives, Scope, and 

Methodology

Page 93 GAO-15-347 Small Business Administration

 
Appendix I: Objectives, Scope, and 

Methodology

directors at each location.2 For our interviews with nonmanagement staff 

at the 10 district offices, district office management invited any interested 

nonmanagement staff to meet with us. However, SBA required the 

presence of district counsel during these interviews. Participation by 

nonmanagement staff members in the interviews was limited. Specifically, 

out of approximately 120 nonmanagement employees in the 10 district 

offices that were invited to speak with us, a total of 28 employees 

attended the interviews.3 To allow any nonmanagement staff who did not 

participate in our on-site interviews an additional opportunity to share their 

thoughts on our objectives, we sent an e-mail to all nonmanagement staff 

at those 10 district offices, inviting them to share their thoughts on specific 

topics with us by sending an e-mail to a specified GAO e-mail address. 

Nine staff members responded to our e-mail and provided us with 

information.4 The results of our interactions with the 10 district offices 

cannot be generalized to other SBA district offices. The union 

representatives we interviewed were from headquarters and the field.5

To assess the status of SBA’s management challenges related to specific 

programs, we reviewed annual SBA Office of the Inspector General (OIG) 

reports on SBA management challenges for fiscal years 2000 through 

2015 (the years for which reports were available on the SBA OIG’s 

website). We reviewed the challenges noted in the fiscal year 2015 

report, including the fiscal year in which each challenge was first reported 

by the OIG. We also reviewed GAO reports issued during this time frame 

to identify those which dealt with SBA management challenges. Finally, 

we reviewed information from GAO’s system for tracking agency 

recommendations to determine which recommendations made to SBA in 

fiscal years 2010 through 2013 remained open.

To evaluate SBA’s strategic planning efforts, we reviewed relevant SBA 

documents such as its Strategic Plan Fiscal Years 2014-2018 and Fiscal 

2

Each interview included a district director and deputy district director except in Louisiana 

where the deputy district director was unable to attend.

3

At 4 of the 10 offices, no nonmanagement staff participated in the interview.

4

The nine staff members were from six of the offices we visited; four also attended our 

interviews. The e-mails were used as additional information sources and to corroborate 

what we heard in the interviews.

5

We contacted the union President, and she extended invitations to other union 

representatives.

Page 94 GAO-15-347 Small Business Administration

 
Appendix I: Objectives, Scope, and 

Methodology

Year 2016 Congressional Budget Justification and Fiscal Year 2014 

Annual Performance Report. We compared SBA’s strategic planning and 

reporting practices with requirements in the Government Performance 

and Results Act of 1993 (GPRA), as updated by the GPRA Modernization 

Act of 2010 (GPRAMA).6 Specifically, we first identified GPRA and 

GPRAMA requirements related to the elements that must be included in a 

federal agency’s strategic plan, such as a mission statement and goals 

and objectives, and requirements related to the strategic planning 

process, such as obtaining stakeholder input. We then reviewed SBA’s 

strategic plan to determine whether it included the required elements and 

interviewed SBA officials to determine the process SBA used to develop 

the strategic plan. We assessed the extent to which SBA met each 

requirement using three categories. “Met” indicates that, in our judgment, 

SBA met all or mostly all aspects of the requirement. “Partially met” 

indicates that it met some but not all or mostly all aspects of the 

requirement. “Not met” indicates that it did not meet the requirement. 

Specifically, one GAO analyst identified the strategic planning 

requirements, reviewed SBA’s practices, and made the initial assessment 

for each requirement reviewed. A second analyst then verified each of 

these steps to ensure consistent results.

To assess SBA’s human capital management practices, we reviewed 

SBA documents such as its Strategic Human Capital Plan Fiscal Years 

2013-2016, Annual Training Plan (Talent Development Initiative) Fiscal 

Year 2014-2015, two assessments of its training programs, and standard 

operating procedures (SOP). We also reviewed SBA’s 2014 Federal 

Employee Viewpoint Survey results on training and employee 

performance management.7 To assess the reliability of these data, we 

reviewed the methodology used to conduct the survey and SBA’s 

response rate. We determined that the data we used were sufficiently 

reliable for the purposes of reporting on employees’ perspectives on 

training offered by SBA and on SBA’s employee performance 

management system. In addition, we reviewed a list of individuals who 

had served in senior-level positions at SBA from calendar years 2005 

through 2015 (the years for which information on all these positions was 

available) and determined the number of individuals who served in each 

6

See Pub. L. No. 103-62, 107 Stat. 285 (1993) and Pub. L. No. 111-352, 124 Stat. 3866 

(2011).

7

The response rate for SBA in 2014 was 63.4 percent.

Page 95 GAO-15-347 Small Business Administration

 
Appendix I: Objectives, Scope, and 

Methodology

position during this time frame. We also compared SBA’s human capital 

practices in the areas of workforce planning and training with key 

principles identified in our previous work.8 Specifically, we reviewed 

SBA’s human capital documents and interviewed SBA officials to 

determine SBA’s workforce planning and training practices. We then 

assessed the extent to which SBA followed each key principle, again 

using three categories. “Follows” indicates that, in our judgment, SBA was 

following all or mostly all aspects of the principle. “Partially follows” 

indicates that it was following some but not all or mostly all of the aspects 

of the principle. “Does not follow” indicates that it was not following any 

aspects of the principle. Specifically, one GAO analyst reviewed SBA’s 

policies and practices and made the initial assessment. A second analyst 

then verified these steps to ensure consistent results.

Because SBA was in the process of updating the SOP on its employee 

performance management system, we were unable to conduct an 

assessment of SBA’s employee performance management system to 

determine whether it was consistent with key principles in employee 

performance management that we identified in a 2003 report.9 Instead we 

reviewed a set of critical elements and performance standards used to 

evaluate employee performance. Specifically, we reviewed critical 

elements and performance standards for the following managers and 

employees in the field: regional administrators, district directors, deputy 

district directors, economic development specialists, business opportunity 

specialists, and lender relations specialists. We requested these because 

8

GAO, Human Capital: Key Principles for Effective Strategic Workforce Planning, 

GAO-04-39 (Washington, D.C.: Dec. 11, 2003); and Human Capital: A Guide for 

Assessing Strategic Training and Development Efforts in the Federal Government, 

GAO-04-546G (Washington, D.C.: March 2004). We developed the key principles for 

workforce planning by synthesizing information from meetings with organizations with 

government-wide responsibilities for or expertise in workforce planning; our own guidance, 

reports, and testimonies on federal agencies’ workforce planning and human capital 

management efforts; leading human capital periodicals; and our own experiences in 

human capital management. We developed the key principles for training through 

consultations with government officials and experts in the private sector, academia, and 

nonprofit organizations; examinations of laws and regulations related to training and

development in the federal government; and reviews of the sizeable body of literature on 

training and development issues, including previous GAO products on a range of human 

capital topics. 

9

GAO, Results-Oriented Cultures: Creating a Clear Linkage between Individual 

Performance and Organizational Success, GAO-03-488 (Washington, D.C.: Mar. 14, 

2003).

Page 96 GAO-15-347 Small Business Administration

 
Appendix I: Objectives, Scope, and 

Methodology

they are the elements and standards for the staff whom we interviewed 

during our site visits. In addition, we reviewed one set of generic critical 

elements and performance standards for SBA employees and one set for 

SBA managers. SBA officials stated that they could not provide data on 

the total number of critical elements because the elements are tracked on 

an individual basis and not across the agency.

To review SBA’s organizational structure, we reviewed prior GAO and 

SBA OIG reports that discussed, among other things, the effect of the 

agency’s structure on its human capital management and program 

oversight. We also examined documentation on changes to SBA’s 

organizational structure from fiscal year 2005 to 2014 (the period after 

SBA’s last major reorganization in 2004). Specifically, we requested and 

reviewed all of the forms that SBA used to document organizational 

changes that were approved during this period. We also reviewed 

documentation on SBA’s planned efforts to assess its organizational 

structure—including its Strategic Human Capital Plan Fiscal Years 2013-

2016, guidance implementing its fiscal year 2014 Voluntary Early 

Retirement Authority (VERA) and Voluntary Separation Incentive 

Payments (VSIP) programs, and the statement of work for a contractor’s 

assessment of organizational structure—and compared these plans to 

federal internal control standards and guidance related to organizational 

structure.10

To evaluate SBA’s risk management, we compared SBA’s enterprise risk 

management practices with GAO’s Standards for Internal Control in the 

Federal Government and risk management criteria on elements of risk 

management.11 Specifically, we reviewed SBA’s limited documentation on 

10The Office of Personnel Management administers VERA/VSIP programs, which give 

agencies the authority to offer employees voluntary early retirement or a lump sum 

payment for voluntary separation when the agency is in the process of restructuring or 

downsizing. GAO, Standards for Internal Control in the Federal Government, 

GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999) and Internal Control 

Management and Evaluation Tool, GAO-01-1008G (Washington, D.C.: August 2001). 

11GAO/AIMD-00-21.3.1 and GAO, Risk Management: Further Refinements Needed to 

Assess Risks and Prioritize Protective Measures at Ports and Other Critical Infrastructure, 

GAO-06-91 (Washington, D.C.: Dec. 15, 2005). We developed our risk management 

framework by reviewing, analyzing, and synthesizing several sources of information, 

including risk literature and previous GAO reports and testimonies; experts in the fields of 

risk management, risk modeling, and terrorism; and numerous frameworks from industry, 

government, and academic sources.

Page 97 GAO-15-347 Small Business Administration

 
Appendix I: Objectives, Scope, and 

Methodology

its enterprise risk management process and implementation plans for 

each step of the process and then assessed the extent to which SBA’s 

process was consistent with the stages of our risk management 

framework, again using three categories. “Follows” indicates that, in our 

judgment, SBA was following all or mostly all aspects of the practice. 

“Partially follows” indicates that it was following some but not all or mostly 

all of the aspects of the practice. “Does not follow” indicates that it was 

not following any aspects of the practice.

For acquisition management, we reviewed (1) data on SBA contracts 

awarded to small businesses from Small Business Goaling Reports for 

fiscal years 2011-2013 to assess whether SBA met contracting goals in 

the last 3 years and (2) SBA contract obligations for fiscal year 2014 as 

reported in the Federal Procurement Data System-Next Generation to 

determine types of spending. To assess the reliability of these data, we 

reviewed documentation on the data and assessed them for consistency 

and completeness. We determined that the data were sufficiently reliable 

for the purposes of reporting on SBA’s contracting efforts. We also 

reviewed recent SBA OIG reports on SBA’s acquisition management 

(including whether the agency’s practices align with guidelines developed 

by OMB). In addition, we examined SBA’s efforts to improve its 

acquisition management, including reviewing documentation of its 2014 

contract with an outside entity to conduct an assessment of SBA’s 

acquisition function to determine the scope and methodology of that 

review. We also reviewed documentation of the results of that 

assessment. 

For procedural guidance, we asked SBA to provide us with an inventory 

of all current SOPs, including the dates of the most recent revisions. In 

July 2014, SBA provided a list of SOPs maintained on the agency’s 

internal website. We also reviewed the agency’s external website and 

found additional SOPs, identifying a total inventory of 153 internal and 

external SOPs. We reviewed this inventory of SBA’s SOPs to determine 

when they were last updated and compared SBA’s guidance to federal 

internal control standards to determine if it met the standards for 

documentation. We also reviewed documentation related to SBA’s fiscal 

year 2014 efforts to conduct an assessment of the status of all SOPs 

across the agency. In fiscal year 2014, SBA’s Office of the Chief 

Operating Officer, Office of Administrative Services began a review of the 

status of all SOPs, working with the program offices to determine whether 

any updates were needed. SBA issued a notice requiring all office heads 

to certify in writing the status of their SOPs. For each SOP, the cognizant 

office was to note whether (1) it did not require any revision, (2) it was 

Page 98 GAO-15-347 Small Business Administration
Appendix I: Objectives, Scope, and 

Methodology

under review, (3) it was being revised, or (4) it was being canceled. If an 

SOP was deemed to fall within one of the last three categories, the office 

was to provide the date by which the action would be completed. As a 

result of that review, SBA created a spreadsheet that flagged some SOPs 

as outdated and some for cancelation. We reviewed SBA’s spreadsheet 

to determine the number of SOPs that needed to be revised, canceled, or 

required no revision.

To assess SBA’s progress in implementing high-priority management 

practices for information technology (IT), we evaluated SBA’s progress on 

six OMB IT initiatives. We used the relevant sections of recent GAO 

reports to report on SBA’s efforts on the initiatives, interviewed SBA 

officials about recent steps that they have taken to implement them, and 

analyzed SBA TechStat documentation to determine when past TechStat 

sessions were held and to identify the outcomes of the reviews. We 

reviewed SBA’s ratings on the IT Dashboard to determine if SBA had held 

a TechStat for the at-risk investments. To corroborate the data reliability 

of those ratings, we interviewed SBA officials to determine their process 

for collecting, updating, and maintaining the data and asked them to verify 

the data’s completeness and accuracy. We determined that the data were 

sufficiently reliable for the purposes of reporting on TechStat reviews of 

at-risk investments. We analyzed SBA’s operational analyses to 

determine if, within the past year, the agency had performed such 

analyses on all of its major IT investments in the operations and 

maintenance phase.

We conducted this performance audit from March 2014 through 

September 2015 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.

Page 99 GAO-15-347 Small Business Administration
Appendix II: Additional Information on SBA’s 

Recent Budget Obligations, Outlays, and 

Authority

In this appendix, we provide additional information on the Small Business 

Administration’s (SBA) budget from fiscal year 2004 through fiscal year 

2016 (requested). Specifically, table 6 provides information on total 

obligations, net outlays, and gross budget authority agency-wide. In 

addition, table 7 breaks down these amounts according to Office of 

Management and Budget (OMB) accounts. Finally, figure 8 compares the 

gross budget authority amounts by OMB account to the total gross budget 

authority for each of these fiscal years.

Table 6: Small Business Administration (SBA) Total Obligations, Net Outlays, and Gross Budget Authority, Fiscal Years 2004 

through 2016 (dollars in millions)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

2015 

est.

2016 

req.

Total 

obligations $4,628 $3,847 $3,124 $2,269 $1,586 $3,444 $6,589 $6,909 $4,119 $2,872 $1,652 $1,660 $2,633

Total net 

outlays 4,308 3,043 1,911 1,949 1,271 2,735 6,206 6,316 3,804 2,174 1,319 1,295 990

Gross 

budget 

authority 4,803 4,650 3,152 1,887 2,352 3,515 6,826 6,069 3,953 3,271 1,655 1,522 2,499

Source: GAO analysis of OMB MAX Information System data for SBA. | GAO-15-347

Note: Obligation means a binding agreement that will result in outlays, immediately or in the future. 

Budgetary resources must be available before obligations can be incurred legally. Outlay means a 

payment to liquidate an obligation (other than the repayment of debt principal or other disbursements 

that are “means of financing” transactions). Outlays generally are equal to cash disbursements, but 

also are recorded for cash-equivalent transactions, such as the issuance of debentures to pay 

insurance claims, and in a few cases are recorded on an accrual basis such as interest on public 

issues of the public debt. Outlays are the measure of government spending. Budget authority means 

the authority provided by law to incur financial obligations that will result in outlays.

Table 7: Small Business Administration (SBA) Total Obligations, Net Outlays, and Gross Budget Authority by Appropriation 

Account, Fiscal Years 2004 through 2016 (dollars in millions)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

2015 

est.

2016 

req.

Salaries and Expenses

Total obligations $614 $726 $1,003 $743 $781 $871 $909 $921 $839 $849 $627 $603 $633

Net outlays 376 8 604 236 486 376 573 407 554 342 369 288 279

Gross budget 

authority

645 1,034 722 863 678 964 893 871 746 610 610 603 633

Office of Inspector General

Total Obligations 14 13 15 16 17 19 21 20 20 20 18 21 22

Net Outlays 13 13 13 14 16 17 20 19 19 19 17 20 21

Appendix II: Additional Information on SBA’s 

Recent Budget Obligations, Outlays, and 

Authority

Page 100 GAO-15-347 Small Business Administration
Appendix II: Additional Information on SBA’s 

Recent Budget Obligations, Outlays, and 

Authority

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

2015 

est.

2016 

req.

Gross Budget 

Authority

14 14 21 16 19 27 17 17 17 21 20 20 21

Office of Advocacy

Total Obligationsa . . . . . . 0 0 8 9 9 9 9

Net Outlays . . . . . . 0 0 7 9 9 8 8

Gross Budget 

Authority

. . . . . . 0 0 9 9 9 9 9

Entrepreneurial Development Programb

Total obligations . . . . . . . . . 0 192 220 206

Net outlays . . . . . . . . . 0 55 187 169

Gross budget 

authority

. . . . . . . . . 0 197 220 206

Disaster Loans Program Accountc

Total obligations 1,321 1,040 1,553 961 276 576 373 575 377 609 257 359 320

Net outlays 1,299 1,003 799 1,185 292 584 369 532 384 554 274 350 304

Gross budget 

authority

1,298 1,377 1,775 403 1,103 186 313 274 276 887 230 222 187

Business Loans Program Accountc

Total Obligations 2,654 2,036 530 536 497 1,968 5,276 5,383 2,861 1,379 537 420 1,413

Net Outlays 2,673 2,069 534 536 500 1,766 5,258 5,369 2,858 1,279 609 443 210

Gross Budget 

Authority

2,643 2,034 525 530 496 2,289 5,575 4,881 2,871 1,314 569 420 1,413

Pollution Control Equipment Fund Liquidating Accountd

Total obligations 0 0 0 . 0 0 0 . 0 . . . .

Net outlays 0 0 0 0 0 0 0 0 0 0 0 0 0

Gross budget 

authority

3 3 3 3 3 3 2 2 2 1 0 0 0

Disaster Loan Fund Liquidating Account

Total obligations 3 2 2 2 2 1 1 1 0 0 0 5 5

Net outlays -10 -11 -6 -4 -3 -2 -2 -3 -2 -1 -2 -3 -3

Gross budget 

authority

64 64 18 16 10 7 6 6 4 3 0 5 5

Business Loan Fund Liquidating Account

Total obligations 14 22 8 6 6 3 4 2 6 1 1 8 8

Net Outlays -43 -40 -39 -15 -19 -5 -6 -5 -13 -16 -4 2 2

Gross budget 

authority

128 115 77 45 33 14 9 8 18 21 1 8 8

Surety Bond Guarantees Revolving Funde

Total obligations 8 8 13 5 7 6 5 7 8 5 11 15 17

Page 101 GAO-15-347 Small Business Administration
Appendix II: Additional Information on SBA’s 

Recent Budget Obligations, Outlays, and 

Authority

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

2015 

est.

2016 

req.

Net outlays 0 1 6 -3 -1 -1 -6 -3 -3 -12 -8 0 0

Gross budget 

authority

8 9 11 11 10 25 11 10 10 17 19 15 17

Source: GAO analysis of OMB MAX Information System data for SBA. | GAO-15-347

Note: Obligation means a binding agreement that will result in outlays, immediately or in the future. 

Budgetary resources must be available before obligations can be incurred legally. Outlay means a 

payment to liquidate an obligation (other than the repayment of debt principal or other disbursements 

that are “means of financing” transactions). Outlays generally are equal to cash disbursements, but 

also are recorded for cash-equivalent transactions, such as the issuance of debentures to pay 

insurance claims, and in a few cases are recorded on an accrual basis such as interest on public 

issues of the public debt. Outlays are the measure of government spending. Budget authority means 

the authority provided by law to incur financial obligations that will result in outlays.

a

Cells containing “.” indicate a missing value, which in this context means the account did not exist in 

that year.

b

In fiscal year 2014, a new Entrepreneurial Development Appropriation account was established and 

includes programs such as Boots to Business, the HUBZone Program, SCORE, and Small Business 

Development Centers, among others. Prior to fiscal year 2014, noncredit programs such as these 

were included in the Salaries and Expenses Appropriation account.

c

The Disaster Loans Program Account and Business Loans Program Account include administrative 

expenses and loan subsidies.

d

Public Law 94-305 established the Pollution Control Equipment Fund Liquidating Account to alleviate 

the adverse impact of pollution regulations on small businesses.

e

The Surety Bond Guarantees Revolving Fund includes reimbursement of sureties to cover the losses 

sustained if the contractor defaults.

Figure 8: Small Business Administration Gross Budget Authority by Appropriation Account, Fiscal Years 2004 through 2014

Page 102 GAO-15-347 Small Business Administration
Appendix III: Open GAO Recommendations for 

the Small Business Administration, as of July 

2015

As of July 2015, 69 of the recommendations that we have made to the 

Small Business Administration (SBA) were open.1 See table 8 for a list of 

these open recommendations by subject area.

Table 8: Open GAO Recommendations to the Small Business Administration (SBA) by Subject Area, as of July 2015

Product number Product title Recommendation 

8(a) business 

development

program

RCED-00-196 Small Business: SBA Could Better 

Focus Its 8(a) Program to Help 

Firms Obtain Contracts

To better address the purpose of the 8(a) program, meet the needs and 

expectations of the firms in the program, and improve SBA’s ability to 

determine how well the program is working, the Administrator, SBA, should 

periodically perform a nationwide sample survey of 8(a) firms to obtain 

measurable program data. At a minimum, the survey should assess whether 

SBA assistance is meeting the firms’ expectations and needs.

RCED-00-196 Small Business: SBA Could Better 

Focus Its 8(a) Program to Help 

Firms Obtain Contracts

To better address the purpose of the 8(a) program, meet the needs and 

expectations of the firms in the program, and improve SBA’s ability to 

determine how well the program is working, the Administrator, SBA, should 

provide a method for collecting data on each firm’s training needs for tracking 

the assistance provided.

GAO-09-16 Small Business Administration: 

Agency Should Assess Resources 

Devoted to Contracting and 

Improve Several Processes in the 

8(a) Program

To improve its administration of the prime contracting, subcontracting, and 8(a) 

business development programs, and to increase the usefulness of 

surveillance reviews for the 8(a) program, the Administrator of SBA should 

update its guidance to incorporate regular reviews of 8(a) contracting in the 

scope of the reviews.

GAO-10-353 Small Business Administration: 

Steps Have Been Taken to 

Improve Administration of the 8(a) 

Program, but Key Controls for 

Continued Eligibility Need 

Strengthening

To improve the monitoring of and procedures used in assessing the continuing 

eligibility of firms to participate in and benefit from the 8(a) program, and to 

help ensure greater consistency in carrying out annual review procedures and 

improve the overall quality of these reviews, the SBA Administrator should 

monitor, and provide additional guidance and training to, district offices on the 

procedures used to determine continuing eligibility, including (1) taking 

appropriate action when firms exceed four of seven industry size averages, 

including notifying firms the first year and enforcing procedures relating to 

early graduation of firms that exceed industry averages for 2 consecutive 

years, (2) obtaining appropriate supervisory signatures to finalize annual 

review decisions, (3) submitting remedial action or a waiver for firms in the 

transition phase that did not meet business activity targets, (4) graduating 

firms that exceed the net worth threshold of $750,000, (5) performing timely 

eligibility reviews in required cases, and (6) completing required annual 

reviews.

1

We did not include four recommendations—from reports GAO-14-233 and GAO-10-

353—that had been addressed by SBA and were being closed as implemented.

Appendix III: Open GAO Recommendations 

for the Small Business Administration, as of 

July 2015

Page 103 GAO-15-347 Small Business Administration

 
Appendix III: Open GAO Recommendations for 

the Small Business Administration, as of July 

2015

Product number Product title Recommendation 

GAO-10-353 Small Business Administration: 

Steps Have Been Taken to 

Improve Administration of the 8(a) 

Program, but Key Controls for 

Continued Eligibility Need 

Strengthening

To improve the monitoring of and procedures used in assessing the continuing 

eligibility of firms to participate in and benefit from the 8(a) program, and to 

reduce the practice of retaining firms that fail to submit annual review 

documentation as required, SBA should monitor the implementation of 

regulations relating to termination to see if they are achieving their purpose or 

whether business development staff need further guidance in interpreting the 

regulations. SBA should consider providing specific examples of what might be 

considered a pattern of failure to submit documentation as required.

GAO-12-84 Federal Contracting: Monitoring 

and Oversight of Tribal 8(a) Firms 

Need Attention

To improve oversight of tribal firms’ participation in the 8(a) program, the 

Administrator of SBA should establish and communicate to Congress the time 

frame for developing and implementing SBA’s new, planned policy regarding 

determination of substantial unfair competitive advantage in an industry, and 

when the policy will be incorporated into the regulations.

GAO-12-84 Federal Contracting: Monitoring 

and Oversight of Tribal 8(a) Firms 

Need Attention

To improve oversight of tribal firms’ participation in the 8(a) program, the 

Administrator of SBA should establish procedures to enforce new joint venture 

rules, including how SBA district officials will ascertain that the 8(a) partner 

performs the required percentage of the joint venture’s work and, for populated 

joint ventures, that the non-8(a) partner and its affiliates do not receive 

subcontracts under the 8(a) contract.

GAO-12-84 Federal Contracting: Monitoring 

and Oversight of Tribal 8(a) Firms 

Need Attention

To improve oversight of tribal firms’ participation in the 8(a) program, the 

Administrator of SBA should examine relationships between subsidiaries 

under tribal entities to determine whether practices such as subcontracting to a 

sister subsidiary or using the past performance of a sister subsidiary to show 

capability to perform on an 8(a) contract are in line with the business 

development purposes of the 8(a) program and should be allowed under 

program rules. If SBA determines that these practices are not in line with the 

8(a) program purposes—and to the extent that Congress has not authorized a 

practice in law—SBA should address them in its regulations.

GAO-12-84 Federal Contracting: Monitoring 

and Oversight of Tribal 8(a) Firms 

Need Attention

To improve oversight of tribal firms’ participation in the 8(a) program, the 

Administrator of SBA should, as the new 8(a) tracking database is being 

developed, take steps to ensure that it has the capability to (1) provide visibility 

to district offices into all tribal 8(a) firms’ activity by tribal entity to ensure 

compliance with new prohibition to award sole-source 8(a) follow-on contracts 

to sister subsidiaries; (2) track revenue from tribal 8(a) firms’ primary and 

secondary industry codes to ensure that subsidiaries under the same parent 

company are not generating the majority of their revenue from the same 

primary industry; and (3) track information on 8(a) contracts and task or 

delivery orders, including orders awarded under basic ordering agreements, to 

help ensure that district officials have information necessary to enforce the 

8(a) program regulations.

GAO-12-84 Federal Contracting: Monitoring 

and Oversight of Tribal 8(a) Firms 

Need Attention

To improve oversight of tribal firms’ participation in the 8(a) program, the 

Administrator of SBA should, in light of the new prohibition on awarding 8(a) 

sole-source follow-on contracts to sister subsidiaries, reinforce to procuring 

agencies the requirement to provide the full acquisition history of the 

procurement in the offer letter, when available, and direct district office 

business development specialists to focus on this issue when they review offer 

letters for tribal 8(a) firms.

Page 104 GAO-15-347 Small Business Administration
Appendix III: Open GAO Recommendations for 

the Small Business Administration, as of July 

2015

Product number Product title Recommendation 

GAO-13-118 Federal Contracting: Slow Start to 

Implementation of Justifications 

for 8(a) Sole-Source Contracts

To help ensure that SBA officials meet Federal Acquisition Regulation 

requirements for sole-source contracts over $20 million, the Administrator of

SBA should, when revising operating procedures and training curricula, 

include instructions to business opportunity specialists on the steps they are to 

take to confirm whether agencies have met the justification requirement, such 

as obtaining a copy of the justification from the agency.

GAO-13-118 Federal Contracting: Slow Start to 

Implementation of Justifications 

for 8(a) Sole-Source Contracts

To help ensure that SBA officials meet Federal Acquisition Regulation 

requirements for sole-source contracts over $20 million, the Administrator of 

SBA should, when revising operating procedures and training curricula, 

include instructions to confirm that procuring agencies have prepared an 8(a) 

justification rather than a Competition in Contracting Act of 1984 justification.

Lender oversight

GAO-04-610 Small Business Administration: 

New Service for Lender Oversight 

Reflects Some Best Practices, but 

Strategy for Use Lags Behind

SBA should develop contingency plans that would enable SBA’s continued risk 

management of the 7(a) and 504 portfolio overall, individual lenders, and their 

portfolios in the event that the Dun & Bradstreet contract is discontinued.

GAO-14-233 Small Business Administration: 

Actions Needed to Ensure 

Planned Improvements Address 

Key Requirements of the 

Development Company (504) 

Loan Program

To help ensure that certified development companies (CDC) are meeting the 

504 loan program’s jobs-supported requirement, the SBA Administrator should 

develop specific guidance on how CDCs should compile information on jobs 

created or retained and on the documentation CDCs should maintain to 

support these data.

GAO-14-233 Small Business Administration: 

Actions Needed to Ensure 

Planned Improvements Address 

Key Requirements of the 

Development Company (504) 

Loan Program

To help ensure that CDCs are meeting the 504 loan program’s jobs-supported 

requirement, when reviewing CDCs’ annual reports, the SBA Administrator 

should implement a process to assess the supporting documentation for a 

sample of the jobs data that CDCs report.

GAO-14-233 Small Business Administration: 

Actions Needed to Ensure 

Planned Improvements Address 

Key Requirements of the 

Development Company (504) 

Loan Program

To help ensure that CDCs are meeting the 504 loan program’s requirement 

that CDCs invest retained earnings in local economic development, when 

finalizing the agency’s risk-based review procedures, the SBA Administrator 

should include in the checklists or guidance for examiners a requirement to 

review compliance with the retained-earnings requirement.

GAO-14-233 Small Business Administration: 

Actions Needed to Ensure 

Planned Improvements Address 

Key Requirements of the 

Development Company (504) 

Loan Program

To help ensure that CDCs are meeting the 504 loan program’s requirement 

that CDCs invest retained earnings in local economic development, when 

reviewing CDCs’ annual reports, the SBA Administrator should add an item to 

its annual report review template requiring SBA staff to assess compliance 

with this requirement.

GAO-14-233 Small Business Administration: 

Actions Needed to Ensure 

Planned Improvements Address 

Key Requirements of the 

Development Company (504) 

Loan Program

To help ensure that CDCs with Accredited Lenders Program (ALP) authority 

are taking the necessary steps to determine whether there has been no 

adverse change to borrowers’ financial condition prior to loan closing, the SBA 

Administrator should include oversight of CDCs’ compliance with this 

requirement in the agency’s process for renewing ALP authority.

Page 105 GAO-15-347 Small Business Administration
Appendix III: Open GAO Recommendations for 

the Small Business Administration, as of July 

2015

Product number Product title Recommendation 

Small business contracting

GAO-11-549R Improvements Needed to Help 

Ensure Reliability of SBA’s 

Performance Data on 

Procurement Center 

Representatives

To help ensure that Government Contracting Area Report (GCAR) data are 

accurate and that SBA reliably can use the data to monitor procurement center 

representative (PCR) and commercial market representative (CMR) 

performance and determine whether established goals have been achieved, 

SBA’s Director of Government Contracting should require that monthly GCAR 

data are verified and that documentation for PCR and CMR records are 

periodically reviewed for quality and completeness.

GAO-14-36 Small Business Contracting: 

Updated Guidance and Reporting 

Needed for Consolidated 

Contracts

To promote agencies’ compliance with existing law, the Administrator of SBA 

should submit required bundling reports to Congress.

GAO-15-54 Women-Owned Small Business 

Program: Certifier Oversight and 

Additional Eligibility Controls Are 

Needed

To improve management and oversight of the women-owned small business 

(WOSB) program, and to help ensure the effective oversight of third-party 

certifiers, the Administrator of SBA should establish and implement 

comprehensive procedures to monitor and assess performance of certifiers in 

accord with the requirements of the third-party certifier agreement and 

program regulations.

GAO-15-54 Women-Owned Small Business 

Program: Certifier Oversight and 

Additional Eligibility Controls Are 

Needed

To improve management and oversight of the WOSB program, and to provide 

reasonable assurance that only eligible businesses obtain WOSB set-aside 

contracts, the Administrator of SBA should enhance examination of 

businesses that register to participate in the WOSB program, including actions 

such as: (1) promptly completing the development of procedures to conduct 

annual eligibility examinations and implementing such procedures; (2) 

analyzing examination results and individual businesses found to be ineligible 

to better understand the cause of the high rate of ineligibility in annual reviews, 

and determine what actions are needed to address the causes; and (3) 

implementing ongoing reviews of a sample of all businesses that have 

represented their eligibility to participate in the program.

GAO-15-234 Small Business Contracting: 

Opportunities Exist to Further 

Improve HUBZone Oversight

To improve SBA’s administration and oversight of the Historically Underutilized 

Business Zone (HUBZone) program and reduce the risk that firms that no 

longer meet program eligibility criteria receive HUBZone contracts, the 

Administrator of SBA should conduct an assessment of the recertification 

process and implement additional controls, such as developing criteria and 

guidance on using a risk-based approach to requesting and verifying firm 

information, allowing firms to initiate the recertification process, and ensuring 

that sufficient staff will be dedicated to the effort so that a significant backlog in 

recertifications does not recur.

GAO-15-234 Small Business Contracting: 

Opportunities Exist to Further 

Improve HUBZone Oversight

To improve SBA’s administration and oversight of the HUBZone program and

reduce the risk that firms that no longer meet program eligibility criteria receive 

HUBZone contracts, the Administrator of SBA should establish a mechanism 

to better ensure that firms are notified of changes to HUBZone designations 

that may affect their participation in the program, such as ensuring that all 

certified firms and newly certified firms are signed up for the broadcast e-mail 

system or including more specific information in certification letters about how 

location in a redesignated area can affect their participation in the program.

Page 106 GAO-15-347 Small Business Administration
Appendix III: Open GAO Recommendations for 

the Small Business Administration, as of July 

2015

Product number Product title Recommendation 

Program evaluation

GAO-11-548R Mentor-Protege Programs Have 

Policies That Aim to Benefit 

Participants but Do Not Require 

Postagreement Tracking

To more fully evaluate the effectiveness of their mentor-protege programs, the 

Office of Small and Disadvantaged Business Utilization and Mentor-Protege 

Program Directors of the Department of Homeland Security, Department of 

Energy, Department of State, Environmental Protection Agency, Federal 

Aviation Administration, General Services Administration, Department of 

Health and Human Services, SBA, Department of the Treasury, and 

Department of Veterans Affairs should consider collecting and maintaining 

protege postcompletion information.

GAO-11-698 Small Business Innovation 

Research: SBA Should Work with 

Agencies to Improve the Data 

Available for Program Evaluation

To build upon efforts to implement a government-use database for program 

evaluation, the Administrator of SBA should work with participating Small 

Business Innovation Research (SBIR) agencies to identify best practices for 

verifying the accuracy of data related to progress in increasing 

commercialization.

GAO-12-819 Entrepreneurial Assistance: 

Opportunities Exist to Improve 

Programs’ Collaboration, DataTracking, and Performance 

Management

The Director of the Office and Management and Budget, the Secretaries of the 

Departments of Agriculture, Commerce, and Housing and Urban 

Development, and the Administrator of SBA, should work together to identify 

opportunities to enhance collaboration among programs, both within and 

across agencies.

GAO-12-819 Entrepreneurial Assistance: 

Opportunities Exist to Improve 

Programs’ Collaboration, DataTracking, and Performance 

Management

The Secretaries of the Departments of Agriculture, Commerce, and Housing 

and Urban Development, and the Administrator of SBA, should conduct more 

program evaluations to better understand why programs have not met 

performance goals and their overall effectiveness.

GAO-12-819 Entrepreneurial Assistance: 

Opportunities Exist to Improve 

Programs’ Collaboration, DataTracking, and Performance 

Management

The Secretaries of the Departments of Agriculture, Commerce, and Housing 

and Urban Development, and the Administrator of SBA, should consistently 

collect information that would enable them to track the specific type of 

assistance programs provide and the entrepreneurs they serve and use this 

information to help administer their programs.

GAO-13-727 Patriot Express: SBA Should 

Evaluate the Program and 

Enhance Eligibility Controls

To help ensure that SBA makes informed decisions on the future of pilot 

programs it creates under its own authority, the Administrator of SBA should 

require the agency to design an evaluation plan for any such pilot program 

prior to implementation—including an assessment of the program’s 

performance and its effect on program recipients—and to consider the results 

of such an evaluation before any pilot is extended.

GAO-14-260 Small Business Administration: 

Cosponsored Activities Can 

Benefit Small Businesses but Lack 

a Consistent Feedback 

Mechanism

To ensure that SBA most effectively implements the statutory authority to 

conduct cosponsored events for the benefit of small businesses and to 

enhance SBA’s ability to evaluate the use of its cosponsorship authority, the 

Administrator of SBA should develop a mechanism to consistently obtain 

participant feedback on cosponsored activities.

Information technology

GAO-12-295 Information Technology: SBA 

Needs to Strengthen Oversight of 

Its Loan Management and 

Accounting System Modernization

The Administrator of SBA should clarify the responsibilities of the executive 

bodies responsible for the Incremental Improvement Projects (IIP) and ensure 

they provide the appropriate oversight of the project’s progress. Specifically, 

these executive bodies should conduct and document executive review and 

approval of the Loan Management and Accounting System modernization’s (1) 

risk management approach; (2) target segment architectures; and (3) cost and 

schedule baselines, including ongoing oversight of progress against those 

baselines.

Page 107 GAO-15-347 Small Business Administration
Appendix III: Open GAO Recommendations for 

the Small Business Administration, as of July 

2015

Product number Product title Recommendation 

GAO-12-295 Information Technology: SBA 

Needs to Strengthen Oversight of 

Its Loan Management and 

Accounting System Modernization

To better ensure that the loan management incremental improvement projects 

are completed as planned and provide anticipated capabilities, the 

Administrator of SBA should direct the Chief Information Officer (CIO) to 

ensure that SBA is applying the appropriate information technology 

management practices to the IIPs. Specifically, SBA should ensure that (1) IIP 

requirements are managed appropriately, including elicitation, documentation, 

and verification and validation; (2) information technology (IT) risks to the IIPs 

are adequately managed, including preparing for risk management, identifying 

and analyzing risks, mitigating risks, and providing executive oversight of risk 

management activities; (3) the human capital necessary for the IIPs is 

managed appropriately, including the determination of human capital needs, 

the identification of gaps between current capabilities and needs, the 

development of a strategy to close those gaps, and the documentation of 

these activities; and (4) the enterprise architecture segments related to the 

IIPs are managed appropriately, including the development, prioritization, and 

maintenance of the segments.

GAO-12-756 Information Technology Reform: 

Progress Made but Future Cloud 

Computing Efforts Should be 

Better Planned

To help ensure the success of agencies’ implementation of cloud-based 

solutions, the Secretaries of Agriculture, Health and Human Services, 

Homeland Security, State, and the Treasury; and the Administrators of the 

General Services Administration and Small Business Administration, should 

direct their respective CIOs to develop, at a minimum, estimated costs, 

milestones, performance goals, and plans for retiring legacy systems, as 

applicable, for planned additional cloud-based services.

GAO-12-756 Information Technology Reform: 

Progress Made but Future Cloud 

Computing Efforts Should be 

Better Planned

To help ensure the success of agencies’ implementation of cloud-based 

solutions, the Secretaries of Agriculture, Health and Human Services, 

Homeland Security, State, and the Treasury; and the Administrators of the 

General Services Administration and Small Business Administration, should 

direct their respective CIOs to establish estimated costs, performance goals, 

and plans to retire associated legacy systems for each cloud-based service 

discussed in this report, as applicable.

GAO-12-791 Organizational Transformation: 

Enterprise Architecture Value 

Needs to Be Measured and 

Reported

To enhance federal agencies’ ability to realize enterprise architecture benefits, 

the Secretaries of the Departments of Agriculture, the Air Force, the Army, 

Commerce, Defense, Education, Energy, Homeland Security, the Interior, 

Labor, the Navy, State, Transportation, the Treasury, and Veterans Affairs; the 

Attorney General; the Administrators of the Environmental Protection Agency, 

General Services Administration, National Aeronautics and Space 

Administration, and Small Business Administration; the Commissioners of the 

Nuclear Regulatory Commission and Social Security Administration; and the 

Directors of the National Science Foundation and the Office of Personnel 

Management, should fully establish an approach for measuring enterprise 

architecture outcomes, including a documented method (i.e., steps to be 

followed) and metrics that are measurable, meaningful, repeatable, consistent, 

actionable, and aligned with the agency’s enterprise architecture’s strategic 

goals and intended purpose.

Page 108 GAO-15-347 Small Business Administration
Appendix III: Open GAO Recommendations for 

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2015

Product number Product title Recommendation 

GAO-12-791 Organizational Transformation: 

Enterprise Architecture Value 

Needs to Be Measured and 

Reported

To enhance federal agencies’ ability to realize enterprise architecture benefits, 

the Secretaries of the Departments of Agriculture, the Air Force, the Army, 

Commerce, Defense, Education, Energy, Homeland Security, the Interior, 

Labor, the Navy, State, Transportation, the Treasury, and Veterans Affairs; the 

Attorney General; the Administrators of the Environmental Protection Agency, 

General Services Administration, National Aeronautics and Space 

Administration, and Small Business Administration; the Commissioners of the 

Nuclear Regulatory Commission and Social Security Administration; and the 

Directors of the National Science Foundation and the Office of Personnel 

Management, should periodically measure and report enterprise architecture 

outcomes and benefits to top agency officials (i.e., executives with authority to 

commit resources or make changes to the program) and to OMB.

GAO-14-65 Information Technology: 

Additional OMB and Agency 

Actions Are Needed to Achieve 

Portfolio Savings 

To improve the agency’s implementation of PortfolioStat, in future reporting to 

OMB, the Administrator of the Small Business Administration should direct the 

CIO to fully describe the following PortfolioStat action plan elements: (1) 

consolidate commodity IT spending under the agency CIO; (2) establish 

targets for commodity IT spending reductions and deadlines for meeting those 

targets; (3) target duplicative systems or contracts that support common 

business functions for consolidation; and (4) establish a process to identify 

those potential investments and a schedule for eliminating them from the 

portfolio.

GAO-14-65 Information Technology: 

Additional OMB and Agency 

Actions Are Needed to Achieve 

Portfolio Savings

To improve the agency’s implementation of PortfolioStat, the Administrator of 

the Small Business Administration should direct the CIO to develop a complete 

commodity IT baseline.

GAO-14-413 Federal Software Licenses: Better 

Management Needed to Achieve 

Significant Savings GovernmentWide

To ensure the effective management of software licenses, the Administrator of 

the Small Business Administration should analyze agency-wide software 

license data, such as costs, benefits, usage, and trending data, to identify 

opportunities to reduce costs and better inform investment decision making.

GAO-14-413 Federal Software Licenses: Better 

Management Needed to Achieve 

Significant Savings GovernmentWide

To ensure the effective management of software licenses, the Administrator of 

the Small Business Administration should develop an agency-wide 

comprehensive policy for the management of software licenses that addresses 

the weaknesses we identified.

GAO-14-413 Federal Software Licenses: Better 

Management Needed to Achieve 

Significant Savings GovernmentWide

To ensure the effective management of software licenses, the Administrator of 

the Small Business Administration should employ a centralized software 

license management approach that is coordinated and integrated with key 

personnel for the majority of agency software license spending and/or 

enterprise-wide licenses.

GAO-14-413 Federal Software Licenses: Better 

Management Needed to Achieve 

Significant Savings GovernmentWide

To ensure the effective management of software licenses, the Administrator of 

the Small Business Administration should establish a comprehensive inventory 

of software licenses using automated tools for the majority of agency software 

license spending and/or enterprise-wide licenses.

GAO-14-413 Federal Software Licenses: Better 

Management Needed to Achieve 

Significant Savings GovernmentWide

To ensure the effective management of software licenses, the Administrator of 

the Small Business Administration should provide software license 

management training to appropriate agency personnel addressing contract 

terms and conditions, negotiations, laws and regulations, acquisition, security 

planning, and configuration management.

Page 109 GAO-15-347 Small Business Administration
Appendix III: Open GAO Recommendations for 

the Small Business Administration, as of July 

2015

Product number Product title Recommendation 

GAO-14-413 Federal Software Licenses: Better 

Management Needed to Achieve 

Significant Savings GovernmentWide

To ensure the effective management of software licenses, the Administrator of 

the Small Business Administration should regularly track and maintain a 

comprehensive inventory of software licenses using automated tools and 

metrics.

GAO-14-753 Cloud Computing: Additional 

Opportunities and Savings Need 

to Be Pursued

To help ensure continued progress in the implementation of cloud computing 

services, the Secretaries of Agriculture, Health and Human Services, 

Homeland Security, State, and the Treasury; and the Administrators of the 

General Services Administration and Small Business Administration, should 

direct their respective Chief Information Officers to ensure that all IT 

investments are assessed for suitability for migration to a cloud computing 

service.

GAO-14-753 Cloud Computing: Additional 

Opportunities and Savings Need 

to Be Pursued

To help ensure continued progress in the implementation of cloud computing 

services, the Secretaries of Agriculture, Health and Human Services, 

Homeland Security, State, and the Treasury; and the Administrators of the 

General Services Administration and Small Business Administration, should 

direct their respective Chief Information Officers to establish evaluation dates 

for those investments identified in this report that have not been assessed for 

migration to the cloud.

Disaster assistance

GAO-09-755 Small Business Administration: 

Additional Steps Should Be Taken 

to Address Reforms to the 

Disaster Loan Program and 

Improve the Application Process 

for Future Disasters

To facilitate SBA’s progress in meeting and complying with requirements of the 

Small Business Disaster Response and Loan Improvements Act of 2008 and 

improve the Disaster Loan Program, the Administrator of SBA should develop 

an implementation plan and report to Congress on the agency’s progress in 

addressing all requirements within the act—including creating and 

implementing new programs such as the Immediate and Expedited Disaster 

Assistance Programs—and include milestone dates for completing 

implementation and any major program, resource, or other challenges the 

agency faces as its continues efforts to address requirements and meet 

deadlines in the act.

GAO-12-844 Disaster Assistance: USDA and 

SBA Could Do More to Help 

Aquaculture and Nursery 

Producers

To help ensure that small aquaculture and nursery producers are aware of the 

disaster assistance programs available to them, the Secretary of Agriculture 

and the Administrator of the Small Business Administration should direct Farm 

Service Agency and SBA officials to conduct targeted outreach to small 

aquaculture and nursery producers, for example, by building on existing 

agency outreach programs.

GAO-14-760 Small Business Administration: 

Additional Steps Needed to Help 

Ensure More Timely Disaster 

Assistance

In order to address potential risk to SBA’s ability to provide timely disaster 

assistance in the future, based on the agency’s experience from Hurricane 

Sandy, the Administrator of SBA should direct the Office of Disaster 

Assistance to revise SBA’s disaster planning documents to anticipate the 

potential impact of early application submissions on staffing and resources for 

future disasters, as well as the risk this impact may pose for SBA’s timely 

disaster response.

Page 110 GAO-15-347 Small Business Administration
Appendix III: Open GAO Recommendations for 

the Small Business Administration, as of July 

2015

Product number Product title Recommendation 

GAO-14-760 Small Business Administration: 

Additional Steps Needed to Help 

Ensure More Timely Disaster 

Assistance

In order to provide Congress with reliable information on challenges SBA has 

faced in implementing the Immediate Disaster Assistance Program, the 

Administrator of SBA should direct the Office of Capital Access to (1) conduct 

a formal documented evaluation of lenders’ feedback that can inform SBA and 

Congress about statutory changes that may be necessary to encourage 

lenders’ participation in the Immediate Disaster Assistance Program and (2) 

report to Congress on the challenges SBA has faced in implementing the 

Immediate Disaster Assistance Program and on statutory changes that may be 

necessary to facilitate SBA’s implementation of the program.

GAO-15-209 Disaster Relief: Agencies Need to 

Improve Policies and Procedures 

for Estimating Improper Payments

To help reduce the risk that improper payment estimates related to Disaster 

Relief Appropriations Act, 2013 funding developed and reported by selected 

agencies may not be accurate or reliable, and to help ensure that SBA 

produces reliable estimates of its Disaster Relief Appropriations Act, 2013

improper payments, the Administrator of SBA should direct the appropriate 

officials to revise its Disaster Assistance Loans program policies and 

procedures for estimating improper payments by: (1) defining improper 

payments consistently with the Improper Payments Information Act of 2002, as 

amended, and OMB Circular No. A-123, Appendix C; (2) requiring payments to 

federal employees to be included in populations for testing as required by the 

Improper Payments Information Act of 2002, as amended; (3) including steps 

to assess the completeness of the population of transactions used for 

selecting the samples to be tested; (4) providing sufficient procedures for 

determining an error and what documentation is necessary to substantiate 

payment; (5) requiring the agency to maintain sufficient documentation to 

support improper payment estimates; and (6) requiring that the sampling 

methodologies meet the precision requirements outlined in OMB Circular No. 

A-123, Appendix C.

GAO-15-209 Disaster Relief: Agencies Need to 

Improve Policies and Procedures 

for Estimating Improper Payments

To help reduce the risk that improper payment estimates related to Disaster 

Relief Appropriations Act, 2013 funding developed and reported by selected 

agencies may not be accurate or reliable, and to help ensure that SBA 

produces reliable estimates of its Disaster Relief Appropriations Act, 2013 

improper payments, the Administrator of SBA should direct the appropriate 

officials to develop policies and procedures for the Office of Entrepreneurial 

Development Grants program to estimate improper payments by: (1) clearly 

identifying roles and responsibilities for estimating improper payments; (2) 

defining improper payments consistently with the Improper Payments 

Information Act of 2002, as amended, and OMB Circular No. A-123, Appendix 

C; (3) requiring payments to federal employees to be included in populations 

for testing as required by the Improper Payments Information Act of 2002, as 

amended; (4) including steps to assess the completeness of the population of 

transactions used for selecting the samples to be tested; (5) providing 

sufficient procedures for determining an error and what documentation is 

necessary to substantiate a payment; (6) requiring the agency to maintain 

sufficient documentation to support improper payment estimates; (7) requiring 

that the sampling methodologies meet the precision requirements outlined in 

OMB Circular No. A-123, Appendix C; and (8) requiring a consultation with a 

statistician to ensure the validity of sample design, sample size, and 

measurement methodology.

Page 111 GAO-15-347 Small Business Administration
Appendix III: Open GAO Recommendations for 

the Small Business Administration, as of July 

2015

Product number Product title Recommendation 

Small business research programs

GAO-13-421 Small Business Research 

Programs: Actions Needed to 

Improve Compliance with 

Spending and Reporting 

Requirements

To ensure that participating agencies and SBA comply with spending and 

reporting requirements for the SBIR and Small Business Technology Transfer 

(STTR) programs, the SBA Administrator should direct participating agencies 

to include in their annual reports the calculation of the final extramural 

research and development (R&D) budget used as the basis for their SBIR and 

STTR spending requirements and, if they did not meet the spending 

requirements, the reasons why not and how they plan to meet the spending 

requirements in the future.

GAO-13-421 Small Business Research 

Programs: Actions Needed to 

Improve Compliance with 

Spending and Reporting 

Requirements

To ensure that participating agencies and SBA comply with spending and 

reporting requirements for the SBIR and STTR programs, the SBA 

Administrator should provide Congress with a timely annual report that 

includes a comprehensive analysis of the methodology each agency used for 

calculating the SBIR and STTR spending requirements, providing a clear basis 

for SBA’s conclusions about whether these calculations meet program 

requirements.

GAO-13-421 Small Business Research 

Programs: Actions Needed to 

Improve Compliance with 

Spending and Reporting 

Requirements

To ensure that participating agencies and SBA comply with spending and 

reporting requirements for the SBIR and STTR programs, the SBA 

Administrator should provide additional guidance on how agencies should 

calculate spending requirements when agency appropriations are received late 

in the fiscal year and the format agencies are to include in their methodology 

reports.

GAO-13-421 Small Business Research 

Programs: Actions Needed to 

Improve Compliance with 

Spending and Reporting 

Requirements

To ensure that participating agencies and SBA comply with spending and 

reporting requirements for the SBIR and STTR programs, the SBA 

Administrator should provide timely annual feedback to each agency following 

submission of its methodology report on whether its method for calculating the 

extramural R&D budget used as the basis for the SBIR and STTR spending 

requirements complies with program requirements including an itemization of 

and an explanation for all exclusions from the basis for the calculations.

GAO-14-431 Small Business Research 

Programs: More Guidance and 

Oversight Needed to Comply with 

Spending and Reporting 

Requirements

To improve compliance with the Small Business Act and enhance SBA’s ability 

to provide oversight of the programs, the SBA Administrator should request 

that the agencies submit their methodology reports within 4 months of the 

enactment of appropriations, as required by the Small Business Act and the 

program policy directives.

GAO-14-431 Small Business Research 

Programs: More Guidance and 

Oversight Needed to Comply with 

Spending and Reporting 

Requirements

To improve compliance with the Small Business Act and enhance SBA’s ability 

to provide oversight of the programs, the SBA Administrator should revise the 

language in the SBIR and STTR policy directives to accurately summarize the 

statutory provisions that describe the program spending requirements.

GAO-15-68 Small Business Innovation 

Research: Change in Program 

Eligibility Has Had Little Impact

To help ensure that participating agencies understand the requirements of the 

National Defense Authorization Act for Fiscal Year 2012 provisions applicable 

to allowing majority-owned portfolio companies to apply for SBIR awards, the 

Administrator of SBA should discuss the evidence required for the written 

determination with the participating agencies, such as at their monthly meeting 

or as part of another outreach effort, and, if needed, and in consultation with 

the participating agencies, amend its SBIR Policy Directive to provide 

additional guidance.

Page 112 GAO-15-347 Small Business Administration
Appendix III: Open GAO Recommendations for 

the Small Business Administration, as of July 

2015

Product number Product title Recommendation 

GAO-15-358 Small Business Research 

Programs: Challenges Remain in 

Meeting Spending and Reporting 

Requirements

To ensure full compliance with SBIR and STTR spending and reporting 

requirements, the SBA Administrator should assess the methodology reporting 

requirement to determine whether it generates adequate information for SBA 

to analyze the accuracy of agencies’ calculations of their extramural R&D. If 

SBA finds that the information is inadequate, SBA should update its guidance 

to require adequate information.

GAO-15-358 Small Business Research 

Programs: Challenges Remain in 

Meeting Spending and Reporting 

Requirements

To ensure full compliance with SBIR and STTR spending and reporting 

requirements, the SBA Administrator should notify Congress in SBA’s annual 

report if it cannot determine agency compliance with program spending 

requirements when agencies that participate in the SBIR and/or STTR 

programs do not report extramural R&D obligations data, or develop a 

proposal to Congress that would change the requirement.

GAO-15-358 Small Business Research 

Programs: Challenges Remain in 

Meeting Spending and Reporting 

Requirements

To ensure full compliance with SBIR and STTR spending and reporting 

requirements, the SBA Administrator should provide greater transparency for 

the administrative pilot program by requiring participating agencies to provide 

data on the use of the funds, rather than a total cost for all of the activities 

under the pilot.

Other

GAO-10-91 Language Access: Selected 

Agencies Can Improve Services to 

Limited English Proficient Persons

To provide more meaningful access to limited English proficiency populations, 

the Administrator of SBA should complete a comprehensive national needs 

assessment which should include data from its existing funding recipients on 

the number of limited English proficiency persons served and how they are 

served.

GAO-10-91 Language Access: Selected 

Agencies Can Improve Services to 

Limited English Proficient Persons

To provide more meaningful access to limited English proficiency populations, 

the Administrator of SBA should finalize and issue its limited English 

proficiency plan and recipient guidance.

GAO-11-605 Social Media: Federal Agencies 

Need Policies and Procedures for 

Managing and Protecting 

Information They Access and 

Disseminate

To ensure that appropriate privacy measures are in place when commercially 

provided social media services are used, the Administrator of SBA should 

conduct and document a privacy impact assessment that evaluates potential 

privacy risks associated with agency use of social media services and 

identifies protections to address them.

GAO-13-217 Export Promotion: Small Business 

Administration Needs to Improve 

Collaboration to Implement Its 

Expanded Role

To help small businesses understand and get the most benefit from the 

various export assistance products and services provided by different federal 

entities, and to efficiently use government resources, the Administrator of SBA 

should consult with the Department of Commerce and U.S. Export-Import 

Bank and more clearly define roles and responsibilities of export promotion 

entities’ export counseling and financing staff agency-wide and at the local 

levels.

GAO-13-217 Export Promotion: Small Business 

Administration Needs to Improve 

Collaboration to Implement Its 

Expanded Role

To improve collaboration and leverage available resources, the Administrator 

of SBA should consult with the Department of Commerce and U.S. ExportImport Bank and identify ways to increase, where possible, sharing of client 

information deemed useful for SBA, the Department of Commerce, and U.S. 

Export-Import Bank.

Page 113 GAO-15-347 Small Business Administration
Appendix III: Open GAO Recommendations for 

the Small Business Administration, as of July 

2015

Product number Product title Recommendation 

GAO-13-217 Export Promotion: Small Business 

Administration Needs to Improve 

Collaboration to Implement Its 

Expanded Role

To more effectively implement SBA’s expansion of Office of International 

Trade field staff as required by the Small Business Jobs Act of 2010, the 

Administrator of SBA should update SBA’s plan for additional Office of 

International Trade staff to include funding sources and time frames, as well as 

possible efficiencies from clearly defining roles and responsibilities and 

leveraging other entities’ export assistance resources.

Source: GAO. | GAO-15-347

Note: The table does not include our open recommendations to the Office of Advocacy, an 

independent office within SBA.

Page 114 GAO-15-347 Small Business Administration
Appendix IV: Results of the Small Business 

Administration’s Internal Review of Its 

Standard Operating Procedures, as of March 

2015

In fiscal year 2014, the Small Business Administration’s (SBA) Office of 

the Chief Operating Officer, Office of Administrative Services began a 

review of the status of all standard operating procedures (SOP), working 

with the program offices to determine whether any updates were needed. 

Specifically, SBA issued a notice requiring all office heads to certify in 

writing the status of their SOPs. For each SOP, the cognizant office was 

to note if it (1) did not require any revision, (2) was under review, (3) was 

being revised, or (4) was being canceled. As a result of this review, SBA 

determined that 74 SOPs needed to be revised (see table 9); 31 needed 

to be canceled (see table 10); and 60 required no revision (see table 11). 

SBA also determined that it needed to issue an additional 9 new SOPs 

(see table 12).

Table 9: Standard Operating Procedures (SOP) to Be Revised

SOP number SOP title

Effective 

date/edition

10 04 Processing Applications for Small Business Investment Company (SBIC) Licenses 1985/10

40 03 Disclosure of Information 2004/08

50 53 Lender Supervision and Enforcement 2010/10

50 30 Disaster Assistance Program 2011/05

80 06 Historically Underutilized Business Zone (HUBZone) Program 2007/11

00 01 Delegations of Authority and Lines of Successions 2002/02

00 03 Federal Register Documents 1997/12

00 41 Records Management Program 1998/12

60 03 Subcontracting Assistance Program 2006/12

90 22 Investigations Program 2010/12

90 22 Investigations Program 2010/12

00 07 HSPD-12 - Personal Identify Verification 2011/04

00 10 Mail Management Program 1999/09

00 13 Personal Property Management Program 2007/08

00 14 Printing Program 1998/04

00 15 Space Management Program 2006/05

00 16 SBA Safety and Health Program 1984/04

00 17 Parking Program 2005/11

00 11 Acquisition Standard 6/13/2013

00 12 The Government Purchase Card Program Business Operation 2007/06

90 56 SBA Web Management 2005/01

00 30 The Forms Management Program 2006/12

37 13 Equal Employment Opportunity Program 12/5/2012

Appendix IV: Results of the Small Business 

Administration’s Internal Review of Its 

Standard Operating Procedures, as of March 

2015

Page 115 GAO-15-347 Small Business Administration
Appendix IV: Results of the Small Business 

Administration’s Internal Review of Its 

Standard Operating Procedures, as of March 

2015

SOP number SOP title

Effective 

date/edition

90 30 Civil Rights Compliance 2003/02

50 53 Lender Supervision and Enforcement 2012/06

51 00 On Site Lender Reviews/Examinations 2006/09

00 23 Directives Management Program 2006/04

50 45 The Surety Bond Guarantee Program 1999/03

40 04 Privacy Act Procedures 2004/06

20 29 Managing Federal Credit Programs 1986/03

20 30 Agency Guidelines on Financial Management Systems 1985/04

20 01 Operating Budget System - Part 1 1983/10

20 03 Accounting Structure 1994/03

20 12 Administrative Accounting Procedures 1993/12

20 17 Disbursement Functions 1998/12

20 18 On-Line Payment and Collection Administrative Procedures 1998/01

20 19 Loan Accounting Procedures 1998/06

20 26 Surety Bond Guarantee Accounting & Collection Process 1988/06

00 80 Alternate Work Sites 2005/12

34 10 Employee Development Programa 1997/12

10 08 SBIC Examination Guidelines 1997

10 09 SBA Internal Examination Guidelines 1998/01

20 11 Travel 2006/05

20 35 SBA Office of Inspector General (OIG) Audit Follow-up Not provided

33 00 Employmentb 2003/04

80 05 8(a) Business Development 2008/11

90 10 Audit Program 2005/02

90 65 International Trade Program 1986/07

00 21 Executive Secretariat’s Mission and Functions 2007/11

00 02 Internal Control Systems 1986/01

10 06 Oversight and Regulations of SBICs Investment Division 2007/05

10 06 Appendix 1 Oversight and Regulations of SBICs Investment Division 2007/05

10 06 Appendix 2 Oversight and Regulations of SBICs Investment Division 2007/05

10 06 Appendix 3 Oversight and Regulations of SBICs Investment Division 2007/05

10 06 Appendix 4 Oversight and Regulations of SBICs Investment Division 2007/05

10 06 Appendix 5 Oversight and Regulations of SBICs Investment Division 2007/05

10 06 Appendix 6 Oversight and Regulations of SBICs Investment Division 2007/05

34 30 Performance Management and Appraisal Systemc 2000/05

33 59 Telecommuting Program 2015

Page 116 GAO-15-347 Small Business Administration
Appendix IV: Results of the Small Business 

Administration’s Internal Review of Its 

Standard Operating Procedures, as of March 

2015

SOP number SOP title

Effective 

date/edition

90 47 Information System Security Program 2012/08

90 48 Telephone and Facsimile 1994/11

90 50 Breach Notification Response Plan 2008/07

90 51 The Office of the Chief Information Officer Organizational SOP 2004/06

35 00 Position Classification Programd 2002/09

37 11 SBA Labor Relations Program 2001/08

37 52 Discipline and Adverse Actions 2001/08

37 71 Employee Dispute Resolution Processd 1999/09

37 92 Employee Assistance Program 1990/02

39 20 Senior Executive Service Program 2001/01

33 17 Probationary Period for Supervisors and Managers 1990/01

90 57 National Environment Policy Act 1980/02

90 60 Credit and Financial Reports 1981/03

90 77 External and Economy Act Agreements 1994/01

90 80 Women’s Business Ownership Program 1993/05

Source: SBA. | GAO-15-347

Note: According to SBA officials, the Telecommuting Program SOP was renamed Telework Program 

and published in May 2015.

a

According to SBA officials, an updated Employee Development SOP was being prepared for the 

Administrator’s signature as of August 2015.

b

According to SBA officials, as of August 2015 the Employment SOP had been broken up; each 

chapter was being reviewed to determine if an update was required and if so, SBA would create a 

standalone SOP for that chapter. Officials noted that all but two chapters had been updated and 

standalone SOPs had been published or were in the clearance process.

 cAccording to SBA officials, as of August 2015 this SOP had been signed by the Administrator and 

was in the process of being published.

d

According to SBA officials, an updated version of this SOP was in the clearance process as of 

August 2015.

Table 10: Standard Operating Procedures (SOP) to be Canceled

SOP number SOP title

Effective 

date/edition

00 09 Warehouse Management 2001/04

00 11 Small Purchases, Contracts, Grants & Cooperative Agreements 6/20/2006

10 08 SBIC Examination Guidelines 11/25/1997

20 00 Accounting Policies, Principles and Standards 1998/04

20 04 Cash Management 1987/04

20 06 Lease Guarantee Revolving Fund Program Accounting Procedures 1985/05

20 07 Pollution Control Financing Guarantee Program Accounting Procedures 1985/04

Page 117 GAO-15-347 Small Business Administration
Appendix IV: Results of the Small Business 

Administration’s Internal Review of Its 

Standard Operating Procedures, as of March 

2015

SOP number SOP title

Effective 

date/edition

20 08 SBIC Accounting Procedures 1993/01

20 09 Section 8(a) Program Accounting Procedures 1990/05

20 22 Source Documentation and Accounting for the Business Loan & Investment Program 1998/05

20 23 Loan Collection Procedures (Denver) 1986/10

20 25 Loans in Liquidation & Provision for Loss Procedures 1982/02

20 28 Closing Fiscal Year Accounts 1990/09

20 33 Accounting & Financial Management of the Disaster Loan Fund 1988/02

32 52 Personnel Management Authority 1993/12

50 30 Disaster Assistance Program 2007/11

50 50 Loan Servicing 2004/05

50 50 Loan Servicing 2000/08

50 50 Loan Servicing 2000/08

50 50 Loan Servicing 2004/04

50 50 Loan Servicing 1999/10

50 51 Loan Liquidation 2010/11

50 51 Loan Liquidation and Acquired Property 1997/12

50 51 - A Loan Liquidation and Acquired Property 1998/11

50 51 - B Loan Liquidation and Acquired Property 2005/04

50 51 - C Loan Liquidation and Acquired Property 2005/06

50 51 - D National Loan and Acquired Property 2007/10

60 15 Small Business Development Centers (SBDC) 1983/09

60 16 SBDC Program Policy Guidelines 1985/05

70 50 Legal Responsibilities 1999/02

90 70 Veterans Small Business Training Guide 1984/12

Source: SBA. | GAO-15-347

Table 11: Standard Operating Procedures (SOP) That Required No Revisions

SOP number SOP title

Effective 

date/edition

00 08 Organizational Structure 7/12/2012

10 07 SBIC Liquidation Program 2007/12

10 09 SBA Internal Examination Guidelines 1998/01

20 01 Operating Budget System - Part 2 1998/10

20 05 Cash Control and Process Procedures 10/13/2013

20 05 Cash Control and Process Procedures 2006/04

20 13 Capitalized Property Accounting Program 2005/03

Page 118 GAO-15-347 Small Business Administration
Appendix IV: Results of the Small Business 

Administration’s Internal Review of Its 

Standard Operating Procedures, as of March 

2015

SOP number SOP title

Effective 

date/edition

20 32 Credit Report Services 1986/12

33 01 Superior Qualifications and Special Needs Pay-Setting Authority 3/13/2013

33 02 Recruitment, Relocation, and Retention Incentives 4/13/2013

33 03 Pathways Program 1/13/2013

34 00 Separation Clearance 2011/09

34 50 Employee Recognition Program 2012/03

36 00 Attendance and Leave 1997/12

39 15 The Acquisition Career Development Program 2010/07

39 15 The Acquisition Career Development Program 2008/01

39 21 Category Rating 2012/03

39 22 Human Capital Accountability Policy 6/11/2012

39 30 Addressing Domestic Violence, Sexual Assault, and Stalking 12/11/2013

40 00 Congressional and Legislative Affairs 2007/11

50 10 Edition 5 Lender Development Company Loan Programs 2008/08

50 10 Edition 5 Revision F Lender Development Company Loan Programs 2014/01

50 10 Edition 5 Revision E Lender Development Company Loan Programs 2012/06

50 10 Edition 5 Revision E Lender and Development Company Loan Programs 2012/01

50 10 Edition 5 Revision E Lender and Development Company Loan Programs 2012/01

50 10 Edition 5 Revision E Lender and Development Company Loan Programs 10/1/2012

50 10 Edition 5 Revision E Lender and Development Company Loan Programs 10/1/2012

50 10 Edition 5 Revision E Lender Development Company Loan Programs 6/1/2012

50 10 Edition 5 Revision E Chapter 6 Closings 6/1/2012

50 10 Edition 5 Revision D Lender Development Company Loan Programs 10/1/2011

50 10 Edition 5 Revision D Lender Development Company Loan Programs 10/1/2011

50 10 Edition 5 Revision D Lender Development Company Loan Programs 10/1/2011

50 10 Edition 5 Revision C Lender Development Company Loan Programs 10/1/2010

50 10 Edition 5 Revision C Lender Development Company Loan Programs 10/1/2010

50 10 Edition 5 Revision C Lender Development Company Loan Programs 10/1/2010

50 10 Edition 5 Revision B Lender Development Company Loan Programs 2009/10

50 10 Edition 5 Revision A Lender Development Company Loan Programs 2009/03

50 10 Edition 4 Revision E Loan Processing 2000/12

50 10 Edition 5 Revision F Lender Development Company Loan Programs 2014/01

50 10 Edition 5 Revision B (with 

tracked changes)

Lender Development Company Loan Programs 2009/10

50 46 Claims Recovery Program 1999/01

50 52 Consumer Loan Servicing and Collections for Disaster Home Loans 2002/06

50 55 Loan Servicing and Liquidation 2013/10

Page 119 GAO-15-347 Small Business Administration
Appendix IV: Results of the Small Business 

Administration’s Internal Review of Its 

Standard Operating Procedures, as of March 

2015

SOP number SOP title

Effective 

date/edition

50 57 7(a) Loan Servicing and Liquidation 2013/03

52 00 Microloan Program 2013/03

60 02 Prime Contracts Program 2013/10

60 02 Prime Contracts Program 2004/10

60 04 Certificate of Competency Program 1998/04

60 06 Property Sales Assistance Program 1998/02

70 20 Regulation Development and Review Program 2005/08

90 01 Size Determination Program and Review of Size Standards 2012/03

90 22 Small Business Administration Standard Operating Procedure 2013/07

90 41 Procedures for Managing and Assessing the Quality of SBA Information Technology 

Projects 

2011/09

90 42 Managing Changes to SBA Information Systems 2011/09

90 43 Personal Identity Verification Credentials to Access SBA’s Facilities, Network and 

Information System

2011/09

90 49 Appropriate Use of SBA’s Automated Information Systems 2008/12

90 52 IT Investment Performance Baseline Management Policy 2011/05

90 54 SBA Advisory Councils 2005/11

90 75 Outreach Activities 2007/04

90 76 Restrictions on Lobbying 1993/09

Source: SBA. | GAO-15-347

Note: According to SBA, two versions of the same SOP may be listed because one version tracks the 

changes made to the prior version and the other version does not.

Table 12: New Standard Operating Procedures (SOP) to Be Issued

SOP number SOP title

Estimated start 

date of 

development of 

new SOP 

10 09 SBIC Internal Examination Guidelines Fiscal year 2013

New 00 Securitya 3/1/2014

New 00 Grants Management 2/3/2014

New 00 Fleet Management 2/21/2014

New 30 Schedules of Workb 4th quarter fiscal 

year 2014

New 30 Merit Promotion Signed and 

published March 

2015

New 30 Employee Suggestion Program Fiscal year 2013

Page 120 GAO-15-347 Small Business Administration
Appendix IV: Results of the Small Business 

Administration’s Internal Review of Its 

Standard Operating Procedures, as of March 

2015

SOP number SOP title

Estimated start 

date of 

development of 

new SOP 

New 30 Compensatory Time for Travel Signed and 

published April 

2014

New 60 Small Business Development Center Program 4/1/2014

Source: SBA. | GAO-15-347

Note: According to SBA officials, the Schedules of Work SOP was renamed Hours of Work. In 

addition, the officials noted that the Merit Promotion SOP was signed and published in March 2015, 

and the Compensatory Time for Travel SOP was signed and published in April 2014.

a

According to SBA officials, as of August 2015 this SOP was being drafted.

b

According to SBA officials, as of August 2015 this SOP was in the clearance process.

Page 121 GAO-15-347 Small Business Administration
Appendix V: Comments from the Small Appendix V: Comments from the Small Business Administration

Business Administration

Page 122 GAO-15-347 Small Business Administration
Appendix V: Comments from the Small 

Business Administration

Page 123 GAO-15-347 Small Business Administration
Appendix V: Comments from the Small 

Business Administration

Page 124 GAO-15-347 Small Business Administration
Appendix V: Comments from the Small 

Business Administration

Page 125 GAO-15-347 Small Business Administration
Appendix VI: GAO Contact and Staff 

Acknowledgments

William B. Shear, (202) 512-8678, or shearw@gao.gov

In addition to the contact named above, David Powner (Director), A. 

Paige Smith (Assistant Director), James Sweetman, Jr. (Assistant 

Director), Deena Richart (Analyst-in-Charge), Gerard Aflague, Emily 

Chalmers, Elizabeth Curda, Pamela Davidson, Nancy Glover, Meredith 

Graves, Kaelin Kuhn, John McGrail, Marc Molino, Erika Navarro, 

Meredith Raymond, William Reinsberg, and Gloria Ross made key 

contributions to this report.

Appendix VI: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(250770) Page 126 GAO-15-347 Small Business Administration
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