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98–245 2016

ATTENTION NEEDED: MISMANAGEMENT AT THE 

SBA - THE ADMINISTRATOR RESPONDS 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

HEARING HELD 

JANUARY 7, 2016 

Small Business Committee Document Number 114–035 

Available via the GPO Website: www.fdsys.gov 

SBREP-219 with DISTILLER


Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

STEVE CHABOT, Ohio, Chairman 

STEVE KING, Iowa 

BLAINE LUETKEMEYER, Missouri 

RICHARD HANNA, New York 

TIM HUELSKAMP, Kansas 

CHRIS GIBSON, New York 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

CARLOS CURBELO, Florida 

MIKE BOST, Illinois 

CRESENT HARDY, Nevada 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

YVETTE CLARK, New York 

JUDY CHU, California 

JANICE HAHN, California 

DONALD PAYNE, JR., New Jersey 

GRACE MENG, New York 

BRENDA LAWRENCE, Michigan 

ALMA ADAMS, North Carolina 

SETH MOULTON, Massachusetts 

MARK TAKAI, Hawaii 

KEVIN FITZPATRICK, Staff Director 

EMILY MURPHY, Deputy Staff Director for Policy 

JAN OLIVER, Deputy Staff Director for Operation 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

SBREP-219 with DISTILLER

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

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

Hon. Nydia Vela ́zquez ............................................................................................. 2 

WITNESS 

The Honorable Maria Contreras-Sweet, Administrator, United States Small 

Business Administration, Washington, DC ....................................................... 3 

APPENDIX 

Prepared Statement: 

The Honorable Maria Contreras-Sweet, Administrator, United States 

Small Business Administration, Washington, DC ..................................... 35 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

None. 

SBREP-219 with DISTILLER

SBREP-219 with DISTILLER

(1) 

ATTENTION NEEDED: MISMANAGEMENT AT 

THE SBA - THE ADMINISTRATOR RESPONDS 

THURSDAY, JANUARY 7, 2016 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 11:00 a.m., in Room 

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

Present: Representatives Chabot, Luetkemeyer, Hanna, 

Huelskamp, Gibson, Brat, Radewagen, Knight, Curbelo, Bost, 

Hardy, Kelly, Vela ́zquez, Hahn, Payne, Meng, Lawrence, Clarke, 

Adams, and Moulton. 

Chairman CHABOT. Good morning. I call this hearing to order. 

I want to welcome back Small Business Administrator, Maria 

Contreras-Sweet. 

I think everyone here wants the same thing, and that is to serve 

America’s small businesses the best we can. Those of us up here 

on the dais have, I think, an advantage. Our constituents let us 

know how we are doing all the time, and on an ongoing basis. 

As the head of an agency, I sometimes worry that too often you 

mostly hear from your own folks and from other Washington bureaucrats. That is the only explanation for why the 69 GAO identified concerns and problems have not been addressed. 

Yesterday was not the first time that these issues have been 

raised. Yesterday we heard some pretty serious concerns, both by 

members of this Committee and from our GAO witness who testified here yesterday about the management of the SBA. 

Administrator Contreras-Sweet, since you were not with us yesterday, I will recap those briefly with you, although I am sure your 

staff has probably already given you a rundown. 

I told the GAO witness yesterday that this kind of reminds me 

of being a parent. If your teenager’s room is a mess and they have 

stuff thrown all over the place, let’s say there are 70 items thrown 

on the floor, 69 to be exact, and they only pick up seven of those 

items, you do not look at the 62 remaining on the floor and raise 

their allowance for having made some progress. 

The ongoing problems at the SBA as GAO identified span the entire breadth of the agency, from information technology and security, to staff management issues, from disaster response, to fraud 

in your lending and contracting programs. It is a safe bet that 

small businesses in our districts on both sides of the aisle are paying the price for your agency’s failures. 

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2 

What we have here is a failure of confidence in the SBA, and unfortunately, for good reason. Before this hearing is over, I hope to 

hear a commitment from you to resolve as many of these problems 

as possible by June 30, and I mean this year. 

I do appreciate how accessible you have always been to members 

of this Committee, and I request that your office start providing 

monthly updates to our staff documenting your progress. 

If I were you, I would start with these IT and cybersecurity deficiencies. That is what worries me the most, and I will tell you why. 

We have seen the IRS hit, the State Department, OPM, and even 

the White House hacked. Small businesses trust the SBA, your 

agency, with their information. Oftentimes, very sensitive information, that they do not want a rival business or their neighbors or 

the Chinese Government to have access to. Yesterday, GAO told us 

this information is not adequately secured, and that cannot continue. 

I want to make this simple. We are not asking you to defend the 

SBA. We are asking you to do your best to fix it. I would now yield 

to the ranking member for her opening statement. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman, and thank you for 

holding this important hearing. As the only agency in the federal 

government charged specifically with helping small businesses 

grow and succeed, the Small Business Administration is critical to 

our nation’s overall economic health. All of its functions serve to 

strengthen and preserve the foundation of our economy. 

For small businesses to fully reap the benefit from SBA’s programs, it is important for the agency to operate efficiently and effectively, investing taxpayers’ dollars wisely. As such, one of the 

most important roles of this committee is conducting vigorous oversight of the SBA and its activities, so we know the agency is serving small businesses well, while spending taxpayers’ dollars wisely. 

Yesterday, the committee heard from the Government Accountability Office as it described a management report requested by 

myself and former Chairman Graves. GAO testified about a wide 

range of frankly, very troubling management challenges, many of 

which have persisted for years. 

I do fully recognize that many of these problems took root before 

Administrator Contreras-Sweet’s tenure, and furthermore, she has 

demonstrated a commitment to addressing them. 

With that said, there is still much work that needs to be accomplished in terms of addressing GAO’s recommendations. With only 

15 out of the 63 recommendations closed, there needs to be more 

attention, not just to check the box, but to truly improve the agency. 

I understand the frequent changes in political leadership create 

real difficulties for management. That is not an excuse but rather 

a reality of the environment SBA functions in. Yet, here you are, 

Ms. Contreras-Sweet, in the hot seat. You are the administrator, 

and you will be asked to respond for 64 recommendations that have 

been made not only under your leadership but the previous administration as well. I feel optimistic about your commitment to tackle 

those issues, and we are here to discuss how you intend to execute 

those recommendations by GAO. 

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3 

First and foremost, the agency’s complex organizational structure 

may be impeding its ability to perform its mission effectively. Yesterday, it was raised time and time again that SBA operates as a 

silo, resulting in inefficiencies and duplication. 

There also continue to be significant information technology 

problems as well. The agency has yet to implement more than 30 

recommendations made by the Office of the Inspector General related to IT security. This raises concerns about whether SBA’s data 

and system are potentially vulnerable to breaches. 

The SBA’s standard operating procedures are also in need of updating. By the agency’s own admission, 74 of these provisions require revision, and 31 should be cancelled, while another nine still 

need to be stripped. Yet, we have not heard a meaningful time 

frame as to when all of this will be accomplished. 

It is my hope that today the administrator can clarify where the 

agency stands on these procedural notices. 

These are just some of the long-standing issues raised in GAO’s 

analysis. There is always room for improvement. I was heartened 

to hear that SBA has accepted most of GAO’s recommendations, 

and I look forward to learning how the administrator is instituting 

change. 

I recognize that as a political appointee, she is in the difficult position of often having to answer for the work of her predecessors, 

as well as the career officials that often drive many key agency decisions. 

With that, I would like to thank the administrator for being here. 

I know your schedule is busy. As always, we appreciate your participation. I thank the chairman, and I yield back. 

Chairman CHABOT. Thank you very much. The gentlelady 

yields back. If Committee members have opening statements, I 

would ask that they be submitted for the record. 

A brief explanation of our time rules around here, which I know 

you are already familiar with. We basically operate under the 5 

minute rule. You will be given 5 minutes to testify. If you need a 

little more than that, we will give you a little leeway since we only 

have one witness, as we did yesterday, although he kept it, I think, 

within about 3 minutes. We are not asking that you do that. 

We will restrain ourselves by the same rules, 5 minutes, and we 

will go back and forth between Republicans and Democrats, of 

course. 

We all know who you are. I am not going to give a long explanation of who the Administrator is, but she is the 24th Administrator of the United States Small Business Administration, Maria 

Contreras-Sweet, and we welcome you here this morning, and you 

are recognized for 5 minutes or perhaps for a little bit longer if you 

need it. Thank you. 

STATEMENT OF MARIA CONTRERAS-SWEET, ADMINISTRATOR, 

SMALL BUSINESS ADMINISTRATION 

Ms. CONTRERAS-SWEET. Let me just thank you and Ranking 

Member Vela ́zquez, and all the members of the Committee for engaging in the work and giving me this opportunity to testify before 

you today. It is nice to see you. 

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4 

I would like to open just quickly with the review of fiscal year 

2015. It was one of the most successful years in our agency’s history. SBA reached historic levels for small business lending under 

our flagship 7(a) loan guarantee program, extending a whopping 

$23.5 billion in gross approvals. 

This represents a 22 percent increase in the number of loan approvals prior last year, a 23 percent increase in their dollar value 

compared to 2014. These gains matter because FDIC data shows 

that conventional small business lending has only returned to 84 

percent of pre-recessionary levels. 

Filling those gaps in the marketplace is the very purpose for 

which SBA was created. We made notable progress increasing 7(a) 

loans to businesses with the greatest difficulty accessing capital, 

which is an important emphasis. 

The dollar value of our loans was up year over year 22 percent 

to women, 23 percent to minorities, and 103 percent to veterans. 

Our number of loan approvals was up by 29 percent. I just said 

that. 

These successes would not have been possible if not for the swift 

work of your Committee. Due to our record breaking year, SBA ran 

up against our statutory lending cap this August, 60 days before 

the end of our fiscal year. At the urging of our stakeholders, our 

mutual stakeholders, in less than a week, I want to repeat that, 

in less than a week, you passed a $4.5 billion increase in our 7(a) 

lending authority, and ushered its passage onto the House floor. 

Your leadership allowed entrepreneurs across the country to continue to access the requisite capital they need to start, repair, and 

grow their businesses. 

SBA also shattered our record for small business investment 

under our SBIC program. We grew our portfolio by 10 percent to 

a record $25 billion. In fiscal year 2016, the 7(a), the 504, and the 

SBIC program share an important common thread, and I know you 

will appreciate this, all these programs are expected to operate at 

zero subsidy this fiscal year. 

Thanks to this Committee for working across the aisle to include 

an omnibus bill to permanently reinstate of 504 refinancing authority and an increase in SBIC’s Family of Funds’ limit. Both of these 

policy changes will inject much needed capital into our small business ecosystem. 

Another priority for the SBA is Federal contracting. The U.S. 

Government awarded an all time high of 24.99 percent, well over 

our mandated, congressional mandate, of 23 percent, of Government contracts to small businesses, supporting about 550,000 

American jobs. 

We reached historic procurement levels for small disadvantaged 

businesses and firms owned by women and veterans. 

To summarize, SBA achieved a record year in small business 

lending, a record year in investment, and a record year in contracting, with no taxpayer subsidy needed to maintain this momentum. 

This is the context in which our hearing takes place today. Let 

me take this opportunity to acknowledge the Government Accountability Office for helping to confirm the areas of shared concern and 

for offering constructive suggestions to address them. 

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5 

For my first days in office, I have prioritized the need to modernize SBA operations enterprise-wide, to respond to the technological, the demographic, and the globalization changes that are 

transforming our small business economy. 

To that end, I agree with many of the recommendations and appreciate the opportunity to address them, to fully bring, Mr. Chairman, the SBA into the 21st century. 

My corporate, my Government, and my community banking experiences will be brought to bear to make sure that you feel comfortable and the American people feel confidence in our systems, 

whether it be the enterprise risk management board that I have 

established, and all the other systems I have put in place. 

We have implemented a number of mitigation measures that I 

will get into later. My background, starting three businesses, also 

impressed upon me the importance of optimizing ROI, return on investment, when putting precious taxpayer dollars to use. 

We have to take every measure to use those dollars wisely, based 

on the best available data. In July of 2014, I established an impact 

evaluation working group charged with initiating and refining program evaluations for entrepreneurial development programs. 

I have held numerous meetings with key resource partners, our 

SBDCs, SCORE, vets and so on, stressing the importance of collecting meaningful metrics. We are currently performing in-depth 

program evaluations across the agency. This includes the most 

comprehensive assessment of the SBIC program in our history, in 

collaboration with—yes, I wanted to make sure you had confidence, 

so we went to the Library of Congress to do this work. Our report 

is due out this spring. 

We have also made significant strides in addressing the information technology challenges included in the GAO report. In fact, we 

are well underway of a major upgrade of our IT systems. It starts 

with a comprehensive network infrastructure modernization to give 

our systems greater capacity, transparency, and reliability. We are 

in the final stages now of moving our entire email system into the 

Cloud for more security, reliability, and capacity. We are investing 

in mobile technology, recognizing that our SBA field staff must go 

beyond the walls of the Federal offices and go to consumers and to 

small businesses where they are. 

We also launched projects to modernize our lending and contracting systems to re-engineer our disaster credit management 

system, something I care deeply about. 

This entire modernization agenda compliments our work to update our lending partner platforms, the outward facing part of 

SBA, by bringing advances such as automation, digital signatures. 

Yes, I said e-signatures, and online matchmaking to the entrepreneurs that we serve. 

These are time saving and cost saving technology enhancements 

that have encouraged community bankers to come back to SBA in 

many instances or to expand their lending. 

We have taken important steps on our human capital management efforts. I am proud to work along side the thousands of hard 

working dedicated public servants at SBA, and our resource partners. I am committed to ensuring that the agency has the talent 

required to effectively service America’s entrepreneurs. 

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6 

We are currently crafting a comprehensive work plan which will 

include both a skills gap assessment and a gap closure plan. We 

have taken steps to address the SBA’s aging workforce, not just 

unique to SBA, but across the Federal Government a challenge. 

At the launch of the VERA VSIP program, I understood that we 

wanted to offer employees an opportunity to make decisions, to create openings so we could begin to fill those competency gaps. 

SBA is organizing our Presidential management fellow’s program 

to increase our impact. We are working with our veterans. We are 

attracting more Peace Corps to our programs, and I know you are 

going to love this, we installed the first ever chief learning officer 

at SBA. 

I have been on the job for 20 months, and I am proud of the 

progress at this time, but the truth is that I could not have done 

this without your commitment, and I am grateful for your support. 

As a result of your leadership and the daily efforts of our dedicated 

staff, I inherited an agency highly leveraged, operating effectively, 

and focused on advancing and fulfilling our statutory mission. 

Again, the proof of the pudding is in the tasting, in the eating, 

and I think the record of our historic achievements speak to that. 

There is always room to improve, and that is what we are here to 

talk about today. Yes, I am committed to working with you to improve the services and give small businesses the agency that they 

deserve and that taxpayers expect. Thank you. 

Chairman CHABOT. Thank you very much. I will yield to myself 

5 minutes to begin the questioning. Madam Administrator, as I 

mentioned in my opening statement, the GAO witness yesterday 

testified that SBA’s IT security leaves the sensitive information of 

small businesses and their owners vulnerable to hackers, to theft, 

to fraud. Yet, the SBA has failed to implement more than 30 of the 

Office of the Inspector General’s recommendations related to IT security, leaving small businesses and individuals exposed. 

What is being done to address these problems and when will it 

be completed? 

Ms. CONTRERAS-SWEET. I think that is a fair question, Chairman. I honestly do. I think technology drives increasingly more and 

more of our lives, from our microwave to our smartphones. It has 

to be an essential part of our strategy at SBA. 

Just as an example, to show you the progress that I have made 

since I arrived—the last time I was here, you asked me about the 

LMAS system, the loan management accounting system. That is 

the main body with which we interact with our lending partners, 

an important function and purpose. It had been there for a while 

working this way through. I committed to you that I would get that 

done, and we done. 

To say that we are now off the mainframe and that we have an 

interoperable, a compatible system with today’s technology where 

we can unplug and play systems, is a wonderful achievement that 

even many Fortune companies do not achieve, and many in Government. I am proud that SBA has already achieved that. 

Chairman CHABOT. Let me ask you this then, and my time is 

limited, as I am sure you know. I would like your commitment to 

resolving the outstanding GAO recommendations by June 30, and 

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7 

having our staff briefed on that progress on a monthly basis. Do 

I have that commitment? 

Ms. CONTRERAS-SWEET. I commit to you to reporting to you 

on a regular basis and will work with Godspeed to make your deadline. 

Chairman CHABOT. We are shooting for the 30th, there are 30 

things, let’s get it done. 

Ms. CONTRERAS-SWEET. Mr. Chairman, I was able to touch 

the Pope while he was here, and I am hoping it infused me with 

the ability to fulfill that—— 

Chairman CHABOT. You got closer than I did. Let me move on 

to another question. When the GAO interviewed your district personnel so they could do their review, your folks insisted on having 

a lawyer present. Now, when this came up yesterday when the 

GAO was here, Trent Kelly, a member of this Committee who happens to be a former prosecutor and district attorney himself, made, 

I think, an important observation. He said that in his experience, 

when people lawyer up, as you folks did, it often means they have 

something to hide. 

Who made the decision to have a lawyer present, the need to do 

that when the GAO, an arm of Congress, was just performing its 

duty at the request of this body and at the request of the former 

chairman and the ranking member? This was a bipartisan request. 

Ms. CONTRERAS-SWEET. You know, again, I think that is a 

fair comment. I did not know that was happening. I was not 

briefed. I do not know. That is one thing I want to say. 

The second thing is if you have ever met our district staff, I have 

to tell you, nothing intimidates these people. I go out and meet 

with them. We have lawyers in the room. They still tell me all the 

problems and challenges and the wonderful things they are doing. 

Chairman CHABOT. With all due respect, should you not know 

who in your agency gave an order like this that interfered with the 

GAO’s effort to conduct an investigation? Again, the GAO is a 

branch—we all get a paycheck. The taxpayers pay for us. We 

should not have to lawyer up if we are talking. 

Ms. CONTRERAS-SWEET. Mr. Chairman, you know, if I may 

just respond, what I really wanted to say I have no idea if it was 

the reverse, the reciprocal, and I will look into it, and I will get 

back to you. It could have been that some of the employees felt intimidated by an investigation and maybe wanted somebody in their 

presence. 

I understand—what I did get briefed on is that the I.G., Mr. 

Shear, in particular, said—maybe he had independent ability to follow up through emails and was able to get the information, and 

clearly by this report, you can see that nothing was being hidden. 

Chairman CHABOT. It should not take until June 30 to find out 

who made that decision, so please get back to us. 

Ms. CONTRERAS-SWEET. Fair enough. 

Chairman CHABOT. I have limited time. I only have time for 

one more question. The GAO review of the SBA stated, and I quote 

‘‘In the September 2015 report, we found that the SBA has not resolved many of its long-standing management challenges due to 

lack of sustained priority attention over time.’’ 

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8 

GAO went on to say ‘‘This raises questions about the SBA’s sustained commitment to addressing management challenges.’’ In 

other words, dealing with the SBA’s shortcomings and deficiencies 

and, in many, cases failures, apparently just is not a priority to 

some of your folks. Well, it is a priority to this Committee. Why 

should we not question the SBA’s sustained commitment to improving itself, and you have indicated that you are willing to do that, 

I appreciate that, we are willing to work with you, so it can serve 

the needs of America’s small businesses all across this country? 

Ms. CONTRERAS-SWEET. Well, let me just say with great lament, when I read the report that these issues had begun in the 

1990s and some even as far back to the 1980s, so I appreciate that 

I have been here for about 20 months. I think that you will see 

that the progress that we have made is quite remarkable, but as 

I mentioned to you, I am committed to keeping this momentum 

going, and with the good Lord, making the progress that your expectations meet. 

I am absolutely committed to making sure that people understand that this SBA is effective, and as I said, the numbers prove 

it out. Sometimes it is not pretty, and it should be a little prettier 

in terms of our documentation and our processes. 

But when you think of technology, we started a program called 

LINC in this amount of time, that we were able to start a program 

like Match.com—I do not know if any of you are familiar with 

Match.com, but you do not have to tell me if you are—the point is 

seriously that—— 

Chairman CHABOT. Just for the record, I know nothing about 

it. 

Ms. CONTRERAS-SWEET. I just want you to know that with 

that system, we are now able to get data for prospective borrowers, 

but this data is with the lender, 22,000 people have already been 

connected in just a few short months. That is a remarkable technological accomplishment. We are now introducing a new platform 

with our lenders. 

I understand there are challenges in documentation. I commit to 

you working better on that. I want you to know the work is getting 

done. 

Chairman CHABOT. Thank you. My time has expired. Again, 

just to reiterate, our number one priority is what is in the best interest of America’s small businesses. That is what this hearing is 

about. Seventy percent of the new jobs created across America is 

small businesses doing that. We need to do our best for them. 

I will now recognize the ranking member for 5 minutes. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. I would like to 

enter into the record as a matter of clarification the fact that in 

SOP 40-002, it is a requirement for legal counsel to be present 

when district staff is being interviewed, so here it is. It is part of 

the SOP. 

I would like to ask the administrator—actually, I would like to 

recommend that you start with 40-002 to remove barriers to GAO 

access. You could start by updating this SOP, so that it reflects 

there is no intention to prevent staff from speaking to GAO or GAO 

gaining access to documents of the Small Business Administration. 

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With that said, in the report, Administrator Contreras-Sweet, 

GAO found that SBA still has not implemented disaster program 

reforms, which this committee authored when I was chair in 2008. 

I asked GAO the same question yesterday, but I would like to hear 

your answer as well. 

What are the main reasons why SBA has not established the Immediate Disaster Assistance Program? 

Ms. CONTRERAS-SWEET. You and I talked about that off line, 

and I heard you loud and clear, and I did a little bit of homework 

on that. Number one, I learned that we actually had promulgated 

an interim rule and we put it out, so we put the reg out. Then 

when we were recruiting banks, financial institutions—quite frankly, you and I could hold a roundtable—what they said is that the 

IDAP, the immediate disaster assistance program—— 

Ms. VELA ́ ZQUEZ. Because my time is limited, I know you are 

talking to lenders. What is the timeline for doing so? 

Ms. CONTRERAS-SWEET. I am just saying that we already 

have an interim rule for IDAP that we can use and deploy, start 

using that. What we are trying to do now is recruit banks. When 

you ask a bank to amortize a $25,000 loan, a $10,000 loan over 10 

years, it is something that is not attractive to them, especially because it has a low interest cap. Somehow, we have to make it more 

attractive. 

In the spirit of what you want, I wanted to assure you that the 

Office of Disaster does provide loans, and we already did a noncollateralized $25,000 loan that is now being processed in 7 days. 

Ms. VELA ́ ZQUEZ. As you know, we have been dealing with the 

issue of Sandy in New York. Many people and businesses who 

qualified for those loans did not get them. We passed legislation to 

reopen so businesses could reapply. 

If you see some issues where you feel there has to be some legislative fixes, we need to hear about it. Let’s have that discussion 

and get this program up and running, because we cannot wait until 

the next natural disaster strikes and come back here to be in the 

same position, asking the same questions. 

Ms. CONTRERAS-SWEET. Right. When I looked into that, I 

agreed with you, and I did not want to rely on hearsay, and that 

is why now I have put out a formal ANPR, a Notice of Public Rulemaking, and that is out and available, and as soon as we get that 

formal comment, we will respond back to you what those remedies 

might be. 

In the interim, I am also pushing forward on the EDAP and the 

PDAP to make sure that all the complements that you intended are 

executed in the way you imagined. 

I just wanted to add, if I may, our disaster assistance, as you 

know, has been something that is very, very important to both of 

us, and that is why the day I was sworn in, I committed to flying 

to the State of Washington to look at Oso, Darrington, Arlington. 

I went to the State of North Carolina to meet with Nikki Haley 

when she was experiencing hers, and I am committed to going to 

Missouri. Our team is already there. We have a dozen employees 

in Missouri already examining the disaster to determine the appropriate response. 

SBREP-219 with DISTILLER

10 

The record shows that now, once we are given permission and declare a disaster, we are there in 24 hours, Madam Ranking Member. 

Ms. VELA ́ ZQUEZ. Thank you. I just wanted to congratulate you 

on the many successes including the 7(a) lending dollars, contracting goals, exceeding those contracting goals. SBIC is up to 10 

percent. We could do better. That is the reason we are here today. 

We need to update those SOPs because if the agency cannot hold 

its resource partners accountable and there is confusion as to how 

the programs are supposed to operate, that will impede their success and businesses to be able to get the assistance they need. 

What have you done so far and what are you planning to do to 

further upgrade the SOP problem? I do not want to impose upon 

you to provide a report every month, but I want a commitment that 

tells us you are really going to do everything you can. You know, 

the next administration will be in place pretty soon, a year and a 

half from now, and we need to see what type of resources you are 

going to put into place. If there is a lack of adequate resources for 

your agency to do the work, we need to know so that in the next 

budget submission, it is included that you need more funding. 

Ms. CONTRERAS-SWEET. Thank you for that—— 

Chairman CHABOT. The gentlelady’s time has expired. You can 

answer the question, but I do want to make sure, on behalf of the 

Committee, we do want a monthly update on what progress is 

being made towards the deficiencies that the GAO has set out in 

their review. 

Ms. CONTRERAS-SWEET. I heard you, Mr. Chairman. Thank 

you. 

Chairman CHABOT. Thank you. 

Ms. CONTRERAS-SWEET. With great brevity, let me just say 

for those of you who have not seen an SOP, this is a review, a complete review and overhaul of the Department’s way of operating. 

Some of these are inches tall. This is an important body of work. 

I want you to know that we have completed more SOPs in the 20 

months that I have been here than the prior 5 years combined. 

That is just to show you the momentum with which I have taken 

this so seriously. 

I am working hard to make up lost time, but I also want to have 

it institutionalized, so that when somebody comes in, this is work 

that has been harnessed and seized. To that point, we already have 

over 30 more SOPs that we are interacting with and that are pending in interaction that we think will show great progress very soon. 

Just know, I take those SOPs seriously, again, for the institutionalization of our legacy. 

Chairman CHABOT. The gentlelady’s time has expired. The gentleman from New York, Mr. Gibson, is recognized for 5 minutes. 

Mr. GIBSON. Thank you, Mr. Chairman. I appreciate this hearing. You know, with due respect, I will say right up front, I am a 

little disappointed so far in the approach of the hearing in terms 

of the responses. You know, the Chairman set a tone, I think, at 

the outset that we really want to work together going forward identifying all the deficiencies and the shortcomings, but you know, in 

the opening set of remarks, I certainly appreciate how you have 

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11 

pointed out what you did with the resources to support small businesses. I want to state that very clearly and sincerely. 

But really the focus here is on improving what are very disturbing findings from the GAO. Towards that end, my colleague 

from New York, Mr. Hanna, leads a Subcommittee. They did, I 

think, very strong work on behalf of the American people with regard to procurement reforms. This was incorporated into the National Defense Authorization Act in 2013. Yet, among the findings 

from the GAO is there has been no action taken. The law was very 

clear that action was to be taken within 6 months of the implementation of that law. 

My question to you is what explains why nothing has been done 

on this score? Do you disagree with us on what was done? If you 

do, it would have been nice to know that before now, but if you 

agree with us, why has nothing been done? 

Ms. CONTRERAS-SWEET. First of all, let me just thank you for 

your service. I know you are an admirable veteran, and I really salute the work that you have done in particularly difficult zones in 

our world. 

Let me just speak to if I have not shown or exhibited the level 

of seriousness with which I take this work, I apologize. Let me just 

say when I looked to see the momentum, because I thought I 

should stress this to you, under prior administrations, like in 2002, 

for example, there had been one debarment. In 2003, one. In 2004, 

zero. Under my term, I have already completed 47 of these, just to 

show you the momentum with which I am approaching this work. 

Please do not underestimate the commitment, this commitment 

to you. I came from the State of California. I had in California 

42,000 employees to work with in one State. Do you know here, to 

the ranking member’s question, I have fewer than 2,000 employees. 

In procurement, we have to partner, and we work very closely 

with our strategic partners. If you just took the Air Force alone, do 

you know that the Air Force has 22,000 captains—2,200 captains, 

excuse me, just captains alone. Again, I have fewer than 2,000 employees across the agency. Yet, we are managing a portfolio of $120 

billion, the most complex system of networks. We are procuring— 

we are redirecting 23 percent of the largest procuring in the world 

to small businesses successfully. 

Yes, we are pushing to debar because I do not want any fraud, 

waste, and abuse. I can tell you that when I started my own personal business, I could not get certified as a woman business. I 

could not confirm that I was a woman owned business. 

To me, to make sure we are doing those certifications is important, but also more important, to make sure that people are not 

getting in who do not deserve to be in the program and are abusing 

the program and taking advantage of it, and taking contracts from 

people who deserve them. 

Our people are there fighting up against the Department of Energy top officials, up against Department of Defense officials. Our 

small business advocates, our PCRs, are in those places where people do not like them to be because we are sharp elbowing them to 

make sure every appropriate small business opportunity goes to a 

small business. 

SBREP-219 with DISTILLER

12 

Mr. GIBSON. Thank you, appreciate the passion that you bring 

and the leadership to the organization. One just quick follow up on 

that. As the chairman mentioned, and we are going to be anticipating reports, monthly reports, I would hope that in the first one, 

we will see an official response to the implementation of this fiscal 

year 2013 National Defense Authorization Act as it relates to the 

requirements we levied upon the SBA. 

I have very little time remaining. Let me just say from my experiences leading formations, one of the things that concerns me is 

the level of turnover in the SBA, so we are not going to have time 

for you to respond, but also for the record, I would like to know 

from your vantage point as the leader, what are you doing to ensure continuity in terms of transition periods. 

Really, two points. One is are you taking any executive action to 

lessen the turnover, and then two, given those realities, what SOPs 

do you have in place to ensure that when new folks come on board, 

there is a good and effective transition? 

Mr. Chairman, I am sorry I am over and I yield back. 

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

you could give a brief answer. Again, we are going to be receiving 

reports, so you can go in more depth with the follow up, but if you 

could make a brief response. 

Ms. CONTRERAS-SWEET. Let me just say that to me one of the 

most important things is to show people what their job is, to give 

them clarity of purpose, and to reward them appropriately, and to 

provide an environment where they are well resourced, their scope 

of work is clearly defined, and they are well resourced, as I said. 

To that end, I have put in the first ever SBA chief learning officer. I have up scaled the CLO/COE function in our office where 

now I have somebody who actually has the theoretical and the 

practical experience. I am holding town halls, I am visiting every 

district office, to learn what the challenges are across the country. 

Let me just say across the Government, we have an aging workforce challenge that we have to address. I have gone with my chief 

of staff to try to recruit more people. We are holding job fairs 

across the country. Just in the sort time I have been there, I have 

hosted 10 job fairs. I have reached out to the Peace Corps and our 

veterans to try to attract more skills and competencies of discipline, of entrepreneurship, and perseverance. I think it is beginning to pay off, sir. 

Chairman CHABOT. Thank you. The gentleman’s time has expired. The gentlelady from California, Ms. Hahn, is recognized for 

5 minutes. 

Ms. HAHN. Thank you, Mr. Chairman, ranking member. A very 

interesting hearing, and I really want to thank Administrator 

Maria Contreras-Sweet for being here, and just sitting here listening to you, your answers in the first couple of questions, has really 

restored my passion for small businesses and what this agency is 

doing. 

I had an opportunity to work with her when she was secretary 

of California’s Business Transportation and Housing Agency. As 

Administrator, what I really appreciated is your district staff, Victor Parker, and you both have come to my district, and we have 

held roundtables, and we have toured small businesses together. 

SBREP-219 with DISTILLER

13 

The chairman’s opening comment about sometimes all we hear is 

from our own constituents about some of their problems, I think 

you have actually heard the problems yourself because you have 

been on the ground, you have been in our small businesses. 

While certainly this hearing is about the recommendations that 

we are trying to get responded to and reformed in the administration, it is clear that your record year of lending to small businesses, 

investing and contracting is really what I care about, and I know 

maybe the priorities on this Committee may be a little bit different, 

but that is my priority. That is what I always heard, access to capital and Federal contracting, and you are certainly addressing 

those previous weaknesses in the agency. 

It is clear that SBA has been around since 1953, and many of 

these issues that were pointed out in the GAO report have existed 

long before you and long before this administration. 

Whether or not you can address every single one of them by 

June, I do not know. I have no doubt that you are going to try, and 

that is important to you. 

One of the issues in the report that was important to me, and 

I understand it is also a priority for you, is the women owned small 

business program. This is, of course, a program that allows women 

owned small businesses to compete for Federal contracts. 

Unfortunately, one of the things we found out was there were 

problems verifying the eligibility of the applicants resulting in contracts being awarded to men. Yikes. I know you are working on 

this. Can you tell us where you are in the process of making sure 

that those contracts indeed are being awarded to the women owned 

businesses? 

Ms. CONTRERAS-SWEET. Thank you. As you know, when I arrived, you mandated that we achieve a 5 percent goal with women 

owned small businesses, and to my great lament, we had not 

reached a 5 percent goal for contracting with women. Women are 

50 percent of the population. I think it should be something that 

should be achievable. 

We came to you again, and I was delighted that Congress has 

given us a brand new tool, sole source authority, where we have 

now the ability to begin to certify businesses, so we can take out 

any fraud, waste, and abuse. I just published to get the proper 

feedback, to make sure we are following the right procedures and 

processes, and not just implementing something nilly-willy. 

I am pleased to tell you that already we have that out and we 

are already beginning to get comments, and we are going to formalize them and create a process for certification that will assure 

that people understand what is a woman owned small business, 

that the standard is set, and that we have people properly trained 

to be able to certify them. 

Ms. HAHN. Thank you. I appreciate that. Certainly, in L.A. 

County, you know, we have more women owned businesses than 

any other county in the country. We are very proud of that, and 

for me, that is a priority in this Committee, that clearly we are 

supporting the women owned and minority owned businesses, in 

my county, for sure, so I appreciate your work on that one concern 

and recommendation. 

SBREP-219 with DISTILLER

14 

Ms. CONTRERAS-SWEET. You have been a stalwart on behalf 

of women, not only for the County of Los Angeles, but for your 

country. Thank you for your leadership. 

Ms. HAHN. Thank you. I yield back. 

Chairman CHABOT. The gentlelady yields back. The gentleman 

from Virginia, Mr. Brat, is recognized for 5 minutes. 

Mr. BRAT. Thank you, Mr. Chairman. I will yield back my time. 

Chairman CHABOT. The gentlelady from American Samoa, who 

is the chairman of the Subcommittee on Health and Technology, 

Ms. Radewagen, is recognized for 5 minutes. 

Ms. RADEWAGEN. Thank you, Mr. Chairman, and ranking 

member. Madam Administrator, considering the recent new offices 

built that may or may not provide redundant roles as other offices 

in close proximity, was there any thought given to the U.S. territories? Can you explain your rationale? 

Ms. CONTRERAS-SWEET. I am sorry. The rationale for what? 

Excuse me. I am sorry. 

Ms. RADEWAGEN. Let me give you the question again. The U.S. 

territories, the question was considering the recent new offices 

built that may or may not provide redundant roles as other offices 

in close proximity, was there any thought given to the U.S. territories. 

Ms. CONTRERAS-SWEET. I heard the question, I was trying to 

understand. Are you saying we are building offices? I was just trying to clarify. 

Ms. RADEWAGEN. I think so. 

Ms. CONTRERAS-SWEET. Because I am not aware that we are 

building an office there. I am trying to understand the context of 

the question. Let me just say that I would be delighted to sit down 

with you to understand if you are not getting the service levels that 

you deserve and you expect, to come back to you with a plan. 

Ms. RADEWAGEN. Thank you, Madam Administrator. Next, 

what functions are performed by personnel in the agency’s regional 

offices? 

Ms. CONTRERAS-SWEET. What are the personnel functions? 

Ms. RADEWAGEN. Yes, what are the functions performed by the 

personnel. 

Ms. CONTRERAS-SWEET. I see. 

Ms. RADEWAGEN. In the regional offices. 

Ms. CONTRERAS-SWEET. Thank you. What we have at headquarters is policy offices, so you will have, for example, the GCBD, 

the Office of General Contracting and Business Development. You 

will have an Office of Capital Access. We have the various offices 

that operate the various programs, staff, and line functions. 

In the district offices where the magic all comes together, there 

in the district office you will have a lending relations specialist. 

You will have a BOS, business opportunity specialist, working 

along side an EDSS, educational development service specialist. All 

these people work together to create a sense of community, to provide the full complement of services that our resource partners 

need and entrepreneurs need, and our lending partners and local 

governments. 

I will give you an example. We have a challenge today where 

while we can be a program provider, we also want to be a voice for 

SBREP-219 with DISTILLER

15 

small business. One of the challenges we found in local communities is they are the ones that license small business formation, 

and in many instances, capital formation. 

We launched a program called Start Up in a Day. Start Up in 

a Day is where we go into the city to make sure they can put on 

online responses so that small businesses can start their business 

in a day without having to go through a labyrinth of regulation. 

Ms. RADEWAGEN. Thank you. 

Ms. CONTRERAS-SWEET. They execute programs such as that. 

Ms. RADEWAGEN. Have you examined whether those functions 

could be performed by other personnel either at headquarters or in 

the district offices, and thereby provide additional full-time equivalent personnel for functions such as an increase in the number of 

procurement center representatives? 

Ms. CONTRERAS-SWEET. Honestly, having been an entrepreneur and a community banker, I have thought about that, and 

it was a tough call for me. I could convene and have everybody centered and headquartered in Washington, D.C. and not connected to 

community, but I decided that it was more important to be embedded in the community and a part of the community, and understand what those nuances in each neighborhood. I think the numbers prove that is working well. 

Ms. RADEWAGEN. Thank you. You do not have a chief information officer, a position I presume that you consider critical to the 

operation of the agency. Where are you in the process of finding a 

permanent chief information officer? I appreciate that you have a 

chief learning officer. 

Ms. CONTRERAS-SWEET. The chief learning officer is more of 

a human resource function, I should say. What I did is I went to 

Silicon Valley, I went out to California, I have gone to the East 

Coast, to try to find a really thoughtful, successful person who 

knows how to procure and to execute. 

Well, I think that I have some talents. I must say I am not an 

expert in technology. I really wanted to make sure that I had the 

top level of advice, to make sure that I was filling the position appropriately. I have a strong person who has been a dedicated employee of SBA as the acting, and I have now put in what I call a 

chief design officer—digital officer, excuse me, that is working with 

us to fully complement that team and fill it in. 

We are getting candidates. We are going to the right places to 

find the right people. It is tough Government-wide to attract top 

technology talent because of the salary structure and compensation 

in Government compared to the private sector. 

I am determined, and I think we are going to be successful to do 

it. 

Ms. RADEWAGEN. I think you do need a chief information officer. 

Ms. CONTRERAS-SWEET. Agreed. 

Ms. RADEWAGEN. Thank you very much. 

Ms. CONTRERAS-SWEET. Thank you. Agreed. 

Ms. RADEWAGEN. I yield back, Mr. Chairman. 

Chairman CHABOT. Thank you very much. I would just note 

that the gentlelady is absolutely correct. In fact, by statute it is required to have a CIO. We urge you to get that done, please. 

SBREP-219 with DISTILLER

16 

Ms. CONTRERAS-SWEET. Yes. 

Chairman CHABOT. We will now move to the gentlelady from 

New York, Ms. Meng, who is the ranking member of the Agriculture, Energy and Trade Subcommittee. 

Ms. HAHN. You skipped over Ms. Lawrence. 

Chairman CHABOT. Sorry about that. I was given the wrong 

card. Ms. Lawrence? Did you get here when we started? 

Ms. LAWRENCE. Yes. 

Chairman CHABOT. Go right ahead, you have 5 minutes. 

Ms. LAWRENCE. Thank you so much. I want to thank the chair 

and our ranking member. I want to say, Madam Administrator, 

your responses to the questions have been—I sit on Oversight. I am 

used to speaking to our Department heads and leaders in our Government. 

It is refreshing to have an Administrator who first of all shows 

commitment and enthusiasm about your responsibility, but you 

have been able to answer with a proactive response to these questions and concerns. I want you to know that is refreshing and I appreciate it. 

In addition to that, it is important that we do have reviews of 

Departments. The fact that the GAO has identified areas that we 

can improve, we as a Government need to look at those areas, but 

our commitment and our focus should be on how do we move forward. With that, I want to say I am very encouraged by your leadership. 

I wanted to follow up again on something I am very passionate 

about that I share with my colleague, Congresswoman Hahn, and 

that is about the women and minority owned businesses. For the 

record, the women owned businesses grew by more than 25 percent 

and minority owned grew by 38 percent between 2007 and 2012. 

If you want to say how did we grow our economy, it was on the 

women owned and minority owned businesses in America. We 

should be very committed and focused on that area. 

The majority of the women owned businesses that have opened 

has been in health care and social assistance. How is the SBA encouraging and promoting women and minorities to open businesses 

in technology, manufacturing, and the engineering industry? 

Ms. CONTRERAS-SWEET. That is a very, very important question because we have to make sure we are moving forward in terms 

of the skills that the American workforce really needs. I appreciate 

where you are going. 

Let me just give you two broad answers. One is that just to make 

sure that we are getting more people who traditionally have not 

been given access to capital, we have taken some very aggressive 

steps. We had zeroed out fees on loans under $150,000. That is an 

important thing, just so that the cost structure is better for the borrower. 

Second, I have recruited more and more outlets, credit unions. 

We had not really engaged credit unions to the extent that I think 

they can be engaged. They are non-profit. They are not paying 

taxes. They willingly agree to enter into a partnership with SBA 

in an unprecedented way, so I am pleased. 

Instead of having people knock on the door of a bank and another bank and another bank, what I wanted to do was put up this 

SBREP-219 with DISTILLER

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program that I call ‘‘LINC,’’ it is where again a prospective borrower answers some simple questions and then they are connected 

to financial institutions. 

As I referenced earlier, over 22,000 people have already made 

matches. In fact, the last time I was in this room, there was a 

woman who was sitting in this audience who said as a result of 

LINC, she was able to take a very usurious rate loan and make it 

a more attractive loan, and as a result, increased her cash flow, her 

EBIT, and is now growing. Those are the kinds of stories I get 

across the country. 

The second point about making certain we are getting people into 

tech, in the STEM fields, which you allude to, we have launched 

a program that we call ‘‘InnovateHER.’’ When I say ‘‘program,’’ it 

is an outreach initiative. 

What we wanted to do is to say to women who we do not see in 

Silicon Valley and doing the scale ups at the same rate— 

‘‘InnovateHER’’ is spelled h-e-r, the last three letters. It is a national effort to reach out to women to say hack, disrupt, invent, 

change industries, you, too, can be in cybersecurity, you, too, can 

be in precision medicine, you, too, can be in aeroponics. 

We need to get women in the non-traditional fields, so this effort 

of rolling this out is getting women engaged. We had last year 100 

various competitions in women engaging, and beginning to disrupt 

industries that they belonged to. 

I am proud of that progress, but again, we will continue to do 

it, and we invite you to come in and participate this Women’s History Month in March where we will be convening the winners of 

those competitions. 

Ms. LAWRENCE. Thank you so much. Before my time rolls out, 

I also wanted to comment on—you have addressed extremely well 

how you are putting in place standard operating plans, and how 

you are addressing that. I want to make sure that we are supporting you, giving you the tools that you need. You complimented 

us a couple of times for the action that we have take. 

It is not so much just getting a report from you, but also when 

you identify there are areas that the Government could support the 

Small Business Administration, that we are getting those on a regular basis, too. Thank you. 

Ms. CONTRERAS-SWEET. Thank you. 

Chairman CHABOT. The gentlelady’s time has expired, but you 

can answer the question. 

Ms. CONTRERAS-SWEET. Just as I stated earlier, we have 

closed 14 SOPs after not having seen anything closed, more than 

in the prior 4 years combined, as I said. We have an additional 41 

pending and working collaboratively with the GAO, so the momentum is strong, and I do commit to you that we will double what 

we did last year. Thank you. 

Chairman CHABOT. Thank you. The gentlelady’s time has expired. The gentleman from California, Mr. Knight, is recognized for 

5 minutes. 

Mr. KNIGHT. Thank you, Mr. Chairman. Madam Administrator, 

I have just a couple of questions. One of them is on the line of the 

CIO, and I know you have been there for 20 months. This is a critSBREP-219 with DISTILLER

18 

ical position. I understand that someone is overseeing this position 

as an assistant. 

Would we believe that person would have the same responsibilities as a CIO would, would they respond to your expectations? As 

I understand it, responds to the COO and not to you. Would that 

continue to be when the CIO is hired at some future date, would 

they still continue to respond to the COO or would they come to 

you? 

Ms. CONTRERAS-SWEET. That is a fair question. Let me just 

say that in the structure, the organizational structure, as we have 

it, the operations—we have a deputy administrator who is sort of, 

if you will, I do not want to use the term, you could say the chief 

operating officer. The bowels of the organization, the functions that 

run and rev up the engine and are torqued all report into the deputy administrator. That is generally the way the SBA has operated. 

This person reports in through that function, and it is working. 

This person has been hugely successful. I just had him present at 

an entire town hall. I want to tell you, few people in our agency 

enjoy these when we put them on, but we think they are important 

ways to distribute information. He received one of the loudest applauses for the moves that he is making to put us on the Cloud, 

to make that move. He is getting now laptops for our field operations people so they can go to meet and participate in—— 

Mr. KNIGHT. This would still come to you at some point; is that 

correct? 

Ms. CONTRERAS-SWEET. Oh, sure. It is a very flat organization, and I make myself available. I participate in weekly senior 

staff meetings. I am seeing this person on a regular basis. 

Mr. KNIGHT. I understand the day to day operations and how 

the process works. At some point, there are going to be responsibilities and decisions that are going to have to be made, that are 

going to have to be made by you or be on your door step. I just 

want to make sure that is clear, especially when a CIO is hired. 

The 69 items, I know that people have made a lot of this, and 

you being in there for 20 months and these items coming up after 

that, seven items being cleared up and 62 items still being on the 

docket. As a leader of an organization such as yourself or any one 

of us, there must be prioritization, and you must put out the fires 

first and then start working on the issues that you think are number 1 through number, in this case, 69. 

Would you say that any of these items are not on that list? In 

other words, would you say hey, I have looked at these 69 items, 

yes, there are some good items here, there are some things we 

want to work on, some issues that we want to fix, but there are 

some of them, and just by one of your statements that you say 

some of these might not be needed, could you explain parts of these 

or any of these issues, these 69, that might not be needed or you 

might not work on? 

Ms. CONTRERAS-SWEET. You know, I track these. I just want 

you to know I track them. I receive this report on a regular basis. 

What I want to tell you is as I dissected them again, I noted, and 

I think you did, too, that the GAO stated that some stem from the 

1980s and 1990s, so we are working through them as I mentioned. 

SBREP-219 with DISTILLER

19 

I am doing that. In other words, I think they are all important 

and they are all vital, but I am prioritizing. For example, the disaster. There are two that were disaster oriented. We pushed those 

out as a priority. I am going through and sifting, making sure that 

I am—— 

Mr. KNIGHT. Basically, what I want to get to is we have a 

prioritization of basically 1 through 69, we are going to knock these 

items out. Lastly, we have an aging workforce in many industries, 

but there is probably no more difficult industry than the IT area 

in this country. 

We are producing about 150,000 jobs a year in software, IT, coding, and all of these types of positions. It is very difficult to get 

them into Government jobs, as I understand the pay is not as good. 

What kind of policies, what are you pushing forward so we can 

get these young 20-30 year olds that know up-to-date IT, know upto-date software, and you can push them into the SBA? 

Ms. CONTRERAS-SWEET. Thank you. I would like to have, if 

you would, the budget the GE has. I think those commercials are 

fantastic where they say oh, you are going to go work for GE, you 

know, too bad you are not going to go work for a hip, happy place. 

I feel their pain, do you know what I am saying. 

That is why I said we are really trying to reach out to Peace 

Corps’ types, to veteran types. I am going to more college fairs. We 

are traveling to the coast as well as the middle part of the state, 

if you will, to brand SBA. I hope you felt our efforts, for example, 

during Small Business Saturday, which is the weekend of Thanksgiving. I was not just talking about supporting small businesses, 

but also as making SBA an attractive place to work. 

To that end, we are working through millennial channels. I just 

retained a fabulous producer and very popular gentleman with 

youth, Mike Muse, who is now doing video spots for me and placing 

them out in different industries. I partner with anybody who is 

willing to help me amplify the opportunities at SBA. 

More important to the point is I write the correct job description, 

so we are not just hiring the same people again. That is what I 

have undertaken as a priority, to make sure the job descriptions 

speak to the future, and then when they come in, for example, the 

PMSs that I have right now, since I have very limited H.R. training budget, I give them rotational opportunities. I give them an opportunity to be mentored. We are just trying to shake it up. 

Mr. KNIGHT. I appreciate that. I know my time has expired, Mr. 

Chair. Thank you. 

Chairman CHABOT. The gentleman’s time has expired. Now, the 

gentlelady from New York. I apologize for the mix up before. 

Ms. MENG. That is okay. Thank you, Madam Administrator, for 

being here today, and also for all the work that you have been 

doing, traveling all throughout the country to various districts, including ours in New York, hearing directly from small businesses 

about their problems and concerns. 

I, too, echo the sentiments of my colleagues, especially Ms. Lawrence, in appreciating your passion, enthusiasm, and great efforts 

while being Administrator. 

My question is in response to the GAO’s recommendations, the 

agency has said that it is currently restricted from collecting data 

SBREP-219 with DISTILLER

20 

from resource partners, or that the agency does not have adequate 

information collection systems for some programs, which makes 

program evaluations difficult. 

Can you expand on this and explain how these restrictions and 

lack of adequate collection systems are preventing the SBA from 

conducting evaluations, and what efforts can Congress undertake 

to help remove any data collection restrictions and help the SBA 

collect important data from the resource partners? 

Ms. CONTRERAS-SWEET. I think data collection is fundamental in evaluations, assessments, and strategic planning. You 

have to start with good data, rich data. I am pleased that in each 

of my outreach efforts, whether it is our SCORE partners, our 

SBDCs, the SBICs—just stop me if I am using too many acronyms, 

I apologize. I do not like jargon, so I do not mean to do that. 

Our resource partners, let me just say that they are collecting 

rich data, but there is a natural screen in how much they give to 

us. We have reached agreement on 10 measures that we can agree 

on about encounters of capital formation, business start’s, contracting, those kinds of things. That data is collected and it is 

mined, and it is utilized. 

Then we get qualitative data, not just the quantitative, but we 

also work on qualitative interactions, meaning focus study groups 

and interactions in roundtables that I have hosted, for example, 

with you around the country, and with the chairman and the ranking member and others. 

My disappointment, if you will, and a way in which you could 

help me, is that for me, a critical data point would be an unique 

identifier. I am not trying to invade privacy. It can be any numeric 

number, it can be part of an alphabet, but for me, when someone 

says they have served 100 people in a day, I do not know if that 

is somebody that came in twice that one day or if that is 100 different people. 

I think an unique identifier would be very useful in being able 

to track longitudinally what our actual accomplishments are. That 

is what I am very seriously looking into. I have discussed this with 

our resource partners, and they are beginning to be, I feel, some 

are more amenable than others, but with your help, we can get 

there. 

Ms. MENG. Thank you. My last question is about human capital 

management. From yesterday’s hearing, we talked about how the 

GAO report identified challenges at the agency, one of which was 

the need to prioritize transformation in the area of human capital. 

Do you agree, and what is being done about that? 

Ms. CONTRERAS-SWEET. Yes. I should have just mentioned to 

you more to the point about your prior concern, at the agency, what 

I have done is I have put together an interagency evaluation working group so that all the program heads are not just working with 

our resource partners but also what measures matter to them, so 

they are also mining the correct data, and we can build proper 

evaluations to be more responsive to the management challenges 

that we are addressing here today. I just wanted to speak to that. 

With respect to human capital, as I mentioned, when we talk 

about the district offices, as the Congresswoman from the islands 

mentioned earlier, the Samoa Islands, our teams, because we have 

SBREP-219 with DISTILLER

21 

one of the best leverage factors around, again, understanding we 

are fewer than 2,000 employees, leveraging these kinds of numbers, managing the Federal Government procurement process, and 

the kinds of things that we do, we do leverage up. 

These district offices in many instances have five or six employees, and when you and I host a conference with 500 people who 

need their help, it is a lot of lifting. In any instance that we could 

take a serious look at the structure, meaning size of SBA, I think 

it would go a long way. 

Ms. MENG. Thank you. I yield back. 

Chairman CHABOT. Thank you. The gentlelady yields back. The 

gentleman from Florida, Mr. Curbelo, who is chairman of the Subcommittee on Agriculture, Energy and Trade, is recognized for 5 

minutes. 

Mr. CURBELO. Thank you, Mr. Chairman, and thank you, 

Madam Administrator, for being here today, and thank you also for 

visiting South Florida last year. It was a pleasure to see you at 

Florida International University. 

I think one of the complaints that most of us hear most frequently about Government is that it is dysfunctional, that Government is incompetent, Government is unaccountable. 

Yesterday in the GAO representative’s testimony, one of the 

things that struck me the most was that the GAO perceives a 

breakdown in communication at the SBA, that employees do not 

have forums in which they can express their frustrations, perhaps 

their views on how things can be done differently. 

Do you perceive that there is a culture at the SBA where employees do not feel that freedom to express their views, to share their 

concerns, and to share perhaps their contributions with regard to 

how the SBA could be run more efficiently, more effectively, and 

more competently? 

Ms. CONTRERAS-SWEET. Yes. I think communications is 

foundational to running an effective organization. There are formal 

and informal processes. Sometimes people communicate more by 

standing by the fountain, the water fountain, than anything else. 

We have to make sure that we are managing communications because not communicating, the absence of communication, does challenge an organization. 

Just to share with you the systems that we have in place, first 

and foremost, we start with an annual strategic meeting, one time, 

where we bring the entire field operations together with the heads 

of program offices, and we have a full interaction for a three day 

setting, to set priorities and then to talk about execution and accountability, time frame, and so forth. That is number one. 

Number two, we follow up with a weekly engagement. I am on 

the phone or my chief of staff on a weekly basis with every district 

director and in many instances the DDD, the deputy district directors, are on the phone engaging with us. 

On a daily basis, we have what we call the ‘‘SBA Daily,’’ and I 

know it is not a great name, but I have to tell you that people are 

really drawn to this because it tells them exactly what is going on 

on any given day with respect to anything that is happening in 

SBA. 

SBREP-219 with DISTILLER

22 

I visit district offices, the program officers visit district offices. 

Then I hold roundtables with every one of the teams, and I walk 

floors. For Heaven’s sake, on Thanksgiving, I was passing out tangerines. On Halloween, I joined them for festivities. 

We have informal, formal, and then we have special as needed 

events like town halls, so we do not wait for those, if we need to 

have a special town hall, we engage in that, too. 

I have to tell you again, these are people who are fighting and 

are in the district, creating success every day, and I do not see 

them being shy about communicating. 

Mr. CURBELO. Madam Administrator, sometimes communication only flows from the top down. You are comfortable that at the 

agency right now, there is an environment in which employees 

from the rank and file to those in leadership positions can express 

their views, their frustrations, their joys, with their superiors, and 

really create that culture of information sharing that I think is essential for the competent functioning of any organization? 

You feel comfortable that culture exists today? Do you think 

there could be improvements? Do you find any validity in the concerns expressed by the GAO with regards to communication within 

the SBA? 

Ms. CONTRERAS-SWEET. Well, if the GAO stated it, somebody 

must have said to him that there was a challenge, so I have to take 

that seriously. There is no question about I have to take that seriously. 

Again, my reality is that they step forward at town halls. It is 

an open town hall. I take people out to lunch and say what is going 

on. I walk floors and tell me—I get emails from people. I feel if the 

GAO is making this comment, I will look into it, there must be a 

challenge. 

Mr. CURBELO. Thank you very much. Thank you, Mr. Chairman. I yield back. 

Chairman CHABOT. Thank you very much. The gentleman 

yields back. The gentlelady from New York, Ms. Clarke, is recognized for 5 minutes. 

Ms. CLARKE. Thank you, Mr. Chairman, and I thank our ranking member. I want to thank the Administrator, and just say to 

you that I want to thank you for a number of things. 

One, for being engaged on the front lines of the small business 

marketplace and being a visible change agent for small businesses 

across our Nation. I can attest to the fact that you have been out 

across this country. You were in the 9th Congressional District 

meeting with small businesses. I think that is refreshing in and of 

itself. 

You are dealing with an agency that has challenges. There is no 

doubt about that. I think you have demonstrated here today 

through your testimony the passion and drive that you have for the 

small business ecosystem across our Nation, and you have displayed in today’s hearing a response to the challenges of the 21st 

century SBA. 

I appreciate the innovative and creative approach you are taking 

to doing more with less. One of the things that has not been really 

drilled down on and that really struck me in this conversation 

SBREP-219 with DISTILLER

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today is the fact that you have 2,000 employees for the United 

States of America and its territories. 

When we think about the numbers of small businesses across 

this Nation, you are doing a mammoth task. Certainly, there is always room for improvement, but what I have been impressed with 

today is your commitment to meeting these challenges head on, 

and that is critical. 

If indeed you are able to leave that legacy for whomever will be 

next in your shoes, that will take us a long way in making sure 

that the 21st century SBA is meeting all of the goals that we have 

for small businesses in our communities across this Nation. 

The one thing that I would like to do, because I think I have 

heard the answers that I need to hear today with respect to the 

recommendations of the GAO, and I feel assured that you are paying keen attention to those recommendations, is that I want to encourage you to look at how you can do more engagement with the 

small business ecosystems in the U.S. territories and the District 

of Columbia, strengthening them, quite frankly. 

I would use the example of Puerto Rico. Because of the challenge 

they are facing economically, there is going to be a need for undergirding small business, and to the extent that we can be a part of 

helping them to stabilize just the marketplace on the ground for 

small business will go a long way as families struggle with the climate that has been created due to the challenges Puerto Rico is 

facing overall with its economy. 

Having said that, if you would like to respond, that is fine. If not, 

go to it. I am convinced you are focused like a laser on what needs 

to be done, and I want to encourage you to keep up that stride. 

Ms. CONTRERAS-SWEET. Thank you. 

Ms. CLARKE. I yield back, Mr. Chairman. 

Chairman CHABOT. Thank you. The gentlelady yields back. The 

gentleman from—— 

Ms. CONTRERAS-SWEET. May I respond? 

Chairman CHABOT. We have a response. Go ahead. 

Ms. CONTRERAS-SWEET. I just wanted to compliment you on 

the outreach that we did in your district, and I thought it was really superb, so thank you for convening such a stellar group of people. 

I think you raise an important point, and that is we have a program called the HUBZone program, the historically underutilized 

business zone program. I traveled to Puerto Rico to meet with the 

Governor, to meet with communities and local officials to understand the rate of debt that every Puerto Rican is assuming, you 

know, that looms large, so it is a serious issue. 

I have some tools, so I wanted to deploy those tools that we have. 

We went there with again our contracting relationships. We went 

in to say a couple of things. We said we want to make sure we are 

bringing corporations in to procure from the small businesses here. 

We want to make sure that the Federal Government is showing up 

here. We put on a conference of about 30 major procurers to focus 

on Puerto Rico. 

I did not want to stop there because for small businesses, even 

when they get a contract, what happens is sometimes it takes the 

SBREP-219 with DISTILLER

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Government too long to pay, so we have to look at the minutia on 

some of these things. 

In that instance, we launched two programs with the White 

House. One is called ‘‘SupplierPay,’’ which is where we say to large 

corporations, we will pay you in two weeks if you pay small businesses in two weeks, and a QuickPay program, which is we pay 

small businesses in two weeks if they are doing business with the 

Federal Government, so we are now driving that through as well. 

It is giving again people more capital and cash flow to be able to 

grow their business. 

Chairman CHABOT. Thank you. The gentlelady yields back. The 

gentleman from Mississippi, Mr. Kelly, is recognized for 5 minutes. 

Mr. KELLY. Thank you, Mr. Chairman, and thank you, Madam 

Administrator, for being here and answering questions. 

I, too, am encouraged. It seems like you want to work and to fix 

all these things, and I am very encouraged by that. 

That being said, I found in whatever walk of life, whether it be 

in the military and commanding a battalion, or whether it be a district attorney and prosecuting a murder case, or whether it be 

working at McRae’s, which was a department store when I worked 

there, I have often found that priorities in a business plan are so 

important regardless, and not just for the overall, but for each individual task that you want to do. 

I have heard a lot of talk about what you have done, and I am 

very impressed with that. I am also very impressed and thankful 

and grateful for your response to Mississippi, to the recent tornadoes, where I lost several victims’ lives in my district and millions 

of dollars in property. 

I hope that you will keep a check, checking on my folks, and 

making sure that SBA does all they can with disaster relief in Mississippi, which has been declared a Federal emergency. 

I guess my question is have you prioritized the 62 of the 69 GAO 

objectives they have for you, have you prioritized those, and if so, 

have you decided—going back to a college, CPM and those things, 

you can do some things simultaneous, some things you cannot do 

until the other things are done, is there a matrix or chart? In the 

military, we call it a ‘‘horse blanket.’’ You have to accomplish these 

tasks. 

Do you have an overall strategic plan that says these are the 

tasks, this is when we are going to accomplish them, further, this 

is the person that has the rose pinned on them to accomplish this, 

and deadlines or a plan of action for each of those 62 that have not 

been accomplished? 

Furthermore, same thing, IT. You have to get the CIO hired, I 

think, in order to address the IT issues appropriately. I would encourage you do the same thing with those 30 that are outstanding 

that the I.G. pointed out in the IT area. 

If you could address what you have done to do those things. 

Ms. CONTRERAS-SWEET. Thank you. Again, let me just say 

that as I mentioned earlier, I looked at them, prioritized them, 

rated them, if you will, and started with what I think is the priority, and that is what I am doing. 

You are right. Some of them you cannot achieve until the other 

is complete. That is why I focused on the disaster, these investSBREP-219 with DISTILLER

25 

ment funds are really important to the SBICs, so that is why I 

went to the Library of Congress to help me study and to do that, 

so you would have confidence in the research and the metrics, the 

measures and the evaluation. 

It is why we put in an evaluation program for six different items 

here. We will continue to do that work. Yes. 

Let me just continue to share with you that process does matter, 

as you say. You know, I came in. I left my small business that I 

created. I started three different businesses. I left my small business to do something here. 

If it is not enduring, then what was the point. I am not just here 

to tell you about what we have done. That is why I am here in a 

collegial fashion. I understand the importance of institutional memory and documentation, to make certain that the next person who 

I will be handing this to in not so many months will be able to continue on this journey. 

I thank you for your engagement and for your thoughtful consideration. 

Mr. KELLY. Let me tell you, I came here with a whole different 

attitude than now. I think you are a dynamic leader, and I think 

you have some opportunities. I am trying to give you some things, 

and if you do not put it in writing, I can tell you as a commander, 

if it is not written, it does not matter how good the organization 

is, we tend to lose that. 

The second thing, you have talked a lot about what you have 

done with SOPs. SOPs are so important. From my military background, we cannot operate without SOPs. They have to be current 

and they have to be active, and they have to be applicable. 

I hear you saying you are putting 41 new SOPs into practice, but 

my follow up question would be to that how many of the old SOPs 

and the duplicative SOPs have you taken out of action because 

when people are confused as to which SOP, it is just as important 

to do away with the old as it is to enact the new, so I would like 

to hear if you have addressed that or if you intend to address the 

duplicative or otherwise. 

Ms. CONTRERAS-SWEET. Yes, thank you. Again, one of the last 

businesses I started was a community bank. I have to tell you, I 

present some things to my board about above the line metrics, and 

then I am in the organization running the below the line metrics, 

so I understand exactly what you are talking about—to make sure 

if I have to reach—how many sales numbers I am going to complete, how many sales calls, how many sales people. All those 

below the line metrics that we have to have to manage a proper 

organization. 

I respect your training and understand it. I have tracked ISO 

certification, lean start-ups, lean manufacturing, Myers and Briggs. 

I have been through so many trainings, ad nauseam. Excuse me, 

sir. 

I appreciate what you are saying and I think it is important to 

prioritize, to sift, as I stated earlier, and to make sure that we are 

doing what matters soon, the 80/20 rule. Thank you. 

Chairman CHABOT. The gentleman’s time has expired. Thank 

you. The gentlelady from North Carolina, Ms. Adams, who is the 

SBREP-219 with DISTILLER

26 

ranking member of the Investigations, Oversight and Regulations 

Subcommittee, is recognized for 5 minutes. 

Ms. ADAMS. Thank you, Mr. Chair. Thank you to the ranking 

member as well, and to you, Madam Administrator. I appreciate 

you being here and your testimony. 

I am going to skip asking about the implementation of the recommendations because we have already talked about that. Are 

there budgetary impediments that Congress can address to assist 

the SBA in moving more expeditiously? 

Ms. CONTRERAS-SWEET. I very much appreciate the question 

because absolutely, there are budgetary constraints. I am trying to 

be as resourceful as possible, for example, in training, as I alluded 

to earlier. To travel, to have someone to travel, to come in even to 

headquarters is an expense. I have to put them up. I have to put 

up a per diem. I am trying to be as resourceful as I can, for example, to put on more webinars for training, to use local tools. I am 

putting people in clusters so they are doing mentoring. 

You know, I am trying to do what I can with what I have, but 

if you wanted to have a serious conversation about the budget, in 

California, I had 14 different departments, Highway Patrol, DMV, 

Caltrans, Department of Real Estate, Housing. It was a challenge 

to run them. I had an unique opportunity that few people have, 

and that is to create a new department, the Department of Managed Health Care, that is still operating now, I think, as one of the 

better government run programs in the State of California. 

It was an entirely different thing to start with the slate, a clean 

slate, and say this is the talent, this is the core competencies I am 

after. Clearly, when you are refining an organization, it is a little 

more nuanced than it is to just start from fresh. 

I would be delighted to engage in that conversation because that 

really requires a very thoughtful answer that you truly deserve. 

Ms. ADAMS. Great. Thank you very much. Let me just turn to 

the issue of program performance evaluations. GAO found that 

SBA has made limited progress in addressing the lack of program 

evaluations. Without evaluations, SBA lacks critical information for 

ensuring the validity and effectiveness of its goals, objectives, and 

strategies, as well as the validity and effectiveness of both new and 

existing programs. 

For example, SBA has for many years conducted an annual client 

survey to evaluate the effectiveness of its management training 

programs. Are there any plans to survey SBA loan recipients to determine if the SBA’s loan guarantee programs are meeting client 

needs, and if not, why not? 

Ms. CONTRERAS-SWEET. I can just give you an example of 

some of the data points that we are receiving, business start’s, revenue growth, job creation, retention, capital infusion, new markets, 

which ones are exporting, contracts acquired, innovation milestones, client demographics, the usefulness of the services, and 

most important, customer satisfaction. 

These are metrics that we are tracking. As I mentioned earlier, 

I am interested in an unique identifier so that I can track the person longitudinally, because I think that is really a vital point. 

Again, that is on the specifics of our resource partners and our public to understand what they are using. 

SBREP-219 with DISTILLER

27 

What we are also doing is trying to understand where the entrepreneurs are, so we have—I understand that we are in Federal 

Government space and not every entrepreneur, to my disappointment, thinks of coming to SBA in the Federal office for entrepreneurial support. That is why I have deployed our team to go out 

and to find, for example, in these innovation hubs and these incubators, the growth accelerators that are across the country, and we 

are learning there, too, what millennials need that might be different from our core entrepreneurs, that might be different from 

our women, veterans. These are market segmentations. 

With the advent of technological evolution, we are now able to 

do much more targeted digital marketing to people. I would like to 

have that kind of capacity, to answer your budget question, and 

how to discern whether we are actually fulfilling the customer satisfaction that the taxpayers and more importantly the American 

entrepreneurs deserve to compete in an ever evolving globalized 

economy. 

Ms. ADAMS. Great. Thank you very much for your responses. 

Again, thank you for your service. I yield back, Mr. Chair. 

Chairman CHABOT. Thank you. The gentlelady yields back. The 

gentleman from Nevada, Mr. Hardy, who is chairman of the Subcommittee on Investigations, Oversight and Regulations, is recognized for 5 minutes. 

Mr. HARDY. Thank you, Mr. Chairman. Thank you, Madam Administrator, for being here. I, too, am excited and grateful for your 

energy and your passion, and what you are trying to accomplish 

here. 

I still have concerns. I am concerned about what I have read. I 

am concerned about what I have heard and what I have seen. This 

agency is to aid, counsel, to assist, to protect small businesses that 

are vital to this economy. Also, they are supposed to act in a manner that is efficient and nimble like our small businesses are. 

An agency for fiscal year 2015 was intended to support about $30 

billion, I think, in small business financing, $80 billion in Federal 

contracts. This is not only large numbers, but it is also concerning, 

yet the key findings is we have serious challenges out there with 

this administration, and this is troubling for Nevadans, troubling 

for America, troubling for the economy. 

Although, I, too, agree with what my colleague on the other side 

of the aisle just said. We have seen growth in the economy, and I 

do believe that the SBA is vital in that growth, and has assisted 

in that growth in the economy. That shows how important this Department is. 

With these concerns that the GAO has, I have a couple of questions here for you. What is the simple impact on the SBA in utilizing the old outdated SOPs? That is the first question. Another 

question I would like to ask, you have been here 20 months, why 

is the average—I think we have had 10 administrators in less than 

8 years or eight administrators in less than 10 years, what is going 

on? 

Ms. CONTRERAS-SWEET. You know, as I looked at the chart, 

I was really intrigued by the GAO’s report and how far back it 

went. You know, two things, and I did a little research, personal 

SBREP-219 with DISTILLER

28 

research one evening, because it was just interesting to me personally. 

I saw that in some instances, the SBA administrator was promoted to a larger agency. You know, you have to have certain skills 

to be an entrepreneurship, so different things were taking place, 

but we are a victim of the political process. With every new administration, you have a new appointment. Generally, people take a 

four year run and then leave, and you bring in the second bench. 

I hope I am not the second bench. 

Mr. HARDY. It appears to me you have been one of the longest 

here. I appreciate that. It means you must be having success or you 

must have some passion for what you are doing. 

Do you have a succession plan for what is going on when you 

leave or any of your administrators leave? Do you have a succession plan in order? 

Ms. CONTRERAS-SWEET. What you said is SBA is an effective, 

valuable, and critical organization in our country. I agree with you. 

When I traveled, I just met recently a young man named Kevin 

who said because of $150,000 loan that he got from SBA after everybody else denied him, he was able to build a little company that 

has now become Under Armour. I was able to meet with the family 

in San Diego. With a little bit of help from SBIR, they were able 

to build an international global marketplace like—— 

Mr. HARDY. I would like to go right to the question, do you have 

a succession plan in place? 

Ms. CONTRERAS-SWEET. Yes, to that extent, I want this to be 

an enjoined legacy, so I am not just meeting with our political appointments, I meet with our SECs and with the program offices on 

a weekly basis, we are meeting with them, to infuse the entire organization down to the bowels of the organization with a sense of 

priority and value system that we have, and you write it more importantly for institutional purposes, you put it into job descriptions 

and performance rewards. 

Mr. HARDY. Back to that other question, what is the impact of 

small business on the SBA utilizing the outdated SOPs? Do you believe there is a major impact here? 

Ms. CONTRERAS-SWEET. Since we have so many different vehicles—— 

Mr. HARDY. I would just like a yes or no on that. I have another 

question. 

Ms. CONTRERAS-SWEET. Okay, sir. Yes, we are reviewing the 

SOPs as I mentioned. As I mentioned, I am addressing them faster 

than any administrator in the last few years. We are making good 

progress. I will continue to address that work. 

Mr. HARDY. Also, in your testimony you stated that you require 

senior management to be directly responsible in ensuring and reviewing the dissemination of the SOPs in their jurisdiction. Can 

you expand on what you have asked there, and also, could you tell 

me what they are reporting, do you have a report on their findings? 

Ms. CONTRERAS-SWEET. Right. They are required, sir, to certify every year their SOPs. Sometimes, there are no changes. Sometimes, there are refinements, nuances, and sometimes they need a 

major overhaul. We have already overhauled, for example, the disSBREP-219 with DISTILLER

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aster one, as I mentioned. We have overhauled the SBIC one, as 

I mentioned. 

This is the kind of work that we have been pushing, and again, 

these are arduous processes, but we are doing them, we are undertaking them at unprecedented levels, and we commit to reporting 

to you and reporting back the momentum that we are building on. 

Mr. HARDY. Sorry, Mr. Chairman. Indulge me—— 

Chairman CHABOT. If you have something real quick. 

Mr. HARDY. I just want to ask if they had been reporting to you, 

your administrators? 

Ms. CONTRERAS-SWEET. Oh, sure; yes. 

Mr. HARDY. Thank you. 

Ms. CONTRERAS-SWEET. We have a very flat organization, so 

I see the program officers individually and on a weekly basis in our 

program senior staff meetings. Thank you for your service in construction, you have a marvelous story. 

Mr. HARDY. You studied well. 

Ms. CONTRERAS-SWEET. Thank you, sir. 

Chairman CHABOT. The Administrator is not the Administrator 

for nothing. She has done her research, no question about that. 

The chair would just note for the record, this is being broadcast 

by C-SPAN. For the tens of dozens of people all across America 

that are watching this, an ‘‘SOP’’ by the way is standard operating 

procedure. I am sure they are all wondering what the heck that 

was. 

I will now turn to the gentleman from New Jersey, Mr. Payne, 

who is recognized for 5 minutes. 

Mr. PAYNE. Thank you, Mr. Chairman, and to our ranking 

member. Madam Administrator, once again, good to see you. I had 

the opportunity to have you in my district for a small business 

roundtable, not necessarily with me, but with Senator Cory Booker, 

but it fell in my congressional district. 

Ms. CONTRERAS-SWEET. We had two, actually. 

Mr. PAYNE. I will not hold that against you, that you were there 

with the Senator. 

Ms. CONTRERAS-SWEET. You got the podium for quite a while. 

Mr. PAYNE. Yes, I did. First, I just want to commend you for 

being able to move around the country as you have done during the 

course of your tenure. It does not go unnoticed that you really have 

spread yourself far and wide across the Nation in order to support 

small business efforts throughout this country. 

There have been some issues around retention of senior leadership. If I am going over something that has already been addressed, please forgive me. There have been 41 changes in senior 

level positions at the SBA in the last decade. The GAO report gave 

multiple recommendations to increase human capital, specifically 

noting the SBA still has not developed workforce plans, conducted 

skill assessments, updated SOPs, or established training goals. 

What are you doing to address these human capital issues in 

senior leadership and in the SBA regional district offices? 

Ms. CONTRERAS-SWEET. Yes, again, I think that continuity is 

important to ensure that we have continuous program effectuation, 

so I am committed to that work, as I referenced earlier to that end. 

We are reconstructing many of the job descriptions to make certain 

SBREP-219 with DISTILLER

30 

they are forward looking and responding to the evolving technology 

and communications standards, and just generally, the way entrepreneurship is going. 

Earlier, the member mentioned the importance of being nimble, 

so it is an art form as well as a science, I must say, to be able to 

be nimble and make sure you are following SOPs and GPRA and 

GPRAMA, the General Performance and Results Modernization 

Act, and JOBS Act 2010 and JOBS Act 2012, Dodd-Frank, Sarbanes-Oxley, and Gramm-Leach-Bliley, and this is my life, right, to 

make sure that I am crossing every ‘‘t’’ and dotting every ‘‘i’’ as I 

try to be nimble and agile and responsive to the evolving emergence of entrepreneurship and the globalization of it. 

It is a challenge, and you want to attract the best and the brightest. I think SBA is a very exciting place, and I must tell you, Congressman, that I was really disappointed because of the characterization—these allegations are not valid. 

I respect the GAO, but I must tell you that each and every day 

the SBA employees are working hard and they are dedicated, and 

I think people do not have an appreciation that when we have a 

district office, we are talking about half a dozen people who are 

managing States and managing business partners, lending and 

local officials and State officials. 

These people have to be artful, and they have to be diligent and 

strong communicators, and have to lift up branding opportunities 

through massive media communications efforts. 

It is a very important skill set that we need, and the salary 

structures are somewhat restricted, but it is Government, and I respect the situation. I am managing through it. I think again we 

will continue to evolve these job descriptions to attract people, to 

show them their work is meaningful. 

The studies that I have read say that people care about compensation but more importantly, they care about the meaningfulness of their work. I am here to remind them of that every single 

day. 

There is not anything that makes me happier, like the man I just 

met at the airport, my last flight, who said he was an aspiring doctor, and he could not figure out how to start his business, and he 

received a $50,000 loan from SBA, and he became a doctor, and is 

now 72 years old, and served our country by providing health care 

services to America. 

Mr. PAYNE. Do you feel the compensation levels in your Department may be curtailing your ability to maintain the best and the 

brightest? 

Ms. CONTRERAS-SWEET. Well, I have to tell you, I did not intend to get into this, but the SBA structure, the salary structure, 

is not comparable to other Cabinet offices. I would, given an opportunity, be happy to address that and give you a comparison analysis. 

In many ways, it is a complex challenge. In many ways, I want 

mobility. You want mobility in an organization to continue to create opportunities for the younger folks coming in. On the other 

hand, you want constancy, and you want knowledge, and you want 

a historical framework. 

SBREP-219 with DISTILLER

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Again, delicate challenges that I address every day, every single 

day, I am trying to do this. I actually reached out to OPM, the Office of Personnel Management, and to PPO, the President’s Personnel Office, to talk about how we make sure that SBA employees 

are given opportunities at Treasury, at Commerce, at the State Department, USTR, and they are now getting opportunities. That is 

the good news. The bad news is that now while I have upward mobility, I now have to find new talent to fill those slots. 

Mr. PAYNE. Right. 

Chairman CHABOT. The gentleman’s time has expired. 

Mr. PAYNE. Thank you. 

Chairman CHABOT. Thank you very much. The gentleman’s 

time has expired. The gentleman from Missouri, Mr. Luetkemeyer, 

who is vice chairman of this Committee, is recognized for 5 minutes. 

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

Madam Administrator. I got in a little bit late but I know that you 

commented that you would be willing to come to Missouri, my 

home state, which has experienced a weather disaster recently. We 

certainly welcome you to come. 

My only comment would be that rather than spend your time 

there, if you would have your folks be willing to respond more 

quickly to our needs and our concerns, that would be really appreciated, because that is where we need the help. If you want to come 

and see it, you are more than welcome. You will see a lot of water. 

With regards to that, what do you see happening, where do you 

see the SBA going, what is your response at this point to the disasters that are happening as we sit here right now? 

Ms. CONTRERAS-SWEET. First, let me just assure you that I 

deployed my team even before we had been designated as a disaster in the area. There are certain circumstances that have to be 

met. I already have about 10 employees already assessing and 

going out and conducting that study. As soon as we are given the 

orders and are able to go, we are now getting there in 24 hours, 

so it is a remarkable achievement. 

Overall, as I mentioned, I have traveled now to Washington to 

see how we responded there. I have traveled to Texas, to North 

Carolina, to meet with Governor Nikki Haley. I am trying to get 

out to understand what the refinements are that need to take 

place, and as a result, we have put in some what I think are important changes. 

We used to do this manually, where we would send out the information to victims of disasters. Now, when they come into our offices, we have the technology to do it, so we can track them better 

and give them information more efficiently. I am sorry. 

Mr. LUETKEMEYER. We are getting to be able to deploy the 

folks to be able to do the work, that is great. A question for you, 

the next question I have here is with regard to in 2008, the Small 

Business Disaster Response Loan Improvement Act was signed by 

Congress. Eight years later, these bridge loans do not seem to be 

able to be had. Why are we not implementing this, especially in a 

time like this? 

Ms. CONTRERAS-SWEET. I think—— 

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Mr. LUETKEMEYER. Is it a program worth having, I guess that 

is the first question. 

Ms. CONTRERAS-SWEET. Well, the financial institutions are 

having a problem adopting it, to be honest. They say it is hard for 

them to process a $10,000 loan that if not repaid by our permanent 

disaster program that we do, that we would provide them, then 

they have to amortize it for 10 years at a very low interest rate, 

so it is not—— 

Mr. LUETKEMEYER. It is not a practical program? 

Ms. CONTRERAS-SWEET. The financial institutions are resisting it, and I am asking to put them on the record for formal comment as to what we need to do to make them work, but meanwhile, 

I—— 

Mr. LUETKEMEYER. If it does not work, it has two choices, either fix it or get rid of it. 

Ms. CONTRERAS-SWEET. That is the point. We are working 

with them to get the answers, but meanwhile, sir, I think this is 

important, what we put in is an uncollateralized $25,000 loan that 

we can do directly through SBA, and we are processing them now 

in 7 days. 

In the spirit of what we are trying to accomplish, the—— 

Mr. LUETKEMEYER. Are you authorized to make direct loans? 

Ms. CONTRERAS-SWEET. Pardon me? 

Mr. LUETKEMEYER. Are you authorized to make direct loans? 

Ms. CONTRERAS-SWEET. That is what the Office of Disaster 

Assistance does, we make direct loans for people who are physically 

or economically affected by a disaster, for renters, as well, it is important to note. This is the only office that makes direct loans; correct. 

Mr. LUETKEMEYER. Perfect. That is news to me because last 

time we had a director in here and she wanted the ability—did not 

want the ability to make direct loans, which was interesting. 

Also, with regard to what is going on, all of this information that 

you are going to be accumulating, with regard to the hacks that 

have been happening with OPM and the IRS, how are you protecting your data? 

Ms. CONTRERAS-SWEET. First, to assure the American people, 

because as the chairman just mentioned, we have other people listening in, let me just say that the SBA operates with financial institutions. They do not join our system until they are assured that 

the data is protected. 

Mr. LUETKEMEYER. That begs the question, do you at the SBA 

have the same protocols and under the same bank secrecy laws and 

data concerns and protections as the banks are? 

Ms. CONTRERAS-SWEET. We operate under NIST, which is the 

National Institute of Standards and Technology, so we operate 

under different guidelines, but similar protocols. In that regard, we 

are working toward what we call a ‘‘Rev 4 level,’’ which is the 

standard in Government, and SBA is comfortable with the work we 

are doing, and—— 

Mr. LUETKEMEYER. You are not there yet, is what you just 

said? 

Ms. CONTRERAS-SWEET. Well, it is—— 

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Mr. LUETKEMEYER. You said you were working toward it, so 

obviously you are not there yet. 

Ms. CONTRERAS-SWEET. That is right. I mean, I want to be 

honest with you. I am here to be honest with you. 

Mr. LUETKEMEYER. I am sure it raises some concerns by our 

citizens in dealing with the SBA about the protection of their information. 

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

and answer. 

Ms. CONTRERAS-SWEET. Thank you, I appreciate that, Mr. 

Chairman. Again, the fact that the financial institutions who review our system and audit our system are comfortable connecting 

gives me some solace, but I have an auditor that comes in to tell 

us, and they found no material weaknesses in our system. We have 

not had a breach, but I have nonetheless made sure that we have 

processed—for example, we have moved our mainframe to a modern—— 

Mr. LUETKEMEYER. Madam Administrator, just as a closing 

thought here, I appreciate what you are saying, but whenever you 

say that we are doing this according to all these protocols and you 

have a GAO study that says you are way behind on getting things 

done with regard to their assessment, not being able to do everything, when you have standard operating procedures that are being 

called into question, I am not sure that the citizens can have great 

faith in what you were just saying. 

It certainly concerns me, but I do appreciate your willingness to 

work on it, and I appreciate your comments. Thank you, and thank 

you, Mr. Chairman. 

Chairman CHABOT. The gentleman’s time has expired. 

Ms. CONTRERAS-SWEET. Mr. Luetkemeyer, I just wanted to 

say that I promised you lunch the last time if I did not fulfill my 

goal, and I want you to know that I think you owe me lunch because SBA-1 is now up and operating. We have several thousand 

banks that have joined us, and it is working. You have to come 

over and take a look at it. I think you will really be pleased, sir. 

Chairman CHABOT. I think the cafeteria is still open. In all seriousness, I want to thank the Administrator for her participation 

today. I certainly appreciate your enthusiasm and your energy that 

you brought to this hearing. I especially appreciate your willingness to do everything within your power to implement the 62 out 

of 69 GAO recommendations, which still need to be resolved. 

As I mentioned, my greatest concern is on the IT security issue, 

because we have seen the White House, for God’s sake, as well as 

a whole bunch of other Federal entities hacked, sometimes by 

China, we think, and these small businesses give you a lot of sensitive information, so let’s protect that. 

I appreciate your commitment to do that and report to us on a 

regular basis. We said monthly. We are willing to be reasonable. 

Just keep us informed and let’s get this done as quickly as possible. 

Ms. CONTRERAS-SWEET. Mr. Chairman, the good news is that 

SBA, while working ardently on these goals, is working in collaboration with our sister agencies, Homeland Security, with the FBI, 

and all of the other organizations available to all of the Government services. 

SBREP-219 with DISTILLER

34 

Again, I want to put confidence into the system. We are working 

with serious financial institutions. I used to run the Department of 

Motor Vehicles at DMV, and I changed the driver’s license. As soon 

as you fix it, there is another system that comes in to hack it. This 

is something that has to be an effort ongoing. 

Chairman CHABOT. I certainly agree with you. There is nothing 

that brings more confidence to the American people than dealing 

with the Department of Motor Vehicles. 

Thank you very much. We appreciate your testimony. Members 

will have 5 days to supplement their reports and add additional 

questions. 

If there is no further business to come before the Committee, we 

are adjourned. Thank you very much. 

Ms. CONTRERAS-SWEET. Thank you, sir. 

[Whereupon, at 12:52 p.m., the Committee was adjourned.] 

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A P P E N D I X 

SBREP-219 with DISTILLER


Insert offset folio 35 here 98245.001
36 

Thank you, Chairman Chabot, Ranking Member Vela ́zquez, and 

members of this committee for the opportunity to testify. 

I’d like to open today with a quick review of Fiscal Year 2015. 

It was one of the most successful years in our agency’s history. 

SBA achieved a 22 percent increase in the number of loans, and 

a 23 percent increase in the dollar value of those loans, compared 

to FY14. These gains matter because FDIC data shows that conventional small business lending has only returned to 84 percent 

of its pre-recession level, adjusted for inflation. Filling those gaps 

in the marketplace is the very purpose for which the SBA was created. 

We made notable progress increasing 7(a) loans to businesses 

with the greatest difficulty accessing capital. 

• The dollar value of our loans was up, year-over-year, 22 

percent to women, 23 percent to minorities, and 103 percent to 

veterans. 

• Our number of loan approvals was up 29 percent to 

women, 27 percent to minorities, and 47 percent to veterans. 

These successes would not have been possible if not for the swift 

work of this committee this past summer. Due to our record-breaking year, SBA ran up against our statutory lending cap this August, two months before the end of the fiscal year. 

At the urging of SBA and our stakeholders, in less than a week, 

you passed a $4.5 billion increase in our 7(a) authority and ushered 

its passage on the House floor. Your leadership allowed entrepreneurs across the country to continue accessing the requisite capital to start and grow their businesses. 

In addition to our historic loan volume, SBA also accelerated our 

small business investment under the SBIC program. We grew our 

portfolio by 10 percent to a record $25 billion. 

And in FY16, the 7(a), 504, and SBIC programs will share a common thread: All three programs are expected to operate at zero 

subsidy. 

Thanks to this committee for working across the aisle to include 

in the omnibus the permanent reinstatement of 504 Refinancing 

Authority and an increase in the SBIC program’s family of funds 

limit. These policy changes will each inject significant capital into 

our small business ecosystem. 

Another priority area for the SBA is federal contracting. The federal government awarded an all-time high of 24.99 percent of government contracts to small businesses, supporting 550,000 American jobs. We reached historic procurement levels for small disadvantaged businesses and firms owned by women and service-disabled vets. 

To summarize: A record year in small business lending, a record 

year in investment, a record year in contracting, with zero taxpayer 

subsidy needed to sustain our momentum. This is the context in 

which today’s hearing takes place. 

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Let me take this opportunity to acknowledge the Government Accountability Office (GAO) for identifying areas of shared concern 

and offering constructive suggestions to address them. From my 

very first days in office, I have prioritized the need to modernize 

SBA’s operations, enterprise-wide, to respond to the technological, 

demographic and globalization changes that are transforming our 

small business economy. To that end, I agree with many of the 

GAO’s recommendations and appreciate this opportunity to update 

you on our efforts to bring SBA fully into the 21st century. 

I was pleased to read that the GAO’s review acknowledges SBA’s 

recent strides to address management challenges. Specifically, the 

report notes that I have prioritized improved human capital management, IT, and the 8(a) Business Development Program. The report also notes that these efforts have already begun to show 

progress. The report highlights SBA’s renewed attention to address 

some internal control weaknesses that the GAO and the SBA Office 

of Inspector General (OIG) identified as an Agency management 

challenge. This renewed attention has produced positive results. 

Since the beginning of FY 2015, SBA has resolved: 

• 14 of the 63 open GAO audit recommendations, and 

• 150 of the 199 open OIG audit recommendations. 

SBA further provided updates to GAO on 32 recommendations in 

FY 2015 and an additional 9 in FY 2016 to date. These numbers 

mark a significant improvement in closing out recommendations for 

the Agency. In fact, we resolved more GAO recommendations in FY 

2015 than in the previous four years combined. This progress came 

after I personally met with the Comptroller General of the GAO 

and made it clear that resolving recommendations was a top priority for the entire agency during my tenure. 

One of our most significant strides is the creation of an Enterprise Risk Management (ERM) Board chaired by my Deputy Administrator. The ERM Board has established a special sub-committee solely to address open GAO and OIG audit recommendations. In addition we have designated a GAO/OIG Recommendations Resolution Officer who reports directly to the Director of Risk 

Management in the Office of the Chief Operating Officer, whose 

principal work is to pursue enhanced audit closure strategies. With 

the ERM Board’s attention, I am confident in the continued momentum in closing out recommendations during the remainder of 

FY 2016. 

The GAO report recommends that SBA take certain corrective 

actions around each of its recommendations. Let me take this opportunity to outline the actions we are taking for each of these specific recommendations. 

1.) Recommendation: To improve management of the 

Small Business Administration and to ensure that SBA assesses the effectiveness of its programs, the SBA Administrator 

should prioritize resources to conduct additional program evaluations. 

My background in banking impressed upon me the importance of 

managing risk to optimize the return on investment. When we put 

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precious taxpayer dollars to use, we have to make every effort to 

use those dollars wisely, based on the best available data. I wholeheartedly agree that evaluations are important to understanding 

the efficacy of SBA’s programs. 

Evaluation of a number of programs is well under way. SBA established an economic impact evaluation working group in July 

2014 with a learning agenda, and the group has been developing 

evaluation plans. The working group developed a methodology for 

conducting impact evaluations of the agency’s programs using administrative data sources residing at SBA and in other federal 

agencies, such as the U.S. Census Bureau and the Bureau of Labor 

Statistics. Numerous SBA program offices participate in this working group, including our Offices of Investment and Innovation, Disaster Assistance, Capital Access, Entrepreneurial Development, 

and Veterans Business Development. As a result of their participation, each of these offices has either developed its own program 

evaluation methodology or established a program evaluation framework and begun initial data collection. 

For example, SBA’s Office of Investment and Innovation, which 

has begun to work with the Library of Congress to assess the comprehensive impact of the Small Business Investment Company 

(SBIC) program. The SBA also has completed three credit program 

evaluations following OMB Circular A–129 guidelines. The Agency 

evaluated the 7(a) guaranteed loan program, SBIC debenture program and the 504 Certified Development Company loan program. 

The Agency remains concerned about its ability to collect some 

key data on small businesses’ resource partners who are in many 

instances the first point of contact with small businesses. To this 

end, I’ve engaged our resource partners to address the criticality of 

and methodology for proper evaluation metrics. SBA has also 

begun incorporating requirements into grants and contract solicitations that awardees provide not only the agreed upon service, but 

also data to allow more robust evaluations of program effectiveness. The Agency looks forward to continuing to work with Congress to address these limitations. 

2.) Recommendation: To improve management of the 

Small Business Administration and to ensure that SBA fully 

meets GPRAMA requirements, the SBA Administrator should 

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. 

The SBA is currently developing a framework for evaluations 

and data collection (see recommendation 1). Once completed, the 

evaluations will be incorporated into the next SBA strategic plan 

and will help shape the agency’s strategic goals and objectives. The 

process of drafting the next strategic plan will begin in FY 2017. 

A list of future evaluations will be incorporated into the new plan. 

3.) Recommendation: To improve management of the 

Small Business Administration and to improve SBA’s human 

capital management, the SBA Administrator should complete a 

workforce plan that includes key principles such as a comSBREP-219 with DISTILLER

39 

petency and skills gap assessment and long term strategies to 

address skills imbalances. 

We’ve taken important actions on our human capital management. I am proud to work alongside so many dedicated public servants at the SBA, and we’re working to ensure that the Agency has 

the talent required to continue serving America’s entrepreneurs in 

the 21st century. We’re currently drafting a comprehensive workforce plan, which will include both a skills gap analysis and a gap 

closure plan. We anticipate that the workforce plan will be issued 

in March of this year. 

We have taken several steps to address the SBA’s aging workforce within current budgetary constraints. More than 150 employees took early retirement under the VERA VSIP program, allowing 

us to recruit candidates with specific competencies. Considering the 

public-facing nature of our work, we prioritized filling key openings 

in our field operations. SBA is also reorganizing our Presidential 

Management Fellows program to increase their impact. We’ve increased our veterans hiring and partnered with the Peace Corps to 

attract service-oriented volunteers to fill SBA positions at the conclusion of their missions. 

We have also hired SBA’s first-ever Chief Learning Officer/Chief 

of Organizational Effectiveness (CLO) to help existing staff acquire 

new skills to advance their careers and fill critical agency needs. 

The CLO is responsible for the implementation of our enterprise 

learning function, drawing upon best practices from the public and 

private sectors. The CLO’s chief responsibilities include formulating and implementing the agency’s learning and development 

strategy; establishing goals and objectives that support the strategy; developing quantitative and qualitative research and reporting 

findings associated with each of the goals; and assessing the agency’s progress in achieving those goals. Placing a premium on workforce upskilling, SBA will expand education, training, certification, 

mentoring, and broaden opportunities available to employees at all 

levels. These actions will build leadership capacity, improve our 

talent management, and foster a culture of continuous learning. 

4.) Recommendation: To improve management of the 

Small Business Administration and to improve SBA’s human 

capital management, the SBA Administrator sho9uld incorporate into its next training plan key principles such as goals 

and measures for its training programs and input on employee 

development goals. 

SBA has identified learning and development goals we will include in the workforce plan. Upon completion of the competency assessment (referenced in Response 3), the SBA will use the results 

to inform additional measures for employee development. To support the achievement of overarching goals outlined in the Agency’s 

learning and development strategy, SBA will set quantifiable targets with specific timeframes at the program level. The Agency’s 

CLO, working closely with senior management, will subsequently 

measure learning effectiveness and return on investment associated with each of the supporting programs. Assessing progress and 

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outcomes against targets will strengthen transparency and accountability. 

5.) Recommendation: To improve management of the 

Small Business Administration and to ensure that SBA’s organizational structure helps the agency meet its mission, the 

SBA Administrator should 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. 

When I arrived at the Agency in April 2014, I undertook a full 

review of SBA’s organizational structure. While I believe our structure and lines of reporting are well defined in the current structure, we are continually examining the possibilities. Our goal is to 

optimize SBA’s service delivery systems to ensure that entrepreneurs and small businesses receive the support they need as efficiently as possible. 

In this regard, we analyzed and instituted several structural 

changes in FY 2015. For example, the Office of Field Operations 

(OFO) completed a position review for its Managers, Business Opportunity Specialists, Lender Relations Specialists, and Economic 

Development Specialists. We incorporated the identified attributes 

into updated Position Descriptions. OFO revised critical elements 

and performance standards as a result. We have established an Office of Intergovernmental Affairs to address streamlining challenges at the local government level, where most small business licensing occurs. The Office of the Chief Information Officer underwent an organizational restructuring at the division level to improve workflow. 

6.) Recommendation: To improve management of the 

Small Business Administration and to ensure that SBA can effectively identify, assess, and manage risks, the SBA Administrator should 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. 

As GAO reported, SBA designated a senior agency official as the 

Director of Risk Management in October 2013. Early in my tenure 

I met with the Director, and in October 2014, I approved the creation of an Enterprise Risk Management Board. We formalized the 

composition of the ERM Board in April 2015, and added a dedicated Enterprise Risk Program Manager in June 2015. Together 

they have been developing a comprehensive Enterprise Risk Management (ERM) process. I believe it is critical that we continue to 

develop and document the ERM process to address ever-evolving 

risks. As a former community banker, I have a keen appreciation 

for the importance of managing risk. We are making considerable 

progress with implementation of our ERM process and will continue to monitor this critical function to ensure milestones are met. 

Recognizing the importance of this work, I appointed the highestranking official under my command, SBA’s Deputy Administrator, 

as Chairman of the ERM Board. They have met 12 times from May 

to December 2015. One of the early projects of the ERM Board was 

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41 

to draft an SBA ERM Board Charter, which I approved on December 18, 2015. I remain personally committed to developing an ERM 

program that meets SBA leadership needs and is in compliance 

withy GAO and evolving OMB guidance. 

7.) Recommendation: To improve management of the 

Small Business Administration and to improve SBA’s program 

and management guidance, the SBA Administrator should set 

time frames for periodically reviewing and updating its SOPs 

as appropriate. 

SBA has in place Standard Operating Procedure 00 23 (Directives Management Program), which outlines the creation, format, 

clearing, publishing and distribution of formal SOPs and their revisions. SOP 00 23 requires an annual attestation by the head of 

each program office that a review of their SOPs has determined the 

following: 1) no revisions are required, 2) the SOP(s) are under review, 3) the SOP(s) are being revised, and/or 4) the SOP(s) may be 

canceled. In an effort to improve our SOP updates, I have required 

senior management to be directly responsible for ensuring the review and dissemination of SOPs under their jurisdiction. While the 

GAO reported that 71 SOPs had not been updated since the 90s, 

and some not since the 80s, SBA has already updated approximately 15% of its SOPs in the last two years. SBA Program heads 

are working diligently to continue this momentum. 

8.) Recommendation: To improve management of the 

Small Business Administration and to help ensure that SBA’s 

IT operations and maintenance investments are continuing to 

meet business and customer needs and the agency’s strategic 

goals, the SBA Administrator should direct the appropriate officials to perform an annual operational analysis on all SBA investments in accordance with OMB guidance. 

By the end of FY2015, we successfully completed operational 

analysis for each of SBA’s investments that have operations and 

maintenance components. OCIO conducts the operational analyse4s 

on an annual basis, but also conducts them on an as-needed basis 

when issues arise. We continue to complete operational analysis for 

each of these investments during their system life cycles, and we 

maintain the documentation for required OMB reporting of investment artifacts. 

SBA has made significant strides in addressing the information 

technology challenges. We’re in the midst of a major upgrade of our 

IT systems. It starts with a comprehensive network infrastructure 

modernization to give our systems greater capacity and reliability. 

We are in the final stages of moving our entire email system into 

the cloud. Additionally, we’re investing in mobile technology because we recognize that our SBA team members in the field need 

to get out beyond the walls of federal offices and meet entrepreneurs where they are. As you know, we have also launched 

projects to modernize our loan and contracting systems and to reengineer our disaster credit management system. 

This modernization agenda complements our work to update our 

external platforms by bringing advances such as automation, digital signatures, greater transparency, reliability and online matchSBREP-219 with DISTILLER

42 

making to our lending partners and the entrepreneurs we mutually 

serve. These time-saving and cost-saving technological enhancements have encouraged community bankers, CDFIs, and credit 

unions across the country to initiate or increase their SBA lending. 

I’ve been on the job at SBA for 20 months, and I’m proud of the 

progress we have made in that time. But the truth is, members of 

this committee have been committed to building a strong SBA since 

long before I arrived. As a result of your leadership and the daily 

efforts of our dedicated staff, I inherited an agency highly leveraged and operating at a high level in fulfilling our statutory mission. 

The proof is in our record-breaking performance. 

Of course, there is always room to improve, and I look forward 

to continuing to work with all of you, your staff, the Inspector General and the GAO to make the reforms necessary to deliver the 

services that small businesses seek as well as the systems and controls that taxpayers expect and deserve. 

Thank you. 

Æ 

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