SBA’s organizational structure comprises headquarters and both regional and district field offices. At the headquarters level, SBA is divided into several key functional areas that manage and set policy for the agency’s programs. As shown in figure 1, 17 headquarters offices report to the Office of the Administrator. In fiscal year 2014, the agency employed 2,137 regular funded full-time equivalent (FTE) staff (excluding staff in the Office of Advocacy, the Office of Inspector General, and the Office of Disaster Assistance) to carry out its mission of supporting small businesses. Four program offices manage the agency’s programs that provide capital, contracting, counseling, and disaster assistance services to small businesses: The Office of Capital Access administers, among other things, the 7(a) loan program. The 7(a) program is SBA’s largest loan program and guarantees a portion of loans for establishing new businesses, operating or expanding existing businesses, or acquiring businesses. The Office of Capital Access also administers the development company (504) loan program, which provides businesses with long- term, fixed-rate financing for major assets such as real estate and equipment. In fiscal year 2014, the office had 569 FTEs. The Office of Government Contracting and Business Development promotes small business participation in federal contracting through a variety of programs such as the 8(a) business development, Historically Underutilized Business Zone (HUBZone), and women- owned small business (WOSB) programs. In fiscal year 2014, the office had 180 FTEs. The Office of Entrepreneurial Development, which had 50 FTEs in fiscal year 2014, oversees a nationwide network of public and private “resource partners” that offer small business counseling and technical assistance. These include small business development centers, women’s business centers, and SCORE chapters. The Office of Disaster Assistance, which had 991 FTEs in fiscal year 2014, makes loans to businesses and families to rebuild and recover after a disaster. SBA provides its services through a network of 10 regional offices and 68 district offices that are led by the Office of Field Operations. In fiscal year 2014, there were 802 FTEs in the regional and district offices. Regional offices, whose administrators are political appointees, oversee the district offices and promote the President’s and SBA Administrator’s messages throughout the region. Considered by officials as SBA’s “boots on the ground,” district offices serve as the point of delivery for most SBA programs and services. Some district office staff work directly with SBA clients, including business opportunity, lender relations, and economic development specialists. These employees provide counseling and training services that aid in the formation, management, financing, or operation of a small business enterprise. They also provide information on and promote SBA products to lenders, the small business community, and groups such as chambers of commerce and trade associations. Additionally, district offices are charged with completing statutorily mandated reviews, such as program participant reviews that ensure participants continue to qualify and are meeting program requirements. SBA’s field structure has been revised over the years. In response to budget reductions, SBA streamlined its field structure during the 1990s by downsizing regional and district offices and shifting oversight responsibilities to headquarters. Since the early 2000s, SBA has further restructured and centralized some key agency functions. For example, from 2003 through 2006, SBA completed the centralization of its 7(a) loan processing, servicing, and liquidation functions from 68 district offices to 1 loan processing center, 2 commercial loan servicing centers, and 1 loan liquidation and guarantee purchase center. Since fiscal year 2013, SBA’s annual budget appropriation has declined. For fiscal year 2014, SBA’s appropriation was $928,975,000, approximately $116 million less than in fiscal year 2013 (see fig. 2). SBA’s fiscal year 2016 congressional budget request of $860,130,000 was approximately $27 million less than the amount enacted for fiscal year 2015. (See app. II for more information on recent trends in SBA’s budget obligations, outlays, and authority.) SBA’s spending on IT fluctuated from 2005 through 2008, as shown in figure 3. The sharp rise in spending in 2006 is attributed to increased amounts for IT investments for disaster credit management, loan and lender monitoring, and IT infrastructure. Since fiscal year 2008, the agency’s yearly IT spending has remained fairly stable at about $100 million. For fiscal year 2015, SBA estimates that it will spend approximately $109 million for IT. Of that amount, $83 million (77 percent) is to be spent on mission-critical systems to, among other things, support agency financial operations and the disaster loan assistance program. In addition, it plans to spend $21 million (19 percent) on developing, modernizing, and enhancing IT investments, while the rest is to be spent on operations and maintenance of existing systems. Government-wide, federal agencies spend more than $80 billion annually to meet their increasing demands for IT. In a 2014 report, we found that duplicative, wasteful, and low-value investments had proliferated over the years, highlighting the need for agencies to avoid such investments whenever possible. OMB has made a similar observation in its guidance. To help address their management of federal IT dollars, OMB has implemented a series of initiatives for federal agencies to use to, among other things, consolidate the growing number of federal data centers, shift to increased use of cloud computing, and promote the use of shared services. In a June 2014 report, we found that OMB’s IT reform initiatives could help to improve the efficiency and effectiveness of federal agencies and save billions of dollars. In the last 15 years, we and the SBA OIG have identified management challenges at SBA, many of which are related to specific programs. In accordance with the Reports Consolidation Act of 2000, the SBA OIG issues annual reports in which it identifies SBA’s most serious management challenges—programs or activities that it has determined pose significant risks. These annual reports represent the SBA OIG’s current assessment of SBA programs and activities that pose significant risks, including those that are particularly vulnerable to fraud, waste, error, mismanagement, or inefficiencies. The OIG’s most recent report for fiscal year 2015 identified 11 such challenges, 7 of which are issues that have persisted for 10 years or longer. These 7 long-standing challenge areas are loan guarantee purchases, the 8(a) business development program, IT security, loan agent fraud, human capital, lender oversight, and small business contracting (see fig. 4). The other challenge areas are: improper payments, the Loan Management and Accounting System, and acquisition management. Our past reports have identified some of the same long-standing management challenges that SBA needs to address, particularly in the areas of contracting, lender oversight, and the Loan Management and Accounting System (and other IT management issues). We and the SBA OIG have also identified problems in SBA’s disaster loan processing that, while not long-standing, also pose risks to the agency. To address SBA’s challenges, we and the SBA OIG have made various recommendations. While SBA has made some progress in addressing these challenge areas, many of our recommendations remain unimplemented. As of July 2015, 53 percent of the recommendations (32 of 60) we made to SBA across all subject areas in fiscal years 2010 through 2013 had not been fully addressed. See appendix III for a list of all 69 recommendations we have made to SBA since fiscal year 2000 that remain open. We maintain that these recommendations continue to have merit and should be fully implemented. Loan guarantee purchases. Loan guarantee purchases occur when lenders request that SBA purchase the guarantee following loan liquidation or delinquency. The SBA OIG has cited issues related to loan guarantee purchases as a serious management challenge since fiscal year 2000. For example, in its fiscal year 2011 management challenges report, the OIG stated that its audits of defaulted loans and SBA’s guarantee purchase and liquidation processes showed that reviews performed by the agency’s loan centers did not consistently detect lenders’ failures to administer loans in full compliance with SBA requirements and prudent lending practices, resulting in improper payments. In its fiscal year 2012 management challenges report, the OIG stated that in the last decade, the agency had made significant progress in improving deficiencies identified in SBA loan liquidation and guarantee purchase processes but that a significant deficiency continued to exist in the area of quality assurance. The report noted that while SBA had developed a quality assurance program, additional work remained before the agency could demonstrate that all elements of the program had been completed and followed. In its fiscal year 2015 report on management challenges, the SBA OIG found that SBA had made significant progress in developing and implementing a quality control program for all of its loan centers to verify and document compliance with the loan process, from origination to close- out, and to identify where material deficiencies might exist so that remedial action could be taken. Further, the OIG stated that SBA had (1) developed and documented quality program manuals and review checklists for each center; (2) assessed center functions by risk to prioritize required quality control reviews; (3) refined feedback, training, and reporting processes; and (4) developed new systems to improve the tracking of quality control deficiencies and corrective actions. However, the SBA OIG noted that SBA would need to continue monitoring the quality control program during fiscal year 2015 to verify that (1) required quality control reviews were being completed, (2) quality control activities provided adequate coverage over loan center operations, and (3) quality control reviews were effective at identifying and correcting material deficiencies. 8(a) business development program.