WASHINGTON, D.C. – Today, Chairman Roger Williams (R-TX) led a full Committee on Small Business hearing titled “Reducing Mismanagement: GAO Recommendations for Improving the SBA.” Chairman Williams issued the following statement after today’s hearing.

“Today’s hearing with representatives from the Government Accountability Office was very informative,” said Chairman Williams. “When issues are identified by small business owners, they work tirelessly to find solutions for their business. With 41 open recommendations identified by the GAO, the SBA has shown little to no effort in resolving them. Simply put, the GAO calls the balls and strikes, and the SBA ought to heed their advice and implement their recommendations sooner rather than later.”

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Watch the full hearing here.

Below are some key excerpts from today’s hearing:

Chairman Williams: “The COVID 19 pandemic showed some serious weaknesses within the SBA, which we've already heard. The agency's inspector general estimates over $200 billion in fraudulent pandemic dollars stolen by criminals. This is unacceptable and it's a high number, and I'm proud of the creative solutions coming out of this committee to get some of these funds returned to the taxpayers. However, I don't want everything we do to be backward looking. If there's ever another time where the SBA needs to deliver funds quickly, I'm extremely concerned that they have yet to institute the proper guardrails to prevent and detect fraud within these programs. So, the GAO has also highlighted some outstanding concerns on this issue. So, I want to open the floor to either one of you, both of you. What is the single most important fraud control measure that the SBA could implement to fix the remaining vulnerabilities?” Ms. Ayers: “So thank you for that question. I think the key control that SBA does need to put in place is what you alluded to, and that is focusing in on prevention. So, if I could ask for one thing for SBA to do, it is to end the reliance on self-certification. And I'll take a second to make a pitch for data analytics so that SBA can appropriately screen applications as they come in and flag those that look suspicious and quickly take actions to resolve them. And if the fraudster does happen to receive money, to have those analytics in place so that they can readily detect when fraud has occurred.”

Rep. Crane: “Can you repeat the issues you found with SBA's failure to support our veteran business community?” Dr. LaFountain: “So this recent work identified two issues. One is that SBA is required by statute to give special consideration in its lending programs to veteran owned small businesses.” Rep. Crane: “If you had to take a guess, why aren't they by statute doing what they're supposed to do to help veterans, small business owners?” Dr. LaFountain: “That is an important question when we talk to them. They cited a lack of awareness. And so one thing that we would like SBA to do to remedy this situation is put policies and procedures in place so that doesn't happen in the future.”

Rep. Meuser: “If you look at the numbers, there was just as much fraud in the PPP and the EIDL from this administration as the previous administration. So, what has been done? Back to my question. Okay. If you write a paper, you know, that's wonderful. That's a wonderful bureaucratic action to take. Was that followed up? Was there any improvements actually done, such as new I.T. systems, new procedures, bringing in the people from the private sector, credit card companies that are so much better at detecting and keeping fraud because it's their money that they're losing? It's not, you know, the American taxpayer dollars, which sometimes doesn't get that the respect that it deserves. Has the GAO actually done anything besides write reports?” Ms. Ayers: “So we have evaluated the actions that SBA did take to address fraud as it emerged during the pandemic. And we did find that the controls that were added, such as data analytics, enhanced screening of applications as they came in and then doing post award reviews did help prevent fraud and help more readily detect it. I do think it is fair to say, based on our work as well as the work of the Inspector general, that while there was progress made, there were at times plans that SBA put into place that weren't always followed. For example, the SBA for a period of time had not been running applications through Treasury's do not pay system to flag people applicants with potential problems.”

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