August 31, 1999

Thompson Letter on GPRA - SBA

Thompson Letter on GPRA - SBA

August 17, 1999

The Honorable Aida Alvarez

Administrator

Small Business Administration

409 Third Street, SW

Washington, D.C. 20416

Dear Administrator Alvarez:

As you know, the Congress is focused on ensuring that the federal government delivers better results to its citizens and taxpayers. The Congress has enacted a statutory framework to achieve these results. This statutory framework includes the Government Performance and Results Act (GPRA); financial management statutes, such as the Chief Financial Officers Act; and information resources management statutes, such as the Clinger-Cohen Act. Each of these reforms aims at achieving more efficient and effective performance throughout the federal government.

As part of our oversight agenda, the Committee has developed information on how effectively the Small Business Administration (SBA) is using the above statutory tools to improve its performance in several key areas such as becoming more results-oriented and resolving long-standing problems of fraud, waste, and mismanagement. The purpose of this letter is to share with you the information we have developed and obtain your response to certain questions pertaining to it. With this dialog as a start, we hope to work with you on a continuing basis to ensure that the SBA delivers the best possible results for the American people.

Performance Plan Assessment

The Congress continues to look closely at how well departments and agencies are implementing GPRA. At the request of this Committee and others, GAO recently completed an assessment of the SBA annual performance plan for fiscal year (FY) 2000. According to GAO, SBA’s FY 2000 plan "has made little, if any, improvement" over its FY 1999 plan. SBA did reduce the number of performance measures from over 100 to 55 and establish target levels of performance for each measure.

The FY 2000 plan’s major strengths are that it: created a set of performance goals and measures that address SBA’s program performance; included baseline and trend data for performance measures; and identified the agencies whose programs and activities complement those of SBA. For instance, SBA acknowledged its joint role with the Federal Emergency Management Administration to help businesses and families recover from disasters but provided no details on how coordination would occur.

GAO found that the FY 2000 plan had six key weaknesses: (1) the plan did not identify performance goals and measures for SBA’s major management problems; (2) it did not link the strategies to the performance goals and describe how they will help achieve those goals; (3) it did not describe strategies or actions SBA could take to mitigate the effects of external factors on the accomplishment of performance goals; (4) it did not identify how SBA will use its human capital to help achieve its performance goals; (5) it did not describe efforts to verify and validate the data used to assess performance; and (6) it did not discuss the limitations of internal and external data sources for assessing performance.

Need to implement audit recommendations on major management problems

One area where there have been too few results is solving major management challenges that seem to persist year after year at most agencies, including SBA. According to information provided to the Committee by your Inspector General (IG), there are a number of open audit recommendations addressing major management problems at SBA.

The enclosure describes many such unresolved recommendations by the IG. Several of the IG recommendations propose ways to improve management of the 8(a) program. For example, the IG recommended that SBA re-align 8(a) firms’ program years with their fiscal years and the tax years of the disadvantaged owners.

Need for specific performance goals to address major management problems

It is essential that agency heads and other managers commit themselves to tangible steps that will lead to solutions and that agency heads accept accountability for following through on these commitments. One obvious way to do this is to establish specific and measurable goals in your annual GPRA performance plans. OMB guidance in Circular A-11 for agencies to prepare their performance plans states that

performance goals for management problems should be included particularly for problems whose resolution is mission-critical or which could potentially impede achievement of program goals...

GAO recently evaluated the extent to which SBA’s fiscal year 2000 GPRA performance plan contains specific and measurable performance goals to address the most serious management problems confronting SBA that your IG identified. According to the GAO evaluation, which is detailed in the enclosure, SBA’s plan has no specific goals for any of the 10 problem areas.

Among the major management problems for which there are no goals or measures are: (1) lenders are not held accountable for errors in loan processing and servicing; (2) borrowers are not held accountable for misuse of funds; (3) the need to develop a program-based cost accounting system; (4) and SBA does not enforce its own rules regarding excessive subcontracting.

I am concerned about the total absence of goals to address your major management problem areas. Without specific and measurable performance goals, it is difficult, if not impossible, to assess progress in addressing major management problems and to hold agencies accountable.

Congressional Follow-Up

With so many tax dollars being wasted, this Committee expects agencies to take every opportunity to use the many tools available to them, such as GPRA plans, to resolve major management problems. Furthermore, the GAO and your own IG exist to work in partnership with you to solve longstanding issues of waste, fraud, and abuse.

I hope that the information provided with this letter will stimulate you to make greater use of these tools and resources. In this regard, I ask that you review the enclosed information and respond to the following questions:

• Do you disagree with any of the IG recommendations described in the enclosures? If so, what is the basis for your disagreement?

• Where you agree with the recommendations, what specific actions are you taking to implement each one and how long will it take to complete?

• Do you disagree with any of the IG designations of management problems facing SBA? If so, which ones and why?

• Where you agree with the problem designations, are you prepared to establish specific and measurable commitments to address each one of them in your next performance plan?

• If so, could you outline what approach you plan to take for each problem?

• If you believe that any of these problems do not lend themselves to specific and measurable performance plan goals, please explain why. Please also explain what alternative steps you are taking to solve the problem.

I would appreciate your early attention to this letter. After receiving your response, I will ask Committee staff to arrange a meeting with your representatives to discuss it. My Governmental Affairs Committee staff contact is Robert Shea.

Sincerely,

Fred Thompson

Chairman

FT/rs

Enclosures

 

SPECIFIC PERFORMANCE GOALS IN SBA’s FY 2000 PERFORMANCE PLAN

ADDRESSING

IG-DESIGNATED MAJOR MANAGEMENT CHALLENGES

Major Management Challenge	Specific Performance Goal(s)
Loan programs: Lenders are not held accountable for errors in loan processing and servicing.	None.
Loan programs: Borrowers are not held accountable for misuse of funds.	None.
Loan programs: Recoveries in servicing and liquidation are not maximized.	None.
Fraud deterrence and detection require continued emphasis.	None.
Minority Enterprise Development: Contract dollars are concentrated among relatively few companies in SBA’s 8(a) minority business development program whose owners remain in the program after amassing substantial wealth.	None.
Minority Enterprise Development: SBA does not enforce its own rules precluding excessive subcontracting.	None.
Minority Enterprise Development: SBA’s monitoring of companies in its 8(a) minority business development program is mismanaged.	None.
SBA needs to develop and implement a program-based cost accounting system.	None.
Information system controls need improvement.	None.
The Paperwork Reduction Act and the Privacy Act need to be rationalized with the Government Performance and Results Act to permit effective measurement of performance outcomes.	None.