Luetkemeyer: SBA Lacks Adequate Structure and Roles to Manage Unprecedented Fraud
WASHINGTON, D.C. – Ranking Member Blaine Luetkemeyer (R-MO) issued the following statement in response to the recent Small Business Administration Office of Inspector General’s report on the fraud and mismanagement in the SBA’s programs:
“The rampant fraud and mismanagement in the SBA’s programs have been an ongoing subject of concern for Committee Republicans. For months, I have been demanding answers on how the SBA is managing what is being called ‘the greatest fraud in a generation.’ The SBA’s Office of Inspector General’s report confirmed my fears: the SBA lacks an adequate organizational structure with clear roles and responsibilities to manage the unprecedented amounts of fraud in the agency’s programs. This is unacceptable and cannot continue. It is clear to me the SBA under President Biden has failed to protect these federal dollars thus hurting both the American taxpayer and our struggling small businesses across the country. The SBA clearly cannot manage this critical task. That is why I introduced the IMPROVE the SBA Act, which will reform the SBA to better position the agency to address major issues such as the one it is facing now,” said Ranking Member Luetkemeyer.
Read the full SBA Office of Inspector General report here.
On April 11, 2022, Ranking Member Luetkemeyer sent a letter to SBA Administrator Guzman expressing concern with the lack of commitment and follow through for those within the SBA to address the clearly identified problems of fraud. More specifically, the Ranking Member requested the names of individuals who have been tasked with managing risk and fraud prior to the appointment of the Special Counsel for Enterprise Risk.
On May 4, 2022, SBA Administrator Guzman responded to the Ranking Member’s April 11th letter. The Administrator highlighted how the SBA did not face serious fraud risks prior to the COVID-19 pandemic and therefore the responsibility of managing risk belongs to the sixteen senior leaders of SBA offices, which comprise the Enterprise Risk Management Board (ERMB), which was established in 2015. Specifically, there is no one official or office that handles the tracking and management of fraud and risk.
On May 18, 2022, Ranking Member Luetkemeyer sent a follow-up letter expressing concern for the SBA not having an adequately structured apparatus to responsibly manage fraud and risk throughout the SBA’s programs. Additionally, the Ranking Member requested information specifically asking for the identities and responsibilities of individuals, which were not answered in the Administrator’s response.
On May 26, 2022, the Small Business Administration Office of Inspector General released Report Number 22-13, titled “SBA’s Handling of Potentially Fraudulent Paycheck Protection Program Loans.” This report stated the “SBA did not have an organizational structure with clearly defined roles, responsibilities, and processes to manage and handle potentially fraudulent PPP loans across the program. In addition, the agency did not establish a centralized entity to design, lead, and manage fraud risk.” This report proves the Committee Republicans’ shared concern that the SBA is not equipped to combat the rampant fraud present in their programs.