[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]






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

                               __________

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
  
  
  
  

            Small Business Committee Document Number 114-035
              Available via the GPO Website: www.fdsys.gov
              
              
              
              
              
              
              
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                   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 VELAZQUEZ, 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
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                                       OPENING STATEMENTS

                                                                   Page
Hon. Steve Chabot................................................     1
Hon. Nydia Velazquez.............................................     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.
 
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, Velazquez, 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.
    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. VELAZQUEZ. 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.
    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 Velazquez, 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.
    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.
    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.
    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 
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.''
    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. VELAZQUEZ. 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.
    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. VELAZQUEZ. 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 
non-collateralized $25,000 loan that is now being processed in 
7 days.
    Ms. VELAZQUEZ. 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.
    The record shows that now, once we are given permission and 
declare a disaster, we are there in 24 hours, Madam Ranking 
Member.
    Ms. VELAZQUEZ. 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 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.
    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.
    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.
    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 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.
    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 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 critical 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.
    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 up-to-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 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 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.
    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 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 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 
investment 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 
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.
    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 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 disaster 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 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.
    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----
    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----
    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.
    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.]
    
    
    
    
                            A P P E N D I X

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Thank you, Chairman Chabot, Ranking Member Velazquez, 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.

    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 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 competency 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 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 
highest-ranking 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 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 re-engineer 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 matchmaking 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.

                                 [all]