SBA Administrator Karen Mills had a busy day last Wednesday. Before she appeared before the Senate Committee on Small Business and Entrepreneurship to defend her agency’s fiscal 2011 budget request, she joined SBA Inspector General Peggy Gustafson at an oversight hearing before the House Committee on Small Business. Recent House rules require quarterly oversight hearings geared toward uncovering “fraud, waste, abuse and mismanagement of programs under Committee jurisdiction.” It is a rule and a role that Committee Chairwoman Nydia Velázquez (D-NY) takes very seriously. Since they are required to do this sort of oversight regularly anyway, members of the panel from both sides of the aisle willingly put Mills through the ringer in the nicest way possible — mostly. Administrator Mills took a certain amount of heat because several members of the panel felt that the needed reforms were not happening fast enough.

Inspector General Gustafson reported ongoing issues with small business procurement and lender oversight. In both cases, schemes initiated by larger players to avail themselves of programs for which they did not qualify was a recurring theme. Procurement programs for targeted populations such as service-disabled veterans, women and the HUBZone program that targets distressed communities use self-certification for small business contractors to qualify. That, of itself, is not necessarily a problem, Gustafson said, as long as the SBA has stringent certification requirements and stronger program oversight. Similarly, Inspector General Gustafson described what she called “complex conspiracies” often involving SBA lenders. This was another problem that could be addressed by stronger oversight, said Gustafson. In both cases, the SBA needs to become more willing to throw both lenders and contractors out of its program when they are found to be acting in bad faith.