Small Business Administration

The 1990s have been a time of rapid and sweeping change at the Small Business Administration (SBA). From 1993 to 1997, SBA's workforce was cut by about 15 percent. The regional office structure, a layer of management between SBA headquarters and district offices, was a prime target of this reduction. At the same time, new administrators were appointed at the agency in 1993, 1994, and 1997, which brought about further changes at the agency. Following the change in control of Congress in 1995, SBA provided noncompetitive, career appointments to some displaced congressional staffers under the Ramspeck Act. Questions arose about whether improper personnel practices--such as political favoritism, the improper hiring of district office directors, and improper salary setting for political appointees--had taken place. This report examines several events involving personnel reassignments, appointments, and activities at SBA.

GAO noted that: (1) SBA made hundreds of appointments during the 1990s using competitive procedures for career appointments, special noncompetitive hiring authority for the Office of Advocacy, and political appointment procedures for other appointments; (2) for the appointments that GAO reviewed, GAO found that SBA adhered to the different procedural requirements; (3) for example, although 6 of the 42 District Director appointees were hired from outside SBA to the career positions, and 2 of them had political backgrounds, GAO found nothing procedurally amiss in the hiring process; (4) GAO determined, however, that in several cases SBA did not follow applicable federal regulations when setting the starting salary at a rate higher than the minimum rate for the grade; (5) SBA could not provide the documentation required by federal regulations to support the advanced salary settings; (6) SBA has developed draft procedures that, if properly implemented, should help prevent such situations from recurring; (7) GAO also determined that SBA poorly controlled its interagency detailing of employees, with the result that cost reimbursements were not always being collected; and (8) SBA officials advised GAO that they are developing new procedures to better control interagency details and collections of reimbursements.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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