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SBA Recovery Lending Extended Through April 30

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April 1, 2010 by cs

President Barack Obama signed on Friday legislation extending through April the U.S. Small Business Administration’s ability to provide enhancements in its two largest small business loan programs.  The enhancements, first made available under the American Recovery and Reinvestment Act, include a higher guarantee on some SBA-backed loans and fee relief.

The SBA estimates the $40 million extension will support about $1.4 billion in small business lending.

“Thousands of small businesses across the country have taken advantage of these Recovery loan enhancements to get the capital they need during these tough economic times,” said SBA Administrator Karen Mills.  “The increased guarantee and reduced fees on SBA loans helped put more than $23 billion into the hands of small business owners and brought more than 1,100 lenders back to SBA loan programs.  As a result, average weekly loan approvals by SBA have climbed by 86 percent compared to the weekly average before passage of the Recovery Act.  These programs have been successful in helping jump- start our economy, which is why we will continue to work with Congress on a longer extension of the increased guarantee and reduced fees.

“Additionally, we continue to encourage the Congress to act on other proposals the President has put forward, including higher SBA loan limits and refinancing for commercial property mortgages to help thousands of small businesses avoid potential foreclosure. Small businesses need the changes the President has called for to ensure that they have the tools to drive economic growth and create jobs in communities all across the country.”

As part of the Recovery Act enacted on Feb. 17, 2009, SBA received $730 million to help small businesses, including $375 million to increase the SBA guarantee on 7(a) loans to 90 percent and to waive borrower fees on most 7(a) and 504 loans.  The funds for these programs were exhausted on Nov. 23, 2009, and an additional $125 million was provided in December.  Those funds were exhausted in late February, 2010, and an additional $60 million was provided subsequently.  That funding was exhausted late Friday.

Under the new extension SBA may continue to waive loan fees and provide higher guarantee levels on 7(a) loans through April, 30, 2010, or until the funds provided under the bill are exhausted.

When the funds provided for March were exhausted, SBA reactivated the Recovery Loan Queue, as occurred in November and again in February, to cover the brief period of time before the funds from the extension become available, which should be within a few days.  

Eligible small business loan applicants, in consultation with their lenders, may choose to be placed in the queue for possible approval of a Recovery Act loan when funding becomes available.  

For non-Recovery Act 7(a) or 504 loans already funded during the Recovery Loan Queue period, this extension does not provide a retroactive guarantee or fee relief.  Loans that were funded under non-Recovery Act terms cannot be canceled and resubmitted to take advantage of the Recovery Act extension provisions.

This extension does not affect other SBA Recovery Act programs, including the America’s Recovery Capital (ARC) loan program or the agency’s microloans.  Recovery Act funding still remains available for both of those programs.

Recovery Act auditors aim to strengthen contractor oversight

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March 25, 2010 by cs

by Katherine McIntire Peters - govexec.com – March 24, 2010 – The unprecedented federal spending spurred by the 2009 American Recovery and Reinvestment Act spawned an equally unprecedented effort to make sure the nearly $800 billion in stimulus funds authorized by the law were not misused. That oversight effort, and the lessons learned from it, will have far-reaching benefits for agency inspectors general and taxpayers, said federal auditors charged with uncovering contractor waste, fraud and abuse, on Tuesday.

Of particular benefit is the Recovery Operations Center, a kind of intelligence clearinghouse for information about contractors and the risk they represent. It creates for the first time a central repository for contractor information available to all 29 federal inspectors general.

Director Doug Hassebrock said the operations center screens stimulus recipients using risk models to determine where to focus auditing efforts. Using open-source records, federal watch lists, and public-information aggregators like Lexis-Nexis, analysts at the center try to determine any nonobvious, but important associations company principals might have that should garner greater attention from federal investigators.

“Think of this as a lead factory. Our job is to come up with what we see as high-risk recipients or projects,” he told attendees of a federal financial management conference in Washington. Hassebrock also is assistant director of the Recovery Accountability and Transparency Board, the body overseeing stimulus spending.

Hassebrock gave a recent example of the center’s work: When analysts searched the DUNS number of one particular company — the unique nine-digit number agencies use to track spending — “it came up clean as a whistle, no problems at all,” he said.

“However, the other dozen DUNS numbers the company is associated with all have been debarred from federal service for fraud,” Hassebrock added. “On the day the parent company was debarred [a subsidiary company] got a Recovery Act contract and two more the day after.”

Companies debarred from doing business with the federal government can circumvent that by setting up a new company under an associate. “All you’ve got to do is have your spouse or your neighbor down the street or whoever you want open up a company with a new DUNS number and you’re back in business,” he said.

Besides collecting and analyzing data, the center also shares information among the 29 federal inspectors general. If an IG calls the center with concerns about a particular contractor, officials can determine if other agencies also have had problems with the contractor and share that information, so the two agencies can coordinate an investigation if appropriate.

“As basic as that sounds, you’d be amazed that [was not happening]. It’s very powerful — you have 29 IGs focused together against similar targets,” Hassebrock said.

The center has been a “phenomenal” help to agency IGs, said Richard Skinner, Homeland Security Department IG and vice chairman of the Recovery Board. “The center’s legacy will live well beyond the Recovery Board.”


(C) 2010 BY NATIONAL JOURNAL GROUP, INC. ALL RIGHTS RESERVED.

Stimulus Workload Taxes Agency Staffs and Missions

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March 16, 2010 by cs

By Robert Brodsky – GovExec.com – March 12, 2010

The additional workload associated with administering billions of dollars in stimulus funds has put a strain on the federal government’s contracts and grants workforce, according to new findings the Commerce Department’s inspector general released on Friday.

Although agencies are prioritizing Recovery Act work and, in many instances, hiring more staff or realigning tasks, the increased workload has exacted a price on departmental operations, the IG found.

“The awarding of contracts and grants is being delayed as is other work; employees are working overtime; and the oversight and monitoring of awards — especially non-Recovery Act contracts and grants — are expected to decline, as many agencies attempt to implement Recovery Act requirements while carrying out their ongoing programs and operations,” according to the report, which was mandated by the 2009 American Recovery and Reinvestment Act.

At the request of the Recovery Accountability and Transparency Board, the IG surveyed 29 federal agencies receiving stimulus funds to gauge whether there are enough qualified and well-trained acquisition and grant personnel overseeing stimulus funds. Twenty six responded, including officials from 140 divisions and offices.

Agencies receiving stimulus funds calculated that from April 1 through June 30, 2009, they assigned more than 22,000 employees — just over 20 percent of their contracting and grants workforce — to Recovery Act contracts and grants. Those projects resulted in more than 3.7 million hours of work during this period, the IG report said.

Agencies projected that between July 2009 and June 2010, their contracting and grants staff would spend more than 17.5 million hours on stimulus projects — or the work of nearly 8,600 full-time equivalent employees. Recovery Act staffing is expected to increase to nearly 25,000 by June, the report said.

Despite the added help, officials report they still are overwhelmed with responsibilities. More than 40 percent of respondents at large agencies said their Recovery Act staffing was inadequate. Another 45 percent said their agencies had enough employees to administer Recovery funds but the workload affected non-Recovery Act projects. The remaining 14 percent reported their staffing was fine and the work had minimal impact on other operations.

Nearly one-fourth of officials at smaller agencies reported their staffing levels were sufficient, although more than half said stimulus work was cascading into non-Recovery tasks.

“Recovery Act funding has substantially increased the workload of most agencies receiving these funds, as agencies were expected to make additional awards as quickly as possible while adhering to regulations and procedures that would ensure a fair and competitive process,” the report said.

The workforce challenges appear dire among officials administering grants, which represent a significantly higher portion of Recovery spending than contracts. Officials told the IG that unrelated tasks are being delayed, including the performance of routine grants management, reviewing applications in discretionary grants competitions and resolving audit findings.

Members of the acquisition workforce also acknowledged delays in awarding non-Recovery Act contracts.

“Respondents indicated that acquisition delays will range from longer lead times in initiating awards and not completing projects on time, to rescheduling projects or even postponing them indefinitely,” the report said. “Additionally, several respondents reported that timely obligation of all fiscal year funds, policy development and other programmatic initiatives, along with training, might not be completed over the next year.”

Those problems could be just the beginning. Several respondents said without additional resources, their staffs will not be able to devote enough attention to processing modifications, updating contract management plans, monitoring contractor systems or tracking deliverables for their nonstimulus contracts.

Acquisition personnel also expressed concern about the increased costs of meeting Recovery Act requirements, including overtime, credit hours and compensatory time. Others noted. “The toll that prolonged extended hours can have on employees, citing burnout, and decreased morale and productivity.”

In addition, the report found gaps in the training and certification of the acquisition workforce. While nearly all contracting officers assigned to Recovery Act acquisitions are certified, only 75 percent of civilian contracting officer technical representatives/contracting officer representatives have the necessary certification. The Defense Department has not established certification standards for COTRs/CORs.

The grants workforce, meanwhile, has no governmentwide qualification or training requirements, although a handful of agency-specific requirements exist. The IG recommended agencies establish standard qualifications and training requirements, similar to those in the acquisition workforce, for the grants community.

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(C) 2010 BY NATIONAL JOURNAL GROUP, INC. ALL RIGHTS RESERVED.

Extension of SBA Recovery Lending Programs Will Support $1.8 Billion in Small Business Lending

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March 4, 2010 by llyons

Agency plans to restart Recovery loan approvals on March 10

WASHINGTON – President Barack Obama signed legislation Tuesday extending until March 28 the U.S. Small Business Administration’s ability to provide small business loans that are enhanced with special provisions of the American Recovery and Reinvestment Act (ARRA), including a higher guarantee of SBA-backed loans and a waiver of loan fees normally paid by borrowers. SBA estimates the additional funding will support about $1.8 billion in small business lending. New approvals of eligible loans with the higher guarantee and reduced fees made possible by the Recovery Act are expected to resume on March 10. Loan applications from borrowers in SBA’s Recovery Loan Queue will be funded first, followed by new loan applications.

“These key loan programs have been successful in helping jump-start the economic recovery for America’s small businesses,” said SBA Administrator Karen Mills. “The increased guarantee and reduced fees on SBA loans helped put almost $22 billion into the hands of small business owners and brought more than 1,100 lenders back to SBA loan programs. As a result, average weekly loan approvals by SBA have climbed by 87 percent compared to the weekly average before passage of the Recovery Act.

“We will continue working with the President and with Congress to move forward with proposals for a longer extension for these important program enhancements, as well as higher loan limits, refinancing for commercial property loans and other significant ongoing support for small businesses. Small businesses need the changes the President has called for to ensure that they have the tools they need to drive economic growth and create jobs in communities all across the country.”

As part of the Recovery Act, SBA received $730 million, which included $375 million to increase the SBA guarantee on 7(a) loans to 90 percent and to waive borrower fees on most 7(a) and 504 loans.  The funds for these programs were exhausted on Nov. 23, and an additional $125 million was provided in December. Those funds were exhausted in late February.

SBA has implemented the Recovery Loan Queue twice before as part of its temporary transitions back to pre-Recovery Act lending.  Eligible small businesses, in consultation with their lender, could choose to be placed in the queue for possible approval of a Recovery Act loan if funding became available from loans canceled for a variety of reasons.  Currently there are 652 loan requests totaling $230 million in the Recovery Loan Queue.

The extension signed by President Obama authorizes the higher guarantee levels through March 28, 2010, for 7(a) loans.  The fee relief is available until the additional funding is exhausted or the end of the fiscal year on Sept. 30, whichever comes first.  As was the case in November and again in February, SBA is prepared to transition into a queue system as the funds start to wind down in order to ensure the maximum simulative effect of the programs and disbursement of funds.

For non-Recovery Act 7(a) or 504 loans already funded during the transition period, this extension does not provide a retroactive guarantee or waived fees.  Loans that were funded under non-Recovery Act terms cannot be canceled and resubmitted to take advantage of the Recovery Act extension provisions.

This extension does not affect other SBA Recovery Act programs, including the America’s Recovery Capital (ARC) loan program or the agency’s microloans. Recovery Act funding still remains available for both of those programs.

Transportation IG finds gaps in contractor enforcement

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January 12, 2010 by cs

A new report from the Transportation Department’s inspector general found that millions of dollars in stimulus funds have been awarded to companies that the department could have suspended from doing business with the government.

The audit, which reported that the Commonwealth of Kentucky awarded more than $24 million in Recovery Act contracts, found serious gaps in Transportation’s suspension and debarment procedures, including reviews dragging on for more than a year, unclear guidelines and poor management oversight.

“Not only do these delays put DoT and other federal agencies at risk of awarding contracts or grants to parties who should be suspended or debarred, but they also create funding risks that could impact the effective and efficient use of funds — especially those awarded under [the American Recovery and Reinvestment Act],” the IG said.

Auditors highlighted one case in which taxpayer funds might have gone to an ineligible contractor.

In September 2008, the IG recommended that the Federal Highway Administration (FHWA) suspend several companies and individuals who had been indicted in a bribery case. The company officers, who allegedly bribed state officials to obtain confidential state documents to determine bid estimates, were charged with conspiracy and obstruction of justice.

In July 2009, 10 months after the initial referral, FHWA suspended several individuals, although it did not punish their respective companies. In the meantime, officials in Kentucky had awarded those businesses a pair of multimillion-dollar stimulus contracts.

“With better communication between FHWA and Kentucky’s Transportation cabinet regarding the forthcoming suspensions, the awarding of the ARRA contracts may have been avoided,” the report said.

Linda Washington, Transportation’s assistant secretary for administration, said there was not enough evidence to suspend the companies that won the Recovery awards. The FHWA, however, has asked the IG to provide additional oversight of the two contracts, she said in response to the IG report.

Washington added that many of the problems the IG cited already have been addressed. “[Federal Highway Administration] in particular has substantially ramped up the resources and management attention devoted to suspension and debarment cases and has already completed significant accomplishments in the area,” she said.

The long delays in executing suspensions are not uncommon. Transportation guidelines, established in 2005, set a 45-day deadline for making a suspension and debarment decision. Department officials also have a five-day window for reporting suspensions to the General Services Administration, which manages the Excluded Party Listing System, a governmentwide database of banned companies.

But Transportation has not come close to meeting those deadlines. As of March 31, 2009, the average processing time for executing a suspension at the Federal Highway Administration, Federal Aviation Administration and Federal Transit Administration was 301 days. Only 30 percent of suspensions were executed within 45 days. Processing times for debarments were even worse, averaging 415 days, according to the report.

Department employees told the IG they thought the 45-day period was merely a goal for conducting research and providing recommendations.

One problem the IG cited is Transportation officials have an unnecessarily high evidentiary threshold in suspension cases. While Transportation rules state an indictment or conviction is sufficient, officials often performed extra time-consuming tasks, such as gathering additional information and research not required by department policy, the report said.

The Federal Highway Administration, which processes the majority of Transportation suspension and debarment cases, told the IG that these additional steps allow companies, many of which are small businesses dependant on the government for work, an opportunity to demonstrate why they should not be suspended.

In other instances, IG found that the suspension and debarment workload was considered collateral duty and staff often would be pulled away for other assignments.

Some cases have been pending for several years without action because Transportation officials lack the necessary follow-up procedures to close cases, investigators found.

For example, the Federal Highway Administration waited more than four years to close a case involving a contractor that pleaded guilty in May 2005 to conspiracy, bribery and unlawful storage of hazardous materials. Ultimately, the Environmental Protection Agency — which also employed the firm — debarred the company and its principals in mid-2007.

According to a Federal Highway Administration suspension and debarment official, the case “slipped through the cracks.” In September 2009, 27 months after EPA’s debarment, the FHWA closed the case.

Meanwhile, nearly half the suspension and debarment decisions the IG reviewed were not entered into the Excluded Party Listing System within the required five days. The IG found 14 cases that took more than 100 days to be added to the database and one case that took a whopping 864 days.

In one case, the Federal Transit Administration failed to provide documentation until March 2007 on a business and four individuals it debarred in November 2006. According to FTA officials, staff misplaced paperwork on these decisions. No single office is responsible for managing the agency’s suspension and debarment program.

The IG recommended that Transportation strengthen and revise its internal controls and modify its corresponding data systems. The department agreed with the recommendations.

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