[Congressional Record (Bound Edition), Volume 156 (2010), Part 11]
[Extensions of Remarks]
[Pages 15846-15847]
[From the U.S. Government Publishing Office, www.gpo.gov]




RECOMMENDATION OF CHANGES IN LAW THAT HELP ACHIEVE DEFICIT REDUCTION BY 
 REDUCING WASTE, FRAUD, ABUSE, AND MISMANAGEMENT, PROMOTING EFFICIENCY 
 AND REFORM OF GOVERNMENT; AND CONTROLLING SPENDING WITHIN GOVERNMENT 
                   PROGRAMS, PURSUANT TO H. RES. 1493

                                 ______
                                 

                        HON. NYDIA M. VELAZQUEZ

                              of new york

                    in the house of representatives

                     Wednesday, September 15, 2010

  Ms. VELAZQUEZ. Madam Speaker, pursuant to section (c)(2)(C) of H. 
Res. 1493, the Small Business Committee has taken steps to ``identify 
changes in law that help achieve deficit reduction by reducing waste, 
fraud, abuse, and mismanagement, promoting efficiency and reform of 
government, and controlling spending within Government programs'' that 
fall within the Committees' legislative jurisdiction. With the economy 
beginning to show promising signs of recovery, it remains imperative 
that Congress and this Committee effectively oversee that taxpayer 
funds are used effectively. This includes not only terminating 
duplicative programs, but also taking steps to eliminate wasteful 
practices in federal agencies.
  The Committee has taken its oversight role very seriously. H. Res. 
40, which was passed at the beginning of this Congress, amended Clause 
2(n) of House Rule XI by requiring that committees undertake intensive 
and regular examination of executive branch activities. We have 
exceeded the 1 hearing per 120 day requirement under H. Res. 40 and 
held 10 hearings on the Small Business Administration (SBA) and its 
programs. This has included 4 Government Accountability Office (GAO) 
investigations, all of which were requested by this Committee.
  As a direct result of these oversight activities, the Committee makes 
the following recommendations pursuant to H. Res. 1493:
  1. Termination of Patriot Express Loan Program: The Increased Veteran 
Participation Program contained in P.L. 110-186, the Military Reservist 
and Veteran Small Business Reauthorization and Opportunity Act of 2008, 
provides a more suitable financing alternative for veteran-owned small 
businesses than the Patriot Express Loan program. In particular, the 
program established in P.L. 110-186 provides for a higher guarantees, 
larger loan sizes, and reduced fees than the Patriot Express pilot 
program currently operated by the SBA. For this reason, the Committee 
recommends the termination of the Patriot Express initiative because 
the alternative program established in P.L. 110-186 will better serve 
veteran entrepreneurs.
  2. Termination of SBA Express Loan Program: Given increasing defaults 
and the projected costs associated with the SBA Express program, the 
Committee recommends that this program be immediately terminated. The 
initiative has grown costly and does not satisfy any public policy 
goal, making it a poor use of scarce taxpayer funds. With a reduced 
guarantee of only 50 percent, the SBA Express Loan program fails to 
provide a sufficient incentive for lenders to make loans that they 
would otherwise not make.
  3. Termination of the HUBZone Program: In the last three years, GAO 
has found that the program was continually subject to widespread fraud 
and mismanagement. The program places taxpayer funds at substantial 
risk for fraud, waste, and abuse. Given the high frequency of fraud, 
legitimate small business contractors are placed at a distinct 
disadvantage due to the continued operation of this program. As a 
result, the Committee recommends that it be terminated.
  4. Termination of the Emerging Leaders Initiative: While the goals of 
this program are justifiable, the Committee is concerned about the 
effectiveness and efficiency of the initiative due to its program 
design and past performance. As a pilot program, the initiative failed 
to demonstrate the capacity to generate a significant economic impact 
despite the large share of resources allocated to it. This program only 
produced 132 jobs at a cost of $800,000--an average of cost of $6,000 
per job created. This amount is almost twice as much as the job 
creation cost of the Small Business Development Center program, which 
costs $3,500 to create one job. In addition, this program is 
duplicative of SBA's extensive network of entrepreneurial development 
providers. As a result, the Committee recommends that it be terminated.
  5. Termination of the Regional Innovation Clusters Initiative: The 
Committee has major concerns over the design of the regional cluster 
program. Although the program's goal is to target significant resources 
to regional industry clusters, the institutional framework to implement 
the proposal has not been clearly established. Plans for the allocation 
of resources, partnership agreements among local, private, and federal 
service providers in the targeted areas, and decision-making 
coordination remain unclear. In addition, the program lacks a specific 
implementation strategy, has inadequate federal oversight over the 
allocation of resources, and does not contain sufficient performance 
measures to determine its success. Due to these limitations, there is 
significant concern over abuse of thirds for this initiative. As a 
result, the Committee recommends that this program be terminated.
  6. Termination of the National Veterans Business Development 
Corporation: This Corporation was created to provide training and 
entrepreneurial development services to veterans. Unfortunately, it has 
not reached its full potential and the American Legion and Veterans of 
Foreign Wars have called for its termination. Given concerns that the 
organization is insufficiently fulfilling its purpose to provide 
comprehensive assistance to separating members of the nation's military 
forces, the Committee has authored and the House passed an alternative 
program in H.R. 1803, the Veterans Business Center Act of 2009. This 
legislation establishes a dedicated national network to deliver the 
services more efficiently than the Corporation. The Committee's 
commitment to promoting veteran entrepreneurship remains strong. 
Therefore, it is critical that assistance programs to the sector are 
effective and that veterans have access to these resources so they can 
establish successful enterprises in all stages of the economy.
  7. Termination of the Drug-Free Workplace Program: The Drug-Free 
Workplace program was originally created to assist small firms in the 
implementation of a plethora of substance abuse counseling and training 
activities. This included creating workplace drug policies, drug 
prevention training and education seminars, providing for drug-testing, 
and counseling employees on substance abuse. Instead, the program has 
evolved into a subsidy solely for drug-testing centers, a private 
industry that does not warrant funding from the SBA, an agency whose 
mission is to promote and assist small businesses. Given the financial 
challenges facing the government, it is not prudent to use scarce 
taxpayer funds to purchase drug-testing services from and for viable 
private sector companies. As a result, the termination of program 
funding is appropriate due to the lack of meaningful returns on the 
public investment.
  8. Termination of the National Women's Business Council (NWBC)--The 
NWBC mandate is to conduct research on women entrepreneurship, which is 
duplicative of the research work of the SBA's Office of Advocacy. 
Having two research entities conduct similar research is unnecessary 
and the NWBC funding should be terminated. The Office of Advocacy is 
the appropriate entity to conduct all entrepreneurship-related research 
as it benefits from both economies of scale and scope in its 
organization structure and staff capabilities.
  In the last 18 months, small businesses have increasingly turned to 
the SBA for assistance. This has helped stem job losses and, in some 
parts of the country, created pockets of new growth. As a result, we 
are now beginning to see signs of strength, as private sector jobs 
continue to be added. To this end, the National Association for 
Business Economics recently found that 31 percent of companies added 
jobs between April and June, the highest level since 2007. 
Additionally, 39 percent of businesses surveyed reported that they 
expect to hire more workers over the next six months, which is the most 
since January 2008. Such growth is promising and it suggests that the 
business climate is becoming ripe for the establishment of new firms. 
This means that the SBA needs to be prepared to help these firms 
succeed, while also containing its costs. The Committee's proposals, if 
implemented, will accomplish this by reducing the federal deficit, 
curtailing fraud, and enabling the SBA to focus on its most important 
and successful programs. By increasing efficiency, the agency's 
existing tools and resources can be improved, without imposing 
additional costs on the taxpayer. This is a means to not only act in a 
fiscally prudent manner, but also a way to meet the needs of our 
nation's small businesses.

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