[House Report 118-220]
[From the U.S. Government Publishing Office]


118th Congress    }                                     {       Report
                          HOUSE OF REPRESENTATIVES
 1st Session      }                                     {      118-220

======================================================================
 
  TO REQUIRE THE ADMINISTRATOR OF THE SMALL BUSINESS ADMINISTRATION TO 
 PROVIDE A LINK TO RESOURCES FOR SUBMITTING REPORTS ON SUSPECTED FRAUD 
                   RELATING TO CERTAIN COVID-19 LOANS

                                _______
                                

 September 26, 2023.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Williams of Texas, from the Committee on Small Business, submitted 
                             the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 5426]

    The Committee on Small Business, to whom was referred the 
bill (H.R. 5426) to require the Administrator of the Small 
Business Administration to provide a link to resources for 
submitting reports on suspected fraud relating to certain 
COVID-19 loans, having considered the same, reports favorably 
thereon without amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page
   I. Purpose and Bill Summary........................................2
  II. Need for Legislation............................................2
 III. Hearings........................................................2
  IV. Committee Consideration.........................................2
   V. Committee Votes.................................................2
  VI. Section-by-Section of H.R. 5426.................................5
 VII. Congressional Budget Office Cost Estimate.......................5
VIII. New Budget Authority, Entitlement Authority, and Tax Expenditure5
  IX. Oversight Findings & Recommendations............................5
   X. Performance Goals and Objectives................................5
  XI. Statement of Duplication of Federal Programs....................5
 XII. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
      Benefits........................................................6
XIII. Federal Mandates Statement......................................6
 XIV. Federal Advisory Committee Statement............................6
  XV. Applicability to Legislative Branch.............................6
 XVI. Statement of Constitutional Authority...........................6
XVII. Minority Views..................................................7

                      I. PURPOSE AND BILL SUMMARY

    On September 13, 2023, Rep. Van Duyne, along with Rep. 
Landsman, introduced H.R. 5426. The purpose of H.R. 5426 is to 
require the Administrator of the Small Business Administration 
(SBA) to provide a link on their website to simplify the 
process for reporting suspected fraudulent Economic Injury 
Disaster Loan (EIDL) and Paycheck Protection Program (PPP) 
loans related to the COVID-19 pandemic.

                        II. NEED FOR LEGISLATION

    The SBA's Office of the Inspector General (OIG) estimates 
that $200 billion in potentially fraudulent COVID-19 EIDL and 
PPP loans were disbursed by the SBA, resulting in more than 100 
years of investigatory work. This legislation will streamline 
the process to recoup these funds.
    The bill provides a direct route to report COVID-19 fraud 
straight to the OIG rather than having to go through multiple 
links and websites. It is a top priority of the Committee on 
Small Business to recoup as many of these funds as possible in 
the most timely and efficient manner.

                             III. HEARINGS

    In the 118th Congress, the Committee held one hearing 
examining the issues covered in H.R. 5426. On July 13, 2023, 
the Committee held a hearing titled ``Stolen Taxpayer Funds: 
Reviewing the SBA and OIG Reports of Fraud in Pandemic Lending 
Programs.'' The SBA OIG testified that the SBA disbursed more 
than $200 billion in potentially fraudulent loans through SBA 
pandemic relief programs. He also testified that the 
investigation found 90,000 actionable leads amounting to more 
than 100 years' worth of investigative case work.

                      IV. COMMITTEE CONSIDERATION

    The Committee on Small Business met in open session, with a 
quorum being present, on September 14, 2023 and ordered H.R. 
5426 reported favorably to the House of Representatives. During 
the markup no amendments were offered.

                           V. COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the recorded 
votes on the motion to report legislation and amendments 
thereto. The Committee voted to favorably report H.R. 5426 to 
the House of Representatives at 11:46 AM.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                  VI. SECTION-BY-SECTION OF H.R. 5426

Section 1. Website to report fraud relating to certain COVID-19 loans

    This section requires the SBA to provide a link within 30 
days of enactment to the Office of the Inspector General's 
website where individuals can report fraud, waste, abuse, 
mismanagement, and misconduct related to PPP and EIDLs issued 
in response to the COVID-19 pandemic.

             VII. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

    Pursuant to clause 3(d)(1) of House rule XIII, the 
Committee adopts as its own the cost estimate prepared by the 
Director of the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974. The Committee has 
requested but not received from the Director of the 
Congressional Budget Office a cost estimate for the Committee's 
provisions. Once available, the cost estimate will be published 
in the Congressional Record.

         VIII. NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND
                            TAX EXPENDITURES

    Pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives and section 308(a)(I) of the 
Congressional Budget Act of 1974, the Committee provides the 
following opinion and estimate with respect to new budget 
authority, entitlement authority, and tax expenditures. While 
the Committee has not received an estimate of new budget 
authority contained in the cost estimate prepared by the 
Director of the Congressional Budget Office pursuant to Sec. 
402 of the Congressional Budget Act of 1974, the Committee does 
not believe that there will be any additional costs 
attributable to this legislation. H.R. 5426 does not direct new 
spending, but instead reallocates funding independently 
authorized and appropriated.

                IX. OVERSIGHT FINDINGS & RECOMMENDATIONS

    In accordance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the oversight findings and recommendations of the Committee on 
Small Business with respect to the subject matter contained in 
H.R. 5426 are incorporated into the descriptive portions of 
this report.

                  X. PERFORMANCE GOALS AND OBJECTIVES

    With respect to the requirements of clause 3(c)(1) of rule 
XIII of the Rules of the House of Representatives, the 
performance goals and objectives of H.R. 5426 are to require 
the SBA to provide a link on their website to the SBA OIG's 
website to simplify the reporting of potentially fraudulent 
EIDL and PPP loans.

            XI. STATEMENT OF DUPLICATION OF FEDERAL PROGRAMS

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, no provision of H.R. 5426 is known to 
be duplicative of another Federal program, including any 
program that was included in a report to Congress pursuant to 
section 21 of Public Law 111-139 or the most recent Catalog of 
Federal Domestic Assistance.

 XII. CONGRESSIONAL EARMARKS, LIMITED TAX BENEFITS, AND LIMITED TARIFF 
                                BENEFITS

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee finds that the bill 
does not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits as defined in clause 9(e), 
9(f), or 9(g) of rule XXI of the Rules of the House of 
Representatives.

                    XIII. FEDERAL MANDATES STATEMENT

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

               XIV. FEDERAL ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                XV. APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

               XVI. STATEMENT OF CONSTITUTIONAL AUTHORITY

    Pursuant to clause 7 of rule XII of the Rules of the House, 
the Committee finds that the authority for this legislation in 
Art. I, Sec. 8, cl.1 of the Constitution of the United States.

                          XVII. MINORITY VIEWS

     Over the course of the COVID-19 pandemic, the Small 
Business Administration (SBA) disbursed approximately $1.2 
trillion of economic aid through the Paycheck Protection 
Program (PPP) ($792 billion), Economic Injury Disaster Loan 
Program (EIDL) ($405.2 billion), Restaurant Revitalization Fund 
(RRF) ($28.6 billion), and the Shuttered Venue Operators Grant 
Program, (SVOG) ($14.6 billion) to help small businesses 
adversely impacted by the crisis.
    In an effort to disburse PPP and COVID-19 funds swiftly, 
the SBA weakened and removed internal controls. The Office of 
the Inspector General (OIG) issued a number of reports early on 
warning of the importance of strong internal controls to 
mitigate risk, and a total of 22 reports to identify weaknesses 
in SBA's control environment throughout the pandemic. Beginning 
in early 2021, long-standing anti-fraud controls were 
reinstituted, and new safeguards were put into place by the 
Biden-Harris Administration to reduce the potential for fraud.
    On June 27, 2023, the OIG issued a white paper to provide a 
comprehensive review reporting that SBA disbursed more than 
$200 billion in potentially fraudulent COVID-19 EIDLs, EIDL 
Targeted Advances, Supplemental Targeted Advances, and PPP 
loans. SBA also issued a report, entitled ``Protecting the 
Integrity of the Pandemic Relief Programs,'' which estimates 
that $36 billion of the $1.2 trillion in pandemic relief 
emergency funds was obtained fraudulently. Moreover, the agency 
asserts that 86% of the likely fraud originated in the first 
nine months of the pandemic, under the Trump Administration.
    Currently, whistleblowers can report potential fraud to the 
SBA Office of Inspector General Hotline (OIG hotline) or the 
Pandemic Response Accountability Committee (PRAC). SBA also has 
a link on their main page that will lead to a page entitled, 
``Preventing Fraud and Identity Theft.'' This page has a direct 
link to the OIG hotline for reporting fraud, waste, abuse, or 
mismanagement of federal funds involving SBA programs.
    SBA websites--like those of other federal agencies--must 
conform to U.S. Web Design System standards as required by the 
21st Century Integrated Digital Experience Act (P.L. 115-336). 
Among other provisions, those standards require a consistent 
appearance across all sites, which is the reason SBA houses its 
fraud resources under the Oversight header. Moreover, all 
government websites must be accessible to individuals with 
disabilities in accordance with Section 508. Having additional 
banners or pop-up ads could negatively impact the usability of 
the website for individuals with disabilities.
    The OIG white paper reported that the office has received 
more than 250,000 hotline complaints since the beginning of the 
pandemic. Of those complaints, more than 90,000 have been 
identified as actionable leads, which amount to more than 100 
years of investigative case work.
    Given that SBA already has a link to the OIG website on its 
website, Committee Democrats believe the single most important 
action Congress can take to support the OIG in their efforts to 
combat fraud is to advocate for their Fiscal Year 2024 budget 
(FY 2024) request. The Administration's FY 2024 budget plan 
proposed $47.704 million of discretionary funding, plus a $1.6 
million transfer from SBA's Disaster Loans Program, and an 
additional $14 million transfer to OIG from a mandatory funding 
source. The proposed mandatory funding source for the $14 
million transfer is no longer available following enactment of 
the Fiscal Responsibility Act of 2023 (P.L. 118-5), which 
rescinded the unobligated balances in the SBA Disaster Loan 
Program account.
    The OIG budget request would enable OIG to build on its 
existing oversight capacity as COVID EIDL loans enter into 
repayment with additional criminal investigators, data 
scientists, auditors, and professional staff. These investments 
in data analytics capabilities, auditors, and investigative 
coverage will enable OIG to analyze more data, conduct more 
audits and reviews, and investigate more cases, promoting 
public trust and integrity within SBA's programs and 
operations.
    Unfortunately, the House FSGG appropriations bill provides 
$32.02 million, which would cripple the OIG, providing budget 
authority for approximately 130 positions, and bringing 
operations back to pre-pandemic levels. The Administration's FY 
2024 budget provides the necessary funding to enable the OIG to 
sustain existing oversight capacity and invest in additional 
necessary staffing. Absent the total budgetary resources 
requested in the 2024 budget, the OIG will not have sufficient 
funding to combat fraud within SBA programs or to provide 
effective oversight over the agency's programs. Critically, OIG 
will not have a sufficient operating budget to capitalize on 
the new laws (P.L. 117-165 and P.L. 117-166), which extended 
the statute of limitations for fraud in the PPP and EIDL 
programs to 10 years.
            Sincerely,
                                        Nydia M. Velazquez,
                                                    Ranking Member.

                                  [all]