Overall management of the agency, with that said, i would glad to see sba has agreed with nearly all of the gaos recommendation and has begun to take action. Today im looking forward hearing from gao about whether or not they believe gao is standing through commitment. It is a vital role and one that i want to ask all Committee Members to take part in. I look forward to hearing the gaos testimony and i just to explain very briefly our rules here in the time limits which the share is familiar with, im sure we operate under the fiveminute rules. We will give you a little bit longer than that if you need it theres only one witness, we generally have four. You need a little more time, thats okay and we will limit ourselves to five minutes at least in the first round and then we will determine whether i think its necessary in the second round at the appropriate time. The yellow light comes on and says its time to wrap up and if the red light comes on we will let you go on a little more like we indicated, and we look very forward to your testimony and youre recognized for five minutes or as i say a little bit longer. Thank you. Ill keep it under five minutes. Thank you. Ranking member and members of the committee, im pleased to be here this morning to discuss management review of the Small Business administration. My testimony is based on september 2015 report and related updates and status recommend ago. Rather than focusing on individual programs we conducted a comprehensive assessment, processes and systems including efforts to address management challenges. In september we reported that sba had not resolved many of the longstanding Management Services due to lack of priority attention over time. Many of the management challenge that is we and the sba office of Inspector General had identified over the years remained including some related to Program Implementation and oversight, contracting, Human Capital and it. Sba has generally agreed with prior gao recommendations that would design to address these issues. As we stated in our report, the agency had made limited progress in addressing most of these recommendations but had recently begun to take steps to address them. For example, in july 2015, sba had recommended four to six recommendations from a 2010 recommendation report from a Business Development program. In our report remade eight new recommendations designed to improve sbas program evaluations, strategic and workforce planning, training, organizational structure and Risk Management, procedural guidance and oversight of it investments. Sba generally agreed with recommendations. We also agreed that the recommendations made in prior work have merit and should be fully implemented. As of december 2015, sba had implemented seven of the 69 recommendations from prior report that is were identified in our september report. I will not recognize myself to begin the questioning. In the last year weve seen the federal Government Act in a whole series of breaches. Opium, the office of Personnel Management comment millions of fingerprint records stolen. Social security numbers, addresses, health records, financial and biometric data were all taken. We seen the irs hit, the state department, even the white house. In your review of the sba, the Small Business administration, youve listed a whole range of deficiencies, areas with the sba has fallen short, just not cutting it. The one that worries me the most is in the area of i. T. Security. First of all, the information that they keep on individuals and o Small Businesses can be pretty sensitive information, is that right . Information you might not want a rival business or your neighbors or the Chinese Government to have access to. Would you agree with that and would you like to comment . Chairman chabot, you raised a very good point. One of the things i just want to say procedurally, that when you take such an extensive operational view of an agency like this, we certainly partnered with sbas office of Inspector General, and we greatly appreciate the interactions we had. Ngc in our report that we refer to the igs work quite liberally and some of the issues raised. The issue of i. T. Security is one where we relied and we reported on the igs findings. Basically there are issues identified by the ig that require, require attention but its a very serious issue and its one let me interrupt if i can. Despite the logical concern that individuals or Small Businesses who deal with the sba might have, the sba has failed to implement more than 30 of the office of Inspector Generals recommendations related to i. T. Security, is that correct . Thats what report they stumble is available in september. We know that Information Technology security has been identified for well over a decade as a longstanding management challenge. And its of crucial report that came out recently, there wasnt the report of the number but it certainly is one of the longstanding management challenges. I can attest to its like with the number is at this time. Two minutes left. Let me move to another area. I will again quote from the review. And i quote him in our september 2015 report we found that the sba has not result many of its longstanding management challenges due to lack of sustained priority attention over time, end quote. He went on to say quote, this raises questions about the sbas sustained commitment to addressing management challenges that keep them from effectively assisting Small Businesses, end quote. The principal purposes of even having an sba is to assist Small Businesses. And its our responsibility as the committee on oversight to make sure that the sba is living up to their responsibilities to Small Businesses. So would you like to comment on the fact that they lacked the longterm attention to this issue that it deserved a . Its very disturbing when an agency, you know, weve been here, chairman chabot and Ranking Member velazquez and previously with representative graves, and previously, that the challenges have been around, and its very disturbing to us that these challenges still remain. And it goes down to some very basic function, and with all the Program Audits we done at sba, one of the reasons why we, you know, suggested to the committee the idea of undertaking such a review is that we saw that certain recurring themes happen over and over again would you look across the agency that affect all aspects of its operations and its programs. We think there some work to be done here, and we are looking for some commitment to deal with many of these issues, many of which are internal control type of issue, which we pay very close attention to. Thank you. Ive got more questions that in order to impose the same five minutes of myself and about elst else i will stop and now yield to the Ranking Member. Thank you, mr. Chairman. And thank you, mr. Shear, for being here. In the report gao found the sba still has not implemented Disaster Program reforms, which this committee offered when i was chair in 2008. What are the major reasons why sba has not established for Disaster Assistance program . When weve done work, repeated work, you know, and appeared before this committee on the Disaster Loan Program, there seemed to be some positive movement in the period after the act was passed, the establishment of a office of disaster played with an sba. They appeared up until i was at 2010 some collaboration that was going on between office of disaster preparedness, the office of Disaster Assistance, and the office of Capital Access to try to stand up a Pilot Program as a first step to try to move into these areas to better serve the result of disaster victims. I use use the expression the bal was dropped by sba. This collaboration when we did our work on sandy, this collaboration just seemed to fall apart. We havent seen any evidence that theres really a collaborative effort which i think is whats necessary here for sba to try to develop these three programs. Including idep. To what degree do you think these reasons may be symptomatic of some of the more general operational challenges you found in your management review . I think that its a great question because one of our concerns, sometimes we use simple word like silo effect. Sba has a complex organizational structure, and jeff reporting relationships, working relationships, and you have different parties involved. The idea that with Disaster Assistance involves a number of parties and it just seems like what ill call a silo effect as force of the inability to work across the organization, its relevant to the work we did on enterprise Risk Management. Together to identify risks, to the Agency Working on those risks across the agency, it just doesnt seem like that collaboration is there. I really have to be critical about our first interview dealing with the three private loan programs. When we are doing the sandy work where we were told there was a Conference Call after sandy occurred with three lenders. The lenders could be think it was in a document entity with three lenders didnt like idep. That was a case i had to direct to sba the people that had been involved earlier that were part of this collaborative effort to try to stand up idep and that never came to the table for it even seemed like, you know, almost like it was something that was developed for working on the development by previous people in those positions, that that also kind of fallen off the table. Since the tristate area was affected by sandy, would you tell us based on what youve seen that if there is another largescale disaster, such as Hurricane Sandy, that the administration, sba, will be prepared to tackle the challenges that we saw during Hurricane Sandy . I dont think sba has a real plan for addressing it, especially on the congressional mandate to create three private loan programs. It was the rationale to those programs. Much of it like, for example, with idep survey of gulf coast with katrina at based on our work at our work on the ground with constituents in the tristate area with sandy, there was certainly appeared to be demand for things i could bridge loan type of program and things like that, and i dont think sba really put itself in a position to serve those needs. Have you contacted any other management review with any other federal agency . Will we, as an agency, we did a lot of broad management reviews and basically the 1980s and 1990s. And no now this is one time or without sba was an agency because of these recurring problems that would require one. We currently have an ongoing general management review of had. So thats one. We done other things that would not be called general management reviews that are pretty desperate including what we did a number of years ago at sba. The gentleman from missouri, mr. Luetkemeyer, who is vicechairman of this committee is recognized for five minutes. Thank you, mr. Chairman. Mr. Shear, the report is quite damning and quite concerning from the standpoint that it looks like we have an agency that is mismanaged from top to bottom. I represent the district in missouri that just got hardest hit in our state with regard to flooding this past two weeks, and so when i look at the office of disaster assessment, and then because it can really figure out what to do they created the office of disaster planning and now because they cant coordinate that, those to if anybody else were going to create an office of disaster interagency affairs. This is an example of government run amok. We went agency they cant do the job so great a Second Agency they cant do the job and now weve got a third agency. Am i misreading whats going on, the ineptness of the agency cause it to create more agencies which continued to be an apt . I see youre concerned to erase a very good point and basically what we look for a generally with the way sba operates, including assessing the risk of meeting its mission that you just need more thorough plans on how to do this coverage is creating additional entities isnt necessarily the way to do that. You really need to develop a plan and think strategically about how to deliver the assistant. Through your discussion and your report you talk about gao had their own id had 11 different challenges, and after 10 years only seven of them still exists. Some of them as the chairman alluded as the chairman alludedd to, one of them is extreme airport which is the security of the data that this agency holds. Other ones in there, improper payments. I mean, this is a pretty basic function of the agency i would assume. Do you know off the top of your head what the pastdue rate is for the portfolio . No. It you want to make a question for the record, declined to address that. Just curious if you know off the top of your head, going up or down. Thats always an occasion of a major problem when you that as well as economic times. Also you are talking about develop Strategic Plans, and get them to get the plant and no one goes in, is able to review it. Am i reading that right within your report . The strategic did they develop Strategic Plans yet the soap fault as distinctive the plan is followed and while this is a violation of its effectiveness, whether it was accurate. The Strategic Planning, the deficiency we identified and its consistent with what weve done on individual programs has been that the lack of a valuations of its programs for its effectiveness, consistent with the chairman brought up the modernization act that theres a lack of evaluations and evaluations not really being incorporated. And its hard to would have an effective, Strategic Plan if you dont have a concept of how well voters programs are working. Coming from the private sector need have a Strategic Plan can know where youre headed. The country review a regular basis we know what you did right and what you did wrong and how you can improve. Having a plan is fine but if theres no followup, its a waste of time. Also to talk about Standard Operating Procedures here in rules and regulations would seem to be either ignored or they just create them and they just cant go up on our intention. Theres no coordination or can you elaborate just a bit on that . You know, in and of itself the Standard Operating Procedures are so out of date and im not kept up to date and they might be being relied upon to heavily because its a lack of specificity to begin with. But if you put the different pieces together from what weve done, you have staff that are in a District Office to refer to as the boots on the ground, so you have staff in District Offices that are not being will trained to really to conduct of their functions. When you have that, when you dont have clear guidance we have found with individual Program Audits, clear guidance for how those regulations are supposed to be carried out, and danger doing things in a makeshift manner that sops dont reflect current practices, youre going to have what we have observed which is a lot of inconsistency and incomplete oversight of its programs. I appreciate that. One moment of indulgence by the chandigarh it would seem to me that if we have this kind of to me reckless regard for the reports are sent out, reckless regard for the recommendations there needs to be some sort of punitive action taken by us, mr. Chairman, against this agency started with freezing of the funds and freezing of all future rules and regulations that sops if they cant do the job wouldve gotten if they dont need to be doing anything further so i want to work with you on something along those lines and i yield back. The gentlelady from california, Ranking Member of economic growth, taxation and capital is recognized for five minutes. Thank you, mr. Chairman. Mr. Shear, there seems are some general agreement between sba and gao on the recommendations that gao has made to address important problems at the agency. Its of concern that of the 69 regulations that only seven have been met. However, its also the sba has taken steps to address only some of the issues at hand. In preparing this report did you find disagreement between sba and gao on what gao recommendation should be considered completed or fully implement it by the agency . Over the past year i would say roughly since last april or may, there has been a lot more focus at sba in looking at our open record recommendations, which is a long list. We have reported to this committee before. Sbas track record over the years addressing the open recommendations has not been very good. The comptroller general actually, november, sent a letter to the administrator like you did to other heads of agencies. And in this case the implementation rate, the way we cannot do that right is around 58 , and most of the government is around 80 . So this has been a concern of ours. We have seen some attention and movement on this. Either spent i think i pushed from Senior Management, i would say roughly since last summer, and weve had multiple meetings at sba including Senior Leadership over our open recommendations. So its