itself to unnecessary issues. with regard to procedural guidance gao reported that as of march 2015sba had determined the 74 of 165 standard operating procedures revised needed to be revised and 31 needed to be consult, an additional 9 needed to be issued. without guidance it is impossible for program participants or even is sba to know how a program should operate. this makes it difficult for small firms to work with the agency and given that these are not issued pursuant and common rule making frustrate those that want greater transparency in how government works. the report shows that sba has some work to do in improving the

overall management of the agency, with that said, i would glad to see sba has agreed with nearly all of the gao's recommendation and has begun to take action. today i'm 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 gao's testimony and i -- >> just to explain very briefly our rules here in the time

limits which the share is familiar with, i'm sure we operate under the five-minute rules. we will give you a little bit longer than that if you need it there's only one witness, we generally have four. you need a little more time, that's okay and we will limit ourselves to five minutes at least in the first round and then we will determine whether i think it's necessary in the second round at the appropriate time. the yellow light comes on and says it's 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 you're recognized for five minutes or as i say a little bit longer. >> thank you. i'll keep it under five minutes.

>> thank you. >> ranking member and members of the committee, i'm 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 long-standing 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 sba's 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 we've 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, you've 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 sba's 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 it's a very serious issue and it's 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 general's recommendations related to i.t. security, is that correct? >> that's what report they stumble is available in september. we know that information technology security has been identified for well over a decade as a long-standing management challenge. and it's of crucial report that came out recently, there wasn't

the report of the number but it certainly is one of the long-standing 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 long-standing management challenges due to lack of sustained priority attention over time, end quote. he went on to say quote, this raises questions about the sba's 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 it's 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 long-term attention to this issue that it deserved a? >> it's very disturbing when an agency, you know, we've been here, chairman chabot and ranking member velazquez and previously with representative graves, and previously, that the challenges have been around, and it's 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. i've 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 we've 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 haven't seen any evidence that there's really a

collaborative effort which i think is what's 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 it's 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 i'll call a silo effect as force of the inability to work

across the organization, it's 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 doesn't 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 didn't 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 tri-state area was affected by sandy, would you tell us based on what you've seen that if there is another large-scale disaster, such as hurricane sandy, that the administration, sba, will be prepared to tackle the challenges that we saw during hurricane sandy? >> i don't 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 tri-state 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 don't 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 that's 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 vice-chairman 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 can't coordinate that, those to if anybody else we're going to create an office of disaster interagency affairs. this is an example of government run amok. we went agency they can't do the job so great a second agency

they can't do the job and now we've got a third agency. am i misreading what's going on, the ineptness of the agency cause it to create more agencies which continued to be an apt? >> i see you're 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 isn't 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 past-due 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. that's 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 it's consistent with what we've 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 there's a lack of evaluations and evaluations not really being incorporated. and it's hard to would have an effective, strategic plan if you don't have a concept of how well voters programs are working. >> coming from the private sector need have a strategic plan can know where you're 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 there's no follow-up, it's 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 can't go up on our intention. there's 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 i'm not kept up to date and they might be being relied upon to heavily because it's a lack of specificity to begin with. but if you put the different pieces together from what we've 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 don't 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 don't reflect current practices, you're 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 can't do the job would've gotten if they don't 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. it's of concern that of the 69 regulations that only seven have been met. however, it's 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. sba's 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 we've had multiple meetings at sba including senior leadership over our open recommendations. so it's a positive sign. so the idea was this actually represents an improvement, as you see in my statement, that seven were of limited since issuance of our report, is a positive change from what had

occurred before. and there were a few that were implemented, i would say roughly last summer, for example, i made reference in my statement to some recommendations we made in a report on the program and 2010. service more attention to this. there are certain times when we get information from sba associate it is, we think we've implemented the recommendation that requires a lot of follow-up. and there were certain times when we just don't agree. there certain times we explain excruciating detail why we don't agree that recommendation is supplemented. sometimes there's a back and forth. i'll give an example. on disaster loans, the one dealing with the early submission of applications. that's what we're requires some back and forth but i would say james and his team worked very well with us to say okay, what do we have to do to convince you

that we are addressing the recommendation? we went to the different pieces of what we needed to understand. so it's a very collaborative process between us and sba. there's more attention to make it now but the agency is still very challenged in terms of addressing these recommendatio recommendations. >> there were several recommendations that went to full completion. can you tell me why you believe sba chose to prioritize these or the others, and what was it that made these recommendations rise to the forefront? >> i think that there was one of the things that the chief of staff said there was an emphasis nobody at the aid program. i would say the associated administrator that's relatively new to the position certainly reached out to us with the idea

that she was taking these recommendations seriously, and wanted to better understand what those recommendations were. they are somewhat dated but they are still we think very relevant. pilot was expand the context why would recommendations combination with your entity with how the program, what was operated when we were writing the report. so there's a fair amount of back and forth. as we stated that just prior to issuance of a report for its recommendations from the 2010 report were implemented. i think it was to focus on aid by both senior management at sba and also likewise by the associated administrator herself of the program. >> okay. and if there is disagreement, how do you move forward if there

is disagreement between the sba and the gao speak with a lot of times it is disagreement but kind of a question of is this good for us? and sometimes the focus becomes very much we need documented evidence that they conducted a change. like, for example, there were many times when we stated that district office staff needed better guidance for how to carry out their responsibility, and they would provide is like dates where training, where training occurred. we just say okay, so tell us what the training until. we had to see some substance besides what's happening at the so it tends to be a back and forth process and sometimes we reach resolution. a lot of it is just having a focus on these issues, but there's many of these issues, there's a real focus and a determination if they are not

simple issues. they will take time to address the without the focus on the issues it's not going to happen and i think you see a situation here where many of these issues have not had that focus. >> the gentlelady's time has expired. the chair would just note that if you had a teenager and told them to clear the room, they get sick and i through the cleanup seven of them, that might be in the positive direction, but i don't think most parents would be satisfied with that. i certainly would not be inclined to give him an increase in their allowance. the gentleman from mississippi, mr. kelley, is recognized for five minutes. >> thank you, mr. chairman, and thank you, mr. shear, but for being here. it's my understanding that during the interviews with their employees that they require that there general counsel be present during this. in your experience has that been the same working with other organizations or other agencies with these experiences come when

these investigations are conducted? >> no. the idea of having to counsel present when we are interviewing district, non-management district employees, it's an experience we haven't had with other agencies. >> as a former prosecutor general and people lawyered up, so to speak, that was kind of when they didn't have any reason to it was a routine just talk to, general something behind that. it's so important when you have a sop to understand and sop. and putting on my military side of experience we have sops in every military, for every single thing we do. if you don't understand and use that sop it's not an sop because that stands for standard operating procedure. if you don't know and understand and use it is not an sop. it's just a bunch of guidelines that you're not using. in your experience is the sop that the sba has just basically a bunch of guidelines or do they actually use and understand and

update continue to update their sop? >> you've asked a few questions, and easy questions, and these want answered is, had they been in the process of updating sops and bringing them up to what their current practices are and trying, creating to guidance that the district office staff for example, need, is the idea i think well reported for us as for the procedural guidance, this is one of the major deficiencies, one of the major i call it new efficiency, you know, that we identified in this report. in the sops, there's an issue of how specific they are. so, for example, no matter how good the sop is, because they are pretty general pick the idea that women had district staff saying i was made a business opportunity specialist, handed the sop, and that was my

training. i might be pointing anecdotal evidence from one or two people, that in and of itself isn't sufficient to really so what to carry out their job. >> and now i want to talk about something else that's important to the military side which i don't see the sba but that's risk management. to understand risk obviously you have to understand risk first of all. it's my understanding they don't have any strategic plan. they don't have a risk management program which is ample to determine what the risks are. do you know of anyone or do you think they are capable of, first of all, understand the risk, and second of all if they do understand it either capable of addressing the risk they have experienced? >> it's a great question. as for strategic planning i think we did find many elements of a positive strategic planning process. the park that we really see as

efficient as the rule of evaluation of institution plan. when we stuck to mismanagement, to most like to identify the pieces of that would go into enterprise mismanagement but it requires a very cost-cutting approach across the agency. they created a board which is to save at least in principle should be addressing these issues, but it was first, there was unofficially a risk officer named at that time there was a general counsel in 2009, and who we are years later and you just don't have the albert of a robust enterprise management system to really identify the risks, not only from a financial standpoint, but the risks having to do with carry out the agency's mission like, for example, in disaster and the other pieces of the agency.

sometimes you can look at enterprise risk management and say, even before it was invented there was some basic common sense business practices that really, even, will you ca could find similar types of language, insurance of the enterprise mismanagement, that is becoming common you know, looked upon more by the office of management and budget. it's just that it's had a very premature stage. >> just a final comment. i find it kind of funny that for thforforthe personal risk than d have counsel present at all interviews of employers but they don't pay that kind of attention to the organizational risk and risk management plan. yield back. >> the gentleman's time has expired. the gentleman from new york who is the recommend of agriculture energy and trade subcommittee is recognized for five minutes. >> thank you, mr. chairman. the gao identified several long-standing changes at the agency. of course, those that you only

needed and which are the most important when it comes to service delivery and more tangible and immediate resources for our small businesses? if you had to. >> it's a long-standing business challenge. i would really focus on human capital. the need to really assess the skills gap to identify training that may be necessary. at all these different pieces fit together and the sense of there are certain issues that are associated with us, say contractor programs that require participation across the agency and the various parts of the agency. so that all kind of fit together in a certain way, but if i had to identify one that really

stands out, it would be a human capital challenges as a long-standing challenge. another one that has come up, what do you call a long-standing or not, is they need to be able to document decisions and to evaluate how well your programs are working at the document those decisions. these are some of the things that really stand out based on our work. >> the report notes that the sba has made significant process when it comes to the loan guarantee process. i do believe that sba in addressing human capital has helped it begin to turn the corner on some of those concerns? >> the concerns with loan guarantee -- i'm sorry. just -- >> developing and implementing a

quality control program for the loan centers to verify and document, like compliance with the loan process. >> i don't know whether i can link it to human capital or not, but among the work that we cite from inspector general, there have been certain actions to address those long-standing challenges. i don't know whether they can be linked to any particular type of training or not. i just don't have an answer for that question. >> thank you. i yield back. >> gentlelady yield. the gentleman from florida, mr. curbelo, chairman of the subcommittee on agriculture, energy, trade and reports is recognized for five minutes last night. >> thank you for recognizing my unfortunate injury over the holiday. i reserve all my comments about hoverboards. thank you very much for coming in today. there are a lot of specific

questions that have been asked and think they are all very important. i want to ask you more broadly. is this just a cultural issue that is going to have to be addressed beyond specific fixes that you may recommend. is there just a cultural structural issue here that we should really focus on? i don't think congress is particularly well-equipped to get into the details of how an organization is operating, but we can certainly lay out a vision, antilles suggest a structure. and wonder if you could give us some guidance in that regard? >> you ask the great question so i'm going to stand back for what i'll call the detailed auditing here and now pieces fit together, and some of them fit in with enterprise risk management and come and some of the other matters we've talked

about. i used the word earlier and it's been used over the years of sba of it being silent. and the idea that you can have certain reporting relationships and working relationships that are different. part of that is that you don't have the collaboration that would occur across the agency but so what you're trying to do enterprise mismanagement or just manage just roughly how do you put together an operation that has this many pieces to get that there has to be a way of having that collaboration, you know, across. you have to have more of the culture where bad news can float to the top. i really think that the idea that over the years that there hasn't been that much focus attention on either our recommendations or i think i can say that for the ig as well, that there has to be an ability for information to flow up and

across the agency. and to some degree if you step back from enterprise mismanagement, that's what part of this is. in terms of the concern that sba had with us anything, the question came up of interviewing nonmanagement district office staff. the idea was a concern was raised, we were giving a platform for people to complain. now, this might just come from one or two people in sba, but i just say, i don't get the sense that employs that sba deal that they can offer honest feedback leadership. i know from all the efforts we have gao, to really embrace employee feedback that, but that is part of your, and all these things kind of fit together. everything fits together within the organizational structure, so stepping back from basically

this very detailed audit work, these are some the observations that i would make. >> i think you because we are focusing on a lot of symptoms and, of course, that's important, but i think the root cause, and i agree with you, is a breakdown in committee patients at sba. i look forward to having the administered in here tomorrow and figure out with her and with all of my colleagues what we can do to promote a culture of documentation where people feel free expressing how they feel come with the frustrations are and i think the organization can work better. >> can i add one more point of? >> please. >> thanks. one of the things that we didn't do general management review, but like earlier in president bush's administration, something called agency treasure mission that didn't work out real well, and it was like when steve

preston came in as administrator that was more kind of like business process reengineering, he called it. so there wer were were certain f there. love that stretched towards the end of that administration. and so one of the things we are very conscious of when we reported on those efforts was that there's really a need for someone to really, someone or some group of people in senior positions, because by its very nature appointments to change with each administration even when you don't have changes in party. the idea here is that we're kind of looking like, what senior executive service career people might be in a position to kind of take hold of some of these efforts and to expand them? i think that's one of the issues that this committee should be thinking about, and that sba should be thinking about. because there's about a year left in his administration.

>> time done. the gentleman from new york who is ranking membe ranking memberf investigations or second grade elections subcommittee is recognized for five minutes. >> thank you, mr. chair. north carolina, my state. thank you, ranking member velazquez as well come and mr. shear, thank you for being here and for your testimony. as an enthusiastic supporter of the work that sba performs our nation's small businesses come it is critically important that the agency is run both efficiently and effectively. i'm sure you would agree to the. the gao report noted that sba is considering expanding sba one, and expedite application process to include the eight a program which is critical for minorities to gain a foothold in the federal procurement marketplace. do you believe that this is about the right direction? >> it is a move that can be they

permanency move. on the basis of our audit in one way we would your auto part beside major consideration for much of improvements that are being sought, such as the use of technology, you know, in this case for the 8a program, that the office of management and budget is very specifically requirement that we use an auto work, or i keep tina's work with us on this edges as far as analyzing existing it. at a terms of requirements for investing in new it. in sba is engaged in a number of activities which sba states that

may be sufficient for their it outlook. but these very specific requirements that are there for a purpose and we think that if sba is really wants to use technology to improve program delivery, which is a good thing to be thinking about, that it should have a more rigorous method for following the requirements that omb has for it investments and for the operational analysis of existing investments. >> thank you. gao found that sba had not concluded, conducted regular images of the operational investments to ensure that they continue to meet agency needs. why is this significant? >> for example, overtime you

might have certain systems that you have in place but if they become redundant with new investments, so that's part of the forward-looking i just mentioned in as you and your question about sba one, and it's significant that way. and it's important to know, especially when you have systems that have been in place for a long time, of whether they still are effectively meeting the needs of the agency in delivering its programs. so you running a little bit blind if you don't go through these steps. >> thank you. in its report gao found several issues that sba has not resolved. so what are the key actions or management changes that sba needs to take to address these challenges? >> i think that we reiterated that at the time it was 69

recommendations from early reports, now it's down to 62. but we had a new recommendations. we think they're very substantive recommendations that are really necessary. to the address. to try to improve the operations of the agency. >> okay. let me quickly the review found employers are if i went data measures, not qualitative. gao also found employers report technical problems with aspects of the electronic performance system. as a result many field office in place to there not being properly evaluated. what is sba doing to correct this problem? >> if something i think it's a good question to ask the administrator, because i really think that among these issues, a

lot of it comes down to having that, you to come in terms of our work evolves into the pieces of the human capital planning, the training that's involved in the appraisal system where we denote that the system seems to be heavily dependent on quantity, like how many events did you hold, rather than the quality of those events. and the development of performance standards that really gets at the quality issue, that all government agencies have a challenge in this area i think sba has a way to go this way. and i hope they are developing responses to that. >> thank you. amount of time. yield back. >> the gentleman from new york who is chairman of the subcommittee on contracting and workforce is recognized for five minutes spent thanks are being here, mr. shear, you're always so direct and i appreciate that. i don't know where to go with wh

this. there's so much to talk about especially the new american dream, and the old one, right, people say is disappearing trick it was built by small business. according to walter mead who has written widely about this, that it is the key to the future and the small business plays such a critical role in this. were going to be administered here tomorrow to talk about this but it sounds like they are just ignoring you, that they don't regard you as either know your agency computer knowing what to your talking about when they don't consider it important because it doesn't feel like there's any urgency to this. and yet we know about two to 3% of business loans in this country flow through them. and that number is growing. we've authorized more money to go into those programs. what i would really does but what do we really do about this but it sounds like we will have the same meeting again next

year. >> i think oversight is important, and i would say there's been a slight change that sba. i don't know how extensive the change is a real kind of see overtime, but the idea that last summer, you know, included major efforts it wasn't just by me at 14 to goes by managing director. it was the new chief of staff at sba of convening meetings to going over -- >> do they take you seriously? do you think they agree with you or that they want to implement what you're asking? it sounds like they're just stonewalling you. >> it's one that we see some positive movement. unlike all the other times, sba seems to always agree, but then it's very rare. it's just in certain pockets come in certain programs we might have an associate administrators will into with our recommendations that an

action is taken. this seems to be some movement, but i think time will tell and i would help -- >> is sophistication of no levers to pull to make them do and follow your recommendations? >> -- is this a case. business distant light conversation? >> we find that, so let me go back to what we do as an agency. just recently the comptroller general testified about the importance of agencies implementing our recommendations and how can't improvements to the functioning of the government. and this was all tied in to get within sending letters to the heads of agencies on recommendation implementation rates. we do get a lot of movement in the sense that governmentwide and 80% of our recommendations are implemented. we just don't have that track

record at sba. we haven't had it. there's been some positive movement the last year. >> music 50%, compared to other agencies that are closer to 80 or more pics of the proof is in those numbers that they are not highly functioning. so would you ask administrator suite to more when she is here? i me, what can i can imagine but -- >> many of the question you're asking me today are probably good questions to ask. but part of this is the question of in areas where we're looking for in a sense, some of the bigger issues. for example, are sba to come back to us and say during the course of this we are just saying have you assessed your organizational structure? because our analysis indicates that there's a lot of challenges

associate with either to india to change the structure or you have to do things to address the challenges. >> what you're saying is you just don't care. >> but then we get a response at the agency comment period and that we get response now in a 60 day letter saying we have evaluated organizational structure. so really the idea of really establishing very firm kind of like plans that would extend into the next administration. what plans does she have for -- >> long-term structural changes are permanent and not based on the changes in command. >> yes. i think that to really focus on some of the organizational structure issues, a lot of these things fall together, the human capital issues, the training needs. all those different pieces.

i think what's your plan for getting the agency to be on were highly functioning agency. >> my time has expired. >> the gentleman's time has expired. the gentleman from massachusetts who is ranking member of health and technology subcommittee is recognized for five minutes. >> thank you. them will go to -- we would go to mr. radewagen and she's also the chair of subcommittee on health and technology. >> thank you, mr. chairman. welcome, mr. shear. during the gao's investigation of mismanagement at sba, did you find any regional offices took on more responsibility than other racial offices? for instance, the are two u.s. territories i cannot seem to have regional representation,

let alone a district office. would it be accurate to say sba has neglected in certain regions while perhaps over serving at the region's? >> you ask a great question and i wish i could say that we did audit work to see what representation that did, there was a regional district office in a specific outreach but we didn't try to do that other there is district offices in particular. so it's a very good question but our audit doesn't address it. >> thank you, mr. chairman. ideals back. >> gentle lady yield spread. the gentleman from virginia is recognized. if not, i think the regular house another question and we now yielded to her. >> mr. shear, you know, i can't help but feel frustrated, because we have been on this predicament for so many years.

i've been sitting on this committee for 23 years, and the disaster loan program has been one that i care about because it has impacted new york city, and since katrina we worked on legislation. and who we are today passing a new law that i offered to reopen the disaster loan program because the percentage of decline loan applications were so high. and i'm happy to see that the administration is moving to provide assistance that people deserve, the victims of hurricane sandy. but tomorrow we'll have to, we will have the administrator will have to ask the tough questions that need to be asked based on the review that you just conducted. and my question to you,

listening to my colleagues here and the answers that you provided, is that it looks like someone needs to be in charge of watching the store, right? and it goes to the issue of the organizational structure that could survive the fact that pretty soon we'll going to be looking at a new administration in the white house. so how can we address that? who do we hold accountable in terms of making sure? because you said that the 8(a) program, while there is an associate administrator that cares about making sure that the recommendations that were suggested are implemented to make the program run better.

so be on the administrator, if there's anything that could be done at the organizational structure of the agency that will be accountable in making sure that all these recommendations are implemented. >> the organizational structure, one of the most basic things that we said was there's nothing magical about having the 10 regional offices and the 60 district offices and different lines of reporting, you know, in terms of working relationship, reporting relationships. there's other ways the agency could structure itself. we don't feel that we have the basis for cink's what your social structure should be, but we certainly identify that the are these challenges. when we reported on the 8(a) program it's a symptom of a

situation where you have district staff that are not necessarily sure what their jobs are insurance of continued eligibility and things like that, the oversight that's needed. but from the standpoint of the organizational structure, there was a sold its report, and when it wasn't given to us we didn't feel it was that important because the important thing, what are you doing, sba, to address? if you're going to keep your structure larger impact how you going to address these issues that are associated with it? we still haven't seen anything. when we follow up with them last month we still don't see anything in terms of what i going to do about the structure of this agency? or if you're not making structural changes, how are you making changes to make sure that people are unaccountable and that people are trained to do their job and they understand what their jobs are? i think those are some of the more fundamental issues that we

really have here. you can put all these other things aside and you say that some of the more fundamental issues that have been around for years. there's a lot of things we talked about over the years with individual programs and even looking more broadly across programs that now fall under the rubric of enterprise mismanagement. but that gives us a pretty good rubric as far as saying how do you really define what the mission of the agency is and how do you put the pieces together. then the other piece that we certainly discussed with this committee, with you over the years, we think they need to collaborate across agencies, whether it be usda rural development or these working groups that office of management and budget had set up for collaboration and delivering entrepreneurial assistance, things like that, a more collaborative approach would be,

these are the things that really stand out when i step back from all these individual recommendations. >> thank you. thank you, mr. chairman. i yield back. >> time has expired. just one quick question, mr. shear. what's your assessment of the sba's response to the gao report was submitted to chairman chaffetz and the committee on oversight and government reform? >> one of the things that it does note, and i think that i would expect in a 60 day later, i mean, i read in a 60 day letters and comments and draft report from sba, enough to no certain common things, common themethings such as we agree the are taking action. some of the things, like something positive that's in my statement was even though it might be a small number of

recommendations, a relatively small number over the last year, that there is at least some focus on those recommendations. but i hope it's not just viewed as a fire to within sba that we're trying to do this over a short period of time that we are trying to create a culture and a management structure that can work overtime. even into the next administration. on working on those issues. so as far as there's a lot of activity going around at a lot of what we found in doing this work and that we got a look at other programs, particularly at the contracting programs over the years, there's always a lot of activity around things that are somehow related to certain things that we are finding that but the idea of going the extra mile isn't quite there. there's a lot of initiative and activity that's going there, but you know, it's a matter of take it to the next level.

.. that spa are currently the future leadership can rely on in terms of addressing the issues that the agency and this idea that there has been an assessment, you know, it doesn't really matter to us whether we see the assessment. what is important is there is documented evidence that a thorough examination of the organizati