GAO Criticizes SBA Reorganization The Small Business Administration’s reorganization is plagued by lack of money, turnover in key personnel and poor communication with employees and other stakeholders, the General Accounting Office found. SBA announced a transformation plan last year that involved centralizing loan-processing functions and reorganizing district office staffs to concentrate on marketing and outreach. (SAA, 8/9/02) The first pilot projects, involving three regional offices and two loan-processing centers, began last March; the first phase was to have been completed in September. SBA said the pilots were delayed because it ran short of funds in its 2002 budget; its 2003 appropriation was late in being passed by Congress, and included no money for the transformation effort; and the agency does not expect to receive money for the effort in its 2004 budget, which has not yet been passed. As a result, SBA told the GAO investigators, “the focus is now on creating a new center for centralizing all of its loan liquidation and loan guaranty purchase activities.” The timetable for transforming district offices into marketing centers is unclear. GAO reported, “Many employees in the district offices (involved in the pilots) told us that they had not received the level of funding needed to support marketing and outreach functions including money for travel, laptops, and cell phones that would allow them to cover a wider geographic area in the districts and to test telecommuting and alternative work sites.” GAO criticized SBA for poor communications with employees and other stakeholders, such as trade associations. The investigators said SBA never showed its transformation plan to employees, because agency officials consider it a draft, not a final product. The agency said it was working on the final plan this fall. Poor communication has “created an environment of confusion about the leadership, specific goals, and timeline for transformation,” the report said. While SBA headquarters had communicated regularly with district directors, it had done little to allow rank-and-file employees to ask questions or offer suggestions, it added. “We determined that communication is one-way and through a chain of command model, newsletters, or rumors, GAO said. “Communication is not about just ‘pushing the message out,’ but also involves facilitating an honest two-way exchange and allows for feedback from employees and stakeholders.” The reorganization was headed by SBA’s chief operating officer, Lloyd Blanchard. But Blanchard left the agency last year, and GAO said SBA never announced who had taken over the initiative. SBA has 68 district offices, but they are unevenly distributed around the country. A GAO report last year cited congressional influence in determining where the offices are located.