STATEMENT
of the
Honorable Nydia Velazquez, Chairwoman
House Committee on Small Business
“Oversight of the Small Business Administration and its Programs”
Thursday, November 19, 2009

In the 111th Congress, the House has made an unprecedented commitment to transparency. Under the Speaker’s direction, the House has adopted Rule 11, which requires quarterly hearings on fraud, waste, abuse and mismanagement of programs under committee jurisdiction. I’m proud to say that the Small Business Committee has gone above and beyond that requirement. Since January, we’ve conducted no fewer than 16 oversight hearings. Today’s discussion marks the third in a series we’ve held with GAO and SBA this year, and gives us an opportunity to gauge the state of the agency’s programs.   
 
These hearings are an important tool for measuring progress and gathering information. In the past, they have been enormously useful, not just for spotting SBA’s problem areas, but also for solving them. In July, we met to examine Disaster Loans, a program that has been mired in controversy since Hurricane Katrina. That discussion generated a number of recommendations for improvement and, importantly, was the impetus behind the Small Business Disaster Readiness and Reform Act, introduced by Representative Parker Griffith.  

SBA programs have always been a lifeline for struggling small firms. In light of the current downturn, they are more important than ever. These are initiatives that encourage greater competition in the marketplace and yield significant returns on the tax payer dollar. Even more importantly, they help create jobs. Small firms generate roughly 70% of new positions, and investments in these ventures are a down payment for job growth. That’s why it’s so important for SBA’s programs to be running at full capacity. In past oversight hearings, however, GAO has shed light on some troubling areas in the agency’s contracting portfolio.

At our oversight hearing in May, GAO helped us identify considerable fraud within the HUBZONE program. In some cases, big businesses had gamed the system to win small business contracts. In other instances, firms in wealthy neighborhoods had posed as struggling ventures with HUBZONE addresses. In all cases, we knew just what we were looking at-- the fleecing of America’s entrepreneurs. And, unfortunately, it seems to be happening to some of our most vulnerable businesses.

Fraud within the federal marketplace is never an acceptable thing. But it is particularly troubling when it comes at the expense of our veterans.
The disabled veterans contracting program was established as a means of empowering these men and women. With unemployment for severely disabled soldiers at 85%, it is particularly important today.

Entrepreneurship offers a kind of financial independence that other livelihoods cannot. We need to be sure it remains a viable option for our veterans--the men and women who have served our country so well. These brave Americans have more than earned their shot at entrepreneurship. And yet we now have reason to believe the disabled veterans program is being exploited by an unscrupulous few--dishonest businesses that have cheated our veterans out of countless opportunities. 

This sort of abuse is more than a simple injustice. It is criminal, and it needs to be addressed immediately, not weeks or months down the road. The committee is not only going to look for ways to support the disabled veterans contracting program, but to hold the individuals accountable that have sought to game the system at the expanse our nation’s veterans.   

In times of economic turmoil, small firms have always relied on the SBA. Even amidst tremendous uncertainty, the agency has stood as a beacon of stability. It’s critical that it continue to play that stabilizing role. Just as our economy is counting on small businesses to lead the recovery, small businesses are counting on SBA for strength and support. We cannot afford to let them down.