Hector Barreto resigned as Administrator of the Small Business Administration
(SBA) reportedly to run a small Hispanic lobbying group, and there is evidence
that he has left the agency in shambles. SBA insiders have acknowledged that
Barreto was forced to resign the position he has held for five years after the
White House determined his handling of the SBA was a public relations
nightmare and an embarrassment to President Bush.
According to reports, the SBA’s dismal performance
under Barreto’s leadership has been chronicled in ten Federal investigations
and two private studies that uncovered fraud, abuse, and lack of proper
oversight in virtually every major SBA program. While most of the workers
within the SBA remained dedicated to serving the needs of small business, it
should come as no surprise that due to yearly, unchecked cuts in the agency’s
operating budget and staff, a government-wide survey showed that the morale of
SBA employees plummeted to the lowest level of any Federal agency.
The small business committees in both the House
and Senate have grown accustomed to the false and misleading information he
delivers on SBA performance. Congresswoman Nydia Velasquez (D-NY) was so
angered by Barreto’s attempts to mislead Congress that she publicly accused
him of “being dishonest” in a Congressional hearing last year.
A 2003 Government Accountability Office (GAO) investigation found that Barreto
had allowed Federal small business statistics to be inflated by reporting
billions of dollars in contracts to large companies as small business awards.
A 2004 report commissioned by the SBA Office of Advocacy found Barreto had
permitted awards to firms such as Hewlett-Packard, Oracle, Raytheon, and
Northrop Grumman to be reported as small business contracts. The same report
found “vendor deception” was one reason for the illegal contracting activity.
In 2005, the SBA’s Office of Inspector General issued four reports that
documented continuing cases of fraud and abuse. Report 5-15 stated that, “One
of the most important challenges facing the Small Business Administration and
the entire Federal government today is that large businesses are receiving
small business procurement awards and agencies are receiving credit for these
awards.” Report 5-14 found that during Barreto’s tenure, the SBA had falsified
their own small business contracting statistics by reporting millions in
awards to large businesses as small business contracts.
In one instance, the SBA reported a large contract to Buhrmann NV - a Dutch
firm with 18,000 employees worldwide - as a small business award. Report 5-16
found Barreto had allowed large businesses to receive millions in Federal
small business contracts through “false certifications.” Report 5-20 found
that under Barreto’s guidance, the SBA had failed to properly monitor major
federal “bundled” contracts to allow small companies a more equitable
opportunity to compete for government business.
Moreover, Barreto’s refusal to implement the women’s procurement
program that Congress enacted in 2000 has cost women entrepreneurs well over
$33 billion in lost contracting opportunities. This year, the SBA Office of
Inspector General issued Report 6-15 that revealed the SBA has mismanaged the
8(a) contracting program to the point where it is rife with fraud and abuse.
The GAO released an additional report on abuse by Alaska Native Corporations
in the 8(a) program that the SBA allowed through a significant lack of
oversight.
The Gulf loan program has been so poorly handled that thousands of small
business owners have been forced into bankruptcy because they have been unable
to get timely financial help. While Barreto has frequently touted record
numbers of loans approved for hurricane victims, the reality is that only a
small percentage of the loans
have actually been
dispersed. The
New Orleans
Times-Picayune
cited a recent study by a post-Katrina advocacy
group that found only about 21% of small
businesses had received any assistance.
These problems notwithstanding, the SBA can be turned around. The recipe
for success is relatively simple. To effect the necessary changes, the
position must be filled by someone who possesses an equal amount of business
acumen, tremendous insight, extensive knowledge of the needs of the small and
minority and women owned business communities; and the backbone to get the job
done.
