GAO Faults SBA Disaster Planning
    By Hope Yen
    The Associated Press

    Tuesday 13 February 2007

    Washington - Months before Hurricane Katrina hit, the Small Business Administration deliberately shunned disaster planning that would have sped aid to thousands of companies in dire need, saying it would yield only "limited benefits," investigators say.

    The report by the Government Accountability Office, set to be released Wednesday, is the latest to detail the short-staffing, confusion and disarray that contributed to a backlog of tens of thousands of loan applications in the weeks after the storm struck on Aug. 29, 2005. It found that federal officials discounted centralized planning, arguing their local field offices could figure it out.

    In addition, despite recent efforts to improve, the SBA has yet to set clear timetables for completing key elements of disaster planning such as staffing and training, making it impossible to determine whether the agency is at all ready for the next major disaster, according to the GAO report obtained by The Associated Press.

    "With better planning, available evidence suggests the agency could have been better positioned to provide initial disaster assistance to hurricane victims," it said.

    The audit comes as many Democrats in Congress have decried the Bush administration's commitment to Katrina rebuilding. On Tuesday, a tornado ripped through New Orleans, injuring at least 29 people and underscoring the fragility of the Gulf Coast region, which still has vast stretches of FEMA trailers.

    After Katrina hit, the agency did not send its first check for victims until more than a month after the storm, although SBA eventually was able to boast that it approved more than $10 billion in disaster relief loans. Under fire by Congress, SBA head Hector Barreto resigned in April.

    As of May 2006, SBA was taking on average about 74 days to process loan applications as compared with the agency's goal of doing so within 21 days.

    "The bottom line here is that there are still problems with SBAs disaster loan program - from existing backlogs and unprocessed applications to a lack of a plan," said Rep. Nydia M. Velazquez, D-N.Y., chairwoman of the House Committee on Small Business, which planned to hold a hearing Wednesday on SBA's disaster response.

    "The agency has given us no reason to believe it is ready to respond to another large scale disaster such as Katrina," she said. "At this point, there are simply no excuses for these shortfalls, and the committee plans to make changes that will ensure this agency is able to meet the demand in the future."

    Responding, the SBA said it had taken several steps under new SBA head Steven Preston to improve its disaster loan program, such as by assigning a case manager to each borrower. In addition, the SBA has secured more than 400,000 square feet of office space and begun cross-training of hundreds of workers that could step in to assist with loan processing.

    "The agency is currently at a capacity with respect to systems, facilities and trained personnel which will allow SBA to respond to a very large disaster in the short term," wrote Herbert L. Mitchell, associate SBA administrator for disaster assistance, in the report.

    Among the other findings:

• SBA outreach to Gulf Coast victims remains poor in part due to inadequate funding. The report said the agency made efforts to explain its disaster aid programs and offer help through Web sites and organized events, but was impeded by the number and vast dislocation of hurricane victims.
  
  
• The SBA did not have a system for cross-training its staff, adding to the shortages.
  
  
• The SBA did not have adequate plans to ensure it had adequate office space for its expanded work force, particularly in its Fort Worth and Buffalo offices, exacerbating backlogs on its telephone help line.