In the News

Lia Russell

Agency watchdogs told Congress that the $2.2 trillion in spending to speed recovery and heal economic damage caused by the pandemic would be subject to quick oversight.

Democrats on the House Oversight Committee released a readout of a meeting with agency Inspectors General, and reported that audits of key programs would be forthcoming.

The Small Business Administration IG said that it would review the Paycheck Protection Program, a measure aimed at providing financial relief for small businesses. Since its April 3 rollout, however, small business owners have said that the website to apply for such loans regularly crashed, leaving them at a disadvantage for accessing those needed funds.

At issue with the Paycheck Protection Program, which sets aside hundreds of billions in forgivable small business loans for businesses who maintain payroll without laying off workers, is the demand it places on SBA's loan processing system E-Trans.

"Unprecedented demand is slowing E-Tran response times," a SBA spokesperson told FCW in an emailed statement. "Currently, there are double the number of users accessing the system compared to any day during the initial round of PPP."

Banking trade associations jumped into the fray earlier in the week to complain about the frequent crashes and according to the IG briefing, the outages "created a built-in advantage for larger businesses that had preexisting relationships with banks participating in the program who could better navigate the SBA's system."

"The challenges facing the SBA in the most recent implementation of this program are very frustrating for small business owners and community banks," Rep. Gerry Connolly (D-Va.), the chairman of the Government Operations Subcommittee, told FCW in an email. "This was meant to be a simple, efficient and expedited process. I have communicated these concerns with SBA but we must also recognize that these challenges are a direct result of the federal government's reluctance to make strategic investments in modernizing federal IT."

SBA announced April 29 plans to set aside system time for smaller banks. From 4 p.m. to midnight April 29, SBA will only accept loans from institutions with assets below $1 billion.

"In addition to ensuring access for the smallest lenders, we expect that providing this reserved processing time today will enhance the SBA's loan system performance all users who submit loans outside of this time frame," SBA Administrator Jovita Carranza and Treasury Secretary Steven T. Mnuchin said in a joint statement.

In addition to SBA, the Oversight Committee heard from IGs from the Treasury and Justice Departments.

Acting Treasury IG Richard Delmar said that the office was looking into auditing "air carrier certifications that document employee wages, salaries, and benefits," as well as the Department's implementation of a program that allocated funds to allow air carriers to keep workers on payroll.

The Justice IG Office told lawmakers that it would examine the Bureau of Prison's efforts to mitigate coronavirus outbreaks in federal correctional facilities, through the use of tactics such as home confinement for certain prisoners.

"[On April 24], reports emerged alleging 'shifting, contradictory guidelines' from BOP that affected the early release of 200 inmates to home confinement," the Oversight Democrats wrote.

In March, the American Federation of Government Employees sued the BOP for hazard pay, alleging that it had failed to protect its correctional officers from exposure to the virus when transporting inmates who tested positive for COVID-19.

Separately, the Pandemic Response Accountability Committee announced that it had appointed Robert Westbrooks as Executive Director, slightly easing concerns over who would lead oversight efforts after President Trump removed Acting DoD IG Glenn Fine, who had served as the Chairman of the PRAC.

"Mr. Westbrooks appears to have the right background and a good reputation, and I am hopeful he will be the independent watchdog the moment calls for," Senate Minority Leader Chuck Schumer (D-N.Y.) said in a statement in response to news of Westbrook's appointment.

In early April, Oversight Chairwoman Rep. Carolyn Maloney (D-N.Y.) introduced legislation that would allow any senior official in an agency IG office to serve as Executive Director to oversee the PRAC, with stipulations that they could only be removed for good cause.

The IGs also told Committee members that they would begin issuing "flash reports" to address and highlight problems with the coronavirus response efforts as they arose, in order to provide transparency and keep stakeholders abreast of events as they unfolded.

Justice IG Michael Horowitz added that the Council of Inspectors General on Integrity and Efficiency, of which he is chairman, would work with members of Congress to ensure that any future legislation would protect the officials' independence and ensure their ability to do their jobs free of partisan pressure.

https://fcw.com/articles/2020/04/29/sba-paycheck-loan-ig-oversight.aspx