SBA seeks private-sector solution

The Small Business Administration is looking to the private sector to help make its Loan Monitoring System (LMS), under development for three years, ready for use.

The agency wants to develop pilot programs with financial institutions that already have risk management and loan monitoring systems to see if they would fit SBA's needs, John Whitmore, acting SBA administrator, told the Senate Small Business Committee Tuesday.

"Rather than develop a proprietary system — with all its attendant costs and risks — we intend to determine if such a system already exists," Whitmore said.

After becoming acting administrator in February, Whitmore said he began "a substantial review" of SBA's four-year LMS program, which has received $8 million a year since fiscal 1998.

Whitmore determined that the LMS program had been inappropriately "comingled" with SBA's broader Systems Modernization Initiative, he said. He ordered LMS to be refocused on its original intent: to be an information technology system for risk management, lender oversight and loan monitoring.

SBA is requesting $8 million again for fiscal 2002 "to bring the original program's scope to completion," Whitmore said.

At the same hearing, Harry Alford, the National Black Chamber of Commerce president and chief executive officer, said the government cannot provide an accurate picture of how well it is meeting small-business procurement goals.

"We don't really use accurate numbers," Alford said. "We have many conflicting reports about where we are in small-business procurement and, particularly with 8(a), HUBZone and [small, disadvantaged business] volume."

He said a centralized software system is needed "that can give up-to-the-minute and very specific reporting on the procurement status of each agency and each major procurement."

Eight states use such software to report procurement activity to the Transportation Department's Federal Highway Administration, he said, and the Office of Management and Budget's Office of Federal Procurement Policy should consider using something similar.

Alford also said that contract bundling — grouping a number of procurements into one large contract — "has certainly hurt small business." Although companies that win bundled contracts often pledge to subcontract to small businesses, they are not required to release subcontracting data, he said. Congress should give SBA funding to enable it to monitor large contractors' work with small businesses, he said.