Small Business:

SBA Needs to Improve Administrative Practices for Disaster Operations

RCED-92-144: Published: May 7, 1992. Publicly Released: May 21, 1992.

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Judy A. England Joseph
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Pursuant to a congressional request, GAO examined certain administrative practices that the Small Business Administration (SBA) used in Puerto Rico and the Virgin Islands to help home and business owners obtain disaster assistance loans following Hurricane Hugo.

GAO found that: (1) in justifying an automatic reduction in per diem, SBA did not document that disaster employees could not obtain lodging or meals at reduced costs in part because it lacked information on what temporary employees had to pay for lodging; (2) during the 11 months the waiver was in effect, SBA did not review the waiver justification to determine if the subsistence costs associated with long-term stays in Puerto Rico or the Virgin Islands had changed sufficiently to warrant discontinuing the waiver or adjusting the per diem rates; (3) per diem amounts that exceed employee costs are not taxable; (4) to comply with a legislative limitation on the amount of time it could reimburse temporary employees for per diem expenses in connection with any single disaster declaration, SBA transferred temporary employees to other disaster declarations when work for which they were qualified remained to be done at their current location; (5) SBA efforts reduced the amount of time needed to obtain disaster assistance loan checks from the Treasury; and (6) an insufficient number of adequately trained employees and the lack of forms and manuals contributed to improper personnel practices during the Hugo operation.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: No legislation is pending on this issue and such legislation would not be favorably received by Congress.

    Matter: If SBA is to optimize its use of temporary employees assisting victims of major disasters outside the continental United States, Congress may wish to consider amending the Small Business Act to allow the Administrator, SBA, the discretion to waive, on a case-by-case, person-to-person basis, the provision that limits to 6 months the length of time per diem can be paid to a temporary employee for any one disaster. Such waiver authority could enhance the federal government's efforts to assist disaster victims by permitting SBA to keep experienced employees at a disaster location when there is an overriding need to do so. Any such legislation should require SBA to develop criteria that would be used to justify such a waiver.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: Revisions to SBA's Travel SOP incorporating the change recommended by GAO have cleared SBA's Administrative Services and will be published shortly.

    Recommendation: The Administrator, SBA, should direct the Comptroller, SBA, to amend the SBA Standard Operating Procedure (SOP) for travel to: (1) require that subsistence costs and any other factors used to justify waivers of the automatic reduction in per diem be fully documented; and (2) include guidance on when waivers should be reviewed to determine if and when they should be adjusted or discontinued.

    Agency Affected: Small Business Administration


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