Small Business Administration: Actions Needed to Provide More Timely Disaster Assistance

GAO-06-860 Published: Jul 28, 2006. Publicly Released: Jul 28, 2006.
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Highlights

Hurricanes Katrina, Rita, and Wilma (the Gulf Coast hurricanes) caused more than $118 billion in estimated property damages across the Gulf Coast region in 2005. The Small Business Administration (SBA) helps individuals and businesses recover from disasters through its Disaster Loan Program. GAO initiated work to determine how well SBA provided victims of the Gulf Coast hurricanes with timely assistance. This report, the first of two, focuses primarily on the Disaster Credit Management System (DCMS) and disaster loan process. Here, GAO evaluates (1) what affected SBA's ability to provide timely disaster assistance and (2) actions SBA took after the disasters to improve its response to disaster victims. In conducting this study, GAO analyzed data on loan applications and assessed key aspects of SBA's acquisition and implementation of DCMS.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Small Business Administration In order to provide more timely disaster assistance in the future, the Administrator of SBA should direct the Office of Disaster Assistance to reassess DCMS's maximum user capacity and related loan processing resource needs based on such things as lessons learned from the Gulf Coast hurricanes, a review of information available from catastrophe risk modeling firms and disaster simulations, and related cost considerations.
Closed – Implemented
SBA noted in its comments on the draft report that the agency agreed with the need to reassess the maximum user capacity of the Disaster Credit Management System (DCMS), and this process began following the 2005 Gulf Coast hurricanes. In December 2005, for example, SBA approved a DCMS hardware upgrade project to expand the capacity of the system to more than 8,000 concurrent users. The expanded DCMS user capacity planned for under the project was about four times the system's available capacity immediately following Hurricane Katrina. The expanded DCMS user capacity was expected to enable SBA to process loans for two disasters the size of Hurricane Katrina at the same time. SBA placed the upgraded DCMS hardware into production in June 2006.
Small Business Administration In order to provide more timely disaster assistance in the future, the Administrator of SBA should direct the Office of Disaster Assistance to conduct complete stress testing to ensure that DCMS can function at planned for maximum user capacity levels.
Closed – Implemented
SBA noted in its comments on the draft report that the agency placed upgraded DCMS hardware into production in June 2006, which expanded the system's user capacity to about four times its available capacity immediately following Hurricanes Katrina. In addition, SBA noted that the new DCMS hardware had undergone significant performance (stress) testing before its release into production. SBA further noted that the capabilities of the upgraded system were substantially improved compared with the previous production environment.
Small Business Administration In order to provide more timely disaster assistance in the future, the Administrator of SBA should direct the Office of Disaster Assistance to improve management controls over assessing contractor performance through inspections of all equipment purchased or leased to support DCMS.
Closed – Implemented
SBA issued procurement procedures following its 2006 DCMS upgrade project that require the DCMS Operations Center to complete an inventory of all asset purchases. In addition, the DCMS project manager is required to sign an official inventory report that certifies that purchased assets meet all government specifications.
Small Business Administration In order to provide more timely disaster assistance in the future, the Administrator of SBA should direct the Office of Disaster Assistance to expedite plans to resume business process reengineering efforts to analyze the disaster loan process and identify ways to more efficiently process loan applications including an evaluation of the feasibility of implementing a secure Internet-based application feature for home loan applicants.
Closed – Implemented
In March 2007, SBA created a team to gather and analyze the requirements and develop documentation needed for an electronic loan application, which is intended to enable the general public to complete a loan application for personal or business disaster losses using any Internet-connected computer.

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