Senator Snowe followed Senator Landrieu’s line of questioning, asking why improper loan payments were so difficult to define. Ms. Gustafson answered that each case required some analysis, and that it was not as simple as asking whether the agency had lent money twice, for example.

Senator Snowe continued,  noting that the procedures in place and the level of implementation of said procedures was stll unclear. She asked whether the SBA IG was satisfied with new enforcement procedures against fraudulent loan agents. Gustafson stated that the IG was happy with the procedures, but that these procedures were not fully set in place. She further noted that the SBA needed to be much more serious about debarment as a punitive action for fraudulent loan practices.

Senator Snowe next asked Karen Mills whether a task force was in place to enforce this issue. Mills replied that the task force was indeed in action, though in the beginning stages. She said that all indications were that on the most recent round of fraud cases, that every one had been or was being pursued.

Snowe then moved to the issue of oversight, and gave an example of a recent Wall Street Journal article that claimed government officials were not monitoring the federal contractors for compliance. She further noted that the while the SBA claimed that oversight procedures had been transferred to the Pentagon, the Pentagon maintained that oversight remains in the purview of the SBA. Snowe then asked Ms. Mills what the SBA was doing to bolster this oversight.

Ms. Mills confirmed that the oversight for government contracting was the SBA’s responsibility, and then went on to clarify Senator Snowe’s quotation of the Wall Street Journal. Ms. Mills stated that each government agency though was responsible for the initial contracting procedures, and that the 8 million annual federal contracts as a whole were under the final oversight process through the SBA.

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