CPR’s Persistent Watchdogging of Embattled SBA Office of Advocacy Prompts Scathing GAO Report

by James Goodwin

July 22, 2014

Earlier today, the Government Accountability Office (GAO) published a scathing report, criticizing the regulatory work and research conducted by the Small Business Administration’s (SBA) Office of Advocacy.  For the past several years, CPR has worked to bring much-needed attention from policymakers, the press, and the public interest community to the SBA Office of Advocacy, which has long leveraged its powerful position in the rulemaking process to oppose stronger safeguards necessary for protecting people and the environment.  Critically, as CPR’s work reveals, the beneficiaries of the SBA Office of Advocacy’s interventions have been large corporations and trade groups, to the detriment of the small businesses they are actually supposed to be helping.

The report, Office of Advocacy Needs to Improve Controls over Research, Regulatory, and Workforce Planning Activities, was conducted in response to a request for a review of “Advocacy’s activities” from the Subcommittee on Financial Services and General Government within the Senate Committee on Appropriations.  The report notes that the subcommittee’s request was made because “[q]uestions have recently been raised about Advocacy's efforts to represent small businesses in regulatory activities and some of its research on small business issues.”

Some of the key findings that GAO made in its report include the following:

  • “Advocacy did not ensure that its staff monitored the quality of the information the office disseminated, as required.  GAO reviewed 20 selected research products and found that in 16 cases a required quality review had not been documented.”

  • “Advocacy staff had not followed federal information quality guidelines to retain data and could not substantiate the quality of information in two cost-estimation reports—a research product it has contracted for every 5 years.”

  • Advocacy staff were not adequately documenting key aspects of their work related to rulemaking activities.  For instance, Advocacy staff were not taking adequate steps to document that they had adequate data and information to support their case to intervene in individual rulemakings.

  • “Advocacy is not following its internal policies meant to ensure its roundtables are as open to the public as they could be.”

CPR has raised these and other criticisms of the SBA Office of Advocacy’s work in the past.  A 2013 white paper, Distorting the Interests of Small Business: How the Small Business Administration Office of Advocacy's Politicization of Small Business Concerns Undermines Public Health and Safety, presented a comprehensive description of the antiregulatory role that the SBA Office of Advocacy plays in the rulemaking process.  This white paper documented how Advocacy staff failed to justify their decisions to participate in individual rulemakings and the lack of transparency with which Advocacy staff conducted many of their activities, including the regulatory roundtables.  CPR President Rena Steinzor testified about many of the criticisms in a March 2013 hearing before the House Small Business Committee’s Subcommittee on Investigations, Oversight and Regulations.  Her testimony concluded by calling on the Subcommittee to request a GAO report exactly along the lines of the one released today.  Finally, a 2011 white paper presented a comprehensive critique of the now-infamous “Crain and Crain report,” which was one of the SBA Office of Advocacy’s research projects that today’s GAO report singled out for particular criticism.   As with today’s GAO report, CPR’s white paper specifically criticized the shoddy peer review process that the SBA Office of Advocacy employed before publishing this research project.

I applaud the GAO for completing such a thorough study and the Senate Appropriations Committee’s Subcommittee on Financial Services and General Government for requesting it.  I hope this effort helps to prompt the long-overdue statutory and administrative reforms that are needed to ensure that the SBA Office of Advocacy actually pursues its stated mission of helping small businesses, and to do so in a way that does not undermine public health, safety, and the environment.

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Also from James Goodwin

James Goodwin, J.D., M.P.P., is a Senior Policy Analyst with the Center for Progressive Reform. He joined CPR in May of 2008.

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