In yet another instance of mismanagement of pandemic programs by the Small Business Administration, the SBA had over $5 million in questioned costs associated with contracts for loan support services, according to a recent Inspector General report.
The SBA contracted with a firm called Highlight Technologies LLC for loan support services from 2017 to 2021. When demand for loan support services increased during the pandemic because of the SBA relief programs, the SBA issued additional labor hour contracts with Highlight Technologies to meet demand for loan support services.
These contracts were issued using an existing blanket purchase agreement. Unfortunately, the Inspector General found a number of problems with these additional contracts that led to the SBA, “awarding contracts that were not the best use of taxpayer funds.”
The IG found the SBA did not always perform price analyses, leading it to allow Highlight Technologies to charge higher labor rates than the parties had previously agreed. This led to the SBA paying $3.8 million more in one year than it should have for this pricey labor without any added benefit received.
Additionally, SBA didn’t monitor contracts in accordance with the law, which led to Highlight Technologies using subcontractors that should not have received the majority of the work, which meant another $1.2 million going to businesses that did not meet eligibility standards.
Combined, the SBA wasted $5 million in just one year because of a lack of basic analysis and oversight. If the SBA is going to continue to be trusted with multi-million-dollar loan and grant programs, it needs to seriously clean house and increase its financial controls to ensure taxpayers’ money is used wisely.
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