House committee scolds SBA on modernization delays

Members of the House Small Business Committee told a Small Business Administration official that the agency has to get a handle on its seven-year-old IT system upgrade that has already overrun its planned cost and schedule.

“The fact that they began the modernization process almost seven years ago and have received millions in funding, but continue to mismanage the updating process is completely unacceptable,” said Rep. Sam Graves (R-Mo.), chairman of the committee, said Feb. 8, at a hearing about the modernization project.

SBA has been working to update its outdated loan management and accounting system (LMAS). The system was built in the 1970s on outsourced mainframe software and hardware. It’s programmed in Common Business Oriented Language (COBOL), which came out in the 1960s.

In November 2005, SBA announced the initiation of the LMAS program, with estimated total costs of approximately $217 million over nine years. Since then the estimated price tag has been influx, according to the committee and the Government Accountability Office.

In the hearing, Marie Johns, SBA’s deputy administrator, told the committee that the project will cost $39 million, a $117 million savings from the agency’s initial estimate for the LMAS budget estimate in 2009.

Through some twists and turns in plans, SBA broke down the modernization into seven segments, rather than a massive overhaul. It’s an approach that has taken root through the government in recent years.

Nevertheless, the schedule and cost of the overall modernization has become blurry, said David Powner, GAO's director of IT management issues, who testified with Johns.

In a related report, GAO said SBA has fallen behind schedule on five of the seven pieces of the project and completed one segment two months later than planned. On the money side, the completion of the entire project increased by $5 million since a report from March, reaching $28 million by July of 2013. However, SBA disagreed with GAO's statements on changing costs.

GAO recommends that SBA use better IT management practices. SBA employees need to be analyzing risks and making sure the right people are in place, and the CIO needs to make sure the system’s enterprise architecture fits with each segment of the project, according to GAO.

In addition, SBA needs to clarify which internal SBA group is overseeing the project, auditors said. The agency has two oversight groups, the Business Technology Investment Council and the Executive Steering Council. Johns said the investment council looks broadly at IT investments across the agency, while the steering council focuses on projects such as LMAS.

However, GAO said the two boards have led to some of the management problems. They did not provide enough executive oversight. GAO recommended clarifying each boards’ oversight responsibilities. SBA agreed with GAO's recommendations.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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Reader comments

Wed, Feb 8, 2012

This Hearing was the result of SBA removing two large beltway bandit firms from the project. The large firms lobbied Congress, and today's Hearing was their retribution. Shame on the Committee for a ridiculous Hearing.

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