H. Rept. 118–220: SBA Link for Reporting COVID-19 Loan Fraud
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- Crpt 118Hrpt220
Summary
House Report 118–220 of the 118th Congress, submitted September 26, 2023 by Mr. Williams of Texas from the Committee on Small Business to accompany H.R. 5426, a bill to require the SBA Administrator to provide a link to resources for reporting suspected fraud relating to certain COVID–19 loans. The committee reports the bill favorably without amendment after a markup on September 14, 2023. The report cites SBA Office of Inspector General testimony that more than $200 billion in potentially fraudulent loans were disbursed, and its section-by-section analysis says the link must be provided within 30 days of enactment. Minority Views signed by Ranking Member Nydia M. Velázquez argue that SBA already links to the OIG website and urge support for the OIG's FY 2024 budget request.
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118TH CONGRESS REPORT
" HOUSE OF REPRESENTATIVES !
1st Session 118–220
TO REQUIRE THE ADMINISTRATOR OF THE SMALL BUSINESS ADMINIS-
TRATION TO PROVIDE A LINK TO RESOURCES FOR SUBMITTING RE-
PORTS ON SUSPECTED FRAUD RELATING TO CERTAIN COVID–19 LOANS
SEPTEMBER 26, 2023.—Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
Mr. WILLIAMS of Texas, from the Committee on Small Business,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 5426]
The Committee on Small Business, to whom was referred the bill
(H.R. 5426) to require the Administrator of the Small Business Ad-
ministration to provide a link to resources for submitting reports
on suspected fraud relating to certain COVID–19 loans, having con-
sidered the same, reports favorably thereon without amendment
and recommends that the bill do pass.
CONTENTS
Page
I. Purpose and Bill Summary ........................................................................ 2
II. Need for Legislation .................................................................................... 2
III. Hearings ....................................................................................................... 2
IV. Committee Consideration ........................................................................... 2
V. Committee Votes ......................................................................................... 2
VI. Section-by-Section of H.R. 5426 ................................................................. 5
VII. Congressional Budget Office Cost Estimate ............................................. 5
VIII. New Budget Authority, Entitlement Authority, and Tax Expenditures 5
IX. Oversight Findings & Recommendations .................................................. 5
X. Performance Goals and Objectives ............................................................ 5
XI. Statement of Duplication of Federal Programs ........................................ 5
XII. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits ..................................................................................................... 6
XIII. Federal Mandates Statement ..................................................................... 6
XIV. Federal Advisory Committee Statement ................................................... 6
XV. Applicability to Legislative Branch ........................................................... 6
XVI. Statement of Constitutional Authority ...................................................... 6
XVII. Minority Views ............................................................................................ 7
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I. PURPOSE AND BILL SUMMARY
On September 13, 2023, Rep. Van Duyne, along with Rep.
Landsman, introduced H.R. 5426. The purpose of H.R. 5426 is to
require the Administrator of the Small Business Administration
(SBA) to provide a link on their website to simplify the process for
reporting suspected fraudulent Economic Injury Disaster Loan
(EIDL) and Paycheck Protection Program (PPP) loans related to
the COVID–19 pandemic.
II. NEED FOR LEGISLATION
The SBA’s Office of the Inspector General (OIG) estimates that
$200 billion in potentially fraudulent COVID–19 EIDL and PPP
loans were disbursed by the SBA, resulting in more than 100 years
of investigatory work. This legislation will streamline the process
to recoup these funds.
The bill provides a direct route to report COVID–19 fraud
straight to the OIG rather than having to go through multiple links
and websites. It is a top priority of the Committee on Small Busi-
ness to recoup as many of these funds as possible in the most time-
ly and efficient manner.
III. HEARINGS
In the 118th Congress, the Committee held one hearing exam-
ining the issues covered in H.R. 5426. On July 13, 2023, the Com-
mittee held a hearing titled ‘‘Stolen Taxpayer Funds: Reviewing
the SBA and OIG Reports of Fraud in Pandemic Lending Pro-
grams.’’ The SBA OIG testified that the SBA disbursed more than
$200 billion in potentially fraudulent loans through SBA pandemic
relief programs. He also testified that the investigation found
90,000 actionable leads amounting to more than 100 years’ worth
of investigative case work.
IV. COMMITTEE CONSIDERATION
The Committee on Small Business met in open session, with a
quorum being present, on September 14, 2023 and ordered H.R.
5426 reported favorably to the House of Representatives. During
the markup no amendments were offered.
V. COMMITTEE VOTES
Clause 3(b) of rule XIII of the Rules of the House of Representa-
tives requires the Committee to list the recorded votes on the mo-
tion to report legislation and amendments thereto. The Committee
voted to favorably report H.R. 5426 to the House of Representatives
at 11:46 AM.
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VI. SECTION-BY-SECTION OF H.R. 5426
Section 1. Website to report fraud relating to certain COVID–19
loans
This section requires the SBA to provide a link within 30 days
of enactment to the Office of the Inspector General’s website where
individuals can report fraud, waste, abuse, mismanagement, and
misconduct related to PPP and EIDLs issued in response to the
COVID–19 pandemic.
VII. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
Pursuant to clause 3(d)(1) of House rule XIII, the Committee
adopts as its own the cost estimate prepared by the Director of the
Congressional Budget Office pursuant to section 402 of the Con-
gressional Budget Act of 1974. The Committee has requested but
not received from the Director of the Congressional Budget Office
a cost estimate for the Committee’s provisions. Once available, the
cost estimate will be published in the Congressional Record.
VIII. NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND
TAX EXPENDITURES
Pursuant to clause 3(c)(2) of rule XIII of the Rules of the House
of Representatives and section 308(a)(I) of the Congressional Budg-
et Act of 1974, the Committee provides the following opinion and
estimate with respect to new budget authority, entitlement author-
ity, and tax expenditures. While the Committee has not received an
estimate of new budget authority contained in the cost estimate
prepared by the Director of the Congressional Budget Office pursu-
ant to Sec. 402 of the Congressional Budget Act of 1974, the Com-
mittee does not believe that there will be any additional costs at-
tributable to this legislation. H.R. 5426 does not direct new spend-
ing, but instead reallocates funding independently authorized and
appropriated.
IX. OVERSIGHT FINDINGS & RECOMMENDATIONS
In accordance with clause 3(c)(1) of rule XIII and clause 2(b)(1)
of rule X of the Rules of the House of Representatives, the over-
sight findings and recommendations of the Committee on Small
Business with respect to the subject matter contained in H.R. 5426
are incorporated into the descriptive portions of this report.
X. PERFORMANCE GOALS AND OBJECTIVES
With respect to the requirements of clause 3(c)(1) of rule XIII of
the Rules of the House of Representatives, the performance goals
and objectives of H.R. 5426 are to require the SBA to provide a link
on their website to the SBA OIG’s website to simplify the reporting
of potentially fraudulent EIDL and PPP loans.
XI. STATEMENT OF DUPLICATION OF FEDERAL PROGRAMS
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the House
of Representatives, no provision of H.R. 5426 is known to be dupli-
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included in a report to Congress pursuant to section 21 of Public
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Law 111–139 or the most recent Catalog of Federal Domestic As-
sistance.
XII. CONGRESSIONAL EARMARKS, LIMITED TAX BENEFITS, AND LIMITED
TARIFF BENEFITS
With respect to clause 9 of rule XXI of the Rules of the House
of Representatives, the Committee finds that the bill does not con-
tain any congressional earmarks, limited tax benefits, or limited
tariff benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI of
the Rules of the House of Representatives.
XIII. FEDERAL MANDATES STATEMENT
The Committee adopts as its own the estimate of Federal man-
dates prepared by the Director of the Congressional Budget Office
pursuant to section 423 of the Unfunded Mandates Reform Act.
XIV. FEDERAL ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b) of the
Federal Advisory Committee Act were created by this legislation.
XV. APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to the
terms and conditions of employment or access to public services or
accommodations within the meaning of section 102(b)(3) of the Con-
gressional Accountability Act.
XVI. STATEMENT OF CONSTITUTIONAL AUTHORITY
Pursuant to clause 7 of rule XII of the Rules of the House, the
Committee finds that the authority for this legislation in Art. I, § 8,
cl.1 of the Constitution of the United States.
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XVII. MINORITY VIEWS
Over the course of the COVID–19 pandemic, the Small Business
Administration (SBA) disbursed approximately $1.2 trillion of eco-
nomic aid through the Paycheck Protection Program (PPP) ($792
billion), Economic Injury Disaster Loan Program (EIDL) ($405.2
billion), Restaurant Revitalization Fund (RRF) ($28.6 billion), and
the Shuttered Venue Operators Grant Program, (SVOG) ($14.6 bil-
lion) to help small businesses adversely impacted by the crisis.
In an effort to disburse PPP and COVID–19 funds swiftly, the
SBA weakened and removed internal controls. The Office of the In-
spector General (OIG) issued a number of reports early on warning
of the importance of strong internal controls to mitigate risk, and
a total of 22 reports to identify weaknesses in SBA’s control envi-
ronment throughout the pandemic. Beginning in early 2021, long-
standing anti-fraud controls were reinstituted, and new safeguards
were put into place by the Biden-Harris Administration to reduce
the potential for fraud.
On June 27, 2023, the OIG issued a white paper to provide a
comprehensive review reporting that SBA disbursed more than
$200 billion in potentially fraudulent COVID–19 EIDLs, EIDL Tar-
geted Advances, Supplemental Targeted Advances, and PPP loans.
SBA also issued a report, entitled ‘‘Protecting the Integrity of the
Pandemic Relief Programs,’’ which estimates that $36 billion of the
$1.2 trillion in pandemic relief emergency funds was obtained
fraudulently. Moreover, the agency asserts that 86% of the likely
fraud originated in the first nine months of the pandemic, under
the Trump Administration.
Currently, whistleblowers can report potential fraud to the SBA
Office of Inspector General Hotline (OIG hotline) or the Pandemic
Response Accountability Committee (PRAC). SBA also has a link
on their main page that will lead to a page entitled, ‘‘Preventing
Fraud and Identity Theft.’’ This page has a direct link to the OIG
hotline for reporting fraud, waste, abuse, or mismanagement of fed-
eral funds involving SBA programs.
SBA websites—like those of other federal agencies—must con-
form to U.S. Web Design System standards as required by the 21st
Century Integrated Digital Experience Act (P.L. 115–336). Among
other provisions, those standards require a consistent appearance
across all sites, which is the reason SBA houses its fraud resources
under the Oversight header. Moreover, all government websites
must be accessible to individuals with disabilities in accordance
with Section 508. Having additional banners or pop-up ads could
negatively impact the usability of the website for individuals with
disabilities.
The OIG white paper reported that the office has received more
than 250,000 hotline complaints since the beginning of the pan-
demic. Of those complaints, more than 90,000 have been identified
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as actionable leads, which amount to more than 100 years of inves-
tigative case work.
Given that SBA already has a link to the OIG website on its
website, Committee Democrats believe the single most important
action Congress can take to support the OIG in their efforts to com-
bat fraud is to advocate for their Fiscal Year 2024 budget (FY
2024) request. The Administration’s FY 2024 budget plan proposed
$47.704 million of discretionary funding, plus a $1.6 million trans-
fer from SBA’s Disaster Loans Program, and an additional $14 mil-
lion transfer to OIG from a mandatory funding source. The pro-
posed mandatory funding source for the $14 million transfer is no
longer available following enactment of the Fiscal Responsibility
Act of 2023 (P.L. 118–5), which rescinded the unobligated balances
in the SBA Disaster Loan Program account.
The OIG budget request would enable OIG to build on its exist-
ing oversight capacity as COVID EIDL loans enter into repayment
with additional criminal investigators, data scientists, auditors,
and professional staff. These investments in data analytics capa-
bilities, auditors, and investigative coverage will enable OIG to
analyze more data, conduct more audits and reviews, and inves-
tigate more cases, promoting public trust and integrity within
SBA’s programs and operations.
Unfortunately, the House FSGG appropriations bill provides
$32.02 million, which would cripple the OIG, providing budget au-
thority for approximately 130 positions, and bringing operations
back to pre-pandemic levels. The Administration’s FY 2024 budget
provides the necessary funding to enable the OIG to sustain exist-
ing oversight capacity and invest in additional necessary staffing.
Absent the total budgetary resources requested in the 2024 budget,
the OIG will not have sufficient funding to combat fraud within
SBA programs or to provide effective oversight over the agency’s
programs. Critically, OIG will not have a sufficient operating budg-
et to capitalize on the new laws (P.L. 117–165 and P.L. 117–166),
which extended the statute of limitations for fraud in the PPP and
EIDL programs to 10 years.
Sincerely,
NYDIA M. VELÁZQUEZ,
Ranking Member.
Æ
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