Consolidation may hurt SBA mission

February 3, 2012

The federal government should pursue strategies to eliminate duplication and waste among its agencies.  However, the proposal to combine the U.S. Small Business Administration (SBA) with five other agencies will not achieve this objective and will harm the government’s efforts to assist small businesses.

President Obama proposed last month toconsolidate six federal government units:  the U.S. Department of Commerce, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation, the U.S. Trade and Development Agency and the SBA.  The stated rationale is that the combination will help American businesses succeed and permit a new department to “lead the development and implementation of integrated, strategic, government-wide trade effort and have a focused capacity to help businesses grow and thrive.”

As an adviser to small businesses and partner in one for more than 15 years, I often hear the message of combining to create efficiencies.  Usually, this message comes from large business explaining why it has changed strategies. I’d like to believe that consolidation will lead to efficiencies.

But in this case, I simply don’t buy it.  The listing of agencies proposed to be combined reminds me of the Sesame Street line, which goes like this, “Which of these is not like the others?”  The SBA, of course.  Its objective is to assist small businesses in the U.S. to achieve business success.  The tools it has used for many years include direct lending, loan guarantees, business services provided through partnerships with state and local agencies, procurement assistance and advocacy.  The other agencies in this list focus upon improving one aspect of the life of a business:  trade,  primarily, international trade.

Promotion of international trade is important for the success of business in the U.S., and aligns perfectly with Obama’s previously stated goal of doubling exports from the U.S.  The SBA provides assistance that reaches far beyond trade.  I fear that as one small element in this combined behemoth agency, the SBA’s task and voice will be lost.

Typically, consolidation is proposed to eliminate duplication or overlap of services.  The press releases relating to this proposed consolidation make no such mention of overlap or duplication.  Rather, Jeffery Zients, the deputy budget director, asserts that the consolidation would eliminate between 1,000 and 2,000 government jobs over a 10-year period.  Essentially, once the agencies are squished together, individuals who retire or otherwise leave will not be replaced.  If elimination of duplication is the driving force in this strategy, then I would expect the president to identify the areas of duplication.  But these agencies have different missions and for the most part do not duplicate services. 

Under the current structure, the agencies seek to coordinate services.  For example, I know from personal experience that the SBA refers people to the Ex-Im Bank for its services. 

Let’s eliminate agency duplication.  But we need to find it before we propose combining agencies offering different services and expertise.

I support all thoughtful efforts to eliminate unnecessary expense in the federal government.  But we must focus on consolidation that will not harm the development of small businesses that can and will help lead our economy forward.

Jeffrey Van Winkle is practice group leader for the Corporate Practice Group at Clark Hill, a full service law firm in Michigan and treasurer for the National Small Business Association.

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