Mishandling an agency reorganization can lead to lost money, lowered morale, and limited institutional knowledge — just ask the Small Business Administration.

That’s why members of the House Committee on Small Business wanted to know about the lessons learned from SBA’s last attempt at restructuring in fiscal 2014, as agencies prepare their draft plans for the governmentwide reorganization.

“The program was offered to 149 people; what’s disappointing is [for] 54 people it was not about positions, it was about who they were, the employee,” said SBA Chief Operating Officer Joseph Loddo. “And the lack of that planning, the lack of communications, and a lack of leadership really caused that program to be a failure before it even started.”

The plan was the fiscal 2014 early retirement and early buyout [VERA/VSIP] program.

“The entire plan was done in 30 days,” Loddo said during the committee’s June 1 hearing. “It did not follow 12 of the 14 recommended approaches in terms of building out a VERA/VSIP plan.”

According to an audit from SBA’s OIG, the administration “made limited progress in restructuring and reshaping the workforce.”

“It did not accomplish its stated goals of the VERA-VSIP program,” said acting SBA IG Hannibal “Mike” Ware in his testimony. “As a result, SBA paid $2.1 million for early retirements for positions that were not restructured following VERA-VSIP.”

Ware said his office received requests from congressional oversight committees and from hotline calls complaining that the program was not being correctly planned and implemented.Ware said the scope of the audit did not include employee morale, but that it was “evident that at least some were affected enough to come forward,” Ware said. “Some even went to the Office of Special Counsel.”

Loddo said there was a “tremendous morale problem” within the SBA’s Office of Human Resources Solutions. Loddo said as the deputy chief operating officer, he moved to the office to help with day to day operations because of a lack of leadership. About four months on the job, he discovered a letter from SBA’s then chief human capital officer.

“Two weeks after the VERA/VSIP was announced, the CHCO at the time sent a letter to the rest of SBA basically saying to ignore the guidelines of the OPM policy and the SBA plan for VERA/VSIP, and for any position critical, hire without any restrictions,” Loddo said, adding that after he discovered the letter he immediately rescinded it, “so that the agency would follow the guidelines implemented and promised in the VERA/VSIP plan.”

That letter is one part of the trio of issues that the failed restructuring boils down to, Ware said.

“The first one would be the lack of any true level of planning that would have aligned with OPM’s requirements and SBA’s stated goals,” Ware said. “To add to the first one as well, it’s almost as if they rushed to implement something they weren’t exactly ready for, otherwise the plan would have been done on the top. The second one is the lack of tracking, because they didn’t have a formal tracking mechanism to really track who left what, and what positions would need to be restructured.”

Bad actors

According to the Office of Personnel Management, an agency must submit its early retirement plan to OPM for approval, a fact not lost on Rep. Blaine Luetkemeyer (R-MO).

“So what you’re telling me is OPM is the one that really screwed up here from the standpoint they approved the plan without all of the documentation and everything in place, without checking all the boxes,” Luetkemeyer said.

Loddo said with real due diligence OPM should not have approved the plan; however, what SBA presented to OPM included bad information.

“They made their decision based off of false premises, which is why we ended up with an approval,” Loddo said.

“The point I’m trying to make is we’ve got two bad actors here,” Luetkemeyer said. “We’ve got SBA who didn’t fulfill the requirements of the plan requested to be put in place … and OPM really approved a plan they shouldn’t have to begin with because none of the documentation was in place and they didn’t do the audits that were necessary.”

Ware said OPM was supposed to review quarterly updates from SBA, but the agency reported at the time to OPM that it was too early to provide quarterly updates, and there was no follow up.

Ware’s office also warned that the 2014 restructuring attempt cut down on institutional knowledge.

Loddo said the 2014 program caused losses from district offices and the Office of Capital Access.

“What’s important for us is knowing that that knowledge is leaving, we have the responsibility to transfer that knowledge that’s within the agency to the future leaders and to the new people coming on board,” Loddo said.

The way the agency protects against that now is weekly peer-to-peer hours, mentoring, lender-teacher relationships, and employees also identify areas they want to study.

Learned lessons

The IG recommended that SBA conduct a review of the 2014 VERA/VSIP program, and develop guidance for future programs. SBA agreed with the recommendations, according to Loddo’s testimony.

“We will document the lessons learned, including in the areas of planning, implementation, results and recommended improvements,” Loddo said of the program’s analysis. “We will include all stakeholders in the process.”

Loddo said in his testimony that the agency had determined “there is no need for a VERA/VSIP program during FY2017.”

In a phone call with Federal News Radio, new SBA CHCO Elias Hernandez [who took over the roll in 2016] said there were no plans at this point for a VERA/VSIP program.

The State and Interior departments are reported to be pursuing buyouts, while EPA already set aside $12 million to help cover early buyouts and early retirements.

The $12 million in VERA/VSIP incentive payments are included in carryover funds totaling $24 million, according to an internal memo sent from EPA acting Chief Financial Officer David Bloom, and obtained by Federal News Radio.

During the hearing, Rep. James Comer (R-KY). asked whether SBA’s mistakes were unique, or if other agencies had run into similar issues.

Ware said he’d found a similar report from the IG’s office at the Environmental Protection Agency, but in his 28 years in the IG community, this was his first time wading into this kind of problem.

“That experience tells me that if you don’t start at the front in terms of putting together a proper plan that you can implement, this is the type of thing that happens,” Ware said.

Copyright © 2024 Federal News Network. All rights reserved. This website is not intended for users located within the European Economic Area.