SBA’s Award and Payment Practices in the Shuttered Venue Operators Grant Program

We inspected the U.S. Small Business Administration’s (SBA) award and payment practices used to administer the Shuttered Venue Operators Grant (SVOG) program. Even after determining multiple disbursements would better protect grant funds from fraud or misuse, SBA switched to a riskier single advance payment for all grantees. This payment method may have hastened award disbursement, but the agency removed internal controls that would have better protected taxpayer funds. Multiple disbursements enable program officials to verify that grant recipients used award funds for allowable activities before disbursing additional funds. We selected 10 awards, totaling $33.2 million, to use as a sample to test SBA’s disbursement and budget approval practices. None of the 10 awards reviewed had the proper documentation signed by an authorized government official. The authorizing agency signature on the notice of award demonstrates that the proper procedure has been followed and the obligation has been officially recorded. Without the proper official documentation, all 10 awards we reviewed, totaling $33.2 million, are unauthorized commitments. Program officials did not ensure it had adequate support for the grant amounts in 3 of the 10 awards we reviewed. SBA awarded these three recipients $2.6 million above amounts that were requested. The higher grant award amounts did not correspond to their budgets, nor was there supporting documentation to show why SBA awarded the higher amounts. In addition, SBA did not consistently ensure the recipient’s budget accurately summarized the financial plan for the award amount. Awards made to 1,849 recipients, totaling $1.49 billion, did not have a budget that reconciled to the award amount. We made six recommendations for SBA management to ensure SBA properly safeguards program funds and improves disbursement and award procedures while administering the SVOG program. SBA management agreed or partially agreed with four recommendations and disagreed with two. Management’s planned actions resolve all six recommendations.