Press Releases

Senator Feinstein Continues to Press Small Business Administration to Implement a Comprehensive Disaster Relief Plan

- New GAO report signals Agency still lags behind in disaster relief planning -

Washington, DCU.S. Senator Dianne Feinstein (D-Calif.) today continued to press the Small Business Administration (SBA) to implement comprehensive disaster planning efforts. She urged the Agency to provide a timetable for the completion of a comprehensive disaster plan and asked for assurances that a proposed reorganization of the Disaster Assistance Program would anticipate response needs for large-scale disasters. 

Senator Feinstein has written a letter SBA Administrator Steven Preston, in light of the findings of a new report released this week by the General Accountability Office (GAO) highlighting the shortfalls of the SBA disaster relief during the aftermath of the Gulf Coast Hurricanes in 2005.

The following is the text of Senator Feinstein’s letter to SBA Administration Steven Preston:

February 26, 2007

The Honorable Steven Preston
The Small Business Administration
409 Third Street, SW; Suite 7000
Washington, DC 20416

Dear Administrator Preston:

I am writing to recommend the Small Business Administration promptly implement the recommendations presented in the Government Accountability Office report recently released that further evaluates the SBA’s Disaster Assistance Program.

I appreciate the actions the Small Business Administration has taken to begin addressing the problems the agency experienced responding to the Gulf Coast Hurricanes, but as the GAO report indicates it is unclear whether the Small Business Administration is making sufficient progress in meeting its goals. Can you provide me a timeframe when you expect to complete a comprehensive disaster plan and include the elements in which you are basing this plan?

It is troubling that the Small Business Administration appears to still want to close the Sacramento Disaster Assistance Office even after it was reopened to help process disaster loan applications after the Gulf Coast Hurricanes.  I wrote in March of 2005 expressing my concern that closing this office would hurt the agency’s ability to adequately respond to a large-scale disaster, especially in California and the Western United States.  The delays experienced by needy recipients in the wake of these hurricanes unfortunately substantiated the concerns raised by the Sacramento employees. 

What assurances can you give me that the plans you are developing to improve disaster response and proposed reorganization of the Disaster Assistance Program will not lead to a similar response failure that the SBA experienced in the aftermath of the Gulf Coast Hurricanes?

Thank you for your consideration of this inquiry. I look forward to your response to the specific questions posed and your comments on GAO’s new report.  Please do not hesitate to contact me, if I can be of assistance.


                    Dianne Feinstein
                    United States Senator


Senator Feinstein has urged the SBA to improve disaster relief efforts since February 2005, when she was first made aware of planning shortfalls by employees from Sacramento Disaster Assistance Office. The letter released today by Senator Feinstein is the third she has written on this issue.  

In February 2005, Sacramento SBA employees wrote a letter to Senator Feinstein, expressing their concerns about a proposed reorganization and the new Disaster Credit Management System, or DCMS, which was designed to create a paperless system of making loans to disaster victims. SBA employees objected to the computer system, claiming that it had never been tested on a large-scale disaster of any kind and was already responsible for terrible delays, logjams and confusion when used in small-scale tests. They expected that further use of the problematic DCMS system would result in a spectacular failure in the event of the next big disaster.

Senator Feinstein consequently wrote a letter to the SBA, questioning the effectiveness of the DCMS system and its risk of failure in the event of a large-scale disaster. She requested that the SBA respond with the results of a thorough evaluation of the DCMS system.

In a follow-on letter to Senator Feinstein, Herbert Mitchell, Associate Administrator for Disaster Assistance, asserted that the DCMS had already undergone extensive testing and independent validation, and was sufficiently certified for widespread implementation.

In September 2005, Senator Feinstein asked the GAO to investigate SBA’s disaster response in light of the tragedies experienced by disaster victims in the aftermath of the Gulf Coast Hurricanes and reports by USA Today that only one of the over 28,000 outstanding disaster relief loans had been processed – far exceeding the SBA’s intended disbursement goals.

Senator Feinstein asked the SBA to implement GAO recommendations outlined in a July 2006 report.

The SBA responded in October of 2006 indicating that it was upgrading the capacity of the DCMS system.