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Hearing of the Senate Committee on Small Business ands Entrepreneurship on Nomination of Eric M. Thorson to be Inspector General of SBA

Location: Washington, DC

Kerry Statement on Nomination of Eric M. Thorson to be Inspector General of SBA
Wednesday, March 1, 2006

Thank you very much Madam Chairwoman, I really appreciate your efforts personally. Thank you for allowing the Committee to conduct the necessary due diligence on this nomination. Mr. Thorson, welcome and welcome to the members of your family. And of course we welcome Senator Grassley for whom both you and I have enormous respect and I think his introduction is important to all of us here. I would also like to thank Senators Levin and Lieberman, and their staffs, for their work reviewing this nomination, which they also requested to do.

You know, it is not often that this Committee is charged with confirming Administration nominees. But regardless of the infrequency of the activity, given the potential impact that these nominees could have on an already fragile Small Business Administration, this is a duty that we do take seriously. The need for the SBA Inspector General to be impartial and free of political influence, from either side, to be someone who will act in the best interest of the Agency, and most importantly in best interest of small businesses and citizens across the country - the taxpayers whose dollars are being spent - that's really an importance that cannot be overstated here.

We rely heavily on the work of the SBA's Inspector General for unvarnished investigations and analysis. In 2005 alone, the SBA Inspector General's office released reports critical of the Administration's enforcement of anti-bundling rules, reductions in staff, and enforcement of small business contracting laws. And there is much more oversight to be done, as we discussed Mr. Thorson, work that will require an independent IG who is willing to conduct thorough investigations to address the serious management problems afflicting the agency. These issues include:

# Large businesses receiving contracts intended for small businesses and being counted as small businesses, when they're not,
# A review of the challenges facing the Mentor-Protégé program,
# An audit of the contract bundling review process and the inadequate staffing level of PCRs that led to 87 percent of bundled contracts not being reviewed,
# Major staffing shortfalls in the staffing at the Office of Technology that oversees the SBIR and STTR programs,
# Inadequate staffing and shortfalls in oversight of the 504 liquidation program,

And most urgent -

# The continued inadequate response to victims of hurricanes Katrina and Rita by the SBA disaster loan program, and
# The continued shortfalls in SBA oversight of contracts being awarded to rebuild the hurricane affected region.
Now Madam Chairwoman, I know you believe this as I do. The Inspector General does not belong to a party. The IG is appointed by a party, appointed by a President. But he or she really assumes a very special trust. And there are pressures. We all understand the pressures of politics. But this trust is most important.

Unfortunately, this nomination comes at a time of growing concern over the number of Inspectors General who are put into that position with very special political ties to an Administration that simply doesn't have a strong record of nominating people who are going to be really free and independent. In January 2005, Rep. Waxman, Ranking Member on the House Committee on Government Reform, released a report stating that over 60 percent of IGs appointed by the Bush Administration have had prior partisan political experience, while less than 20 percent have had audit experience, which is what they are really being nominated for.

After reviewing Mr. Thorson's background, it is clear that, unlike many of the IG nominees discussed in the Waxman report, he does have extensive investigative experience. And I welcome that. The issue has really been one that has arisen about the willingness in the record to address serious management challenges within the agency. Will you be an IG who can conduct investigations in a non-partisan manner and who will work diligently to identify the larger problems within the agency?

Madam Chair, as you know in reviewing the record, questions were raised by outside entities, that came to the Committee, with respect to the taxpayer abuse hearings of the Finance Committee that were held in 1997 and 1998, of which Mr. Thorson was the lead investigator. And there were 2 GAO reports that concluded almost all of the claims made during the hearings were either unfounded or inaccurate. And from reports at the time and in subsequent interviews, these were highly partisan hearings. Now, I know Mr. Thorson, in our conversations you disputed that and you will have your chance on the record to make your statements about it. I have said that I don't intend to oppose this nomination, and I don't. But I think it is important for the record to adequately reflect what happened.

Our much respected colleague, now deceased, on May 4, 1998, in The New York Times, Senator Daniel Patrick Moynihan said the hearings were "one sided and partisan." That was his judgment as a senior Senator and Member of that Committee. You had complete authority over those investigations and were the only person responsible for clearing the witnesses prior to those hearings. So the key here is not to go back and re-litigate, the key here is to have confidence that as we go forward, this Committee will have confidence - real confidence - that if we put you in this position, we can expect accountability within the Small Business Administration. And accountability that is based, obviously, on fairness - on a completely nonpartisan record. So we need a strong IG who will conduct those kinds of investigations. It serves all of us - the Committee, the Congress, the Administration - to have that, and I look forward to your testimony and to some answers to questions as we proceed.

Thank you Madam Chair.

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