Sneak Preview: SVOG Concerns Will Lead to Future Risk Assessments
(The following was excerpted from a recent Thompson Grants Compliance Expert article.) The Small Business Administration (SBA), in light of concerns raised in a recent SBA Office of Inspector General (OIG) audit about payments made under the Shuttered Venue Operators Grant (SVOG) program, is now establishing policies that would require its staff to incorporate risk as a component of disbursement decisions and oversight in future disaster relief programs.
The Consolidated Appropriations Act of 2021 (Pub. L. 116-260) authorized SBA to administer the SVOG program. Combined with additional program funding under the American Rescue Plan Act (Pub. L. 117-2), SBA had $16.25 billion available to award to eligible venues that experienced economic hardship from the COVID-19 pandemic. Eligible shuttered venues are live venue operators or promoters such as theatrical and performing arts organization operators; relevant museum operators, including zoos and aquariums (who meet specific criteria); motion picture theater operators; and talent representatives. As of March 7, SBA had awarded 12,881 grants totaling $10.9 billion, and 9,219 in supplemental grants totaling $3.23 billion.
Program statutes required SBA to develop an oversight and audit plan with policies and procedures to govern the SVOG program. The agency developed its initial plan in February 2021, defining risk levels for grantees and stating that recipients of moderate or high risk would have award funds distributed in two or more disbursements. The plan also required recipients to document revenue loss and their use of funds from the first disbursement, which SBA was to review before disbursing additional funds.
In June 2021, the agency changed the plan to disburse all grant awards as a single advanced payment regardless of the recipient’s assessed risk profile. “This change eliminated the requirement for moderate- and high-risk grant recipients to report on how they used the award funds before SBA disbursed additional funds,” OIG noted. “This change weakened SBA’s ability to oversee the program and ensure the grant recipients used funds appropriately during the grant performance period. Multiple disbursements would have allowed SBA to detect potential misuse before disbursing additional funds to recipients considered to present a high or moderate risk to the program.”
(The full version of this story has now been made available to all for a limited time here.)
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