In a letter dated May 9 and made public this week, Ernst primarily requested details about how the SBA is managing IT investments through its IT Working Capital Fund, which the Iowa Republican said it hasn’t used appropriately. But she also probed the agency for details about its AI use cases, alleging the SBA had uses it hadn’t reported publicly in its annual inventory.

“In a recent interview, you stated that the SBA has embraced AI. Despite this, the SBA has not been transparent and reports that it has not used AI,” wrote Ernst, ranking member of the Senate Committee on Small Business and Entrepreneurship. 

AI use case inventories, which were required initially under a Trump-era executive order and later enshrined into statute, are intended to provide information about agency uses of the technology in disclosures posted on their websites. 

However, Stanford research, a Government Accountability Office review, and FedScoop reporting have found that AI inventories have lacked consistency and, in some cases, have omitted uses that should be made public. The Biden administration has recently expanded reporting requirements for those inventories and is looking to improve them.

While the SBA’s AI use case inventory currently shows no uses of the technology, Ernst cited several instances in which the agency had publicly touted AI use cases at the agency. 

She highlighted a May 2023 press release that stated “SBA will use advanced data analytics, third party data checks, and artificial intelligence tools for fraud review on all loans in the 7(a) and 504 Loan Programs prior to approval, starting August 1, 2023.” 

Ernst also pointed to a June 2023 press release that said the agency had used “several tools, including first-of-its-kind artificial intelligence,” to block millions of applications for pandemic relief that were ineligible, duplicative, or attempts at fraud.

In addition to IT investment information and AI disclosure, Ernst also requested information about how SBA planned to use its IT Working Capital Fund to improve its score for the Federal Information Technology Acquisition Reform Act.

Ernst said despite the establishment of the fund — which was created under the Modernizing Government Technology Act that became law in 2017 — SBA “has had declining performance in its efforts to manage IT and implement” FITARA. In the past three years, the agency hasn’t achieved higher than a “C” on its FITARA score, which tracks agency IT modernization progress.

The SBA confirmed to FedScoop that it had received the letter but didn’t provide further comment. Ernst had requested a response by May 23.

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The VA is inching toward awarding contracts for its upcoming modernization of a supply chain management system, officials shared during a House Veterans’ Affairs Subcommittee hearing. The Supply Chain Modernization (SCM) acquisition will be an “indefinite delivery, indefinite quantity” services contract and the validation phase has been approved through the Federal Information Technology Acquisition Reform Act (FITARA) review, led by the agency’s chief information officer. 

Lawmakers across the aisle agreed that the VA is not meeting reporting requirements requested by the subcommittee’s chairman, Rep. Matt Rosendale, R-Mont., as laid out in the House-passed IT Reform Act of 2021, which requires the agency to submit information — including cost, schedule and performance metrics — for “any major technology project” to Congress before the VA expends funds.

“I do believe VA can be successful in this effort if they communicate requirements and resources related to programs, effectively,” ranking member Sheila Cherfilus-McCormick, D-Fla., said during the hearing. “As of now, we haven’t seen that effective communication.”

Michael Parrish, the VA’s chief acquisition officer and principal executive director, said during the hearing that the agency does not view the SCM as a “major” IT project because the VA has not established a “firm budget” or a “firm schedule.”

Parrish described the project as taking a modular approach and said that the VA is addressing subcomponents with separate technology solutions as a service instead of purchasing hardware “that otherwise would be obsolete over time.”

In the current bill text for the IT Reform Act, the threshold for a “major information technology project” is met if the dollar value of the project is estimated to exceed $1 billion for the lifecycle cost of the project, $200 million annually or if the project is designated as such by the department’s secretary or CIO, or the director of the Office of Management and Budget. 

“Without a doubt, the VA and the veterans it serves would benefit from a functional inventory management system, and the department could make better use of taxpayers’ dollars if the system used to order medical supplies were connected to the systems that pay for and track them,” Rosendale said in his opening remarks. “However, what is described in the VA’s request for proposals seems to be a bureaucratic, empire building, mega-project.”

During the hearing, Rosendale cited information given to the committee from the VA putting the lifecycle cost of the SCM system between $9 billion and $15 billion, and would require congressional funding into 2043. Parrish reiterated that the agency is not yet committed to any dollar amount for the project. 

“The [SCM] project is a gigantic effort, the likes of which we have only seen in the [Electronic Health Record] and we know how that has turned out,” Rosendale said. “It would try to knit together all-encompassing systems to manage every aspect of a unified VA supply chain, from tongue depressors to X-ray machines to printer paper to headstones.”

The VA’s Oracle Cerner-run electronic health record has seen a litany of challenges, including patient safety issues with EHR pharmacy software and a  veteran’s death tied to a scheduling error. The system was originally launched in 2020, in an effort to create interoperability of records between the VA and Department of Defense health care systems. The implementation of EHR was later suspended in 2023 as part of a reset, and the department noted that it was working toward holding Oracle Cerner accountable for delivering high-quality services.

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