By John Tozzi
June 26, 2008
President Bush on June 25 tapped a career bureaucrat in charge of economic development for the Commerce Dept. to lead the Small Business Administration. But it could be months before the nominee, Sandy Baruah, goes before the Senate for confirmation—the last SBA head was approved two months after his nomination. And if he's confirmed, Baruah won't have much time before a new Administration enters the White House next year.
As head of the Commerce Dept.'s Economic Development Administration, Baruah is charged with leveraging government investments to support regional economies and encourage innovation, competitiveness, and entrepreneurship. He has pointed to small businesses as the driver of economic growth in a global marketplace. "I believe the strategy for the U.S. in competing in the 21st century is built around the following equation: Entrepreneurship drives innovation. Innovation drives productivity. Productivity drives higher wages and higher standards of living," Baruah said in remarks at a forum in Kansas City, Mo., in September.
Baruah, 43, has served in the Commerce Dept. since 2001, currently as assistant secretary for economic development. Before that, he worked as a business consultant with Portland (Ore.)-based Performance Consulting Group for six years "assisting medium- and large-sized firms improve business practices, communications, and efficiency," according to information he submitted to the Senate for his previous appointment.
But Baruah has never run a company, and his résumé suggests limited experience with small business. The consulting stint was Baruah's only time in the private sector. Prior to that, he held posts at the Labor and Interior Depts. during George H. W. Bush's Administration and also worked on Republican campaigns. A native of Oregon, he has an MBA from Willamette University in Salem.
If confirmed, Baruah would take over an SBA that has faced widespread criticism over its handling of disaster loans (BW SmallBiz, Winter, 2005), falling short of targets (BW SmallBiz, Fall, 2006) for awarding federal contracts to small businesses, and declining loan volume (BusinessWeek.com, 5/14/08) in its government-backed lending program. The agency's budget has also fluctuated wildly in recent years, from $1.175 billion in 2007 to an estimated $530 million this year, with an estimated $825 million allocated in the President's fiscal 2009 budget.
The SBA's previous administrator, Steven Preston, was appointed to lead the Housing & Urban Development Dept. in April (BusinessWeek.com, 5/23/08) after less than two years at the SBA's helm. Since then, deputy Jovita Carranza, a former UPS (UPS) vice-president, has been acting as administrator.
It's unclear whether Baruah, who was confirmed to his current post by the Republican Senate in 2005, will face opposition this time around. A spokeswoman for Senator John Kerry (D-Mass.), chair of the Small Business Committee, said the committee would scrutinize Baruah but declined to comment on when a confirmation hearing might be scheduled. Kerry said in a statement: "For seven years the Bush Administration has put Wall Street ahead of Main Street and denied the SBA the funding and staff needed to serve our small businesses," adding that Preston's successor would need to address the credit crunch and contracts for minority- and women-owned businesses. Senator Olympia Snowe (R-Me.), the ranking Republican on the committee, agreed the agency needs more funding. "Although Mr. Baruah would serve for only half a year if confirmed, it is crucial that he act expeditiously to reverse years of budget shortfalls that are hampering economic growth and job creation," Snowe said in a statement.
The U.S. Chamber of Commerce praised Baruah in a statement on its Web site, saying "his dedication is strong when it comes to supporting America's small businesses." But others disagree. Lloyd Chapman, a persistent critic of the SBA who has successfully sued the agency over data about the size of companies getting federal contracts, believes Bush is trying to dismantle the agency or fold it into the Commerce Dept. Chapman questioned Baruah's qualifications. "He's the third nominee to head the SBA who has no background and experience and interest in small business in any way," he said. But with the time until the next President takes office ticking away, it may not make a difference—Baruah could be on his way out before he unpacks his boxes.
Tozzi covers small business for BusinessWeek Online.