{"slug": "sba-gets-another-push-to-step-up-its-ai-game", "title": "SBA gets another push to step up its AI game", "summary": "The Small Business Administration's Office of Inspector General issued a management advisory finding that the SBA has not finalized an AI strategy, developed a generative AI policy, or convened its AI governance board despite piloting several AI models, and flagged a $300,000 Palantir fraud-detection pilot signed in January as an undisclosed high-impact use case. The OIG delivered six recommendations, all of which SBA management agreed to and resolved, with closure pending evidence of implementation. The advisory follows the SBA posting its first AI use case inventory in March, two months past the deadline, and a May GAO finding that the agency did not consistently follow federal AI reporting requirements.", "body_md": "# SBA gets another push to step up its AI game\n\nThe Small Business Administration hasn’t finalized an artificial intelligence strategy, developed a generative AI policy or completed a host of other federally required governance components despite piloting several models of the emerging technology, according to the agency’s inspector general.\n\nIn a [management advisory](https://legacy.sba.gov/sites/default/files/2026-09/SBA%20OIG%20Report%2026-15%20-%20SBA%27s%20Progress%20on%20Implementing%20Federal%20AI%20Requirements.pdf) made public Monday, SBA’s OIG credited the agency with taking “initial steps” to comply with AI directives laid out by the Office of Management and Budget.\n\nBut the watchdog said the SBA didn’t have an exhaustive AI strategy, hadn’t implemented a process to identify high-impact use cases, and hadn’t convened its AI governance board.\n\n“Without a comprehensive AI strategy with an active governing board, SBA could deploy or rely on AI tools without sufficient oversight, transparency, or safeguards,” the advisory said.\n\nThe SBA has struggled to keep up with OMB requirements for AI reporting, [posting its first-ever use case inventory](https://fedscoop.com/small-business-administration-ai-use-cases-gao-report/) in March — two months after this year’s deadline. The Government Accountability Office in May admonished the SBA for “[not consistently](https://www.gao.gov/assets/gao-26-107828.pdf)” following federal reporting requirements.\n\nThe House Small Business Committee joined the pile-on later that month, advancing a bill to require the SBA to [deliver an annual report on its AI use](https://fedscoop.com/house-small-business-committee-sba-ai-bills/). \n\nSBA management told the OIG that it has focused on improvements to IT infrastructure, cloud computing and network reliability over the past year, paving the way for the adoption of more advanced tools.\n\nThe OIG’s advisory made the case that those technology investments are more likely to be successful if the agency puts in place “appropriate governance over AI use” and fully complies with federal AI requirements.\n\nWith that in mind, the watchdog delivered four policy-related recommendations to the SBA: finish the AI governance board charter and bring agency officials together to manage implementation; finalize and publish AI strategy and compliance plans, per OMB guidelines; create a process to evaluate and update policies on IT, data, privacy and cybersecurity; and establish a generative AI policy with safeguards included.\n\nThe inspector general also pushed the agency to create and follow a process for collecting all AI use cases across the SBA, and update the inventory “at least annually.” And it recommended the SBA develop a process to better identify high-impact AI use cases.\n\nThe advisory paid special attention to SBA shortcomings on the high-impact classification, zeroing in on a pilot program — not listed in its inventory — aimed at detecting fraud in pandemic assistance loans.\n\nThe agency [signed a $300,000 deal with Palantir](https://fedscoop.com/small-business-administration-palantir-contract-minnesota-fraud/) in January, which federal contracting documents referred to as “SBA Fraud Prevention Pilot and Bootcamp.” In July, the SBA said it was [expanding its work with Palantir](https://fedscoop.com/small-business-administration-palantir-anti-fraud-work/) through “ongoing efforts to identify, investigate, and help prosecute fraud in pandemic-era small business relief programs.”\n\n“OIG believes this falls under OMB’s definition of a high-impact use,” the advisory said. “When we spoke to SBA managers about this issue, they said this particular use case did not qualify as high impact, even though the model would be potentially flagging loans as fraudulent.”\n\nPer the advisory, the SBA agreed with and resolved all six of the OIG’s recommendations. The watchdog said it will close them out once agency management shares evidence of implementation.\n\nIn a response letter to the OIG, SBA Deputy CIO Douglas Robertson acknowledged that the agency hasn’t completed every OMB requirement, but said the agency “is actively working to establish and mature the governance, policy, and risk management structures necessary to support responsible AI adoption while appropriately balancing innovation, operational needs, safety, privacy, security, and public trust.”", "url": "https://wpnews.pro/news/sba-gets-another-push-to-step-up-its-ai-game", "canonical_source": "https://fedscoop.com/sba-ai-use-case-inventory-watchdog-report/", "published_at": "2026-09-30 16:41:04+00:00", "updated_at": "2026-09-30 16:50:10.082431+00:00", "lang": "en", "topics": ["ai-policy", "artificial-intelligence", "generative-ai"], "entities": ["Small Business Administration", "SBA Office of Inspector General", "Office of Management and Budget", "Government Accountability Office", "House Small Business Committee", "Palantir"], "also_reported_by": [], "alternates": {"html": "https://wpnews.pro/news/sba-gets-another-push-to-step-up-its-ai-game", "markdown": "https://wpnews.pro/news/sba-gets-another-push-to-step-up-its-ai-game.md", "text": "https://wpnews.pro/news/sba-gets-another-push-to-step-up-its-ai-game.txt", "jsonld": "https://wpnews.pro/news/sba-gets-another-push-to-step-up-its-ai-game.jsonld"}}