SBA’s Process on Implementing Federal Artificial Intelligence Requirements

The Office of Inspector General (OIG) is issuing this management advisory on the U.S. Small Business Administration’s (SBA) implementation of recent federal requirements on artificial intelligence (AI). Several recent executive orders and Office of Management and Budget (OMB) memos direct the use of AI in the federal government to promote human objectives, economic competitiveness, and national security. SBA intends to use AI in a variety of ways, including fraud detection in disaster loan programs and support SBA’s monitoring of 8(a) participants whose program eligibility depends on compliance with 8(a) requirements.

We found that the agency has taken initial steps to comply with AI directives, including appointing a Chief AI Officer and making public most instances of its planned and active use of AI, as of April 30, 2026, the end of our review. However, SBA could improve its information technology management and transparency by developing an AI strategy and governance policies in accordance with OMB requirements. The agency has not implemented a process to identify high-impact uses, such as when AI could be used as a principal basis for decisions or actions that have a legal or significant effect on rights. Without a comprehensive AI strategy with an active governing board, SBA could deploy or rely on AI tools without sufficient oversight, transparency, or safeguards.

SBA agreed with all six of our recommendations and proposed corrective actions that satisfied the intent of the recommendations. These recommendations are resolved and can be closed when SBA managers provide evidence they implemented the planned actions.