Bush names executive at Illinois firm to head SBA

President Bush on Tuesday nominated Steven Preston, an executive at an Illinois company, to be the chief of the Small Business Administration.

Preston will leave his position as executive vice president of Downers Grove, Ill.-based ServiceMaster Co., a $3.6 billion company where he recently has led the strategic services team and previously served as chief financial officer, to pursue the nomination, according to company statements. He joined the company in 1997, prior to which he was a senior vice president at First Data Corp. and an investment banker with Lehman Brothers.

Preston earned a bachelor's degree in political science from Northwestern University and an M.B.A. from the University of Chicago's Graduate School of Business, his biography stated.

Jonathan Ward, ServiceMaster chairman and chief executive officer, described Preston in a statement as a results-oriented executive and financial services leader, and said of the nomination, "[Steve's] work at ServiceMaster has proven that he is a visionary leader with a record of accomplishments and a deep appreciation of small businesses."

But Lloyd Chapman, president of the American Small Business League, was pessimistic about Preston's selection.

"This is a guy who works for a multibillion-dollar publicly traded company. He has no background in small business issues, and it's troubling," Chapman said. "The message I get from this is that Bush has no interest in the issues facing small businesses."

The announcement of Preston's nomination came shortly after the resignation of current administrator Hector Barreto, who has been with the agency almost five years.

An SBA announcement of Barreto's resignation highlighted that the agency's lending, technical assistance and procurement programs have grown since he took the helm in 2001. It noted that "more than $8.4 billion in low-interest [post-hurricane] disaster loans have been made to businesses and homeowners in the disaster area, more than double the next largest disaster response in the SBA's history."

"Accountability, greater efficiencies and results-oriented management are now part of the SBA culture," Barreto wrote, adding, "I am confident that the foundation has been established for even better results in the future to the benefit of our small business clients as well as the U.S. taxpayer."

But SBA's critics have said the agency was slow in processing and disbursing disaster loans following last year's hurricanes. Rep. Nydia Velázquez, D-N.Y., ranking Democrat on the House Small Business Committee, called for Barreto's resignation in December because of delays in the loan programs.

"Entrepreneurs have not been receiving the commitment and dedication they deserve over the past five years, and it was certainly showing in the rising cost of capital, declining contracting opportunities and poor disaster responses," Velázquez said in a statement in response to Barreto's resignation.

The cost of capital has seen double-digit increases over the past few years, and the SBA budget declined on Barreto's watch from a $1.1 billion request in 2001 to a $593 million request last year, Velázquez's office said.

"In the last five years, we have seen the complete and utter abandonment of our small businesses, courtesy of the Bush administration," said Sen. John Kerry, D-Mass., ranking Democrat on the Senate Committee on Small Business and Entrepreneurship.

Chapman highlighted a widely acknowledged problem of large businesses appearing in databases of small business contracts as an area in which Barreto failed to show leadership. "During Barreto's tenure, there have been 11 federal investigations that have documented fraud, abuse, loopholes and a dramatic lack of oversight in small business contracting programs, yet he has done nothing to stop it," Chapman said. "Instead, Barreto has consistently covered it up and denied it."

But Steve Denlinger, a representative of the Hispanic Chamber of Commerce and president of the Latin American Management Association, a group representing Hispanic businesses that contract with the federal government, lauded Barreto's focus on small business procurement issues.

In response to a question, SBA spokesman Michael Stamler said Wednesday, "It was Mr. Barreto's choice to step down."

"Those of us who've been around Washington for a while realize that the administrator's hands are a little bit tied" by the administration's priorities with respect to budget cuts, Denlinger said.

Reinstating the integrity of the agency's small business contracting numbers will be a major challenge facing the next SBA administrator, Denlinger said, as will be better preparing for disasters.

"Although we could see it coming days before, I don't think anyone understood the full magnitude of what was coming down the road [before Katrina]," Denlinger said. "I really felt sorry for him as a manager and administrator, not being able to ramp up as quickly as he would have liked to."

"Overall," Denlinger said, "I give him pretty high marks."

Barreto has said he will stay on in his position during a transition period. After that, he will serve as national chairman of the Latino Coalition, a group that promotes business, economic, and social development of the American Hispanic community.