[Senate Hearing 110-349]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 110-349

                   EXPANDING OPPORTUNITIES FOR WOMEN
      ENTREPRENEURS: THE FUTURE OF WOMEN'S SMALL BUSINESS PROGRAMS

=======================================================================

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                          AND ENTREPRENEURSHIP



                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                           September 20, 2007

                               __________

      Printed for the use of the Committee on Small Business and 
                            Entrepreneurship


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            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                 JOHN F. KERRY, Massachusetts, Chairman
CARL LEVIN, Michigan                 OLYMPIA J. SNOWE, Maine
TOM HARKIN, Iowa                     CHRISTOPHER S. BOND, Missouri
JOSEPH I. LIEBERMAN, Connecticut     NORMAN COLEMAN, Minnesota
MARY LANDRIEU, Louisiana             DAVID VITTER, Louisiana
MARIA CANTWELL, Washington           ELIZABETH DOLE, North Carolina
EVAN BAYH, Indiana                   JOHN THUNE, South Dakota
MARK PRYOR, Arkansas                 BOB CORKER, Tennessee
BENJAMIN L. CARDIN, Maryland         MICHAEL B. ENZI, Wyoming
JON TESTER, Montana                  JOHNNY ISAKSON, Georgia

                 Naomi Baum, Democratic Staff Director
                Wallace Hsueh, Republican Staff Director




















                            C O N T E N T S

                              ----------                              

                                                                   Page

                           Opening Statements

Kerry, the Honorable John F., Chairman, Committee on Small 
  Business and Entrepreneurship, and a United States Senator from 
  Massachusetts..................................................     1
Snowe, the Honorable Olympia J., Ranking Member, a United States 
  Senator from Maine.............................................     3
Dole, the Honorable Elizabeth, a United States Senator from North 
  Carolina.......................................................     8
Enzi, the Honorable Michael B., a United States Senator from 
  Wyoming........................................................     9

                           Witness Testimony

Shear, William B., Director, Financial Markets and Community 
  Investment, U.S. Government Accountability Office, Washington, 
  DC.............................................................    10
Ritt, Debra S., Assistant Inspector General for Auditing, U.S. 
  Small Business Administration, Washington, DC..................    28
Prakash, Anoop, Associate Administrator for Entrepreneurial 
  Development, U.S. Small Business Administration, Washington, DC    37
Goldsmith, Wendi, president, Bioengineering Group, Salem, MA.....    56
Almeida, Ann Marie, president and chief executive officer, 
  Association of Women's Business Centers, Camden, ME............    64
Bratton, Rosemary, executive director, Wyoming Women's Business 
  Center, Laramie, WY............................................    73
King, Gale, owner, Treats by Gale, LLC, Burke, VA................    85

          Alphabetical Listing and Appendix Material Submitted

Almeida, Ann Marie
    Testimony....................................................    64
    Prepared statement...........................................    67
    Responses to post-hearing questions from:
        Senator Snowe............................................   113
        Senator Enzi.............................................   114
Bratton, Rosemary
    Testimony....................................................    73
    Prepared statement w/attachments.............................    77
    Responses to post-hearing questions from:
        Senator Snowe............................................   110
        Senator Enzi.............................................   111
Dole, the Honorable Elizabeth
    Opening statement............................................     8
Enzi, the Honorable Michael B.
    Opening statement............................................     9
    Post-hearing questions posed to:
        Wendi Goldsmith..........................................   109
        Rosemary Bratton.........................................   111
        Almeida, Ann Marie.......................................   114
Goldsmith, Wendi
    Testimony....................................................    56
    Prepared statement...........................................    60
    Responses to post-hearing questions from:
        Senator Snowe............................................   107
        Senator Enzi.............................................   109
Kerry, the Honorable John
    Opening Statement............................................     1
    Post-hearing questions posed to:
        Anoop Prakash............................................    96
        William B. Shear.........................................   101
        Debra S. Ritt............................................   104
King, Gale
    Testimony....................................................    85
    Prepared statement...........................................    87
Lieberman, the Honorable Joseph I.
    Post-hearing questions posed to Anoop Prakash................    98
Prakash, Anoop
    Testimony....................................................    37
    Prepared statement...........................................    40
    Responses to post-hearing questions from:
        Chairman Kerry...........................................    96
        Senator Lieberman........................................    98
        Senator Snowe............................................    99
Ritt, Debra S.
    Testimony....................................................    28
    Prepared statement...........................................    30
    Responses to post-hearing questions from:
        Chairman Kerry...........................................   104
        Senator Snowe............................................   106
Shear, William B.
    Testimony....................................................    10
    Prepared statement...........................................    12
    Responses to post-hearing questions from:
        Chairman Kerry...........................................   101
        Senator Snowe............................................   103
Snowe, the Honorable Olympia J.
    Opening statement............................................     3
    Letter to the Hon. Steven Preston, SBA.......................     5
    Post-hearing questions posed to:
        Anoop Prakash............................................    99
        William B. Shear.........................................   103
        Debra S. Ritt............................................   106
        Wendi Goldsmith..........................................   107
        Rosemary Bratton.........................................   110
        Ann Marie Almeida........................................   113

                        Comments for the Record

Mackey, ML, CEO, Beacon Interactive Systems, Cambridge, MA.......   118
The Women's Business Center Program List.........................   121
Draft report on the audit of grant disbursements to Women's 
  Business Centers, Office of Inspector General, U.S. Small 
  Business Administration........................................   122




















 
                   EXPANDING OPPORTUNITIES FOR WOMEN
      ENTREPRENEURS: THE FUTURE OF WOMEN'S SMALL BUSINESS PROGRAMS

                              ----------                              


                      THURSDAY, SEPTEMBER 20, 2007

                      United States Senate,
                    Committee on Small Business and
                                          Entrepreneurship,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:04 a.m., in 
room 428-A, Russell Senate Office Building, the Honorable John 
F. Kerry (Chairman of the Committee) presiding.
    Present: Senators Kerry, Snowe, Enzi, Dole, and Thune.

  OPENING STATEMENT OF THE HONORABLE JOHN F. KERRY, CHAIRMAN, 
              SENATE COMMITTEE ON SMALL BUSINESS 
       AND ENTREPRENEURSHIP, AND A UNITED STATES SENATOR 
                       FROM MASSACHUSETTS

    Chairman Kerry. We will officially come to order, though 
you are the most orderly group yet in the year. Either that, or 
you are all asleep; I don't know.
    [Laughter.]
    Chairman Kerry. Welcome. We are glad to have you here and 
delighted to be able to have this oversight hearing this 
morning. I want to thank all of our witnesses for coming here 
to discuss the issues that are being faced by women small 
business owners all across the country today.
    I particularly want to recognize Wendi Goldsmith, the 
president of Bioengineering Group, who traveled down here from 
Salem. I am glad to see you here and look forward to your 
testimony about your experiences in trying to contract with the 
Federal Government.
    This is a classic oversight hearing. It has certain detail 
and specificity to it, but this is the purpose of committee 
oversight on a topic of enormous importance to women all across 
the country, whether they are in small business or not, because 
it is really a microcosm of the kinds of problems that women 
face in a lot of sectors of endeavor.
    Today, there are 7.7 million women-owned firms in the 
United States. That means that nearly one-third of all the 
private firms in our country are owned by women, and these 
firms generate more than $1 trillion in sales and employ more 
than 7 million people. In Massachusetts alone, 189,000 firms 
are contributing $30 billion to the economy and employing 
177,000 individuals. And these numbers are on the rise. Women-
owned firms increased by 43 percent over the last decade, 
almost double the increase of firms overall in the country, 
making them obviously a very important part of our Nation's 
economic well-being.
    But despite the good news and the tremendous growth, women-
owned small businesses still continue to have markedly lower 
revenue and fewer employees than firms, even comparable ones, 
owned by men. For instance, only 16 percent of firms with 
employees are owned by women. In addition, although 6 percent 
of businesses owned by men have revenues of $1 million or more, 
only 3 percent of all women-owned firms do so. Women-owned 
firms also account for less than 3 percent of all Federal 
contracts even though they comprise 30 percent of all 
privately-held firms. That is obviously an unacceptable ratio.
    So today, we are going to be focusing on two programs which 
were specifically designed by the Congress, signed into law by 
the President, and are today the law of the land, and they are 
designed to help more women overcome hurdles and become 
successful entrepreneurs--the Women's Business Center Program 
and the Women's Procurement Program.
    Now, the Women's Business Center Program has been 
invaluable in helping women succeed in business, especially 
economically and socially disadvantaged women. No center, I 
think, has done more to help women in Massachusetts than the 
Center for Women in Enterprise. Its leader, Donna Good, is not 
only a friend to women in Massachusetts, but also to this 
Committee, and she has shared the concerns of her clients with 
us on a number of occasions.
    Although the Women's Business Center Program has been a 
tremendous resource for women, our Committee on both sides of 
the aisle has heard from centers that red tape and bureaucracy 
have been the norm in their dealings with the SBA. Late grant 
payments from the SBA, sometimes even a year or more late, and 
a lack of clear guidelines have threatened to weaken the 
program.
    Two recent investigations will shed some light on these 
allegations. Bill Shear of the Government Accountability Office 
is here to discuss the Women's Business Center Program's 
overall strengths and weaknesses, while Debra Ritt from the 
SBA's Inspector General's Office will discuss their recent 
investigation of the Women's Business Center Program. I 
requested this IG investigation after hearing story after story 
of late payments to Women's Business Centers.
    We are also going to discuss the implementation of 
legislation signed into law in May to make permanent funding 
available to established centers. Back in 1999, when Senator 
Snowe and I succeeded in getting the Sustainability Pilot 
Program signed into law, getting centers a maximum of 10 years 
of funding, it was in response to calls from Women's Business 
Centers that they needed continuing Federal funding beyond the 
initial 5 years in order to succeed. And since we were seeing 
tremendous success in that relationship and jobs were being 
created and revenue was being created, it made sense, 
obviously, to try to extend that.
    Since these centers target low-income women and they are 
unable to charge large fees for participation, ongoing Federal 
funding is, therefore, critical to many of these centers. Now 
that we have ensured that Women's Business Centers can continue 
to apply for Federal funding beyond the initial 10 years, we 
need to get this law implemented now. Established Women's 
Business Centers should not have to wait another year because 
of bureaucratic delays.
    Women have also been waiting for the Federal Government to 
make good on its commitment to implement the Women's 
Procurement Program. There is just a glaring question of why it 
has taken 7 years for the Bush administration to put this 
program in place. It is insulting. It demonstrates a complete 
lack of respect and a lack of belief both in the Congress of 
good law, as well as the benefits of this program.
    Women-owned businesses accounted for less than 3 percent of 
all Federal contracting dollars last year, despite the fact 
that they comprise over 30 percent of all firms. Congress 
created the Women's Business Procurement Program so that we can 
help more women-owned firms break into Federal contracting. The 
Administration has just plain been MIA on this. Failure to 
implement the Women's Procurement Program has cost women 
businesses at least $6 billion in lost contracts. It is hard to 
describe the impact that $6 billion would make on a lot of 
folks who are out there struggling to make ends meet, 
struggling to survive, struggling to make a business succeed, 
and playing by the rules. When bureaucratic inefficiency or 
stubborn ideology or something gets in the way, it just sends a 
terrible message to everybody and makes us all look bad.
    In May, I urged the SBA to properly use the Rand Disparity 
Study as they implemented the Women's Procurement Program. In a 
July hearing, SBA Associate Administrator Paul Hsu said that 
the program would be in place by the end of this fiscal year. 
Well, September 30 is just around the corner and women small 
business owners deserve to know exactly what is happening with 
this program, as does the Congress.
    Women entrepreneurs have made enormous strides in the last 
20 years. The 45 percent increase in sales among women-owned 
firms in Massachusetts alone, in the last decade, is just one 
example. But to ensure that women get their fair share of 
Federal contracts and overcome the ever-present barriers to 
accessing capital and business networks, programs such as the 
Women's Business Centers and the Women's Procurement Program 
play an invaluable role. So it is essential that the SBA 
implement these programs and administer them fairly. I look 
forward to hearing from our witnesses and turn now to my 
Ranking Member, Senator Snowe.

 OPENING STATEMENT OF THE HONORABLE OLYMPIA J. SNOWE, RANKING 
                  MEMBER, AND A UNITED STATES 
                       SENATOR FROM MAINE

    Senator Snowe. Thank you very much, Chairman Kerry, for 
holding this timely hearing concerning the SBA's administration 
of the Women's Business Centers and the Women's Small Business 
Procurement Program, as well as for your steadfast leadership 
that is so instrumental to this debate.
    I would also like to welcome our witnesses here today. This 
is a critical hearing when it comes to the Women's Business 
Centers. I know there are a number of issues that we have to 
explore that have been underscored by Chairman Kerry here this 
morning. I most especially want to welcome Ann Marie Almeida, 
who is the executive director of the Women's Business Center 
who has come here from Maine to testify and I appreciate, Ann 
Marie, that you are here.
    We are gathered here this morning to probe why the SBA has 
failed to provide women entrepreneurs with the assistance that 
they require and deserve, and that is also consistent with 
funding and statutory obligations. As Ranking Member of this 
Committee, I have consistently supported women-owned 
businesses, as have all the Committee Members here. We 
recognize that women make tremendous contributions to our 
economy. In fact, women-owned businesses are the fastest-
growing segment of our economy. As I have traveled across my 
State on many main-street tours, what I see repeatedly and 
consistently are women-owned businesses. These women's business 
owners are revitalizing so many communities throughout the 
State.
    As a reflection of their success, on May 25, 2007, 
President Bush signed into law a bill which included a 
provision that was offered by Chairman Kerry and myself along 
with Senator Sununu, which impacted the SBA's Women's Business 
Centers. To that end, I would like to include for the record, 
unanimous consent, a letter that was sent by Senator Sununu 
along with Senator Murkowski, Senator Lott, Senator Gregg, and 
Senator Domenici to the SBA also underscoring their deep 
dissatisfaction with the failure of the SBA to administer the 
new law that was passed last spring.
    [The letter referenced above follows:]

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    Senator Snowe. The legislation was designed to create a 3-
year renewal grant program for Women's Business Centers. 
Regrettably, the SBA has misinterpreted this measure and 
delayed issuing critical funds to women business owners seeking 
assistance. This morning, I certainly want to make clear, and 
hopefully we will make clear to the SBA, that they must execute 
the renewal grant program as soon as possible so that women 
business owners quickly receive the Federal funding they 
rightly deserve under the new law.
    Making great strides nationwide, women-owned businesses 
have breathed new life into our economy, creating jobs with 
pace-setting results. Certainly that is true in my State of 
Maine, as Ann Marie Almeida, I know, will testify, which is a 
forerunner for women-owned businesses. Maine has more than 
63,000 women-owned firms creating 75,000 jobs and spurring more 
than $9 billion in sales.
    Furthermore, there are 10.4 million women-owned businesses 
nationwide employing more than 12.8 million Americans and 
generating $1.9 trillion in revenue nationally. Women are an 
economic powerhouse.
    So given these tremendous statistics, it begs the question 
as to why the SBA is not paving the way for women-owned 
entrepreneurs? The latest reports on these issues from the U.S. 
Government Accountability Office and the SBA Inspector General 
couldn't be more instructive. We will raise these issues here 
this morning.
    It is deeply disturbing, for example, that the draft 
Inspector General's report indicates that the SBA has disbursed 
over 500 payments to the Women's Business Centers for both new 
and sustainability grants, but only 25 percent of those 
payments--about 127 of those 500 grants--were made within the 
agency's and the Office of Management and Budget's goal of 30 
days. The remaining 75 percent of those grants were disbursed 
between 30 and 300 days from the date the SBA received the 
payment request.
    So clearly, there are some serious and significant problems 
with respect to the way the Small Business Administration is 
administering the program and delivering the payments in a 
timely basis to the Women's Business Centers. I certainly want 
to press SBA on why there are these untimely distributions of 
these funds to Women's Business Centers. I think it is 
unacceptable and, frankly, cannot continue.
    Furthermore, individual centers have expressed concerns 
with the evaluation process and the dearth of transparency by 
the Small Business Administration in terms of how they are 
ranked to receive these initial grants. The SBA's 2008 budget 
submission asserts that the agency's processes have become more 
customer-focused and simplified. This morning, the SBA must 
provide clarification in terms of how they have made this 
process more simple, customer-focused and have included 
transparency in the process.
    Finally, I remain extremely concerned about the SBA's 6-
year delay in implementing--6 years I might add, and repeat, 6-
year delay of the Women's Contracting Set-Aside Program. At a 
previous Committee hearing in July, the SBA firmly pledged to 
finally implement this long overdue program by the end of this 
fiscal year. Well, Mr. Chairman, as we know, the current fiscal 
year ends in 10 days. So this morning, I look forward to a 
status update from the SBA on this vital matter for women 
business owners in America.
    I think we are all committed to multiplying the success of 
women-owned businesses across our country with the economic 
opportunities and advancements that are achieved because of the 
leadership and the resolve of the entrepreneurial women. 
Therefore, the SBA should be playing a leadership role in that 
regard. That is why I think it is deeply regrettable that we 
are seeing the intransigence and the reluctance to administer 
these programs consistent with the intent and the spirit and 
the obligations under the law.
    Thank you, Mr. Chairman.
    Chairman Kerry. Thank you very much, Senator Snowe.
    Senator Dole, Senator Enzi, do you have opening statements 
you want to make?
    Senator Dole. Yes, if I may.
    Chairman Kerry. Senator Dole.

  OPENING STATEMENT OF THE HONORABLE ELIZABETH DOLE, A UNITED 
               STATES SENATOR FROM NORTH CAROLINA

    Senator Dole. Chairman Kerry, thank you very much, Ranking 
Member Snowe, for convening this morning's hearing on expanding 
opportunities for women business owners and entrepreneurs. I 
want to thank all of the panelists who are with us today for 
sharing your expertise and your time with us.
    Not that long ago, in fact, Senator Snowe and I remember 
working together 25 years ago when I was in the executive 
branch and she was in the legislative branch in the House of 
Representatives, and what we were doing were identifying and 
helping to eliminate vestiges of discrimination in rules and 
regulations as they applied to women. So it was not all that 
long ago that women often faced an arduous, uphill battle to 
succeed in a business world that, frankly, was dominated by 
men. This was attributed in part to women's lack of access to 
vital resources and information needed to start and grow a 
successful business.
    But in recent years, the Women's Business Center Program at 
the Small Business Administration has been a driving force 
behind positive trends in women-owned business statistics. 
Women's Business Centers around the country, with grants from 
SBA, are helping women overcome obstacles and pursue their own 
dreams of business ownership.
    In North Carolina, where I come from, the number of 
privately-held majority women-owned firms grew by 61 percent 
between 1997 and 2006. This growth is significantly larger than 
the overall increase of 39 percent that occurred for privately-
held firms during the same time period. The tremendous growth 
of women-owned businesses in North Carolina is linked to the 
enactment of the Women's Business Ownership Act of 1998, which 
authorized the Women's Business Center Program. But problems 
exist, as we have heard. It is important that this Committee 
constantly work to ensure that initiatives like the Women's 
Business Center Program are operating effectively and as 
intended.
    To this end, I applaud the hard work of you, Chairman Kerry 
and Vice Chair Snowe, for getting Senate Amendment 187 passed 
and signed into law earlier this year. The 3-year renewal 
program truly is essential to keeping Women's Business Centers 
operational. I strongly encourage the SBA to fully implement 
this program in a timely manner.
    Centers across the Nation must receive the necessary 
funding to carry out their mission, and changes are needed to 
address these specific problems that have already been raised. 
No question, potential and current women business owners are 
critical to our overall economy, which thrives on the activity 
of our Nation's small businesses. I look forward to working 
with my colleagues and the SBA to build on and improve the 
Women's Business Center Program. Thank you.
    Chairman Kerry. Thank you, Senator Dole. Thank you for your 
comments for Senator Snowe and me, and thank you for your 
comments on the program.
    Senator Enzi.

 OPENING STATEMENT OF THE HONORABLE MICHAEL B. ENZI, A UNITED 
                  STATES SENATOR FROM WYOMING

    Senator Enzi. Mr. Chairman, I want to thank you for holding 
this hearing. I want to commend the two of you for the 
Amendment 187 and the effect that that could have and should 
have, and I am pleased that we will hear testimony today that 
will allow us to better understand the condition of the 
programs that are supposed to assist women in starting and 
operating their own small businesses. I do think that that is 
one of the best ways, one of the most hopeful ways that we have 
of closing the pay gap.
    It has long been known that women wishing to start their 
own small businesses face significant challenges. The Women's 
Business Center Program has been successful in improving 
opportunities for women to enter small business ownership, and 
I hope that this hearing will be able to reveal the areas of 
greatest need where these programs can be improved.
    I am especially pleased today to welcome a former small 
business owner from Wyoming who currently serves as the 
executive director of the Wyoming Women's Business Center. 
Since 1999, Rosemary Bratton has worked to establish and 
operate the Wyoming Women's Business Center in Laramie. 
Starting as a project of the Wyoming Coalition Against Domestic 
Violence and Sexual Assault, this has emerged recently as a 
distinct and separate organization that has worked to meet the 
needs of working women across Wyoming. Ms. Bratton will be able 
to share with us valuable insight about her experience at 
starting a business center in a rural State like Wyoming and 
working with the Small Business Administration Office of 
Women's Business Ownership.
    My experience as a small business owner tells me that 
providing consistent and reliable service to your customers is 
what keeps you in business. Women's Business Centers have 
reported success in providing services to women when centers 
are given the appropriate resources. They have to have 
consistent and reliable service, as well, to stay in business. 
Lately, these centers have not received the support in a 
consistent manner. I trust these proceedings will provide the 
Members of this Committee with a better idea of how business 
can be improved with the business centers.
    I also look forward to hearing about the status of the 
Women's Procurement Program. For some time, the implementation 
of that program has been delayed, and I am interested to know 
when the set-aside for women-owned businesses will be 
available. I cannot overemphasize the importance of providing 
women-owned small businesses access to Federal contracting 
opportunities. Procurement can be a difficult and overwhelming 
process for small businesses who have limited resources.
    I thank you for holding this hearing.
    Chairman Kerry. Thank you very much, Senator Enzi. I 
appreciate it.
    Administrator Prakash, if you don't mind, I want to have 
Mr. Shear and Ms. Ritt testify first. That gives you an 
opportunity to respond to them, rather than the other way 
around, where we just ask a lot more questions because of their 
testimony. I know you are going to make your statement.
    Mr. Prakash. That would be fine.
    Chairman Kerry. Mr. Shear, why don't you begin and then Ms. 
Ritt.

STATEMENT OF WILLIAM B. SHEAR, DIRECTOR, FINANCIAL MARKETS AND 
 COMMUNITY INVESTMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE, 
                         WASHINGTON, DC

    Mr. Shear. Mr. Chairman, Senator Snowe, and Members of the 
Committee, I am pleased to be here this morning to discuss the 
Women's Business Center Program. The WBC Program provides long-
term training, counseling, networking, and mentoring to women 
entrepreneurs, especially those who are socially and 
economically disadvantaged.
    Congress created the WBC Program in part due to the finding 
that existing business assistance programs for small business 
owners were not considered adequate to address women's needs. 
But concerns have also been raised about whether SBA's business 
assistance programs are duplicating each other's efforts. The 
two other primary business assistance programs that SBA 
administers are the Small Business Development Center and SCORE 
Programs. Under the terms of the SBA award, WBCs are required 
to coordinate with local SBDCs and SCORE chapters when 
appropriate.
    This testimony provides preliminary views based on ongoing 
work. I will discuss, first, the uncertainties associated with 
the funding process for WBCs; second, SBA's oversight of the 
WBC Program, including policies and procedures for monitoring 
compliance with program requirements; and third, the services 
that WBCs provide to small businesses and actions that SBA and 
WBCs have taken to avoid duplication of the services offered by 
the WBC, SBDC, and SCORE Programs.
    In summary, first, until 2007, WBCs were funded on a 
temporary basis with the expectation that the centers would 
become self-sustaining. In the most recent period prior to 
2007, beginning in 1999, Congress created a Sustainability 
Pilot Program to extend funding an additional 5 years, allowing 
successful WBCs to receive SBA funding for a total of 10 years. 
However, WBCs continue to face funding uncertainties. To 
address these funding uncertainties, recent legislation for the 
WBC Program replaced the Sustainability Pilot Program with 3-
year renewable grants to WBCs that graduated from the program 
after 10 years, as well as the current program participants.
    With respect to our second objective, although SBA has 
always had procedures in place to monitor WBCs' performance and 
use of Federal funds, staff shortages from the agency's 
downsizing and limited communication may hinder SBA's oversight 
efforts. SBA relies extensively on District Office Technical 
Representatives, called DOTRs, to oversee WBCs, but these staff 
members also have other job responsibilities and may not have 
the needed expertise to conduct some oversight procedures. In 
addition, some WBCs also cited communication problems. For 
example, some WBCs told us that SBA did not provide sufficient 
feedback on their performance.
    Third, we found that WBCs we spoke with focused on a 
different type of client than the SBDCs and SCORE chapters in 
their areas. Consistent with the WBC Program's statutory 
authority and SBA requirements, WBCs generally tailor services 
to meet the needs of economically and socially disadvantaged 
women. In addition, SBA's study of WBCs showed that they tended 
to serve clients with businesses that had fewer employees and 
lower revenues than clients of SBDCs and SCORE. However, based 
on our review, WBCs appear to lack guidance and information 
from SBA on how to successfully carry out their coordination 
efforts. Therefore, opportunities for SBA to help improve 
coordination, especially for WBCs that might find coordination 
difficult, appear to be present.
    Mr. Chairman, this concludes my statement. I would be 
pleased to answer any questions.
    [The prepared statement of Mr. Shear follows:]

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    Chairman Kerry. Thank you very much, Mr. Shear. That was a 
good summary.
    Ms. Ritt.

  STATEMENT OF DEBRA S. RITT, ASSISTANT INSPECTOR GENERAL FOR 
  AUDITING, U.S. SMALL BUSINESS ADMINISTRATION, WASHINGTON, DC

    Ms. Ritt. Chairman Kerry, Ranking Member Snowe, and Members 
of the Committee, I am pleased to be here today to discuss the 
Small Business Administration's grant program for Women's 
Business Centers. My testimony is based on work we recently 
completed at the Chairman's request that examined concerns 
raised by many of the Senators about the timeliness of grant 
disbursements. I will address the extent of payment delays, 
their causes and possible solutions, as well as share our 
observations about opportunities to streamline the grant award 
process.
    SBA awards two types of grants under the program, new 
grants that are competitively awarded and funded for up to 5 
years, and sustainability grants, which provide another 5 years 
of funding. Our audit disclosed that SBA was consistently late 
in disbursing grant funds and that the percentage of current 
delays had increased from the previous year. In fiscal year 
2006, SBA disbursed only 25 percent of grant payments within 
OMB's goal of 30 days, and in fiscal year 2005, only 40 percent 
were disbursed timely. The remaining payments were disbursed 
between 30 days and up to a year following receipt of payment 
requests.
    Not all payment delays were the fault of SBA, however. Some 
requests were incomplete or contained errors due to the 
complexity of the required documentation or failure to follow 
agency guidance. That aside, we identified four major reasons 
for late payments, most of which were a consequence of poor 
coordination and communication between SBA's Program Office, 
which performs an initial review of the payment request, and 
its Grants Office, which provides the final approval to draw 
down awarded funds.
    First, payment delays were caused by the agency's varying 
interpretation of the payment requirements. The Program and 
Grants Offices differed in their understanding of the 
information needed for payment and often provided centers with 
inaccurate or conflicting information. The two offices also did 
not collaborate fully in the development of program handbooks 
used to guide WBCs through the payment process and introduced 
new requirements that were not communicated to the centers.
    We believe the Program and Grants Offices should enter into 
a formal agreement on the proper interpretation of the payment 
requirements and the process for updating them and 
communicating changes to WBCs. Alternatively, SBA should 
consider placing grant specialists within the Program Office or 
outsourcing the grants payment function.
    Secondly, the ability of either office to reject payment 
requests resulted in the denial of payment before both offices 
had completed their reviews. For example, payment requests were 
rejected by the Program Office and returned to the WBC only to 
be rejected a second time by the Grants Office upon 
resubmission. These rejections caused a cascading delay in the 
approval of subsequent requests, as past payments had to be 
disbursed before new ones could be approved.
    We recommend that both offices complete their reviews 
before rejecting a payment to reduce the constant shuffling of 
paperwork between their offices, as well as between the agency 
and the WBCs.
    A third cause for delays related to payment requests being 
returned and resubmitted through the mail when corrections were 
needed. SBA also denied payment no matter how small the error. 
For example, the Grants Office rejected a request over a $30 
expense that was charged to the wrong line item. Automating the 
application process would expedite the filing of requests and 
prevent them from becoming lost in the mail. Automated checks 
could also be performed to ensure that the applications were 
complete and free of mathematical errors before submission.
    Finally, SBA lacked an effective tracking mechanism to 
identify when a payment request was received, where it was in 
the process, and whether the request was processed timely. Each 
office reviewing the payment request maintains separate logs 
which prevented tracking of the requests through the full 
review and approval cycle. A centralized payment tracking 
system would improve SBA's ability to manage the timeliness of 
its reviews and respond to center inquiries.
    While not the focus of our review, we also would like to 
share a few observations about opportunities we saw to 
streamline the grant award process. We believe the grant 
opportunity can be announced earlier in the year. SBA generally 
delays posting of the announcement until after it receives its 
appropriations--when it knows how much funding will be 
available and the percentage to be apportioned to 
sustainability grants. However, the announcement is largely 
boilerplate and the funding levels and formulas are not 
required information to post the grant opportunity.
    Next, organizations responsible for approving the grant 
announcement should conduct their reviews concurrently. Before 
SBA can announce the grant opportunity, the Program and Grants 
Offices, as well as counsel must review the appropriations 
language and announcement to ensure that any changes in 
requirements are identified and accurately reflected in the 
announcement. These reviews generally take up to 3 to 4 months, 
as one office has to complete its review before the next 
office's review can begin.
    Lastly, SBA should evaluate proposals involving option year 
funding earlier in the year. We noted that SBA places all 
returning grantees on the same evaluation schedule as new 
entrants, even though they do not compete for funding. Because 
SBA only needs to verify that the WBC is performing in 
accordance with its pre-approved plan, it can evaluate its 
performance earlier in the year so that once the center 
provides an acceptable budget and appropriations are received, 
the grantees can request payment.
    Mr. Chairman, this concludes my statement and I would be 
happy to answer any questions that you have.
    [The prepared statement of Ms. Ritt follows:]

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    Chairman Kerry. Thank you very much, Ms. Ritt. We 
appreciate it.
    Administrator Prakash.

    STATEMENT OF ANOOP PRAKASH, ASSOCIATE ADMINISTRATOR FOR 
       ENTREPRENEURIAL DEVELOPMENT, U.S. SMALL BUSINESS 
                 ADMINISTRATION, WASHINGTON, DC

    Mr. Prakash. Chairman Kerry, Ranking Member Snowe, and 
Members of the Committee, thank you for the opportunity to be 
here with you today to speak about SBA's programs in women's 
entrepreneur and small business. I am Anoop Prakash. I am the 
Associate Administrator for the Office of Entrepreneurial 
Development, and I have been in the office since May of 2007.
    I am very proud to be supporting the dynamic social 
entrepreneurs that lead the network of Women's Business 
Centers. Today, the centers account for 10 percent of the total 
clients served by my office's programs, and in total, they 
receive 11 percent of the entrepreneurial development grant 
funds.
    These centers do differentiate themselves, as my colleague 
here on the panel from GAO has said, by going beyond the task 
of small business development counseling and also creating a 
community of mutually-supporting women entrepreneurs, 
counselors, and mentors in their communities. I have had the 
privilege and opportunity to meet with Women's Business Center 
directors and counselors and several Women's Business Center 
owners to understand and speak about women's entrepreneurship 
and the state of our programs today. While the majority of my 
discussions have been overwhelmingly positive, I am keenly 
aware of the management challenges that have resulted in grant 
disbursement backlogs, delays, and unnecessary challenges for 
the recipients. Some of these delays have also periodically 
placed the Women's Business Centers in financially difficult 
circumstances.
    My spoken remarks today will focus on the management 
challenges associated with the program, and second, I will 
speak specifically to our plan to implement the legislation 
regarding graduated Women's Business Centers.
    As you know, over the course of the program's life, the 
number of Women's Business Centers has grown steadily, starting 
with 13 centers in 1989 and 96 centers receiving funds in 
fiscal year 2007. An additional 26 centers have previously 
graduated from the program and will now be able to apply for 
funds in fiscal year 2008.
    While the size of the network has grown, the SBA resources 
assigned to manage and provide service to those centers has 
declined and the result has been a program that has outgrown 
the manual paper-based procedures and policies currently used 
by the agency to administer the program.
    In early fiscal year 2007, in response to Women's Business 
Center concerns, the agency did begin to examine its processes. 
It did identify bottlenecks and took some steps to fix and 
rectify some of the delays in the payment process. These 
changes did result in more efficient processing of pay 
requests. However, there are still considerable improvements we 
can make to better serve our grantees.
    My office has spent a great amount of time understanding 
the customer service, the management and performance issues 
facing the Women's Business Center Program as it continues to 
grow. As recently as last week, we hosted a focus group meeting 
with senior leaders of 10 Women's Business Centers and a 
representative from the Association of Women's Business Centers 
to understand what is working and what is not, and we did come 
away with a rich set of concerns and recommendations to inform 
our way forward.
    We have also studied best practices and Centers of 
Excellence across the Federal Government and how other agencies 
manage similar grant disbursement programs more effectively, 
and we have received briefings and cost estimates as to how we 
might move to something more streamlined.
    And lastly, we have worked closely with the Inspector 
General's Office, and we fully embrace the IG's report and 
recommendations. These will further clarify some of the issues 
and inform our efforts by providing us a series of 
recommendations which will greatly improve the process for all.
    It is clear to all involved that the program, policies, and 
procedures, as currently administered by the SBA, require a 
focused reengineering effort to automate the exchange of forms 
and information, to streamline the number of reviews, and 
reduce the touch-points within the agency that has resulted in 
some of these delays. We have begun this effort and are 
committed to completing the reengineering process in time to 
effect and enhance the performance of the program in the new 
fiscal year.
    I would now like to address the Committee regarding our 
plans to implement the legislation that was included in the 
U.S. Troops Readiness, Veterans' Care, Katrina Recovery, and 
Iraq Accountability Appropriations Act of 2007. First, I would 
like to be very clear that the agency has not purposefully 
stalled in implementing the legislation. From our General 
Counsel's interpretation, the determination was made that we 
could not implement the new legislation in fiscal year 2007. 
The legislation repealed the Sustainability Program effective 
October 1 of 2007, and by our General Counsel's reading, we 
could not implement Section M until Section L had been 
repealed.
    I would like to acknowledge that the Committee's most 
recent letter to the agency, which we received yesterday, 
clarified the intent of the legislation's provisions regarding 
graduating center priority, and we concur with your continued 
support of the performance-based nature of the program going 
forward. I have full faith we can resolve any remaining issues 
requiring clarification in a manner satisfactory to all.
    Now, I also want to be clear that our intent is to 
implement this legislation immediately and continue to ensure 
the funding is an effective and reliable mechanism for the most 
deserving centers across the country. I wanted to also take 
this opportunity to walk through what I think is a very 
achievable timeline for the agency to do so, and this timeline 
is very much informed by the Inspector General's 
recommendations to move the grant process earlier in the fiscal 
year.
    First, we would issue program announcements for both the 
new and the renewal grants within the first 60 days of fiscal 
year 2008.
    Second, we would publish the program announcements for 30 
days to allow for sufficient time for Women's Business Centers 
to react to the requirements, ask questions, and prepare their 
applications. We have found that anything less than 30 days 
does not provide Women's Business Centers an appropriate 
opportunity to respond to the program announcement.
    Once the applications are received, we will complete the 
competitive selection of all new and all renewal grants inside 
of 30 additional days, which includes the 1- to 2-week time lag 
that we have to undergo as we receive all grant packages from 
grants.gov. Thus, we are hopeful that in 120 days, we will be 
prepared to issue the notice of award again, as soon as 
practicable, once we receive confirmation of appropriations. So 
inside of 120 days, again, the SBA will have completed all of 
its work to get these grants ready for notice of award.
    The SBA is committed to furthering our positive impact on 
women and business across our lending and Government 
contracting and technical assistance programs. Again, we have 
begun the process towards greater transparency and 
accountability but there is still more work to be done to 
improve our customer service, especially with regards to the 
grant disbursements to the Women's Business Centers.
    We welcome the findings of the Inspector General to inform 
our way forward and I look forward to working with my 
colleagues at the agency and the Committee in the coming months 
to implement both the IG's recommendations and the legislation 
with urgency.
    Chairman Kerry, thank you. This concludes my testimony.
    [The prepared statement of Mr. Prakash follows:]

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    Chairman Kerry. Thank you, Mr. Prakash. We appreciate it.
    With respect to the 120 days, when does that begin to toll?
    Mr. Prakash. That begins today, sir.
    Chairman Kerry. Only today? So it is 120 days from today?
    Mr. Prakash. Correct.
    Chairman Kerry. Why would it not have been previous to 
today? I don't quite understand that. Why would the bell toll 
starting today?
    Mr. Prakash. Senator, as legislation was passed, we did 
receive notice of the legislation passing about 2 weeks after 
the bill had been signed. We looked at it, and we did get the 
General Counsel's response, again, that we could not implement 
the program until after October 1 due to the section that 
talked about repealing Section L on October 1 and then moving 
forward with Section M. Again, the legislation was----
    Chairman Kerry. I know there was a disagreement, and there 
now isn't a disagreement, but I suppose the question--I don't 
want to waste a lot of time going back into what the reasoning 
was--but it is pretty hard to understand why, based on what we 
were trying to do and on the intent which you all agree with 
now, there wouldn't have been a simple interpretation that we 
were looking for and the paragraph that we passed in order to 
change the process was, in fact, the operative paragraph.
    Mr. Prakash. Senator, I think the intent was clarified for 
us with the exchange of communications between the Committee 
and our agency. Again, we received that clarification, and we 
are ready to move forward.
    Chairman Kerry. The IG report recommends two very easy 
fixes. One, putting training in handbook and program changes 
online, which it seems to me is sort of a no-brainer in today's 
world, and allowing Women's Business Centers to provide missing 
or incomplete sections of their application without 
resubmitting an entirely new application. Are you prepared to 
implement both of those?
    Mr. Prakash. Yes, I am, Senator.
    Chairman Kerry. Is there any reason why the agency needed 
to be prodded from outside to do that?
    Mr. Prakash. Senator, I can only speak to what I believe is 
a long history of, again, the program ramping from 13 centers 
to 96 and the processes and policies not ramping with it. So I 
don't believe there is any reason we can't fix it, and again, 
we embrace this Committee's efforts to engage the IG to 
highlight some of these areas that just were not being 
necessarily watched.
    Chairman Kerry. You know, one of the things that I think 
bothers Senator Snowe and me--and we have had reversing roles 
here for a period of time--there just seems to be a constant 
process where you all come up here and you get prodded by the 
Committee and you sit there and you say, ``Boy, that sounds 
good. Yes, we are going to do that going forward,'' et cetera, 
and we are sort of always having to ask you to do something or 
push you to do something or prod you to do something. Of 
course, in these hearings, it always makes a lot of sense, and 
then we go back to this struggle.
    I think there is a frustration level with this, that 
Members of the Committee on both sides feel. Where is the 
proactive sort of visionary leadership where you come up here 
and tell us, here is what we are doing to make life easier for 
these folks?
    Mr. Prakash. Senator, I certainly can't speak for my 
colleagues who have been here before. I have been in the office 
since May and immediately----
    Chairman Kerry. That is the other thing that happens. We 
keep getting people sent up here who have had about a month at 
the agency.
    Mr. Prakash. Senator, I can tell you that the 
Administrator, having finished his first year, in my 
estimation, has provided visionary leadership and given me full 
autonomy to fix this issue and streamline other programs that 
are also under my purview, including the Small Business 
Development Centers and SCORE.
    Chairman Kerry. What is going to happen with respect to the 
complaint from many of the folks that they get sent back and 
forth between the offices in SBA? The IG report specifically 
mentions communication and coordination problems with the 
Women's Business Ownership and the Grants Management Office. 
Are you undertaking steps to guarantee that that coordination 
is present where it hasn't been?
    Mr. Prakash. Yes, Senator. I can tell you that right now, 
there are just far too many touch points within the agency that 
are creating the opportunity for paperwork to be lost, for 
misinterpretation of requests, for a different response to 
different Women's Business Centers. We are going to standardize 
that and limit the touch points. I am already exploring ways 
that we can look at some of the Centers of Excellence around 
Government. We have spoken to several that manage much larger 
grant programs than even the Women's Business Centers and we 
feel that would be a great option. It will allow transparency. 
It will allow Women's Business Centers to work with an 
automated system, have full transparency as to where their case 
is or where their application is, and----
    Chairman Kerry. Well, that would be terrific. I mean, the 
sooner you can get something like that, the happier a lot of 
people would be.
    What about the changing requirements that the report also 
talks about before the centers get grants, these requirements 
constantly changing and then there is a delay as a consequence?
    Mr. Prakash. I think the requirements changing is a 
byproduct of the fact that there are two offices within the 
agency today working with the Women's Business Centers. Again, 
the IG report identified the Office of Women's Business 
Ownership, which sits in the Office of Entrepreneurial 
Development, which is my office, and then there is the Division 
of Procurement and Grants Management. The two offices have not 
communicated well. They have, therefore, had these 
communications with the Women's Business Centers which at times 
have been inconsistent, depending on which office was leading 
those communications.
    Chairman Kerry. Is that clarified now?
    Mr. Prakash. We are keenly aware of it and have been keenly 
aware of it. I think the IG report, frankly, helps us get our 
arms around it and address it immediately, whereas before, some 
of these issues are longtime management, people, and cultural 
issues that are hard to address.
    Chairman Kerry. Well, do you believe the money will get to 
the centers faster now?
    Mr. Prakash. Based on what we have reviewed as far as other 
programs that are out there in the Federal Government, they are 
telling us that in their automated systems, they range anywhere 
from 3 to 15 days.
    Chairman Kerry. With respect to the procurement program, it 
is supposed to be in place less than 2 weeks from today. Will 
it be?
    Mr. Prakash. Senator, what the SBA has done to move that 
forward, we have submitted the draft final version of the rule 
to OMB. That was submitted on April 23. It is currently in the 
interagency process that is managed by OMB. We are hopeful we 
will get a response soon, but as you know, it is a complex 
rule. It is not a typical rule. And they are commenting 
basically on--the 24 agencies that effectively have procurement 
programs have to all make comments on the impact of a Women's 
Procurement Program.
    Chairman Kerry. In other words, it won't be in place in 2 
weeks?
    Mr. Prakash. I couldn't say. I can't speak for OMB----
    Chairman Kerry. Well, if you don't have a rule, if you 
don't even have a rule yet, you haven't got any implementation 
orders or anything.
    Mr. Prakash. The draft rule is written and has been 
submitted. Again, it is----
    Chairman Kerry. Well, this is April, you said, right?
    Mr. Prakash. Correct, Senator.
    Chairman Kerry. So what happened in May, June, July, 
August?
    Mr. Prakash. It has been reviewed by 24 different agencies, 
Senator. I can't speak for the pace at which those agencies can 
review.
    Chairman Kerry. Well, do deadlines mean anything?
    Mr. Prakash. I think they do, sir.
    Chairman Kerry. What do they mean?
    Mr. Prakash. I think the deadline, the intent, and I again 
can't speak for my colleague, was to make sure that we were 
doing everything as an agency possible to move this forward. 
What we had to do and follow the process of rulemaking is to 
submit our rule to OMB. Again, we cannot control process and 
progress, although we are doing everything we can to track it 
and move it along.
    Chairman Kerry. Well, I am not sure what--I am going to 
talk to Senator Snowe and try to figure out with her what we 
think we ought to do here. Because I have got to tell you, I 
mean, she said 6 years. I said 7. I guess it depends on when we 
begin to count. But call it 6. Call it 5. Call it 4. It is just 
disgraceful. I know you weren't there then, but it is 
disgraceful. This sort of a complete indifference to the law, 
to a sort of pride in job and in accomplishment. I don't know 
what it is. It is either an indifference, or an arrogance. It 
is one or the other. But either way, it is pretty unacceptable, 
when you say April, whether there were 5 or 6 years prior to 
April, where this thing has been sitting out there.
    I think this Committee really ought to think about what we 
can and ought to do to have the Administrator up here and have 
whoever is responsible for this up here to talk about it, if it 
can't get implemented. It has got to get implemented. You don't 
want to miss another $6 billion of procurement opportunity. I 
don't know. We have got to figure out what we are going to do, 
and we will figure it out.
    Are we going to anticipate that this SBA implementation is 
going to actually address all of the disparities that have been 
present in the statistics we have seen in this?
    Mr. Prakash. Senator, I believe you are referring to the 
Rand study?
    Chairman Kerry. Yes.
    Mr. Prakash. I have not personally read the Rand report. I 
have been briefed on its findings.
    Chairman Kerry. Do you know which set of statistics are 
being used to create the program?
    Mr. Prakash. At this time, there is an active dialogue on 
that. What has been placed for comment is the opportunity for 
agencies to weigh in on the effect of either rule on moving 
forward with a program.
    Chairman Kerry. Senator Snowe.
    Senator Snowe. Thank you, Mr. Chairman.
    Well, as you can detect, it is a deep-seated frustrating 
with the way the SBA has consistently approached the Women's 
Business Centers and the Women's Procurement Programs and Set-
Aside Program. Obviously, it does display a complacency or a 
disregard for the value of those programs and women 
entrepreneurs.
    There was a recent training conference here in Washington 
with the SBA and the Association of Women's Business Centers 
where there was a lot of conversation about all of this. I 
think those conversations are illustrative of the failure of 
the SBA to implement the 3-year renewal program. I mean, it 
seemed to me that was pretty obvious how the new grants should 
be implemented and it is just hard to understand as to why, 
exactly, the SBA refused to do it. It was clear under the law 
that the SBA could have moved forward.
    There is a general feeling that there is a disconnect 
between SBA and the Women's Business Centers in terms of 
attitude, philosophy, and the culture at SBA. This disconnect 
is reflected in the way the agency treats this program. I can 
understand why there would be this widespread sentiment among 
these participants, in terms of the attitude of the SBA towards 
the Women's Business Centers Program, because there have been 
repeated setbacks to the program, certainly illustrated by the 
contracting set-aside. It is just almost hard to imagine you 
don't implement something for 6\1/2\ years. So here we are.
    So you can understand why we feel the way we do today. I 
guess I would like to just get a clearer picture this morning 
in terms of exactly what is going to occur, step by step, one, 
with the renewal program. It wasn't necessary to have the 
announcement of grants before they could apply. But I would 
like to know, step by step, the implementation plan for the 
renewal grants and what we can expect by when. So can you give 
us, first, an understanding when the steps will be implemented 
exactly?
    Mr. Prakash. Yes, Senator. Absolutely.
    Senator Snowe. And two, what are you doing now to prepare 
for the new program? When do you plan to publish the 
announcement of new sustainability grants? Is that going to be 
soon?
    Mr. Prakash. The current winners, or this year's grant 
recipients?
    Senator Snowe. The new ones.
    Mr. Prakash. The new ones. I will speak to that.
    Senator Snowe. OK. And how soon will these awards be made 
after the enactment of the appropriations for 2008, because 
obviously there is considerable lag time. So can you give us a 
complete picture in terms of the implementation of these 
renewal grants, and also speak to the overall attitude, because 
you can understand it is a compounding effect after a while.
    Mr. Prakash. Absolutely.
    Senator Snowe. Will you also speak to Mr. Shear's issue 
that there a difference in philosophy, between SBDCs, SCORE and 
Women's Business Centers in terms of clients served? There are 
obviously some issues here that need to be resolved.
    Mr. Prakash. Great. Thank you, Senator. I will speak first 
to your earlier comment about the training conference. I 
attended the Women's Business Ownership and AWBC conferences as 
we were co-hosting, and I did ask Ann Marie Almeida, who is 
executive director of AWBC, to convene a focus group of center 
directors so I could speak to them personally with our Office 
of Women's Business Ownership management outside the room and 
to get some real candid and curt feedback, and I did. I really 
appreciated some of the experiences that they have had. I was, 
frankly, embarrassed by some of them, and I was very happy to 
also hear from them some real concrete solutions and ideas that 
they had that would enrich not only their ability to do their 
work, but also allow us to maintain some semblance of due 
diligence that is required by the legislation. So I did hear 
them, and it is from that discussion and from the IG's report 
that we have a number of recommendations.
    One of the historic trends in this program has--because the 
amount of sustainability funding and appropriations prior to 
the new legislation varied from year to year, there was an 
admittedly conservative approach by the agency to wait for 
appropriations so they knew how much money was available. I 
believe we now hear from the IG, and I have looked at it 
closely, we believe we can get those program announcements out 
much more quickly, and again, we will just have to wait for 
notice of award upon appropriations.
    As I mentioned previously, the first step in implementing 
this is to issue the new program announcements. We are underway 
in looking at the previous program announcement. As you read in 
the IG testimony and from the GAO testimony, the previous 
program announcement itself needs to be revised significantly, 
not only to reflect the new legislation, but also just to, I 
believe, revamp and retune the requirements that we put on the 
applicants for the grants.
    I am proposing that that will take us 60 days. It takes us 
60 days, one, because we internally have to rewrite these 
program announcements. We have to review them. We would like to 
get comment from the AWBCs to make sure that they can have a 
chance to look at it and give us some informed comment before 
we go public with something that they are not supportive of. 
And we also have to get the internal clearances from the Office 
of General Counsel to make sure we are not asking for something 
that we cannot legally ask for in an application. So that is a 
60-day process that we are committed to follow, and again, we 
are talking in the next 60 days, not after the next fiscal 
year.
    We will then publish those program announcements as per the 
previous plan to publish. Program announcements have in the 
past--historically been published for 30 days and we have found 
that that is the optimal amount of time for Women's Business 
Centers to receive the announcement, react to it, consider the 
requirements, assemble them, ask any clarifying questions, and 
then submit those applications. In the past, we have actually 
gotten feedback that 30 days wasn't enough, that we may want to 
keep it open for longer. However, we think, in most cases, 30 
days has been a manageable amount of time for most Women's 
Business Centers to get their package together in time.
    Once we have published that program announcement, 30 days 
will pass. We will have received new grant and sustainability 
or, excuse me, renewal grant applications. We will then have to 
review all applications received, which at this point we do 
receive a significant amount of applications. This year we 
received 60 applications for the new center grant opportunity. 
So that is a significant selection process. Again, I want to 
bring that back down to 30 days, lock people in a room, have 
them read every application, and score it right there on the 
spot, and make sure we get those done and turned around in a 
timely manner.
    And that is the 120-day process in which we will be ready 
once appropriations hits, as soon as practicable after that 
point from a legal perspective to issue the notice of award.
    Senator Snowe. Mr. Shear or Ms. Ritt, can you comment on 
what Mr. Prakash has just mentioned, anything based on your 
review that you think is consistent or inconsistent with what 
you have identified as problems?
    Mr. Shear. Can I start with----
    Senator Snowe. Yes.
    Mr. Shear [continuing]. What I will call the coordination 
issue among the three programs, if I could go through each 
point there, the oversight issue and then implementing the 
renewable grants? Could I go in that order?
    Senator Snowe. Yes.
    Mr. Shear. OK. Thank you. On the coordination issue, 
something that shows up over and over again is the failure to 
use technology and to come up with clear, formal, structured 
guidance that in this case WBCs could use to help facilitate 
their coordination.
    We observed some very, what could be called, best practices 
or promising practices used by WBCs in coordinating in their 
own areas, and we also had some who just said, we are 
challenged by this and we are looking for guidance from SBA. 
One of the promising practices is in our written testimony, an 
example from Wisconsin, but there are many more. And just at 
the real simple level, use of a Web application and trying to 
use technology to create some structure could provide some 
guidance. I think that this is what the Women's Business 
Centers are looking for, and it is what is really called upon 
if SBA has these requirements, and they are statutory 
requirements. So some of that could start at a very simple 
level, but it involves use of technology.
    As far as the oversight issue, it is a question of 
resources and expertise. I know it is just meant as kind of an 
expression, we are going to lock people in a room to look at 
applications, but the question is of having a structure in 
place and part of that can involve technology. Part of it can 
just be, let us come up with a plan on how we are going to do 
this and coordinate these offices. Over the course of time that 
we have done our review on the reimbursement question which we 
have deferred to the IG, there was basically one change the 
District Office Technical Representatives used to be involved 
with reimbursement. So that has changed in the last year. But 
it is a very tiny move.
    So I would hope that this proactive approach he is talking 
about for looking at the oversight issue could be improved. 
Technology could be improved, that capacity, training needed 
for the DOTRs, a rationalization of how much they can have on 
their plate at any one time. We would hope that those were 
things that they could look at proactively.
    On the funding issue, I am glad to hear for the first time 
that they are consulting with other agencies as far as how they 
could get the funds out in the absence of an appropriation. 
Basically, based on our knowledge of programs--and we do look 
across the Government--our discussions with our appropriations 
lawyers, agencies do things all the time where they are going 
through a grant application process with the idea that they can 
go through the application process with the understanding that 
they have to wait for the appropriation to actually expend the 
funds. We would hope that they would be able to learn some 
lessons from what other agencies do in this area because 
basically you have a number of policy choices here, and if the 
policy choice is what it seems to be, there are actions that 
can be taken.
    Senator Snowe. Well, you raise a very important point about 
structure, and specificity, and the need for a definite program 
in place to address these issues. Rather than just sort of 
casual ad hoc management, Mr. Prakash, I think that Mr. Shear 
makes a very good point that there needs to be some certainty 
and predictability to the type of structure and program in 
place. In order to realize results and deadlines, and whatever 
else is necessary requires certainty. That doesn't sound like 
that is what is going to happen. It is just going to be, 
hopefully it is going to work, but maybe not. You have got to 
hold people to deadlines. I appreciate it. Thank you.
    Chairman Kerry. Thank you, Senator Snowe.
    Senator Enzi.
    Senator Enzi. Thank you, Mr. Chairman. Ms. Ritt, your 
written testimony reveals some troubling statistics regarding 
the ability of SBA to make payments in a timely manner. Could 
you give us some specificity on how this problem has affected 
the operation of the centers that you investigated and maybe 
give us some idea of whether it is possible for SBA to announce 
grant opportunities earlier in the fiscal year and how that 
would help?
    Ms. Ritt. Sure, Senator. Some of the things that we heard 
from the Women's Business Centers that we surveyed was that the 
payment delays were so egregious in some instances that they 
had to turn to bank lines of credit or to their parent 
organizations for funding. In some cases, they had to lay off 
staff, curtail operations--that sort of thing.
    I think that there are many opportunities to streamline the 
process. Like we said in the report, first of all, doing 
concurrent reviews of each year's appropriation and the grant 
announcement, those reviews could probably be completed within 
a month.
    And then I think they also need to decouple the evaluation 
of existing Women's Business Centers who are returning every 
year for the remaining years on their grant from the evaluation 
process that they use for new entrants into the program. The 
returning centers do not need to compete for funding. All that 
is required is an evaluation of their performance, and some of 
that information comes at year end because they have to 
determine the impact that the centers have had by surveying 
their customers, and then they have to approve the budget that 
the centers submit. So for the majority of these centers, I 
would see that they could probably get an award within--or get 
the payments within 3 months. The new centers, however, would 
have to submit a brand new proposal and go through a more 
rigorous evaluation process.
    Senator Enzi. I am glad to see Mr. Prakash taking some 
notes there.
    Mr. Shear, your study found a significant number of centers 
expressed a concern about communication with the SBA. Did 
centers indicate whether these difficulties extended to the 
regional offices, and does feedback differ between the centers 
that have graduated, versus those that have recently been 
established?
    Mr. Shear. The concerns tend to be that there are these 
monthly conference calls and the centers don't find them to be 
really an effective means to get feedback on their performance 
and other matters. I will go back to the idea of having 
something structured and formal in place because certain 
operations can greatly lead to improvements in such 
interaction.
    There are certainly concerns about District Office 
Technical Representatives that are stretched too thin and may 
not have the appropriate expertise, things that I would say are 
related to the reimbursement issue that the IG's Office has 
taken the lead on.
    As far as whether new, versus those who have graduated, 
where most of our interaction has been with those that are 
still in the new and new sustainable grants, as far as 
differences there, I really can't say that we have any finding 
as far as which ones expressed more concern about the lack of 
communication and structure.
    Senator Enzi. Thank you. My time has almost expired. I 
yield back.
    Chairman Kerry. Thank you, Senator Enzi. I appreciate it.
    Senator Thune.
    Senator Thune. Thank you, Mr. Chairman and Senator Snowe, 
for holding the hearing today, and I appreciate the testimony 
of our witnesses and thank the panels for joining us today, as 
well. I think these are effective forums for us as Members of 
Congress to better understand the critical role that women play 
in our Nation's economy. It also provides us with an 
opportunity to ensure that the programs that we have created 
are successful, that they help those who need it the most and 
that they are not overly burdensome.
    The good news is the availability of opportunities to women 
businesses has been improving in recent years. Currently in my 
State of South Dakota, just over 38 percent of all privately-
held firms are at least 50 percent women-owned. These women-
owned firms generate $4.6 billion in revenue annually and 
employ about 37,000 people.
    While those statistics are impressive, more work still 
needs to be done and this is especially true in South Dakota 
and other rural States where we have smaller populations and 
larger distances that sometimes make it difficult for 
individuals to transform a good idea into a successful 
business.
    So I again want to thank our witnesses for being here 
today, for being willing to testify before the Committee. Your 
input along with that of our constituents gives us a good 
information base on which to draw when we make important policy 
decisions, and those decisions hopefully will continue to help 
strengthen America's women-owned small businesses.
    I just have a couple of questions I would like to pose to 
this panel. First, to Mr. Prakash, the IG report spends a great 
deal of time discussing the divide that exists between the 
Program and Grant Offices, and I guess my question is, do other 
programs have this dual processing, and if so, do they run into 
similar problems?
    Mr. Prakash. Senator, thank you for the question. I think 
all the grant programs and contracting programs go through the 
division of programs and grants management. I will say that it 
varies throughout the agency. I think my fellow panelist from 
the GAO has spoken to leveraging technology, leveraging 
different structures to manage a grant and contracting program, 
and depending on how manual or paper-based the process is, how 
many hand-offs have to go down to grants management. I think 
you will find that it varies, but most cases where there is a 
double touch-point, there are issues and challenges in 
coordination and communication.
    Senator Thune. Ms. Ritt and Mr. Shear, you both discuss how 
communication problems between the SBA and the WBC, Women's 
Business Centers, are a continuing problem. In conducting the 
research, did either of you learn in what way WBCs would prefer 
to have this communication improve?
    Mr. Shear. Yes, I will go first. It is clear to us what the 
WBCs find less useful, which is relying on the monthly 
conference calls which they don't think is that good of a forum 
for all types of communications, they are asking for structure 
and guidance and it is not clear that they are getting 
consistent guidance and coordination, those type of issues. It 
is from that--this is still ongoing work for us, but I would 
say in terms of the recommendations that we plan to make, we 
expect to make in our final report when it is issued will be 
what we think are ways, based on the input we have received 
from WBCs and others, that we think could help this process. 
But more of what we have received is what could be called 
challenges associated with the current processes.
    Senator Thune. I am sorry. Ms. Ritt, did you want to 
respond?
    Ms. Ritt. Yes. I just wanted to say that we did a survey of 
the Women's Business Centers and they had many good 
suggestions. Many of them thought that automating the process 
would prevent their paperwork from getting lost in the mail 
because that was a big source of frustration, having to 
resubmit things multiple times. They thought using Web-based 
instructions and guidance would be a good way to communicate 
changes in requirements. And I think they favored the idea of 
more transparency so that when they called someone, they could 
find out the status of their request. So a tracking system that 
would let them know where it was in the process would be very 
helpful.
    Senator Thune. Mr. Shear, I am sure you have already 
answered this question, but when is your final report?
    Mr. Shear. I haven't answered it yet, actually. We plan to 
issue it by the middle of November--there will be a period of 
time where we will be providing a draft report to SBA for 
comment, and that is an important part of our process, to get 
their comments and incorporate those comments into our final 
report. Then we plan to issue it in the middle of November.
    Senator Thune. We will look forward to seeing that final 
report when it is ready.
    Mr. Shear. Thank you.
    Senator Thune. Thank you, Mr. Chairman.
    Chairman Kerry. Thank you, Senator Thune.
    Mr. Prakash, 120 days is January 18. I am inviting you back 
today, and I hope you will accept today to be back here before 
the end of January to review with us where we are with respect 
to these issues.
    Mr. Prakash. Senator, I would be happy to.
    Chairman Kerry. And I am also going to be issuing an 
invitation to the Administrator to be here at that time to also 
review the other issues the Committee has raised in the 
oversight hearings to date with respect to emergency, the 
disaster assistance lending, the procurement target goals 
overall, and other issues where we have had almost a similar 
kind of lapse, if you will, or gap between what the law is and 
what the SBA has done.
    All of us on the Committee recognize that Mr. Preston is 
working hard to achieve these things. He came into a situation 
that was difficult. We understand that. But that will be well 
more than a year that he will then have had the helm of the 
agency, and I think it is important for the entire small 
business community to know where we stand with respect to all 
of the issues that have been raised in the context of oversight 
this year.
    So I just want to serve that notice to the agency, and I 
think it is fair to say that the Committee would expect the 
budget requests for next year's budget to reflect what you have 
talked about in terms of shortfalls and inability to do the 
job. We don't want to come in here and be told, you know, the 
budget is short, or we are not able to do it. It is time for 
this entity to live up to the expectation that the law requires 
and that the community is waiting for.
    Senator Snowe, while you were gone, I said 120 days is 
January 18 and before the end of January, we are going to 
revisit these and the other issues that the Committee has, and 
I think that is fair notice to you and the Administrator. I 
think it is a fair expectation.
    Mr. Prakash. We welcome the opportunity to return and tell 
you how we have improved the program.
    Chairman Kerry. Good. On that note, we ask for the second 
panel, please. Thank you very, very much, each of you. We 
appreciate it.
    Thank you all for coming. Thanks for your patience. We 
appreciate it.
    Ms. Goldsmith, we will begin with you and we will just run 
right down the table. Thank you all.

STATEMENT OF WENDI GOLDSMITH, PRESIDENT, BIOENGINEERING GROUP, 
                           SALEM, MA

    Ms. Goldsmith. Good morning. Thank you all for inviting me. 
I am really honored to provide some testimony that can 
hopefully influence and help advance the Women's Procurement 
Program in particular.
    I have 15 years of experience as a business owner and 
Federal contractor, and I can speak from that experience and 
hopefully share some----
    Chairman Kerry. Could you pull the microphone a little 
closer, Ms. Goldsmith----
    Ms. Goldsmith. Sure.
    Chairman Kerry [continuing]. And Mr. Prakash, I appreciate 
your staying to listen.
    Ms. Goldsmith. My company began working on small-scale 
projects tied to wetland restoration and river and coastal 
flood protection providing certain research and development and 
technical training to the U.S. Army Corps of Engineers through 
their Waterways Experiment Station. We work for other clients, 
too. And over the years, due to their technology transfer 
agency function at the Waterways Experiment Station, we were 
introduced to a number of other Corps of Engineers districts.
    We began small, performing small engineering projects, 
mostly on a pilot scale, but over the years, we were afforded 
incremental opportunity to take on larger responsibilities. 
Within the last year, we formed a joined venture with ARCADIS, 
the Dutch-owned firm regarded globally for their expertise in 
sea defense engineering, and our joint venture has received 
$200 million worth of contracts to date with the U.S. Army 
Corps of Engineers focused on planning, design, and 
construction management of improved hurricane protection 
infrastructure and related coastal wetland repair in Louisiana.
    I have been told by the Corps of Engineers that our $150 
million contract is the single largest Federal civil 
engineering contract ever awarded, so clearly this is a success 
story for women-led business enterprise.
    My firm is essentially an engineering company, but we are 
not conventional civil engineers. We are an interactive team of 
ecologists, earth scientists, landscape architects, and 
engineers from different disciplines. We don't just plan, 
design, and oversee the execution of various large land 
development and public infrastructure projects. We help involve 
the community in the decisionmaking process and we all work 
together to achieve environmentally beneficial, sustainable 
outcomes. We see each project budget as an opportunity to leave 
the human and ecological communities in better shape, and we 
pursue the triple bottom line of economic, social, and 
ecological benefits in relation to project costs. We find this 
approach avoids many problems, wins support from many corners, 
and most of all, leaves the project team really proud of our 
results.
    It is extremely unusual for an engineering firm to be 
founded and managed by a woman, and a non-engineer at that, and 
I believe our culture, which is unique, is in fact influenced 
by my leadership style as a woman, fostering communication and 
participation by people with differing perspectives. In short, 
I see women leadership in business as a plus.
    Regarding any constraints, I can speak best about my 
personal experience in the industry in which I have spent my 
career, and believe it or not, the engineering and construction 
world is still heavily dominated by men. Although women have 
become increasingly involved, the number of women in 
decisionmaking roles remains quite small, and in the first 
decade of my career, I estimate that fewer than 2 percent of 
decisionmakers who were involved in selecting, approving, or 
managing contracts awarded to my firm were women, and typically 
those women were, in fact, relatively new to their roles and 
wielding less influence than their male counterparts.
    This is important because as an engineering consultant, 
selection is based not on price, but on assessment of 
qualifications, and most importantly, on relationships and past 
track record. It is virtually impossible to win work through a 
competitive process without a level of comfort that comes 
through personal relationships, be they long-term 
relationships--going to school together, working together or 
what have you, or the rapidly-formed relationships that can be 
developed in a sales and marketing process. In my early career, 
I often faced situations where I was selling to a group of 
people who did not look like me, and it was an uphill process.
    One way that small business typically gained experience, 
especially in Government contracting, is through teaming with 
large businesses and other businesses, and of course, there are 
requirements for large businesses to share work appropriately 
through subcontracting plans. However, women still face 
disproportionate hurdles in forming teaming relationships with 
large firms and at times actually suffer some unfair costs 
because of how these programs are set up.
    In many cases, small firms are recruited onto teams to help 
win work as called for in contract solicitations. We appear in 
the proposals, often at great expense to the small and minority 
and women-owned businesses due to the work related to 
researching and compiling proposal materials, only to never 
actually receive work under the contract. I cringe to recount 
how many times that happened to my firm and to tally how much 
money, namely hundreds of thousands of dollars my firm 
involuntarily contributed in order to help other firms win and 
perform work, while we received none or sometimes a token 
amount.
    I can also say there were certainly cases where the 
relationships were fair and responsible and helped really build 
that track record through teaming. But the times when we were 
treated unfairly and at great cost to us were not any kind of 
exception, they were an oft repeated pattern, and I believe, in 
fact, this pattern is inadvertently caused by current small 
business subcontracting program structures.
    One key step to changing this pattern and relieving women-
owned firms of the extra burden of participating in these 
proposal efforts that yield no subcontracting fruit is to 
promote prime contracting opportunities directly for qualified 
women-owned firms through set-asides and other means.
    Additionally, the small business community and, in 
particular, women-owned firms would welcome greater enforcement 
of existing small business subcontracting rules so that our 
efforts don't fail to bear fruit.
    In my view, sole-source contracting is also a valuable tool 
to boost the position of women-owned business. I experienced 
sole-source contracting, first by virtue of being recognized 
for providing truly unique technical expertise that could only 
be accessed by the Government that way, and then later, through 
8(a) status which afforded my firm sole-source contract access.
    By gaining Government contracts through these mechanisms, I 
continued to grow and evolve my business, build relationships, 
and establish the technical track record that allowed me to, in 
turn, advance through other channels, including outside the 
Federal market.
    The 8(a) program also facilitated two mentor-protege 
relationships over the last 6 years which helped provide 
management, financial and technical support during challenging 
periods of growth for my business. Similar mechanisms, I am 
confident, would be very beneficial to other women-owned 
business.
    In addition to benefitting the business who receives sole-
source contracts, I would also like to point out what has often 
been a clear advantage for the clients who access our firm that 
way. Sole-sourcing affords the chance to openly negotiate a set 
of services, often through thoughtful collaboration between the 
user and the service provider. The conventional approach to 
contracting typically forces a separation between the 
contractor and the end user, and this approach can typically 
dampen innovation, or tailored problem solving, generally 
inviting or even enforcing that the methods used to perform the 
work will be established methods, not innovative ones.
    My firm has performed some first-of-a-kind work, some 
urgent deadline-driven project facilitation, and other high-
performance consulting and design services for agencies that 
could not have accessed the level of quality, creativity, and 
efficiency through conventional acquisition methods. For 
instance, we have led the Department of Homeland Security 
through the process of incorporating green building principles 
into their new facilities by performing an award-winning level 
of detailed design and cost estimating work, and we also found 
ourselves guiding and clarifying for our client, along the way, 
how and why the green building approach differs from 
conventional design decisionmaking, and generally helping to 
advance the green building policy within the agency through our 
outreach efforts.
    In another case, we performed the stakeholder coordination 
and due diligence process for a transfer of 62,000 acres of 
Special Conservation Land in California. This land transfer had 
been stalled in the Army BRAC process for 15 years and our 
innovative and tailored approach helped the Army Corps solve 
their thorny issue, while saving time and money to the 
Government.
    These examples illustrate how sole sourcing can benefit 
Federal interests, not only the firms receiving the contacts.
    I would like to recommend and support any measures that 
will help other qualified women business owners take their 
vision of success and their commitment to problem solving into 
the Federal marketplace with improved policies to help reduce 
the burdens they will face along the way. All entrepreneurs 
bravely face risks, and now would be a good time to clear away 
some of the special obstacles that interfere with women 
conducting business in the Federal sector. We are going to 
serve the country well, and not only by performing and keeping 
with expectations, but in many cases by exceeding and 
redefining them.
    Thank you very much.
    [The prepared statement of Ms. Goldsmith follows:]

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    Chairman Kerry. Thank you very much. Congratulations to you 
on what you have created. I will tell you, we have heard 
stories of these small entities that are used, literally used 
by larger ones to meet the qualifications and get contracts, 
and then they never see any of the work or any of the money. It 
is an issue the Committee needs to do some thinking about to 
see how we can create some accountability with respect to that.
    Ms. Almeida.

 STATEMENT OF ANN MARIE ALMEIDA, PRESIDENT AND CHIEF EXECUTIVE 
  OFFICER, ASSOCIATION OF WOMEN'S BUSINESS CENTERS, CAMDEN, ME

    Ms. Almeida. Honorable John Kerry, Chairman, the Honorable 
Senator Snowe, Ranking Member, Members of the Senate Committee 
on Small Business and Entrepreneurship, and your amazing staff 
members, greetings from Maine. My name is Ann Marie Almeida, 
and I am president and CEO of the Association of Women's 
Business Centers, and I am honored and pleased to participate 
today, both to thank the Members for their steadfast and 
continuing support for women entrepreneurship and also to raise 
some important issues for the Committee to consider with the 
SBA as we move forward.
    I also submitted written testimony, which I would like to 
be read into the record, if you might.
    Chairman Kerry. Everybody's testimony will be put into the 
record in full, and if everybody can just summarize in about 5 
minutes, it would be helpful.
    Ms. Almeida. Great. That is all I am going to do.
    I also want to thank the GAO and the IG. Their comments and 
their recommendations are spot on from the comments that I hear 
from the field. I am also interested in that January 18 update, 
so thank you for requesting that.
    The AWBC is a national nonprofit organization representing 
Women's Business Centers and the women and men we serve. We 
were founded in 1998 to support entrepreneurial development for 
women as a way to achieve self-sufficiency, create wealth, and 
expand participation in community economic development through 
training, education, technical assistance, mentoring, 
developing and financing opportunities. The vision of the AWBC 
is a world where economic justice, wealth, and well-being is 
realized through the collective leadership and power of 
successful entrepreneurial women and now men. We are the 
organizing force of Women's Business Centers and the people we 
serve. Together in this place of hope, under this dome of 
possibility and in the halls of civil engagement, we are 
invited to interrupt the status quo and provide solutions and 
visions for our fellow Americans, and I am honored and pleased 
to thank you all for your good work.
    In the wake of our recent Women's Business Centers 
Entrepreneurial Leadership and Training Conference that we had 
last week here in the District of Columbia, I bring rousing 
unanimous and heartfelt thanks from the leaders of the Women's 
Business Centers representing each of our 50 States for the 
introduction of the amendment to what became public law and 
provided permanent funding to the Women's Business Center 
Program. Our special thanks to Senators Kerry, Snowe, and 
Sununu for introducing the amendment and for working for its 
passage.
    The Women's Business Centers have a remarkable record of 
achievement over the past 19 years. This year, and in years 
past, we continue to provide counseling to over 150,000 clients 
annually, emphasizing outreach to the economically-
disadvantaged women and women of color. We are also now proud 
to report that 20 percent of our clients are men. They are 
smartening up.
    Results from the research conducted by the National Women's 
Business Council documents that the WBCs provide a staggering 
15-to-1 return of investment on Federal tax dollars in 
businesses launched, revenues generated, and jobs created. You 
can't get a better ROI anywhere, as far as I know.
    But in our dealings with the SBA, we have often been 
treated like a stepchild. With the passage of the legislation 
in May, we finally feel recognized for the hard work that WSBCs 
have accomplished over the past 19 years and we are grateful 
this program is now made permanent. It empowers our 
conversations with you and the SBA.
    On the heels of this hope, we would like to address three 
specific issues that need your attention and certainly have our 
concern. One is the unequal and non-transparent level of 
funding for individual WBCs. Two is the lack of communication 
and uneven application of performance standards in evaluations. 
And three, significant delays in grant disbursements for WBCs.
    One, the permanent funding allocation should be consistent 
and transparent. We constantly hear that the amount of grants 
awarded not only varies significantly across centers, but vary 
year to year within each center. We realize that part of this 
variance may be the appropriations level, but appropriations 
have been nearly flat for the past several years. The SBA has 
put in a tiering system for peer center funding, but the 
formula for tiering is not clear. The SBA is neither 
communicating the amounts of upcoming disbursements to centers 
nor the reasons why the amounts vary from each year and across 
centers. More clarity and transparency is essential.
    We had a conference this year, had roundtable last week and 
had roundtable discussions, and what we hear from the field are 
simply this. Clarify tiering. I am quoting, ``Clarify how to 
move to the top centers. Specify the factors that you use in 
weighting WBCs. We suggest a quality assurance program. Do away 
with the tiering. Give people the 150K if that is what is 
promised. If the centers aren't performing, put them on 
probation or let them go. Transparency must be communicated in 
all tiers.''
    Two, performance-based funding allocations should be 
communicated clearly and evenly. WBCs have struggled in recent 
years with a great deal of uncertainty, not only regarding 
whether they receive funding, but how much they will receive. 
The new legislation removes that uncertainty. It also will help 
to curtail the ``black box'' approach that has been recently 
taken up by the SBA with respect to per center funding 
decisionmaking. The centers also tell us, again from the field, 
I quote, ``We need transparency in how milestones and 
benchmarks are set. Focus on results in addition to the numbers 
coming through the doors. Performance criteria should be in 
line with the center's population and not cookie-cutter. Accept 
input from the WBCs for performance criteria. The performance 
needs to be transparent at all levels. Standardize the 
milestones and performance goals based on market size. We urge 
the Committee to clarify the performance standards.''
    Three, program disbursements should be made in a timely 
manner. We believe that both the names of the grant recipients 
and the value of the awards should be made public. The SBA has 
not fully disclosed this information. We suggest that these 
deadlines be established during the time when the SBA will 
disburse the awards. In recent years, many WBCs have waited 
months, sometimes until the end of their very fiscal year 
before they receive funds, even though they are still providing 
services. This puts our members, all of whom are relatively 
small nonprofits, in severe cash crunch flow. This has not set 
good money management examples for the center clients and it 
violates the Federal Government's Prompt Payment Act. We urge 
the Committee to communicate directly with the SBA on this 
matter.
    The cry for improved payment process rings loudly across 
metropolitan, urban, and rural areas where Women's Business 
Centers continue to provide services on scarce resources. They 
are asking for streamlining the process for submission and 
payment in a timely manner. ``The manual and antiquated 
cumbersome system needs to be upgraded, as we have heard, to be 
online, automated, speeded up. The turn-around time needs to be 
turned around. Be able to submit electronically and able to 
navigate the system.''
    While many Business Centers have noted improvement in the 
payment process, there is still room for improvement. An 
executive of the Women's Business Center in Chicago bitterly 
notes that she has reluctantly given the U.S. Government an 
interest-free loan of $220,000 for the 2 years while she has 
waited for her reimbursements.
    There are so many success stories that breathe life into 
the numbers that Senator Snowe stated around the State of 
Maine. The Women's Business Centers have not only an economic 
impact on our State, but across the Nation, and in fact, we 
believe that their efforts are not only revitalizing 
communities and villages but, in fact, are helping to restore 
peace.
    We thank the Members of the Senate Committee on Small 
Business for your longstanding support. We thank you for your 
recommended $16.8 million in appropriations and for all your 
efforts. We are in solid agreement that the SBA procurement 
process is long overdue, long overdue. We are honored to be 
here with you today, and we welcome any collaborative 
conversations. Thanks so much.
    [The prepared statement of Ms. Almeida follows:]

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    Chairman Kerry. Thank you. Thank you for your energy and 
passion for this. We love it and we appreciate it very, very 
much.
    Ms. Bratton, we are very happy that you have traveled from 
Wyoming, love the work you are doing there. It is impressive. 
We appreciate your being here. I just want to take a moment, 
because I have just been called by Senator Reid, and I need to 
go over to the floor for a moment and I apologize. Senator 
Snowe will preside in my absence, and I hope I can get back. I 
don't know. It depends on what is happening. But I want to 
thank you up front for your work and turning that early effort 
into a nonprofit, which is pretty impressive, and the work 
itself is very important.
    And Ms. King, I wish you had brought some of those cookies.
    Ms. King. We will send some.
    Chairman Kerry. Well, I hope so. I happen to be a chocolate 
chip addict.
    Ms. King. I will make a note of that.
    Chairman Kerry. But I am also very impressed with what you 
are doing. We are so appreciative for all of you for taking the 
time to be here, for putting these issues on the table. It is 
enormously helpful and I know Mr. Prakash and others are 
listening carefully. We look forward to trying to facilitate 
what you are trying to do and your testimony is very important.
    We are going to leave the record open so that colleagues 
who aren't able to be here right now because of conflicting 
hearings and meetings will be able to submit some questions, 
conceivably, in writing if they want to. We will leave the 
record open to do that.
    Again, thank you, and I do apologize to my colleagues and 
to you. Thank you.

  STATEMENT OF ROSEMARY BRATTON, EXECUTIVE DIRECTOR, WYOMING 
              WOMEN'S BUSINESS CENTER, LARAMIE, WY

    Ms. Bratton. Thank you, Mr. Chairman. Members of the 
Committee, I do appreciate the opportunity to appear before you 
today. As our Senator Enzi from Wyoming mentioned, the Women's 
Business Center began as a project of the Wyoming Coalition 
Against Domestic Violence and Sexual Assault while I was 
executive director of that organization, and I can honestly say 
that it was my vision and my personal experience that led to 
the creation of the Women's Business Center.
    Long before I began my career in the field of working with 
survivors of domestic violence and sexual assault, I 
experienced firsthand the economic struggles that many women in 
Wyoming endure and the success that can come from small 
business ownership. After a failed marriage and faced with 
caring for my three boys as a single parent with few resources, 
I started a cleaning company in Story, WY. We were called Mopsy 
and Dusty, the Cleaning Company. No house too big, no pad too 
small, from floor to ceiling, we cleaned it all. On some days, 
I was Mopsy. On other days, I was Dusty. And on many, many 
days, I was both.
    In addition to Mopsy and Dusty, to further increase our 
income, I made and sold purses created from recycled jeans. The 
success of my small businesses enabled me to raise my children 
and earn a college degree. The experience began for me a 
commitment to work as an advocate for women who are socially 
and economically disadvantaged.
    The combination of rural character, geographic obstacles, 
and harsh climate creates economic distress for many Wyoming 
residents. Our economy, however, has been improving, although 
the high-paying minerals extraction employs primarily men. Work 
that is traditionally considered women's work--nursing, 
teaching, office work--is still undervalued, with wages for 
these positions much lower in Wyoming than in other States. The 
gender-based disparity in Wyoming continues to be the highest 
in the Nation, with the average Wyoming woman earning 57 
percent to 67 percent of what a man earns for full-time, year-
round work.
    While Wyoming's vastness contributes to its natural beauty, 
it also creates isolation that keeps women business owners from 
meeting, networking, and sharing information. Wyoming Women's 
Business Center programs include a microlending program, 
individual development accounts where we can match savings for 
low-income individuals, Works of Wyoming, business technical 
assistance training, counseling, networking opportunities, 
personal financial management training and counseling, Internet 
training.
    There is still a strong need for rural frontier Women's 
Business Centers. The Wyoming Women's Business Centers is not 
only vitally necessary to the economy of Wyoming, but also 
appeals to the personal interest by helping women forge better 
lives for themselves and their children in the State with the 
highest gender wage gap in the Nation.
    I would now like to speak to you briefly about our 
experience with SBA's Office of Women's Business Ownership. In 
1999, the Coalition was awarded a 5-year grant. From the 
inception of the Wyoming Women's Business Center as a 
projection of the Coalition, our goal was to eventually 
separate and become an independent, private 501(c)(3). While we 
were a project of the Coalition, we operated as a distinct 
entity with separate accounting, separate grant writing and 
fundraising, and separate physical locations.
    Our last application as a Coalition project with OWBO was 
for a sustainability grant in 2004. On October 1 of last year, 
we officially separated with our application as a nonprofit 
corporation to the State of Wyoming. In March of 2007, we 
received our determination letter and were in a position to 
apply as a new Women's Business Centers with OWBO for the 
physical year 2007-2008 funding.
    I would like to mention that throughout the process of our 
separating from the Coalition, we were in communication with 
SBA's district office in Casper, as well as the OWBO office in 
the District of Columbia. With the separation from the 
Coalition, we were no longer eligible for sustainability 
funding, but were assured, although certainly not promised, 
that we would be in a favorable position when we applied as a 
new center, whether that was for the current year funding or 
future funding.
    Although I have never actually seen the rule or the 
statute, we were told that SBA couldn't have the sustainability 
funding follow the Women's Business Centers as it would be 
considered pass-through funding from one nonprofit to another 
and that that is illegal. And of course, with the new 
legislation, graduated, established centers receive funding 
priority, and I need to add here--which was not in my written 
testimony--that I absolutely support that decision. So even 
though in reality we are an established center, according to 
OWBO, we are no longer eligible for sustainability funding.
    We submitted our grant application to Grants.gov on May 22, 
2007. To date, I have heard nothing official about the status 
of our grant. In August, as I was preparing our budget for our 
next fiscal year, I called the OWBO office, talked with someone 
there on staff, and was told simply that Wyoming was not 
funded. At that time, I was told that the grant review process 
was conducted by an independent committee and that funding was 
based on a point system. When I inquired about a priority being 
given for States without SBA-funded Women's Business Centers, I 
was told that that was no longer a consideration, so I was left 
to believe that our grant did not rise to the top six based on 
the point system.
    I discussed with our DOTR in the SBA District Office in 
Casper about how helpful it would be if I knew where our 
proposal was weak. Last week, she e-mailed OWBO and asked that 
question. Her response was that Wyoming's grant was incomplete 
and, therefore, not considered at all, that we had not 
submitted the technical proposal to Grants.gov.
    After numerous phone calls with Grants.gov and much 
research on their part, it was determined that our grant 
proposal was received by Grants.gov, retrieved and validated, 
then submitted to OWBO, where it was retrieved by them. During 
this process, I was in touch with both Senator Enzi's and 
Senator Snowe's offices, who made inquiries to OWBO about 
Wyoming's grant. Subsequently, I was invited by the Committee 
to be here.
    I was writing this testimony on Monday afternoon. I learned 
on Monday morning that OWBO staff e-mailed our SBA office in 
Casper to say that they had found our grant application, that 
it was complete, and that it would be evaluated by a panel as 
soon as possible. In a later conversation, OWBO staff indicated 
that if our proposal was strong, with points higher than the 
lowest of the six new centers scheduled to receive funding, 
that one of them would be eliminated from funding, and we would 
be included.
    This is very troubling to me for several reasons. What 
would have happened if I had not contacted Members of this 
Committee? While I realize that it is more likely that we will 
not be funded, what happens to the Women's Business Centers who 
attended the post-award mandatory training last week and now 
one of them will be defunded? Were there other applications 
that were simply lost? And what level of tenacity is required 
to get honest answers from OWBO?
    There have been other challenges with OWBO over the years. 
I realize I am way over my time, so I will make this brief. I 
don't think that I can add much to what has already been 
highlighted for you.
    One of the things that we did based, on the loss of reports 
and reimbursement request, is that we instituted a practice 
where we would send all of our written documentation by a 
carrier where we would get an electronic signature verification 
just to insure that it got there, but we still continued to 
make numerous copies of our reports because we knew even with 
the electronic signature we would have to be sending it back 
again.
    And you might be wondering why with all of these problems 
we would want to apply again for OWBO funding, and we did 
carefully consider the frustrations that we have experienced. 
We have enjoyed a truly positive working relationship with SBA 
in Casper, with the Association of Women's Business Centers, 
and with the SBA's Microenterprise Development Branch. We have 
secured State general funding for the required matching dollars 
for both OWBO and the Microloan Program. And then there is 
always the hope that OWBO will provide us with consistency and 
respect. Today, I have more hope than I have in the past. And 
there was a sense of pride and accomplishment that we were 
funded by OWBO. The most important consideration is the 
increased services we can provide for women entrepreneurs in 
Wyoming. We could hire staff to make Works of Wyoming a strong 
studio incubator and provide the needed staff to offer services 
in other parts of the State.
    For me personally, I want, as highlighted again in my 
written testimony, for Liz to have the support she needs for 
her coffee/tea house. I want Joan to have the support she needs 
for her trash management service. I want Lucinda's art gallery 
in Sheridan, Wyoming, to continue to be the amazing success 
that it is now. I want Cowlick and Hooves Beauty Salon in 
Powell, Wyoming, to continue to be successful. And I want a 
woman cleaning houses and making purses in rural frontier 
Wyoming to know that there is a Women's Business Center that 
values her work and will provide her with encouragement, 
counseling, financial resources, networking, and mentoring with 
other amazing Wyoming women.
    Thank you very much.
    [The prepared statement of Ms. Bratton follows with 
supporting documents:]

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    Senator Snowe [presiding]. Thank you. I couldn't agree 
more.
    Ms. King.

 STATEMENT OF GALE KING, OWNER, TREATS BY GALE, LLC, BURKE, VA

    Ms. King. Honorable Olympia J. Snowe, Ranking Member, and 
other Members of the Senate Committee on Small Business and 
Entrepreneurship, my name is Gale King. I am the proud owner of 
Treats by Gale, LLC, a home-based business in Burke, VA. I was 
born in Barbados and came to the United States with my mother 
when I was 12 years old. I attended local schools and graduated 
from James Madison University in 1990.
    When I was laid off in 2004 from my technical job at a 
local dot-com, it was my third layoff. I was a single mom with 
two children in elementary school and I decided to start my own 
business. I wanted to be in control of my own livelihood. Since 
I always loved baking, my friends suggested I start Treats by 
Gale. Like many first-time entrepreneurs, I decided what my 
product was. I would sell cookies and cakes. I printed out my 
own free business cards online from Vista Print and assumed the 
orders and the money would come.
    After 6 months, I had only made $200. I realized I needed 
to do something different, but I had no idea where to turn. I 
was advised by several small business owners I met through 
networking events to seek out the resources of the Women's 
Business Center of Northern Virginia. There, I finally found 
the information and the support that I needed.
    Over the past 3 years at the Women's Business Center, I 
have taken advantage of many programs, including the ABCs of 
starting a business. In this class, I learned about the various 
business entities, the importance of writing a business plan 
and protecting my personal assets, the commitment required by 
my family members, and the many resources that the center had 
to offer.
    Business planning and financing for growth, a class that 
was taught by the senior vice president of a local bank where I 
learned the details of writing my business plan and the 
importance of developing a relationship with my bank manager.
    Tax planning and bookkeeping, and marketing legal and risk 
planning, two other classes in their business tool kit series 
where I learned from CPAs, insurance experts, and attorneys 
about various aspects of business development.
    The nxlevel class for business start-ups, a nationally 
recognized 12-week program where I had the support of my 
instructor and classmates. They helped me write my business 
plan each week. In class, I met my package designers and lots 
of other great professional volunteers.
    QuickBooks Pro, where I used their computer lab to use the 
software for my business accounting.
    First Friday networking breakfasts, they were a wonderful 
place to learn to network properly and partner with other women 
business owners. For example, I met Emily Murphy of Emily's 
Teas, and for the past 2 years, I have provided the baked goods 
for her educational tea parties.
    The free one-on-one technical assistance counseling, where 
I worked with counselors on my marketing plan, understanding my 
cash flow, and the importance of developing my own market niche 
by studying my client demographics.
    The SBA's Small Office Home Office Loan program where I 
received two loans totaling $25,000 which I used to purchase 
new equipment and a delivery van.
    The Annual Women Entrepreneurs Expo, where I learned how to 
effectively exhibit my products to other business owners. I 
also love the center because it rents out its meeting rooms at 
a low cost to home-based businesses. It gave me an affordable, 
professional meeting space for my open houses, and I have also 
gotten great publicity and exposure.
    When ``Recipe for Success,'' a program featuring Al Roker 
on the Food Network, called my center director, I got a 
telephone interview with the show's producer and almost got on 
TV, and here I am now talking to you.
    When I started Treats by Gale, there was no way I could 
afford the services of a business consultant or a coach. 
Through the Women's Business Center, I have learned from 
insurance agents, lawyers, bankers, marketing specialists, and 
accountants. These people all shared their expertise with me. I 
cannot imagine what I would have done without this resource. 
The Women's Business Center staff, they have been cheerleaders 
in my success, and they have been motivators during challenges.
    My business has grown over the years and I am very proud of 
my customer list. I have longstanding contracts with the 
Shakespeare Theater, the Folger Library, Woolly Mammoth 
Theater, and Hyatt Regency on Capitol Hill. I now have more 
business than I can handle on my own and I am in the process of 
interviewing baking assistants. I am happy that I am not only 
able to support my family, but I am now able to employ others. 
In 2006, I gross over $45,000, and in the first 8 months of 
this year I have already grossed that same amount.
    Whenever I meet someone starting out in business, I always 
recommend that they visit the Women's Business Center. Starting 
a business is really overwhelming and there is lots of bad 
information out there. When I send someone to the Women's 
Business Center, I know they will get their questions answered 
and they will get a good foundation on which to build their 
business dream.
    Thank you for your time.
    [The prepared statement of Ms. King follows:]

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    Senator Snowe. Thank you. Thank you all for your very 
impressive testimony and your outstanding examples of what 
women entrepreneurs are all about and what we should be 
celebrating. That is why we want to rectify and clear the path 
of the barriers and impediments within the SBA that doesn't 
allow you to flourish and to help other women flourish. This is 
what it is all about. We are really trying to get to the heart 
of the issues, I am sorry, Ms. Bratton, that you have gone 
through the ordeal on securing funding for the Women's Business 
Center. I think that is deeply regrettable. Wyoming certainly 
deserves one. I will start with you.
    When you talk about the gender earning disparity in 
Wyoming, do you think that the Women's Business Center would 
help to ease that disparity by providing the kind of services 
that would encourage entrepreneurship? I know in the State of 
Maine, as Ms. Almeida has already indicated, Maine has 
certainly been not only a small business model, but also for 
women-owned small businesses.
    Ms. Bratton. Senator Snowe and Members of the Committee, I 
do see small business ownership as an alternative to the low-
wage, sometimes dead end, non-benefitted jobs that are 
available in our State for women. I also support the non-
traditional work that is being done in our State for women 
moving into more of those positions that have typically been 
held by men.
    However, there are many women, and I am one of them, I 
don't want to drive a truck or work on an oil rig. I would be 
far more content doing something which in the past would have 
been considered women's work. So I think we do provide that 
alternative, and it doesn't mean that it is going to lift 
someone out of poverty immediately. But many times, people 
living with low incomes, they income patch. So they might have 
a couple of jobs where they earn wages, sometimes three jobs 
where they earn wages, and I have always thought if one of 
those jobs could be their own small business that will feed 
their family while it makes their heart sing, then that is a 
good alternative for them.
    Senator Snowe. Has this been typical of your experience 
with SBA, the one that you just illustrated?
    Ms. Bratton. I have never had a grant that I submitted be 
lost before. I have experienced a long period of time between 
submitting a grant and learning whether or not we were actually 
funded. There were some years when we were funded through the 
Coalition that we would attend the mandatory post-awards 
meeting without ever having actually received our notice of 
award, but we would just trust that we were going to be funded, 
and we would make our plans to attend the meeting.
    As far as things being lost, long delays in getting 
reimbursement, yes, that has been true through the years. We 
are one of those centers where we did have a line of credit 
because we were never able to actually receive our funding in 
time to meet the most important thing, payroll for our staff. 
So we certainly had that experience.
    We also--one of the things I would like to add is that the 
641s, which are the client intake forms which we have available 
online now in Wyoming--we are very technology-based--we are 
required to have an original signature before that client 
intake form can be counted by SBA. So that means someone will 
e-mail it to us, fax it to us. We have to send it back in order 
to get an original signature, which wastes a lot of our 
valuable time. We are a staff of only 2\1/2\ people and we are 
serving the entire State of Wyoming. Without continued funding 
from SBA, we will continue to be 2\1/2\ people. So we use 
technology as much as we can to streamline our work so that we 
can continue to serve the entire State.
    The same way with counseling records. Counseling records 
have to be documented in writing in each person's file. We are 
not allowed to do that electronically, and I don't really 
understand what all the reasons are for this, but that is what 
we have been told through the years.
    Senator Snowe. Thank you. Ms. Almeida, you listed--and I 
know we have had many conversations on this, many of these 
issues, the numerous difficulties with the entire 
implementation of the program with respect to the funding, the 
new renewal grants and so on. Can you tell me what you think of 
what you heard in the previous panel from Mr. Prakash and Mr. 
Shear and Ms. Ritt? Do you think we have addressed all these 
issues, or that they will be addressed systematically from what 
you heard? Where are the omissions, or where do you agree?
    Ms. Almeida. I have hope that they will actually meet their 
120-day deadline, but like you and the Committee, the centers 
that I hear from are anxious that they will meet their mark. 
There is a great deal of concern about why didn't it happen 
when it was implemented. Everyone was sort of geared up and 
ready to respond and now we have 16 centers that are out of the 
system and then another 9 that have just left. So for us, it is 
heartbreaking because there is a gap in services for those 
areas.
    Based on history, we have a certain measure of pessimism, 
but I have to say that the Women's Business Centers and the 
AWBC, as Mr. Prakash had suggested, that we work together to 
figure out why isn't this happening. There has always been a 
willingness on all of our parts to make it work. I mean, that 
was the intention of the legislation that you were so brilliant 
in implementing.
    So I think in all cases, there needs to be communication 
and transparency in the process. We seem to work so hard for 
legislation and then get cut out of the implementation process 
and that doesn't make any sense to us. Since we know what needs 
to happen, why not include us in the process of implementation? 
And yet this is the first time we have heard an invitation to 
do that.
    Senator Snowe. So this has been the first time?
    Ms. Almeida. Yes.
    Senator Snowe. It has not happened in the past?
    Ms. Almeida. No, not for the implementation process. I know 
that both your staff and Senator Kerry's staff have asked for 
an implementation plan. We have not been invited to help work 
together. This was--is the first time that he has gathered a 
group of people together and said, how do we do this? And I 
think the time is right now. There is a considerable level of 
hope in the country now across the Women's Business Centers 
instead of being in the land of the living dead, because each 
year we were in this nightmare of funding. So there is a 
willingness, and even though everyone is busy, there is a 
capacity to help them implement a process that can work because 
we are on the ground.
    Senator Snowe. Well, it sounds like there is universal 
dissatisfaction with SBA, with the way in which they have 
approached and treated Women's Business Centers. I mean, I 
think that is abundantly clear. From what you heard today, you 
are encouraged, more encouraged----
    Ms. Almeida. I am more encouraged because I have to believe 
their words. I am more encouraged that the invitation was 
presented to us. Now we will have to follow up to make sure 
that that really happens.
    Senator Snowe. OK.
    Ms. Almeida. And I am hoping that we have communication 
with your staff to make sure it does.
    Senator Snowe. Absolutely, and I think that we should have 
a status report in that regard----
    Ms. Almeida. Great.
    Senator Snowe [continuing]. Both from SBA, but also from 
your experience and how they approach you and your interaction.
    Ms. Almeida. I am happy to do that.
    Senator Snowe. We just started a vote, so I am going to be 
quick. Ms. King, just tell me very quickly, what was your best 
result from the Women's Business Center? What services were the 
most important to you to make you obviously very successful?
    Ms. King. The one-on-one counseling, that time where, as 
opposed to being in a classroom where there is a broad 
scenario, where we were able to focus in on my situation, on my 
financial statement, on my customers, on my business. I realize 
that that is a limited resource, so the fact that someone did 
take their time to spend that time with me, something that 
would have cost $300 an hour if I had tried to do it on my own, 
was invaluable for me to start focusing on the correct types of 
customers to launch my business forward.
    Senator Snowe. So they gave you very critical information 
in which to move forward?
    Ms. King. Right. Individual attention is very important.
    Senator Snowe. And individual attention, the one-on-one.
    Ms. King. Yes.
    Senator Snowe. Ms. Goldsmith, I know you are in a more 
male-dominated industry. Were Women's Business Centers and 
SBA's services beneficial to you in any way?
    Ms. Goldsmith. The SBA service centers have been, as has 
the SBA lending programs. We haven't made use of the Women's 
Business Centers, but certainly the 8(a) and Small Business 
Procurement Programs have afforded us an opportunity to enter 
into the Federal contracting arena, and based on our success 
within those, I would certainly look very much forward to an 
equally successful Women's Procurement Program.
    Senator Snowe. I think that is remarkable, because there 
are many challenges within those programs and that you have 
been able to insert yourself in that process effectively is 
outstanding. Securing Government contracts has been one of the 
biggest challenges we have had with respect to that program for 
any small business, let alone women-owned small business and 
disadvantaged small business and so on. If you can give us any 
ideas in terms of how we can improve it, as well, that would be 
certainly welcomed.
    Ms. Goldsmith. I would be glad to continue in any ongoing 
dialogue.
    Senator Snowe. Because Government contracting is a door-
opener for so many businesses, given the amount of money that 
the U.S. Government issues in Federal contracts, 300 to 400 
billion dollars is very, very important. That is money that is 
going to be spent. The question is how do we best help to 
participate in that program to be eligible to receive Federal 
contracts.
    Senator Enzi.
    Senator Enzi. Thank you, Madam Chairman. First of all, I 
want to thank Mr. Prakash for staying for this part of the 
process. Quite often after people testify, they leave. I am 
sure you have to be inspired, as we are, to hear these stories, 
some of the difficulties, but also some of the successes.
    Ms. King, I am very impressed with what you have been able 
to do. I consider you to be one of the great inventors. You 
have invented a business, and you have made it successful with 
help of other people, and it is that networking that really 
does help anybody that is in business.
    Ms. Bratton, I appreciate your comments that show not only 
what has happened to Wyoming, but also to bring some attention 
to rural businesses. We are a little bit more rural than most 
of the other States, so we are a good example for that. I 
appreciated your comments about what I consider to be true 
small businesses. I have often commented in this Committee that 
that is where the owner of the business sweeps the sidewalk, 
cleans the toilets, does the accounting, and waits on 
customers, and definitely not in that order.
    [Laughter.]
    Senator Enzi. There are a lot of small businesses out there 
that can make a real difference and that can close that gender 
gap and I really appreciate the people that are willing to take 
the risks, like you, Ms. Goldsmith. I hope that we can change 
some of the rules and perspectives, and your testimony will 
help to do that, so that it isn't just a sham process. That is 
what the Small Business Administration is supposed to be 
helping on, too. That has been very helpful.
    Since we do have a vote scheduled, and, in fact, the five 
lights up there indicate that it is almost over, we are going 
to have to leave. I will submit some questions for each of you 
in writing, and since I am the only accountant in the Senate, 
some of them will be more detailed than the general public 
would be interested in hearing. But it will be information that 
will help us in our decisions and in forwarding information to 
the Small Business Administration so that we can improve 
things.
    Thank you so much for testifying.
    Senator Snowe. Thank you, Senator Enzi, and I want to thank 
all of you for your exceptional testimony in helping us and 
guiding us through this process with the Small Business 
Administration. I, too, want to thank you, Mr. Prakash, for 
being here today and sitting through the testimony to get a 
sense of the concerns. These women here are extraordinary 
examples of what can be accomplished if we continue to 
cultivate women-owned businesses and do everything we can to 
ensure that they have the resources that they deserve.
    So I want to thank you all for being here, and Mr. Shear 
and Ms. Ritt, thank you very much for being here, for your 
contributions, as well. We are going to get to the bottom to 
try to resolve some of these fundamental issues so that others 
don't experience what you have, Ms. Bratton.
    Thank you. This hearing is adjourned.
    [Whereupon, at 12:06 p.m., the Committee was adjourned.]
                      APPENDIX MATERIAL SUBMITTED

  Responses by Anoop Prakash to Questions from Chairman John F. Kerry

                      I. WOMEN'S BUSINESS CENTERS

    Question 1. I am concerned about reports that Women's 
Business Centers are not clearly being told the criteria for 
their evaluations or why they receive a particular score. Since 
funding levels are based on the score, please explain:

     What is the criteria for evaluating a center?
     How are the criteria and the center score communicated to 
the center?
     Also, will this criteria change with implementation of 
the new permanent funding program or vary for graduated versus 
new centers?

    Answer. We are in process of reviewing and revising our 
proposed evaluation criteria of Women's Business Centers to 
ensure that the intent of the program is being met, and that 
there is increased transparency and clarity for applying 
centers.
    The new Program Announcement will articulate the criteria, 
which reflect a policy for strategic investment in development 
of women's entrepreneurship that is market-driven. Selection of 
new centers will be evaluated based on market need and key 
organizational success factors.
    Continued funding for existing (and returning centers) will 
be awarded based on successful past performance, in addition to 
key organizational success factors and market need--defined 
primarily by the center's ability and accountability to meet 
the grant performance criteria and the ability to serve the 
market as agreed.
    Upon completion of our evaluation and ranking, we will 
provide all centers written notice of their total score and the 
award range as soon as practicable upon completion of the 
proposal evaluations.

    Question 2. Your written testimony states that SBA budget 
cuts have made it more difficult to manage the Women's Business 
Center program and have been the cause of delayed funding and 
paperwork problems. You also mentioned in your testimony the 
eightfold increase in funding for this program in the last 18 
years. Although that is true, the program has been flat-funded 
for the last 7 years.

     What changes has the agency made to compensate for budget 
cuts?

    Answer. Our approach is to pursue improvements in program 
efficiency, by streamlining processes and adopting automated 
approaches to processing grant and pay requests, and 
consolidating redundant functions across grant programs. We 
believe these steps will achieve the appropriate balance 
between existing resources and OWBO's ability to administer the 
program at an exceptional level.

    Question 2a. Women's Business Centers have asked us why SBA 
can't eliminate the incredible paperwork burden and have an on-
line system. Is this something you are considering?

    Answer. Better use of technology and payment processing 
centers of excellence are at the forefront of our evaluation.

    Question 3. I am glad to hear that the SBA is taking steps 
to get money to the centers faster and glad that the SBA is 
embracing the IG's report. The centers complain that they get 
sent back and forth between offices in SBA. The IG report 
specifically mentions communication and coordination problems 
within SBA's Office of Women's Business Ownership and its 
grants management office.

     What is SBA doing to coordinate these offices?
     How are women's business centers supposed to get paid? 
Please detail all steps in the payment process.

    Answer. Today, the Division of Procurement and Grants 
Management (DPGM) is responsible for budget and final invoice 
approval. DPGM establishes payment and documentation criteria. 
The Office of Women's Business Ownership (OWBO) is responsible 
for reviewing payment requests from the WBCs for documentation 
sufficiency prior to DPGNI's final review and payment approval. 
Sufficient documentation criteria are established primarily by 
DPGM.
    The SBA continues to evaluate the invoicing process 
utilizing lean six sigma standards to guide improvements. An 
internal collaborative work team between DPGM and OWBO has been 
formed to further simples and standardize the invoicing 
process.

    Question 4. According to the IG, the SBA's requirements for 
grants are far greater than is required by OMB.

     Why are these additional requirements necessary?
     Is SBA looking to reduce these requirements, in any way, 
thereby, reducing the work for SBA and WBCs?

    Answer. As the new program announcement is developed, we 
will explore every opportunity to reduce the overall program 
requirements, while maintaining adequate internal financial 
controls for the program. Best practices from other grant 
programs within SBA (e.g., SBDC program) and across government 
will inform the approach.
    In addition, the SBA continues to evaluate the invoicing 
process utilizing lean six sigma standards to guide 
improvements. An internal collaborative work team between DPGM 
and OWBO has been formed to further simplify and standardize 
the invoicing process.

            II. IMPLEMENTATION OF RENEWAL GRANT LEGISLATION

    Question 5. I was pleased to hear that you plan to 
implement the new permanent funding for graduated centers by 
January 18, 2008, and I look forward to working with you to do 
so.

     What is the SBA's plan for implementation?

    Answer. We established a 120-day timeframe (from the date 
of the September hearing) for the new program announcement 
development, dissemination, review and award process. We expect 
to have our evaluation of applications complete by mid-January.

    Question 5a. Will centers in renewal status be eligible to 
receive funding for costs incurred prior to receiving the 
award? It is my understanding that this is done by other 
agencies. It would help WBCs tremendously.

    Answer. We will evaluate the OMB rules for grant making to 
assess this possibility, If possible, please provide the 
specific examples of programs and contacts for where this is 
done, so we might follow up to learn whether those approaches 
are applicable to this program.

    Question 5b. How soon after Congress appropriates funds can 
we expect to see centers in the program for more than 10 years 
begin receiving grant money from the SBA?

    Answer. Our goal is to have the selection and notices to 
centers made at the end of the 120-day timeframe, subject to 
the availability of funding. Whenever appropriation is 
confirmed, we will engage our newly established payment 
process, to include advance-funding requests at the beginning 
of the grant.

    Question 6. The IG Report says that SBA could decrease the 
time it takes to award grants by adjusting the schedule of the 
grant application reviews, so that returning grantees are 
reviewed at a different time. I am told that this would smooth 
out the burden on SBA at any given point, making it easier on 
SBA personnel and decreasing the time until grants are 
distributed.

     Is the SBA planning to do this? If not, why?

    Answer. SBA has published three program announcements on 
grants.gov that will close January 24, 2008. Evaluation and 
review for all renewable and initial grant applications will be 
conducted simultaneously, with an anticipated completion of the 
process by March 1.

    Question 7. According to the IG, the grant process for 
graduated centers can be different than that for new centers.

     In light of the fact that graduated centers have an 
established record (and thereby a clear record of whether they 
have met their goals and are effective), does SBA plan to 
streamline the process in any way? It is my understanding that 
doing so would reduce the burden on SBA and WBCs.

    Answer. We are developing program announcement and grant 
criteria that will be based on the most transparent and 
efficient method to award and distribute funding to all WBCs, 
including the centers ``rejoining'' the national network.

    Question 8. The IG Report says that SBA could decrease the 
time it takes to award grants by: 1) announcing the grant 
opportunity in the first quarter of the fiscal year and 2) 
having the different SBA offices review the grant language at 
the same time.

     Is the SBA planning to make these changes? If not, why?

    Answer. Yes.

    Question 9. We are committed to helping these centers get 
their funding and wish to work with you in order to see that 
happen.

     What can this Committee do to help you implement the new 
legislation as quickly as possible?

    Answer. [No answer was provided by press time.]

                      III. WOMENS PROCUREMENT PLAN

    Question 10. At our contracting hearing in July, SBA 
testified that the Agency would implement the Women-Owned Small 
Business Federal Contracting Assistance Program by the end of 
this fiscal year. We are now into the new fiscal year and 
implementation still has not occurred.

     Can you tell us where SBA is in the process of 
implementing this program?

    Answer. SBA has prepared a Proposed Rule containing the 
procedures for implementation of Section 8(m) of the Small 
Business Act and incorporating the industries in which women-
owned small businesses are underrepresented or substantially 
underrepresented in the Federal Procurement arena. This 
Proposed Rule was submitted to the Office of Management and 
Budge (OMB) for review. The OMB has now completed their review 
and, on December 20, 2007, the agency submitted the proposed 
rule to the Federal Register for publication, providing for a 
60 day period for public comment. This time allows interested 
parties, and the public as a whole, the opportunity to comment 
on the Proposed Rule and in this case, the proposed 
implementation of Section 8(m).

    Question 11. Of critical importance to me is what set of 
statistics the SBA is using to formulate the program. The RAND 
study analyzed women's contracting in several different ways, 
and I am concerned that SBA will choose to use statistics which 
will lead the agency to create a procurement program that only 
applies to a few industries. That would make a mockery of what 
we have been fighting for, for all these years.

     Can you tell the Committee which set of statistics are 
being used to create the program? Can we expect that SBA will 
construct a program that addresses all disparities?

    Answer. The SBA is relying on the findings of the RAND 
Corporation Study, an independent analysis that determined in 
which Federal procurement areas women are underrepresented or 
substantially underrepresented.

    Question 12. The President's budget request for Fiscal Year 
2008 did not include any funds specifically for implementing 
the Women-Owned Small Business Federal Contracting Assistance 
Program.

     What is the estimated cost for implementing this program, 
and how does the SBA plan to fund the cost?

    Answer. The estimated costs for implementing this program 
and SBA's plan will be addressed in the rule.

    Question 12a. Did the Administrator request funds to 
implement this program?

    Answer. As Congress has not authorized any office within 
the SBA to specifically manage this program, the Office of 
Government Contracting and Business Development will include 
these duties within the current structure and personnel 
allocation. Further, the SBA did not request additional funds 
for this program and will use the currently allocated Agency 
budget.
                                ------                                


    Responses by Anoop Prakash to Questions from Senator Joseph I. 
                               Lieberman

    Question 1. You mention in your testimony that the ability 
of OED to administer the Women's Business Centers Program as 
well as its other programs has been adversely affected by an 
overall decline in the agency's budget. Given the rise in 
complaints about SBA, and the fact that Federal funding for SBA 
has declined in real dollars since fiscal year 2001, do you 
think your office has sufficient resources to complete its 
mission?

    Answer. Yes. Our approach is to pursue improvements in 
program efficiency, by streamlining processes and adopting 
automated approaches to processing grant and pay requests, and 
consolidating redundant functions across grant programs. We 
believe these steps will achieve the appropriate balance 
between existing resources and their ability to administer the 
program at an exceptional level.

    Question 2. Ms. Ritt's written testimony cites a lack of 
coordination between OWBO and DPGM as a reason for much of the 
delay in grant payments to WBCs. She reports that each office 
reviews requests separately and often uses different standards 
in evaluation grant requests. These procedures seem complex and 
arbitrary, and I fear this kind of needless bureaucratic morass 
will discourage many meritorious WBCs from applying for grants. 
What steps has your office undertaken to increase communication 
between the two offices? Have you attempted to develop an 
integrated plan for WBC grants requests? Has any thought been 
given to having both offices review requests together, or at 
least concurrently?

    Answer. The SBA continues to evaluate the invoicing process 
utilizing lean six sigma standards to guide improvements. An 
internal collaborative work team between DPGM and OWBO has been 
formed to further simplify and standardize the invoicing 
process. We have also hired an expert consultant to guide this 
process improvement team.

    Question 3. One complaint I have heard a lot about from 
small business owners and other interested parties is that, due 
to budget cuts, many SBA field offices have either cut their 
staff or had them transferred to Washington. This personnel 
reduction has greatly reduced the level of service these 
offices can provide to small business owners in their 
community. Mr. Shear's testimony indicates that due to these 
cuts, the district office of technical representatives (DOTRS) 
assigned to oversee local WBCs have too many other 
responsibilities and lack the expertise to effectively oversee 
and assist the WBCs. Could you tell me about some of the 
efforts your office is undertaking to address these complaints 
and to restore the quality of service and oversight provided by 
the field offices?

    Answer. We have detailed to SBA central office a senior 
DOTR from Vermont to guide our improvements in the areas of 
technical training and relationship management for our field 
representatives. A workgroup of DOTRs are developing the work 
plan for us to follow. We are also working with the Field 
Advisory Council to improve communications with the District 
Directors in this regard.
                                ------                                


 Responses by Anoop Prakash to Questions from Senator Olympia J. Snowe

    Question 1. What problems does the SBA anticipate in 
creating the new evaluation criteria and requirements for the 
new 3 year renewable grant program which were created as part 
of the ``Troop Readiness, Veterans' Care, Katrina Recovery and 
Iraq Accountability Appropriations Act of 2007''? What is the 
SBA doing to prevent these difficulties?

    Answer. The SBA anticipates no problems in developing new 
evaluation criteria and requirements in response to the new 
legislation. We are on pace to meet the time commitments made 
during the September 20, 2007 hearing

    Question 2. The SBA's testimony states that the SBA has 
taken six steps since March 2007 to improve the processing of 
WBC grant disbursements. What performance metrics is the SBA 
using to prove these steps are successful?

    Answer. A new partnership with the Department of Health and 
Human Services--Grants Payment Management System, will convert 
the current paper-based reimbursement payment process to an 
automated payment advance system, with two major reconciliation 
points--one at mid year and one at year-end closeout. The 
advance system, with appropriate checks and balances, will 
provide a remedy for grantee's with cash-flow concerns. Our 
objective is to meet the OMB prompt payment standards of 30 
days or less, and respond in a similar timeframe if there are 
questions or issues with the payment request.

    Question 3. What steps is the SBA taking to address 
centers' concerns about ranking criteria? What is the SBA doing 
to make the ranking criteria, for the new renewable grants as 
well as the other WBC grants, based on relevant, fair, 
understandable, and transparent measures?

    Answer. We are in process of reviewing and revising our 
proposal of evaluation criteria to ensure that the intent of 
the program is being met, and that there is increased 
transparency and clarity for applying centers.
    The new Program Announcement will articulate a policy for 
strategic investment in development of women's entrepreneurship 
that is market driven. Selection of new centers will be 
evaluated based on market need and key organizational success 
factors.
    Continued funding for existing (and returning centers) will 
be awarded based on successful past performance, in addition to 
key organizational success factors and market need--defined 
primarily by the center's ability and accountability to meet 
the grant performance criteria and the ability to serve the 
market as agreed.

    Question 4. Moving forward, what specific recommendations 
does the SBA have for ensuring that new and rural centers will 
be funded in the coming years?

    Answer. The new Program Announcement will articulate a 
policy for strategic investment of resources that is market 
driven. Selection of new centers will be evaluated based on 
market need and the service gaps or growth opportunities 
identified in the current portfolio of Women's Business 
Centers.

    Question 5. Will the SBA need additional appropriations to 
continue to expand the WBC program? If so how much additional 
funding would be necessary? Will the SBA be able to open new 
centers if additional funding is not provided? Please explain 
why or why not and all the possibilities for expanding the WBC 
program.

    Answer. The program's intent is to seed and develop centers 
in areas of greatest need, and we believe the current levels of 
funding achieve that intent.

    Question 6. What should be done to help rural women's 
business centers expand their services to women's businesses?

    Answer. Rural-based Women's Business Centers face unique 
challenges in getting WBC services to their clients. These 
challenges will be factored into the new selection and funding 
criteria.

    Question 7. How is the SBA leveraging technology to help 
rural centers better meet the needs of their women business 
owners? What else should be done to help rural centers use 
technology to their advantage?

    Answer. The SBA has identified best practices within all of 
its resource partner networks that exemplify innovative use of 
technology in service delivery. We are working to improve the 
dissemination of these best practices throughout the networks. 
We have also recently invested in several new web-based 
assessments and training modules to support entrepreneurs not 
able to receive local counseling assistance. These investments 
have already drawn significant attention from entrepreneurs, 
with over 1300 entrepreneurs daily utilizing these tools. 
Further, we believe a key organizational success factor in 
evaluating center applications is the leadership experience 
with technology and the presence of a technology-based element 
to their center's service strategy.

    Question 8. What kind of training and assistance is SBA 
providing to WBCs to aid them in their fundraising efforts?

    Answer. At the most recent national post award conference 
for WBCs and DOT& in early September, several opportunities 
were created for WBCs to hear speakers and dialog on this 
issue. We will continue to provide guidance and educational 
opportunities for WBC directors that help them expand 
partnerships, leverage additional funds for their centers, and 
achieve an appropriate balance between program delivery 
responsibilities and program development opportunities. It 
should also be noted that fundraising is not an allowable cost 
under grants law. Therefore, SBA faces stringent legal 
constraints with regard to using appropriated or grant funds to 
pay costs associated with providing training on fundraising to 
WBCs.

    Question 9. Without appropriate monitoring and enforcement, 
prime contractors often fail to follow through with their 
promised plans to award small business subcontracts. What steps 
should the SBA take to monitor and enforce the plans for 
subcontracting with women-owned small businesses?

    Answer. The SBA is taking the same precautions to monitor 
and enforce plans for subcontracting for women-owned small 
businesses as it does with all other small businesses. For 
instance, the recent SBA recertification regulation that 
requires companies with Federal contracts to recertify, their 
size status as ``small businesses.'' This will increase 
opportunities for more small businesses, including those that 
are women-owned, to receive contracts from the Federal 
Government.
    In addition, subcontracting plans are reviewed by both 
contracting officers and SBA prior to contract award. 
Furthermore, SBA's Commercial Market Representatives (CMRs) are 
available to assist small businesses, including women-owned 
small businesses, with subcontracting opportunities.

    Question 10. As a result of the lack of monitoring by the 
SBA's and other agencies' contracting personnel women-owned 
small businesses, as well as other small businesses become 
frustrated and discouraged from pursuing Federal subcontracting 
opportunities. What is the SBA specifically doing to ensure 
women-owned small businesses continue to pursue subcontracting 
opportunities?

    Answer. The SBA is committed to furthering our positive 
impact on women in business across our contracting programs. 
Additional resources for women are available through SBDCs, 
WBC, SCORE, PTACs (at DoD facilities--Procurement Technical 
Access Centers). Furthermore, all agencies have Offices of 
Small Disadvantaged Business Utilization (OSBDU) and within the 
OSDBU, there are often women's business advocates.
    Each of these can make a difference and can encourage more 
women-owned businesses to join the Federal contracting system. 
More women-owned businesses in the system should directly 
translate into more contracting dollars going to women-owned 
small businesses.

    Question 11. What is your agency doing to increase Federal 
contracting opportunities for women-owned small businesses?

    Answer. SBA's semi-annual scorecard of the other procuring 
Agencies is a great example of the Agency's plan to increase 
Federal contracting opportunities. The scorecard is providing 
transparency and accountability for the procuring agencies. It 
is publicly calling on them to achieve all of their small 
business goals, including focusing 5 percent of all contracting 
dollars to women-owned small businesses.

    Question 12. At a recent hearing in the House Small 
Business Committee, Administrator Preston stated the SBA has 
recently submitted a new rule, relating to the women's 
contracting set-aside program, for interagency review, The 
Administrator stated that it will take at least another 90 days 
before a response is given. The women's contracting set-aside 
pro gram was enacted nearly 7 years ago. How much longer will 
it sake fop the law to be implemented? What other steps is SBA 
taking to ensure the law is implemented immediately following 
the 90 days?

    Answer. The proposed rule has been submitted to the Federal 
Register for publication. The public will now have an 
opportunity to comment on the Proposed Rule for a period of 60 
days. Upon completion of those 60 days, SBA will review and 
respond to all of the comments received in a final rule. Since 
we have just started the public comment period, any estimation 
of an implementation date is premature.
                              ----------                              


 Responses by William B. Shear to Questions from Senator John F. Kerry

    Question 1. As you outline in your testimony, the lack of 
certainty over funding is one of the most critical problems 
facing Women's Business Centers, as it has been since the 
program was first implemented. In your opinion, to what degree 
was this lack of certainty detrimental to the ability of 
Women's Business Centers to fulfill their purpose, to assist 
women entrepreneurs and business owners, particularly those of 
lesser means? In your opinion, is the new legislation an 
improvement over the old system?

    Answer. Concerns about funding were common among the WBCs 
that we spoke with. For example, some WBCs in both the regular 
and sustainability programs said that they were concerned about 
their ability to continue operations after losing SBA support. 
In addition, OMB reported in its Program Assessment Rating Tool 
(PART) that frequent changes in the WBC program's funding 
structure, delays in extending sustainability funding, and 
uncertainty about the future had created challenges for the 
program. The new legislation, which provides continuous funding 
for WBCs through renewable 3-year awards, directly addresses 
concerns WBCs expressed about a lack of long-term or permanent 
support from SBA. Nevertheless, SBA may encounter some 
challenges going forward. For example, it is unknown how the 
new awards will impact SBA's ability to fund new centers.

    Question 2. In your investigation you looked into SBA 
oversight over the WBC program. What is your opinion of SBA's 
current oversight of the program--is it effective? Are there 
ways of improving it that would maintain oversight, while 
decreasing the burden on SBA and the centers?

    Answer. The oversight process that SBA has in place, as 
well as the performance-based aspect of the WBC program, are 
intended to assist WBCs in complying with the requirements of 
the program and in carrying out its mission. However, SBA faces 
challenges in its oversight of WBCs, including imbalances in 
its staff resources to oversee the program and ineffective 
communication with the centers. SBA has an opportunity to 
increase the effectiveness of its oversight by ensuring that 
the centers receive clear and timely guidance. While our work 
did not include an assessment of WBC compliance, oversight and 
the assurance of WBC compliance could be improved by addressing 
the challenges we identified. For example, better communication 
between SBA and WBCs about program requirements could improve 
the oversight process.

    Question 3. According to GAO and the Office of the IG, 
communication within SBA and between SBA and the centers is a 
major problem. Do you have any recommendations for addressing 
the communication problems? Is using the web a good idea?

    Answer. WBCs we spoke with cited several communication 
issues with SBA. In addition, a separate study we cited in our 
testimony found that over half of the 52 WBCs surveyed said 
that SBA could improve its communication with them. We think 
that effective communication among SBA's offices that oversee 
the program and between SBA and the centers is essential in 
ensuring that the program is achieving its goals. To this end, 
SBA should make use of available technology, including the 
Internet, in its efforts to communicate program requirements 
and other key information. We anticipate making a 
recommendation to address this issue in our final report.

    Question 4. Women's Business Centers have complained about 
the unclear criteria upon which they are evaluated. As someone 
who has looked at the program very closely, what do you think 
are fair and accurate benchmarks for evaluating the performance 
of a center?

    Answer. Some WBCs told us that SBA did not provide them 
with feedback on their performance or that SBA's criteria for 
determining annual award amounts were not clear. When we 
followed up with SBA, agency officials told us that they were 
aware of this concern and would provide regular feedback to the 
centers going forward. They also said that they were working 
toward making the WBC evaluation process more transparent. We 
think that SBA's performance-based funding process encourages 
high performance among the centers. Although we did not assess 
SBA's specific performance benchmarks for WBCs, we think that 
making the process more transparent and improving communication 
with WBCs about their performance would improve the process for 
evaluating the performance of centers.

    Question 5. You mention that, oftentimes, Women's Business 
Centers are not able to coordinate with SBDCs and SCORE in a 
way that benefit all of the SBA programs involved. Based on 
what you have learned from your study of Women's Business 
Centers, do you feel that it is possible to create synergy 
between those programs? What measures can SBA take to reduce 
duplication of services and highlight the unique nature of each 
particular program?

    Answer. In line with the WBC program's mission, we found 
that the WBCs we spoke with focused on serving women, including 
those that were socially and economically disadvantaged. 
Additionally, representatives from the WBC, SBDC, and SCORE 
programs that we spoke with, as well as SBA officials, often 
differentiated the programs by a typical client with regard to 
stage of business or the type of assistance needed. In our 
testimony, we also note that an SBA study found that WBC 
clients tended to have fewer employees and smaller revenues 
than clients of other SBA business assistance programs. 
However, in some instances, WBC clients may be able to benefit 
from services that a local SBDC or SCORE chapter offers and 
vice versa. In some markets, we found evidence that program 
representatives were very aware of what each program offered 
and saw examples of active coordination to meet the needs of 
small business clients. For example, five co-located SBDCs and 
WBCs we contacted shared administrative support and leveraged 
counseling staff in order to better serve clients. Although 
local markets vary, SBA could make sure that others understand 
each program's uniqueness and provide examples of promising 
practices to highlight coordination opportunities and reduce 
the potential for duplication. We anticipate making a 
recommendation to address this issue in our final report.

    Question 6. Another major issue that you address in your 
testimony is that the District Office Technical Representative 
charged with carrying out oversight of the Women's Business 
Centers often lack the expertise necessary to effectively do 
this work or have so many other responsibilities that they 
cannot dedicate the time necessary to do it properly. Do you 
think that it is possible, within the current SBA structure, to 
allocate personnel specifically to the role of overseeing 
Women's Business Centers? What role should the District Office 
play?

    Answer. In our review, we found that some District Office 
Technical Representatives have too many responsibilities 
overall or lack expertise in certain areas to carry out WBC 
oversight effectively. Nevertheless, district office staff can 
have a useful role in oversight because they are closer to the 
centers, are more likely to be knowledgeable about the 
communities in which they operate, and are able to conduct site 
visits. Though SBA faces agency wide challenges as a result of 
downsizing, we believe SBA can achieve effective oversight with 
an appropriate allocation of responsibilities between 
headquarters and district office staff. We anticipate making a 
recommendation to address this issue in our final report.

    Question 7. As you are aware, the new legislation alters 
the funding structure for Women's Business Centers, allowing 
the centers to apply for a Renewal Grant every 3 years, with no 
limit to the number of years they can receive grants. Based on 
your review of the Women's Business Center program and your 
expert knowledge of the SBA, what suggestions or 
recommendations can you make for implementing this as quickly 
as possible?

    Answer. SBA can begin the application review process for 
fiscal year 2008 prior to receiving its appropriation. In 
addition, SBA could develop a structured approach to 
implementing the new program that provides a timeline or plan 
for updating the award announcements, incorporating changes it 
may have in the application process, and specifying how 
coordination among relevant SBA offices shall occur. Since the 
goal of the new legislation is to implement continuous funding 
for WBCs, SBA could also consider giving some priority to 
facilitate uninterrupted funding for centers that graduated at 
the end of fiscal year 2007 and are eligible to continue in the 
program.
                                ------                                


  Responses by William B. Shear to Questions from Senator Olympia J. 
                                 Snowe

    Question 1. With the creation of the renewable grants 
enacted in the Troop Readiness, Veterans' Care, Katrina 
Recovery and Iraq Accountability Appropriations Act of 2007, 
the SBA will be required to rank and evaluate all of the 
existing centers as well as all of the graduated centers. What 
steps is the SBA taking to address centers' concerns about 
ranking criteria? What is the SBA doing to make the ranking 
criteria, for the new renewable grants as well as the other WBC 
grants, based on relevant, fair, understandable, and 
transparent measures that will be used in the evaluation 
process?

    Answer. With regard to implementing the new renewable 3-
year awards, SBA officials told us that they anticipate 
revising certain criteria to incorporate the new program 
structure and the mixed pool of applicants. At the time of our 
review, SBA was still reviewing the criteria. However, some 
WBCs told us that SBA did not provide them with feedback on 
their performance or that SBA's criteria for determining annual 
award amounts were not clear. When we followed up with SBA, 
agency officials told us that they were aware of this concern 
and would take steps to make the WBC program's performance-
based funding process more transparent.

    Question 2. In its testimony, the GAO stated that centers 
felt the SBA did not provide sufficient feedback on center 
performance. What changes should the SBA make to better 
evaluate centers and help centers understand how to improve 
their performance?

    Answer. Some WBCs told us that the lack of feedback 
regarding their performance was a concern. This concern was 
part of a broader issue among WBCs about SBA's communication 
with them. We asked SBA officials about providing the centers 
with performance feedback and they told us that in the past, 
they provided feedback when the WBC needed to make a 
correction. They also said that they were aware that the 
centers had this concern and would provide regular feedback to 
the centers going forward.

    Question 3. Without specific guidance from the SBA, have 
Women's Business Centers taken steps to coordinate with Small 
Business Development Centers and SCORE on their own initiative? 
If so, please describe these steps.

    Answer. Some WBCs have coordinated with SBDCs and SCORE in 
local markets using a variety of approaches. For example, a WBC 
in Wisconsin that was working with SBDC, SCORE, and other small 
business assistance providers to develop a detailed triage 
system for small business clients so that the providers could 
divide resources and systematically determine where to refer 
clients. Under a memorandum of understanding, WBC, SBDC, and 
SCORE representatives in South Carolina organized informal 
groups with other area small business providers to plan events, 
coordinate services, or facilitate training. In several 
locations, WBCs were co-located or shared space with SBDCs and 
SCORE chapters. Co-located WBCs were often able to benefit from 
reduced overhead costs that came from shared facilities and 
office space. For example, in California, a WBC that was co-
located with an SBDC often referred clients to SBDC counselors 
if WBC counselors were not available in order to maximize 
resources and better serve small business clients.

    Question 4. Would a detailed SBA plan explaining 
coordination efforts between its business assistance programs 
reduce uncertainties in the duplication of services? Why or why 
not?

    Answer. A detailed plan that included information on 
promising practices and examples of successful coordination 
would help to reduce uncertainties and would also facilitate 
and encourage coordination efforts. Recognizing that local 
markets vary, successful coordination strategies can also vary 
between different markets depending on factors such as the 
programs available in a given area, specific program offerings, 
and the level of interaction between program representatives. 
Increased awareness of each program's services at the local 
level could facilitate coordination and reduce the potential 
for duplication. We anticipate making a recommendation to 
address this issue in our final report.

    Question 5. Given the various SBA technical assistance 
programs serve different clientele, why would duplication be an 
issue?

    Answer. In general, the potential for duplication could 
still be an issue because all of the programs offer counseling 
and training services and small business clients do not always 
know which program best meets their needs. Because local 
markets vary, there may also be more potential for duplication 
between the services that WBC, SBDC, and SCORE offer in some 
areas than others. In their efforts to coordinate and avoid 
duplication, SBA's technical assistance programs may also find 
opportunities to leverage resources. For example, WBC clients 
may be able to benefit from services that a local SBDC or SCORE 
chapter offers and vice versa. Overall, small business clients 
would be best served where the programs and SBA coordinate to 
serve businesses at all stages of development and with a 
variety of needs, and where potential clients have a clear 
understanding of which program can best meet their needs at any 
given time.
                              ----------                              


  Responses by Debra S. Ritt to Questions from Chairman John F. Kerry

    Question 1. Based on your work at other Federal agencies 
and reviews of the practices in other offices at SBA,
     Are the grant problems with Women's Business Centers 
typical? How does the Women's Business Center office compare to 
other offices in SBA?

    Answer. The grant problems experienced by Women's Business 
Centers (WBCs) are not typical of other grant programs 
administered by SBA. Authorizing legislation requires that WBC 
grants be administered by SBA's Office of Women's Business 
Ownership (the program office). However, we found that both the 
program office and SBA's Division of Procurement and Grants 
Management (the grants office) share responsibility for 
processing the grant awards and payment requests. Our audit 
determined that problems experienced by WBCs in receiving 
timely payment resulted from disagreements between the program 
office and the grants office in their understanding of the 
information that WBCs must submit to get paid. In contrast to 
the WBC program, both the Small Business Development Center 
grants and earmarked grants are disbursed more timely than the 
WBC grants.

    Question 2. Your written testimony says that offices within 
SBA did not work together to develop payment requirements in 
the program manuals. It is my understanding that these manuals 
are distributed to Women's Business Centers during mandatory 
training.
     How good are these manuals--do they include all the 
necessary information? Does every center have one?
     What additional information should be included that is 
not?
     Do you have any suggestions for how best to communicate 
manual changes to the centers?

    Answer. Annually SBA updates the WBC program manuals to 
reflect the most current eligibility and payment requirements. 
The manuals are fairly comprehensive and user-friendly. 
However, we noted that last year the grants office was not 
sufficiently involved in developing the manuals, which resulted 
in the omission of some payment requirements. It also led to an 
open disagreement between the grants office and the program 
office during WBC training and throughout the 2007 grant 
administration process. For example, the manuals did not 
stipulate that WBCs must submit original supporting documents 
and original signatures. The manuals also provided conflicting 
and unclear requirements about the reporting of changes in 
center personnel to SBA. For example, one section of the manual 
instructed WBCs to submit the names of all personnel changes to 
SBA, while another section advised that only changes in key 
personnel must be reported. The manual also did not adequately 
define key personnel.
    Program manuals are provided to only those Women's Business 
Centers who attend annual training. We found that after the 
manuals were distributed to WBCs and training conducted, the 
program and grants offices introduced new requirements for 
payment requests. These changes were not always communicated to 
WBCs in time for them to make required changes to their payment 
requests nor were the manuals updated.
    Our report recommends that the manuals, and any updated 
information, be posted on SBA's website so that the latest, 
most comprehensive information is available to all WBCs.

    Question 3. Women's Business Centers have complained about 
the unclear criteria upon which they are evaluated. As someone 
who has looked at the program very closely:

     Do you agree that there has been confusion about the 
evaluation criteria and how WBCs are scored? Is that a problem?
     Based on your familiarity with the program, what criteria 
do you believe would be fair and accurate for evaluating these 
centers?

    Answer. Because our audit focused primarily on the 
processing of grant payments, we did not evaluate SBA's 
communication of its grant evaluation criteria or determine 
whether the criteria were fair and accurate. However, we did 
note that SBA's grant solicitation announcement includes the 
criteria that the Agency will be using to evaluate WBC grant 
proposals, as required by the authorizing legislation.

    Question 4. Mr. Bill Shear from the Government 
Accountability Office testified that the District Office 
Technical Representative (DOTR) charged with carrying out 
oversight of the Women's Business Centers often lack the 
expertise necessary to effectively do this work or have so many 
other responsibilities that they cannot dedicate the time 
necessary to do it properly.

     Did you find this to be a problem?
     If so, what role should the district office play?

    Answer. We have some indications from previous audits that 
SBA's district offices may be understaffed and that district 
employees have many collateral duties. In 2003 the OIG also 
reported that district personnel assigned to perform oversight 
of a Texas WBC did not have the financial background or proper 
training to perform financial reviews of the WBC. SBA relies 
heavily; however, on DOTRs to carry out many WBC program 
responsibilities even though they have other full-time 
responsibilities. In March 2007, the SBA's Office of Women's 
Business Ownership (the WBC program office) relieved the DOTRs 
of duties associated with reviewing and certifying payment 
requests, and assumed those responsibilities exclusively at SBA 
Headquarters. While DOTRs no longer review and certify payment 
requests, they continue to oversee the activities and 
operations of local WBCs in their districts.
    The role that district offices should play in the WBC 
program is currently evaluated by the Agency. Recently, the 
Associate Administrator for Entrepreneurial Development 
established a task force to examine all roles and 
responsibilities associated with the award and administration 
of WBC grants. Part of that examination will include a review 
of DOTRs' roles and responsibilities.

    Question 5. With your in-depth knowledge of the grant 
making process perhaps you can give some advice to the Agency 
on how to include centers newly eligible for funding in the 
next round of grants.

     Can you outline a timetable for how SBA could administer 
the grant process for new and older centers?
     Is it true that pre-award costs can be eligible for 
reimbursement?
     Also, is it true that different requirements can be used 
for each program--the new centers versus the permanent funding 
for existing centers?
     Although centers are required to meet their goals and 
show that they are effectively providing services, is 
competition required for distributing grants such as these? How 
do other agencies handle similar situations?

    Answer. A timetable for the award of the renewable grants 
is currently being developed by the Associate Administrator for 
Entrepreneurship Development to ensure that the grants are 
awarded by January, 2008, as requested by the committee. In 
general, we believe that SBA could more expeditiously award WBC 
grants for both new and established centers, according to the 
following timetable:

     Post the grant solicitation or formal announcement by 
October 31 of each fiscal year for a minimum of 30 days. 
Additionally, this announcement could be augmented by a year-
round publication on SBA's website of the availability of WBC 
grants, much like student grant programs are advertised all 
year, with stated deadlines (i.e., cutoff dates) and 
requirements for application.
     Review the proposals and make selections by late 
December.
     Announce grant awards by mid-January.

    Based on information obtained from OMB, pre-award costs can 
be eligible for reimbursement provided that they are 
specifically addressed in the grant opportunity announcement.
    Different application requirements can be used for new 
versus existing centers. Older centers only need to submit 
information on their past performance and budget, whereas new 
centers must furnish greater detail about their 5-year plan 
with clear goals and time-phased activities, a milestone chart, 
a list of the types of training and counseling offered, and the 
required certifications.
    According to appropriations law, whether a grant program is 
competitive depends on whether the grants are mandatory or 
discretionary. In a mandatory grant program, grant awards are 
usually directed to one or more classes of prospective 
recipients who must meet specific eligibility criteria. These 
grants are often awarded on the basis of statutory formulas. 
The concept of competition generally applies to discretionary 
grants. The Federal Grant and Cooperative Agreement Act 
encourages competition in order to identify and fund the best 
possible projects to achieve program objectives. The WBC grant 
program is a discretionary program where the centers compete 
annually for the maximum award amount.
    Further, the authorizing legislation for the WBC program 
specifically required that sustainability grants be competed 
simultaneously with requests for proposals from new and 
returning entrants in the first 5 years of the grant program. 
While not specifically requiring competition for new entrants 
and for returning entrants in the first 5 years, the 
authorizing language included a requirement that SBA evaluate 
and rank applicants in accordance with predetermined selection 
criteria that were to be stated in terms of relative importance 
and be made publicly available in each grant solicitation for 
applications. In addition, the authorizing legislation required 
the Office of Women's Business Ownership to select applicants 
to participate in the program, and required that SBA consider a 
center's past performance before awarding grants.
    Other agencies, like SBA, follow appropriations law 
governing the award and administration of mandatory and 
discretionary grants.

    Question 6. Are there any other changes or suggestions that 
you would recommend for implementing this new law and improving 
the process for WBCs and the SBA?

    Answer. First, SBA should decouple its evaluation of new 
entrants from that of established WBCs seeking renewal grants 
or option year funding as established centers should not have 
to submit the same amount and type of information that is 
required from new entrants. If a center is already in the 
program and returning for option year funding or applying for a 
renewal grant, SBA already has historical performance data for 
that center. Therefore, SBA should adjust its evaluation 
requirements to better match the maturity of the center. 
Further, placing all returning grantees on the same evaluation 
schedule as new entrants requires the expenditure of 
substantial resources, for example, to evaluate potentially 
over 100 proposals every year, and unnecessarily delays 
returning grantees from requesting payment earlier in the year.
                                ------                                


 Responses by Debra S. Ritt to Questions from Senator Olympia J. Snowe

    Question 1. Provisions in the Troop Readiness, Veterans' 
Care, Katrina recovery and Iraq Accountability Appropriations 
Act of 2007 require the SBA to create the Women's Business 
Centers 3 year renewable grant program in fiscal year 2008. 
What problems does the SBA IG anticipate the SBA may have by 
implementing the 3 year renewable grant programs and what 
should the SBA do to prevent these difficulties?

    Answer. SBA will be challenged to meet the January 2008 
commitment for the award of renewable grants. This is because 
SBA has to re-engineer its award process, publish evaluation 
criteria for the 2008 grants, post the announcement, wait 30 
days for proposals, and then evaluate the proposals and select 
awardees. As of November 1, 2007, SBA had not posted the 
request for proposals.
    Further, it is anticipated that since the 2008 grantees 
will be announced in January, SBA will be disbursing both the 
2007 and 2008 grants concurrently upon receipt of payment 
requests from the WBCs. This volume of payment requests may be 
difficult for SBA to process timely.

    Question 2. Why are timely payments to Women's Business 
Centers so difficult for the SBA to achieve? How should SBA 
reduce these delays?
    Answer. Our audit determined that timely payments to WBCs 
were difficult for SBA to achieve because of poor coordination 
and communications between two SBA offices that processed 
payment requests, the inability of these two offices to work in 
an integrated fashion, and flaws in the payment process itself 
that caused paperwork to be rejected or lost. To ensure that 
grant funds are disbursed more timely, our report made several 
recommendations to either streamline or automate the processing 
of payment requests, including that the Associate Administrator 
of Entrepreneurial Development:

     Enter into a Memorandum of Understanding (MOU) requiring 
collaborative development of criteria and an interpretation of 
payment requirements for complete and appropriate submittals, 
agreement on criteria changes, and agreement on respective 
roles and responsibilities in rejecting payment requests. If an 
acceptable agreement cannot be reached, either place grants 
specialists within the program office or outsource the WBC 
grants reimbursement function.
     Annually develop and provide WBCs a consolidated 
checklist of payment requirements and supporting documentation 
to ensure payment requests are complete.
     Establish a change control process to prevent or minimize 
changes made to payment requirements after the grant award, and 
to ensure that handbooks and information required on the 
payment request forms are appropriately updated.
     Automate the payment request review and approval process 
to the fullest extent possible. Leverage existing grants office 
automation capabilities and apply them to the WBC grants, 
tailoring the process as needed to meet the requirements of 
both SBA offices as contained in the signed MOU. In the 
meantime, ensure that all issues are identified before 
returning the payment requests for correction so that WBCs only 
have to submit one set of corrections.
     Permit WBCs to provide missing, incomplete or incorrect 
sections of their payment requests so that the complete request 
package does not have to be returned to WBCs and resubmitted to 
avoid restarts of the payment review process. Also disburse all 
funds except those costs that are in question to enable WBCs to 
get partial payments until their requests can be fully 
resolved.
     Enable web access by WBCs to the training, handbooks and 
program changes.
     Develop and post a complete log of payment review events 
on a secure password-protected website for viewing by WBCs and 
both SBA's program and grants offices so that WBCs can 
determine the status of their pay requests and can match their 
requests to specific invoices; and the Agency can monitor the 
timeliness of processing actions.

    Question 2. Does the SBA have sufficient procedures in 
place to recreate consistency and accurate check payment to 
Women's Business Centers going forward? Is the SBA sufficiently 
using technology to help streamline this process and reduce the 
wait time for check payment?

    Answer. Our audit found that SBA lacked sufficient 
procedures to ensure consistent and accurate payment of WBCs 
going forward. Our audit disclosed that SBA rejected payment 
requests before both the program and grants offices completed 
their reviews of the request, creating multiple restarts of the 
payment process. When payment requests were rejected, the 
entire original package, and corrected versions were mailed 
back and forth between SBA and the WBCs instead of only 
correcting the document(s) affected. Both offices also differed 
in their interpretations of the payment requirements. The 
Agency's lack of a tracking system to identify when the payment 
request is received, reviewed, and paid, also contributed to 
delays. We understand that SBA is in the process of revising 
its WBC grants disbursement processes and procedures and 
expects to have these changes finalized by January 15, 2008. 
Until these changes are implemented, we expect that payment 
delays will continue to plague the program.
                              ----------                              


Responses by Wendi Goldsmith to Questions from Senator Olympia J. Snowe

    Question 1. On July 18, 2007, the SBA stated at a recent 
contracting hearing before this Committee that women-owned 
small business contracts accounted for $11.6 billion in fiscal 
year 2006 and 3.4 percent of total Federal procurement, an 
increase of $1.4 billion (or 0.3 percent) over fiscal year 
2005. What can the SBA do, in addition to implementing the 
women contracting set-aside program, to further increase women-
owned small business contracting opportunities?

    Answer. My key recommendation is to establish a set-aside 
program, but also to include sole-sourcing measures similar to 
the 8(a) program. As discussed in my answer above, there can be 
a catch-22 situation where the women owned business needs 
proven experience in order to compete, even on a set-aside 
basis, for additional work.

    Question 2. The government needs to quantify women's 
participation in government contracting in order to determine 
if, and by how much, women's contribution levels are increasing 
or decreasing. Which contracting measurement, numbers of 
dollars or number of contracts, should be used to measure women 
participation levels in government contracting? Please explain 
the benefits of your recommended measurement method.

    Answer. I believe that numbers of contracts is important 
because it ensures that a variety of contracts, across a full 
spectrum of NAICS codes, are being used. It is this number of 
contracts that will allow women owned firms to build 
experience, and in my view this is the best way to track 
performance of the program. However in the final assessment, I 
believe that the dollar value of contracts awarded to women 
owned firms must stand as the key measurement, and I believe 
that the goal should be significantly higher than the present 
goal, and that the progress toward increasing the level of 
funds directed toward women owned firms should more closely 
reflect demographic parity.

    Question 3. Your website states that innovation is critical 
in your ecological planning work. How have you, as a small 
business owner, been able to think outside the box on 
ecological restoration, in ways that larger companies have not?

    Answer. Thank you for asking this question! I know from 
experience that the staff we attract and retain, and the 
relationships we cultivate with our clients is very different 
from large firms'. When you are solidly established and have a 
lot to lose, it is natural to avoid risks and potential 
conflicts, and stick to conservative approaches. There has long 
been a perceived and often very real antagonism between 
pragmatic engineers and idealistic environmentalists. Hence it 
has been innately risky for engineering institutions to embrace 
ecologically attuned methods, and even when they try, 
environmental stakeholders have been slow to accept and believe 
their attempts. It has been possible for the Bioengineering 
Group, as a small business, and as a firm with key leaders who 
are themselves rooted in both the pragmatic and the idealistic 
realms, to define specific approaches and processes to build 
concensus and integrate ecological functions into engineering 
solutions. We have brought these skills to serve various 
Federal clients over the years, and I firmly believe that the 
small business programs that have allowed us to develop our 
capabilities and our client relationships have benefited not 
only our firm, but chiefly our clients. Small business breeds 
innovation and resourceful problem-solving and our spin on this 
has been ecologically based interdisciplinary planning and 
design solutions.

    Question 4. You mentioned that you'd like to see greater 
enforcement of subcontracting rules so that small businesses 
are not exploited by larger firms. Have you contacted SBA with 
your concerns about specific cases of exploitation? If so, and 
what was SBA's response?

    Answer. I have contacted SBA on various occasions to 
discuss this issue but have not received help from them. One 
reason I realize is that without some comprehensive data on how 
the full set of contractors is fulfilling their small business 
commitments, it is difficult to single out specific firms and 
situation for intervention. Currently I understand that no such 
dataset exists, though I have heard rumor of some data being 
collected by certain agencies for their own use. Also I should 
note that the SBA personnel I have discussed this issue with 
lack knowledge and familiarity with my industry and have 
appeared to me to lack tact in addressing such matters. I have, 
on two occasions, dropped the matter due to my concern that SBA 
intervention would backfire and cause damage to my contracting 
relationship, and potentially a ripple effect spreading to 
other firms. There is not simple way for me as a small business 
owner to blow the whistle on my prime contractor for failing to 
use me as promised without being identified as the 
``complainer''. However I fully support the use of systematic 
enforcement of subcontracting plans including random rigorous 
review and evaluation of subcontrating performance including 
anonymous interview with small business subcontractors to air 
complaints and make suggestions. I would assume that if 
penalties were severe, and new contract awards made tightly 
contingent on past subcontracting performance (there is a 
growing but still weak awareness that this topic matters in the 
selection process). Also the key loophole is that the 
subcontracting plan only applies if work is subcontracting at 
all, and currently small businesses are used to flesh out a 
strong competitive proposal, then the large business often 
self-performs the vast majority of the work, rather than 
adhering to prior worksplit provisions with subcontractors. 
Federal subcontracting program rules do not address this 
problem, though perhaps this should be changed so that prior 
worksplit commitments be shared with the government and used 
for measurement of performance.
                                ------                                


 Responses by Wendi Goldsmith to Questions from Senator Michael B. Enzi

    Question 1. During the hearing, you commented about the 
difficulties of finding a starting point in the government 
procurement process. Your point was especially well taken when 
you described the specific challenges of being awarded 
contracts in the field of engineering. What efforts on behalf 
of the Small Business Administration and the Women's Business 
Center might better facilitate the needs of women seeking 
business through competitive bidding processes?

    Answer. In order to build the level of experience needed 
for women business owners to compete successfully for Federal 
contracts, especially in highly technical fields such as 
engineering, it may well be necessary to use both sole-source 
and set-aside measures. In my own business experience, without 
the possibility of gaining experience through sole source 
opportunities, my success would have been doubtful. Set-aside 
opportunities may provide a suitably sheltered climate for 
women owned firms to compete, but in my experience, these 
channels do not work well unless prior experience of a targeted 
nature can be demonstrated--hence a catch 22 situation where 
you need to have experience to get experience. As I described 
earlier, small firms often spend considerable resources 
participating as subconsultants for proposal preparation, only 
to wind up getting little or no work from the contracts, so 
unfortunately gaining experience that way has proven uncertain 
and costly. I would like to believe that through greater 
involvement by SBA and/or Womens Business Centers in providing 
oversight and accountability to subcontracting programs, 
including advocacy and enforcement when there are problems, 
that the situation could be corrected. However sole sourcing 
and set-asides simplifies the problem by putting women business 
owners in charge of the work, rather than wrangling for their 
portion.

    Question 2. I was pleased to learn that you found great 
success in sole source contracting and the Mentor-Protege 
program. From your experience, in what ways can the Mentor-
Protege program and opportunities for sole source contracting 
be improved?

    Answer. Much as outlined above, it would often be helpful 
to have advocacy and enforcement support through SBA or the 
WBCs to cultivate better use and understanding of both sole-
sourcing mechanisms, and also of navigating Mentor-Protege 
relationships. In my experience I found that Federal 
contracting officers remain inconsistently informed to this day 
about suitability and methods for issuing sole-source 8(a) 
contracts, and the situation is worse when marketing directly 
to many end users who have less training and react with fear to 
sole-sourcing which sounds ``to easy and too good to be true, 
therefore it must be fishy''. In my experience SBA personnel 
have refused to assist in these situations, citing that it is 
the responsibility of the 8(a) firm to conduct marketing, and 
the SBA simply approves the sole source contract action. In my 
experience, though, the problem is often that the end user is 
not comfortable even initiating this step do to poor 
information and high levels of suspicion and discomfort. In one 
instance a year ago a user recommended to a superior that my 
firm receive a sole source contract for which we were eminently 
suited, and the supervisor's reaction was discomfort and 
reluctance. The end user contacted that agency's ethics officer 
and/general counsel to verify that the approach was 
appropriate, but the supervisor still rejected it, based on 
various faulty statement about the sole-sourcing being 
inappropriate. Worst of all the interaction created a lot of 
bad blood between various parties. Earlier in my career I 
experienced frequent obstacles due to misinformation but with 
the highly practiced negotiation skills and program knowledge I 
now possess, these obstacles still exist. It would be helpful 
to have an ombudsman or similar resource to call upon in such 
instances to clarify facts and most importantly smooth out any 
suspicions or fears of ethics violations before they spin out 
of control. My main recommendation for the Mentor-Protege 
program is that SBA could establish a tutorial for Mentor-
Protege relationship kick-offs, and a forum for firms with 
Mentor-Protege relationship experience to aid small firms in 
identifying and selecting Mentors. In my experience large firms 
do not automatically adopt an attitude of support and 
cooperation to aid and collaborate with their Proteges, but 
rather fall into long-standing patterns of strong-arming small 
business as is typical in subcontracting relationships. Even 
when some large firm staff grasp the nature of the Mentor-
Protege relationship, other key staff typically fail to 
understand and act appropriately. I believe that improvements 
could be made through an outreach program that features a set 
of relationship guidelines, and most importantly shared case 
studies of top performers and weak performers. After all we 
entrepreneurs large and small like to excel, and if educated 
about the highly mutual and supportive Mentor-Protege 
strategies that lead to great shared benefit, most would pick 
that outcome over the alternative of greed, manipulation, and 
even destructive behavior that I know from experience can 
otherwise occur.
                              ----------                              


            Responses by Rosemary Bratton to Questions from
                        Senator Olympia J. Snowe

    Question 1. Today, women-owned businesses are the fastest-
growing segment of the economy; they comprise roughly a third 
of all businesses and are represented across all industrial 
categories. However, women-owned businesses are of much smaller 
scale in size and continue to generate significantly lower 
incomes than businesses owned by men. According to the Small 
Business Administration's Office of Advocacy, the average firm 
owned by a woman generates only 78 percent of the profit of the 
comparable business owned by a man. Please explain these 
trends. Why are more women-owned businesses developing at much 
smaller scales, and with significantly lower profit margins 
than businesses owned by men? What factors could be 
contributing to this disparity? What policies could Congress 
enact to rectify this disparity?

    Answer. Women owned businesses and other small business 
need specific contracting assistance on an immediate need 
basis. RFP's should be user friendly with adequate time to 
respond. In addition, a national help line call center needs to 
be in place for small business owners to get immediate answers 
and contracting assistance when preparing a RFP. A nationwide 
call center could be staffed with employees who can assist 
clients through the bidding process on an as needed basis. 
Without this specialized assistance clients lose the 
opportunity to participate. These services should be available 
during regular business hours across all U.S. time zones. 
Creating a program for WBC's to actually ``certify'' women 
owned business on a recognizable national basis would assist 
with contracting opportunities. Currently women owned 
businesses must pay large amounts of money to private firms to 
become ``certified''. It is our experience that businesses 
operated by women are not those that are traditionally operated 
by men making a comparison difficult. Women in Wyoming are less 
likely to borrow adequate capital because they are perceived by 
the banking community as less qualified due to their lack of 
personal capital investment and tangible assets to be pledged 
as collateral.

    Question 2. According to the National Women's Business 
Council, 9 out of 10 women business owners want to expand their 
business and 83 percent want to increase their firm's 
profitability. Yet, only 3 percent of these businesses generate 
one million or more in annual revenues. Why are women finding 
it difficult to expand their businesses? What specific steps 
would you recommend that Congress and the SBA take to address 
these difficulties?
    Answer. The lack of specific duties to be performed by the 
various SBA funded organizations (WBC, SBDC, SCORE) provide for 
overlap of services. This overlap confuses small business 
owners by requesting assistance from all organizations at once 
instead of having orderly steps to proceed with specific 
assistance from each organization. The specific scopes of work 
covered by each organization would allow SBA to better track 
each funded organizations' effectiveness and facilitate better 
decisionmaking for the funded organizations in the future. 
Please refer to Appendix A for further breakdown of suggested 
categories and scale of the term ``small business''. Rural 
business owners whether male or female have very different 
challenges than urban areas in expanding their small 
businesses. Often there are few available workers to expand 
except for those businesses who franchise to other communities 
or become high tech on line.

    Question 3. Currently, four more rural states--Wyoming, 
Montana, Idaho, and Kentucky--do not have SBA funded Women's 
Business Centers. What should be done to help rural states 
secure SBA funded women's business centers or expand their 
existing services to women's business owners?
    Answer. Rural states also have unique challenges for 
program delivery to entrepreneurs. One organization cannot 
provide all the services to all the small businesses. 
Streamlining SBA funded program organizations to develop 
specific scopes of work to guide entrepreneurs through each 
level of business planning, management and troubleshooting will 
create organized series of steps for each entrepreneur. The 
rural entrepreneur will know what services are available from 
each organization and request services accordingly. It is 
Imperative that every rural state have at least one SBA funded 
women's business center. Increased funding for additional staff 
members to handle rural areas is necessary to maintain a high 
level of service. Question 4 plays a large role in rural areas.

    Question 4. How is the SBA leveraging technology to help 
rural centers better meet the needs of their women business 
owners? What else should SBA do to help rural centers use 
technology to their advantage?

    Response. Technology availability is a requirement for 
rural centers. The first concern to be addressed before we 
discuss availability of technology based information to clients 
is the technology available from SBA to the individual centers 
for program management.
    (a) Edmis II brought about many changes in reporting to 
SBA. The problem with Edmis 11 is that it did not include and 
address the need for a cohesive reporting and client management 
system throughout the organization of SBA and all the WBC's. 
Edmis 11 needs to be upgraded to include a complete client 
management system to track counseling, training, projects, 
microloans, and client information such as annual sales and 
earnings along with jobs and employee salary information. This 
client management system could be created to automatically 
generate the needed reports to SBA as well as reports for each 
center to track their progress. The new system could have a 
client reporting module that could be placed on each center's 
website to annually report their financial information that 
would feed directly into the client management data base for 
tracking by the SBA and the centers. The time wasted with 
administrative duties could be cut by more than half for SBA 
and WBC employees. This time could be better utilized assisting 
the taxpayers (our clients). SBA would have instant access to 
the same information as the centers. Information sharing is a 
necessity to make sound decisions based on properly compiled 
information, not a hodgepodge of information filtering in from 
individual centers based on their system reporting 
capabilities. This consistent client management data base would 
prove useful in implementing best practices for the entire 
network of Women's Business Centers.
    (b) Rural client technology is imperative to effectively 
serve rural clients. Traveling hundreds of miles to attend a 
specific training is not feasible for most small business 
owners (especially during the winter months in Wyoming). Online 
training technology must be made available through the use of 
Learning Management System (LMS) software. The SBA has the 
power to negotiate a contract with a LMS provider to make this 
type of online learning available to all centers. The online 
training could also be converted to CD to mail to clients 
living in rural areas that don't have access to high speed 
internet capabilities. The SBA could negotiate a reduced price 
to make this type of software affordable for all centers. 
Currently, having a website is a requirement to being a WBC, so 
providing online training would not be an issue if the LMS 
software was affordable. LMS software providers offer extensive 
training and support which could be made available to the 
individual centers.
                                ------                                


Responses by Rosemary Bratton to Questions from Senator Michael B. Enzi

    Question 1. The hearing revealed that women's business 
centers have experienced continued difficulties with receiving 
feedback on the status and outcome of grant applications from 
the Small Business Administration. In addition to receiving 
little or no feedback on applications, concerns about the 
transparency of the grant scoring process have also continued. 
What experiences have you had in receiving responses on grant 
applications?

    Answer. We were told by OWBO that the sustainability 
funding that we were receiving as a project of the Wyoming 
Coalition Against Domestic Violence and Sexual Assault 
(WCADVSA) could not follow us as we separated and formed our 
own 501c3. OWBO had known from our inception that we planned to 
separate and encouraged us to become independent. Although I 
have never actually seen the rule or statute, according to OWBO 
the original grant was made to the WCADVSA and to have the 
funding follow us as a separate 501c3 would be considered pass 
through funding and is illegal. While we were never guaranteed 
that we would be funded as a new center we were told that we 
would be in a ``favorable'' position based on our years of 
providing excellent services. We applied as a new center in May 
of 2007 and as of today, November 1, 2007 I have not received 
any ``official'' notification of the status of our grant. 
Unofficially I was told by staff from the SBA District Office 
in Casper on 9/27 at a conference that we scored high but not 
as high as the 6 new centers that OWBO is funding. Also, I did 
receive a copy of the email that was sent to our district 
office on 9/21/07 indicating that our grant would not be funded 
and that the official notices would be mailed soon.
    In August as I was preparing our budget for our next fiscal 
year I finally called the OWBO office, talked with someone 
there on staff and was told simply that Wyoming was not funded. 
I discussed with our DOTR in Casper about how helpful it would 
be if I knew where our proposal was weak, she emailed OWBO and 
asked that question. The response from OWBO was that our grant 
was incomplete and therefore, not considered at all because we 
had not submitted the technical proposal to Grants.gov.
    After numerous phone calls with Grants.gov and much 
research on their part, it was determined that our grant 
proposal was complete, was received by Grants.gov, retrieved 
and validated, then submitted to OWBO where it was retrieved by 
that office. I later learned from our district office that OWBO 
had found our grant application that it was complete and that 
it would be evaluated by the panel as soon as possible. OWBO 
staff also indicated that if our proposal was strong, with 
points higher than the lowest of the 6 new centers scheduled to 
receive funding, then one of those centers would be eliminated 
for funding and we would be funded instead. This was very 
troubling for several reasons. What would have happened if I 
had not contacted members of the Small Business Committee? What 
a devastating impact on one of the 6 newly funded centers to 
have already attended the mandatory post award training and 
then not receive funding! Were there other applications that 
were simply lost? What level of tenacity is required to get 
honest answers from OWBO? Maybe the answer to that question is 
testifying before the Senate Committee on Small Business and 
Entrepreneurship? In fact it may take more that testifying for 
as I mentioned before it is now November 1 and I have never 
heard anything directly from OWBO about grant.

    Question 2. A question that I wanted to ask you and have 
placed in the record pertains to the unique challenges of 
serving rural areas. I found your comments on the need to 
improve the electronic signature portion of the applications 
especially helpful. I am concerned about the Office of Women 
Business Opportunities not allowing counseling information to 
be kept electronically. Could you please describe the 
difficulties you have faced working with your clients across 
Wyoming in keeping and doing business with physical documents?

    Answer. Two issues need to be addressed with this question. 
First the original signature requirement for form 641 and 
second, the paper files for forms 641 and 888.
    (a) Many WBC's have the ``client intake form'' (form 641) 
on their websites. This practice allows the clients to complete 
the form and email it directly to the center. Unfortunately, 
SBA still requires original signatures. This requirement means 
the center must print and mail the form 641 back to the client 
to sign and return before they can be considered a client. This 
practice is cumbersome, time consuming and expensive to the 
center, not to mention burdensome on the client that has taken 
the time to complete the form electronically and return the 
form via email. This requirement adds to client confusion and 
frustration. We have found many clients fail to return the form 
with an original signature which creates WBC employee time to 
follow-up with the client, not to mention long distance phone 
charges for rural WBC's. We feel the act of completing the 
online form 641 and emailing it to the center should constitute 
the client's intent to request our services. A statement could 
be added to the form requiring a response from the client 
accepting the terms and conditions stated on the form 641 
including the release of liability.
    (b) The paper copy of form 641 and 888 requirement wastes 
time and requires double duty by WBC staff. Most centers have 
some sort of a client management system that can be accessed by 
all staff members. Rural centers usually have outreach offices 
throughout their area so the computerized client management 
system is essential for assisting clients at all locations. The 
requirement of paper files simply does not work for rural 
centers because the paper files do not offer the flexibility of 
outreach staff members to review case files on the clients. 
Proper computer back-up routines and storage of offsite back-
ups create a user friendly environment as well as prepare a 
center for any disaster that may occur. Paper files are highly 
destructible in a disaster such as fire, flood, tornado, etc.

                               Appendix A

                                     Sliding Scale Small Business Definition
----------------------------------------------------------------------------------------------------------------
              Level Four                     Level Three               Level Two                Level One
----------------------------------------------------------------------------------------------------------------
Sales: > 10,000,000                    Sales: 5,000,000 to      Sales: 1,000,000 to      Sales: < 1,000,000
Employees: > 250                        9,999,999.               4,999,999.              Employees: < 50
                                       Employees: 100 to 249    Employees: 50 to 99
----------------------------------------------------------------------------------------------------------------


                            Steps to Success
------------------------------------------------------------------------
        Step One--WBC            Step Two--SBDC       Step Three--SCORE
------------------------------------------------------------------------
Nascent entrepreneurs with    Start-up through      Existing business
 little or no business         existing business     owners needing
 experience. Feasibility and   ownership. Business   specialized
 initial planning stages.      plan assistance.      technical
 Centers offer basic           SBDC offers           assistance. Trouble
 business training and         advanced business     shooting customized
 counseling programs and       training and          to each individual
 credit management. Access     counseling            business.
 to capital.                   programs..
------------------------------------------------------------------------

                              ----------                              


   Responses by Gale King to Questions from Senator Olympia J. Snowe

    Question 1. How specifically do Women Small Business 
Centers help women entrepreneurs gain confidence in their 
entrepreneurial abilities to overcome social barriers?

    Answer. Women Small Business Centers provide information, 
successful examples, a supportive environment, mentors and 
encourage peer relationships. All these things contribute to 
confidence.

    Question 2. Why are women finding it difficult to expand 
their businesses? What specific steps would you recommend that 
Congress and the SBA take to address these difficulties?

    Answer. Women find it difficult for several reasons. They 
are the prime caregiver in their families and often have to 
sacrifice the time required to grow their business to the needs 
of their families. There is guilt associated with balancing 
family and business expectations. Women also fear rejection and 
failure, it is safer not to try than to have to recover from 
obstacles. We also are unaware of many of the funding options 
available to us. Finally, we lack information on how to take 
our business beyond the ``mom and pop'' stage of growth.
    Congress and SBA can help with education on funding for 
business growth including assistance with the application 
process. Education on business growth practices is needed. Some 
suggested subjects: strategic planning, corporate structure, 
building your core team. I am not sure how you can help with 
the family stresses and the fears associated with business 
expansion
                              ----------                              


            Responses by Ann Marie Almeida to Questions from
                        Senator Olympia J. Snowe

    Question 1. Today, women owned businesses are the fastest-
growing segment of the economy; they comprise roughly a third 
of all businesses and are represented across all industrial 
categories. However, women-owned businesses are of much smaller 
scale in size and continue to generate significantly lower 
incomes than businesses owned by men. According to the Small 
Business Administration's Office of Advocacy, the average firm 
owned by a woman generates only 78 percent of the profit of 
comparable business owned by man. Please explain these trends. 
Why are more women-owned businesses developing at much smaller 
scales, and with significantly lower profit margins than 
businesses owned by men? What factors could be contributing to 
this disparity? What policies could Congress enact to rectify 
this disparity?

    Answer. While women owned business are developing at a 
faster rate in the economy, the matter of scale is a factor. 
Possible contributing exogenous factors include limited access 
to capitol; ineffective and limiting Federal procurement 
policies; market and corporate myopia to fully engage with 
women-owned business; limited access to networks to gain 
greater market interest, and the gender commitment to provide 
greater access to employee benefits thereby reducing business 
profits.
    Potential policy solutions: Improved Procurement Policies 
and adoption of Senate Snowe's Small Business Procurement 
Program; widespread and greater support by the Administration 
and the SBA to provide equal access to education; and both 
words and actions from that agency that underscore their 
understanding of the importance and impact of women's 
entrepreneurship in the U.S.

    Question 2. The SBA Office of Advocacy has recently 
published a report that highlights the difference between men 
and women entrepreneurs. One of the differences highlighted in 
the study was the venture size of a startup business. According 
to the report, women startup business with lower levels of 
initial employment and capitalization than men. The report 
further concludes that these results are due to lack of larger-
scaled business opportunities and the financial resources 
necessary to develop women-owned businesses. In your 
experience, is there a lack of opportunities and financial 
resources available to women to start-up and develop larger-
scaled businesses? Why or why not? Please explain.

    Answer. In a report underwritten and distributed by the 
Ewing Marian Kauffman Foundation which examined access to 
venture capital and angel financing, the results indicated two 
findings that I thought were particularly interesting: one, 
women are still only receiving 2-3 percent of the venture 
capital funds and those percentages remain stagnant; and two, 
the majority of venture capital deals are made through 
referrals via a fairly closed system of networks. The majority 
of women business owners do not have access to these networks 
of influence.

    Question 3. Last month, the SBA Office of Advocacy 
announced an ambitious new regulatory reform initiative, the 
``Regulatory Review and Reform,'' or ``r3'' initiative. The r3 
initiative would help the Office of Advocacy identify the 
existing Federal rules that are imposing a significant and 
potentially unintended burdens on small businesses--in Maine 
and across the country. According to the Office of Advocacy, 
very small firms with fewer than 20 employees annually spend 
nearly 45 percent more per employee than larger firms to comply 
with Federal regulations. What specific Federal regulations are 
unduly burdening women-owned small businesses from creating 
jobs and driving the economy? Which regulations should the r3 
initiative suggest that Agencies review to mitigate small 
business burdens?

    Answer. For the most part, regulations that impede the 
growth of small businesses impact both women- and men-owned 
firms. Setting low employment thresholds for environmental 
regulations, family and medical leave, and other paperwork 
requirements are the areas of greatest interest to the women's 
business community. Setting the threshold too low for these 
types of requirements can impede small business growth--as 
owners may decide not to add jobs if doing so will add 
significantly to their paperwork burden or put them into a more 
onerous category for regulatory compliance.

    Question 4. In your opinion, are there duplications in the 
services provided by Women Business Centers, Small Business 
Development Centers and SCORE? What services are offered by 
Women Business Centers that are not found in these other 
business assistance programs? Should the SBA provide a detailed 
plan of guidelines in coordination efforts between these SBA 
business assistance centers? Why or why not?

    Answer. Research results coordinated by the SBA along with 
data provided by the GAO continue to underscore that there is 
not a duplication of services provided by the WBCs, SCORE or 
SBDCs.
    As detailed in the SBA longitudinal research, as well as 
research published by the National Women's Business Council and 
the Association of Women's Business Centers, and the Center for 
Women's Business Research, Women's Business Centers provide 
long-term, full scope training curriculum similar to an 
Executive MBA program. The multi-week training programs also 
introduce women entrepreneurs with a full scope of advisors 
such as bankers, accountants, attorneys, organizational 
development consultants, insurance and financial planners and 
others to vet the business training process that ultimately 
delivers a bankable business plan. Networking, mentoring and an 
extended range of business trainings and services such as 
access to loans and loan packaging are also elements of the 
Women's Business Centers services. One of the singular elements 
that distinguish the Women's Business Programs from all 
entrepreneurial training programs is its commitment to 
relationship building. In fact, the effective currency that 
sustains the longevity of the women's business centers and 
successfully supports its clients is this relationship-based 
training. In fact, in the study completed by Babson College 
regarding the effectiveness of WBC's women business centers are 
characterized with the capacity to deliver and support a cycle 
of business creation.
                                ------                                


  Responses by Ann Marie Almeida to Questions from Senator Michael B. 
                                  Enzi

    Question 1. I appreciated your testimony that highlighted 
the need to make the grant process more transparent by allowing 
the public to access information regarding the results of 
applications. For the record, could you please elaborate as to 
how the disclosure of this information can improve the 
operation of Women Business Centers and their applications?

    Answer. By increased transparency we mean two things: 
first, that the SBA's Office of Women's Business Ownership be 
clearer about the timing and scheduling of its annual request 
for grant proposals; and second, that the criteria for 
evaluation and the distribution of the grant amounts be shared 
openly with all applicants. In recent years the grant 
announcements have not been made on a regular schedule, and not 
enough time is given for responding to the RFPs. Second, it has 
been unclear how the awards decisions have been made, and if 
grant winners are receiving equal amounts. Having a clearly 
identified point or rating system, and sharing the amounts of 
all of the grants will improve the quality of future 
applications, thus benefiting the entire program--as well as 
the taxpayer.
                        COMMENTS FOR THE RECORD

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


                                  
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