[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
Available via the World Wide Web: http://www.access.gpo/gov/congress/
senate
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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
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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:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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
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Level Four Level Three Level Two Level One
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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
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Steps to Success
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Step One--WBC Step Two--SBDC Step Three--SCORE
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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..
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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
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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.
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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]