[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]





                   PROMOTING ENTREPRENEURSHIP AND JOB
             CREATION BY DECREASING DUPLICATION AT THE SBA

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

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                              MAY 25, 2011

                               __________






            Small Business Committee Document Number 112-016
              Available via the GPO Website: www.fdsys.gov




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                   HOUSE COMMITTEE ON SMALL BUSINESS

                     SAM GRAVES, Missouri, Chairman
                       ROSCOE BARTLETT, Maryland
                           STEVE CHABOT, Ohio
                            STEVE KING, Iowa
                         MIKE COFFMAN, Colorado
                     MICK MULVANEY, South Carolina
                         SCOTT TIPTON, Colorado
                         JEFF LANDRY, Louisiana
                   JAIME HERRERA BEUTLER, Washington
                          ALLEN WEST, Florida
                     RENEE ELLMERS, North Carolina
                          JOE WALSH, Illinois
                       LOU BARLETTA, Pennsylvania
                        RICHARD HANNA, New York
               NYDIA VELAZQUEZ, New York, Ranking Member
                         KURT SCHRADER, Oregon
                        MARK CRITZ, Pennsylvania
                      JASON ALTMIRE, Pennsylvania
                        YVETTE CLARKE, New York
                          JUDY CHU, California
                     DAVID CICILLINE, Rhode Island
                       CEDRIC RICHMOND, Louisiana
                         GARY PETERS, Michigan
                          BILL OWENS, New York
                      BILL KEATING, Massachusetts

                      Lori Salley, Staff Director
                    Paul Sass, Deputy Staff Director
                      Barry Pineles, Chief Counsel
                  Michael Day, Minority Staff Director






























                            C O N T E N T S

                              ----------                              
                                                                   Page
Opening Statements:
    Graves, Hon. Sam.............................................     1
    Velazquez, Hon. Nydia M......................................     2

                               WITNESSES

Mr. William B. Shear, Director, Financial Markets and Community 
  Investment, U.S. Government Accountability Office, Washington, 
  DC.............................................................     4
Mr. Arnold Baker, Founder/CEO, Baker Ready Mix & Building 
  Materials, New Orleans, LA.....................................     5
Ms. Jody Keenan, Director, Virginia SDBC Network Mason Enterprise 
  Center, Fairfax, VA............................................     7
Ms. Denise Pickett, Executive Vice President, American Express 
  OPEN, New York, NY.............................................     9

                                APPENDIX

Prepared Statements:
    Mr. William B. Shear, Director, Financial Markets and 
      Community Investment, U.S. Government Accountability 
      Office, Washington, DC.....................................    24
    Mr. Arnold Baker, Founder/CEO, Baker Ready Mix & Building 
      Materials, New Orleans, LA.................................    37
    Ms. Jody Keenan, Director, Virginia SDBC Network Mason 
      Enterprise Center, Fairfax, VA.............................    40
    Ms. Denise Pickett, Executive Vice President, American 
      Express OPEN, New York, NY.................................    44
Questions for the Record:
    Graves, Hon. Sam.............................................    55
    Owens, Hon. Bill.............................................    56
Answers for the Record:
    Mr. William B. Shear, Director, Financial Markets and 
      Community Investment, U.S. Government Accountability 
      Office, Washington, DC.....................................    59
    Ms. Jody Keenan, Director, Virginia SDBC Network Mason 
      Enterprise Center, Fairfax, VA.............................    61
    Ms. Denise Pickett, Executive Vice President, American 
      Express OPEN, New York, NY.................................    75
Additional Materials for the Record:
    Association of Small Business Development Centers 
      Accreditation Standards 2010...............................    77
    Association of Small Business Development Centers 
      Accreditation Standards Study Guide 2010...................    88

 
  HEARING: PROMOTING ENTREPRENEURSHIP AND JOB CREATION BY DECREASING 
                           DUPLICATION AT SBA

                              ----------                             

                        WEDNESDAY, MAY 25, 2011

                          House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 1:00 p.m., in room 
2360, Rayburn House Office Building. Hon. Sam Graves (chairman 
of the Committee) presiding.
    Present: Representatives Graves, Bartlett, Hanna, Coffman, 
Mulvaney, Fleischmann, Landry, West, Velazquez, Chu, Cicilline, 
Richmond, Owens.
    Chairman Graves. We call this hearing to order. I want to 
say good afternoon and I appreciate all our witnesses being 
here. We are going to have a vote called somewhere between 1:20 
and 1:30 and it is going to be somewhat lengthy. It may be an 
hour or an hour and a half, unfortunately, we do not get the 
opportunity to schedule those. So it may mess up the hearing 
for just a little bit. I hope you will bear with us and we will 
try to get through as much of the opening statements as we can.
    Our nation is at a critical point and our national debt and 
annual deficits have reached historic proportions. It is 
Congress's obligation to look for ways to reduce federal 
spending to get our fiscal house in order. The first step is to 
cut out waste and duplication in government programs. This 
Committee is responsible for determining how the U.S. Small 
Business Administration can operate more efficiently while 
providing quality services to our nation's aspiring 
entrepreneurs and business owners so that they can grow our 
economy and create more jobs.
    Turning an idea into a small business can be very 
overwhelming. To aid small business owners, the SBA offers 
online training and counseling, both through its district 
offices and through its network of resource partners. However, 
as government continues to grow, so have the number of 
entrepreneurial development programs, not only at the SBA but 
at a number of different federal agencies as well. It is our 
job now to take a thorough look at what each of these programs 
does and how best to serve the American people, both those who 
use the programs and the taxpayers who obviously finance them.
    Today we have a very distinguished group of panelists, who 
will provide guidance to this Committee so we can look to 
streamline the government to make delivery of services more 
efficient and more effective. First, we are going to hear about 
the scope of the problem. According to the Government 
Accountability office, there are 80 programs in four different 
federal agencies charged with helping entrepreneurs. And for 
fiscal year 2010, these programs cost the government $6.2 
billion.
    Next, we want to look at the needs of entrepreneurs through 
the eyes of the people on the ground providing the counseling. 
We will hear from someone who is providing services through the 
SBA Small Business Development Center Program. And then finally 
we are going to hear about some of the programs available to 
business owners that are not funded by the taxpayers but by 
industry peers who want to help their communities prosper.
    I am very much looking forward to the testimony today to 
help guide our efforts to streamline the government and provide 
more efficient delivery of services to entrepreneurs and the 
taxpayers who are funding them. And again, I want to thank all 
of our witnesses for their participation and for being here. We 
appreciate it very much.
    And now I will turn to Ranking Member Velazquez.
    [The information follows:]
    Ms. Velazquez. Thank you, Chairman Graves. And good 
afternoon to all the witnesses.
    The SBA is charged with a broad mandate and fulfils it 
through various programs and initiatives. In doing so, it 
undertakes a wide range of activities running the gamut from 
providing seed capital for start-ups, to helping mature 
companies gain access to foreign markets. This initiative has 
become essential to our nation's small businesses, which are 
responsible for creating two-thirds of all new jobs. In 
administering these programs, it is critical that the SBA do so 
in a manner that maximizes efficiency and minimizes waste. In 
practice, this means ensuring that rules and regulations are 
clearly articulated, that a framework for evaluation is in 
place, and that the initiatives are not duplicative of other 
agency efforts. It is imperative that programs are continually 
evaluated and it should not take a fiscal crisis to do so.
    Democrats on this Committee have repeatedly pinpointed 
programs at SBA that are wasteful and duplicative, irrespective 
of budgetary politics. We have annually identified tens of 
millions of wasteful spending that could be reinvested in other 
valuable programs, but as we do so we have to be mindful that 
the Bush administration slashed the Agency's budget by nearly 
50 percent, taking it from nearly a billion dollar agency under 
President Bill Clinton and leaving it largely unable to meet 
the needs of entrepreneurs.
    The Committee has also done significant work with third 
party evaluators such as GAO. As a result, fraud in the HUBZone 
initiative has been exposed. There were 108,000 HUBZone 
contract actions in 2010 and in 70 percent of these cases, the 
small business actually qualified for another SBA contracting 
program. We have also asked GAO to review the Agency's disaster 
program, as well as how its loan program can be better 
coordinated with the USDA. Eliminating waste and improving 
efficiency could enhance services for entrepreneurs.
    Oversight is not only a responsibility on Congress, 
however, but also for the SBA. Unfortunately, in this regard, 
the Agency has not met expectations. According to GAO, it has 
not yet developed outcome measures for the HUBZone program that 
are linked to its mission. Without them the Agency is unable to 
measure the program's effectiveness. In addition, the Agency 
has established unauthorized pilot programs without any 
performance measure that provide the basis for such oversight.
    While these initiatives cost taxpayers millions of dollars, 
the Agency has repeatedly failed to use objective metrics to 
quantify their success or failure. It recently requested funds 
to operate seven pilots, including the Small Loan Advantage and 
Community Advantage programs, among others. The last three of 
these programs alone cost $50 million. That is more than we 
spend on the Women's Business Centers, an initiative that is 
authorized and regularly overseen by Congress.
    While the regional intent may be admirable, once launched, 
these pilot programs often take on a life of their own, drawing 
funds away from proven initiatives. Even among programs that we 
know work, there is a need for better harmonization. In its 
recent report, GAO found that SBA does not help its resource 
partners coordinate their services. If it did, the SBA could 
lower administrative costs and leverage each program's unique 
strength. Such steps must also be taken between agencies that 
operate similar programs so that taxpayers are getting the 
biggest bang for their buck, and equally important, that small 
businesses' needs are met.
    Today, reducing the duplication and improving program 
performance are not just nebulous bureaucratic catch phrases. 
When applied, they mean better services for entrepreneurs and 
greater job creation for the economy. Everyone here recognizes 
the importance of entrepreneurship to our recovery. As we seek 
ways to make economic development programs more efficient, we 
cannot afford to shortchange small businesses. Instead, our 
goal should be ensuring these programs work in concert together 
delivering small businesses the help they need. And that is why 
I look forward to today's testimony on this important topic. 
And I thank the witnesses in advance for your presence here.
    Thank you, Mr. Chairman. I yield back.
    [The information follows:]

STATEMENTS OF WILLIAM B. SHEAR, U.S. GOVERNMENT ACCOUNTABILITY 
   OFFICE; ARNOLD BAKER, CHAIRMAN, NATIONAL BLACK CHAMBER OF 
COMMERCE; JODY KEENAN, STATE DIRECTOR, VIRGINIA SMALL BUSINESS 
   DEVELOPMENT CENTER NETWORK; DENISE PICKETT, EVP, AMERICAN 
                          EXPRESS OPEN

    Chairman Graves. Thank you very much.
    Our first witness is going to be Bill Shear, who is the 
director of Financial Markets and Community Investment Team at 
the U.S. Government Accountability Office. The Financial 
Markets Team works to improve the effectiveness of regulatory 
oversight in financial and housing markets. It also oversees 
the management of community development programs. Mr. Shear, 
you are no stranger to this Committee and we appreciate you 
being here today.

                 STATEMENT OF WILLIAM B. SHEAR

    Mr. Shear. Thank you very much. It is really an honor to be 
here.
    Chairman Graves, Ranking Member Velazquez, and members of 
the Committee, I am pleased to be here this afternoon to 
discuss the potential for duplication and fragmentation in 
economic development programs.
    In March, and more recently last week, we reported on 
potential duplication among federal economic development 
programs. This statement is based on this work.
    Absent a common definition for economic development, we had 
previously developed a list of nine activities most often 
associated with economic development. Our recent work includes 
information on 80 economic development programs at four 
agencies--SBA, Agriculture, Commerce, and HUD.
    The SBA administers 19 of the 80 programs. According to the 
agencies, funding provided for these 80 programs in fiscal year 
2010 amounted to $6.2 billion of which about $2.9 billion was 
for economic development efforts. Here I want to stress that 
our focus to date has been on the design of these programs. In 
other words, we have evaluated the permitted uses of funds and 
have not as of yet drilled down to see how each program's funds 
are actually distributed among various uses.
    In summary, based on our work to date, we have found that 
first, the design of each of these economic development 
programs appears to overlap with that of at least one other 
program in terms of the economic development activities that 
they are authorized to fund. Second, Commerce, HUD, SBA, and 
USDA appear to have taken actions to implement some 
collaborative practices, but they have offered little evidence 
so far that they have taken steps to develop compatible 
policies or procedures with other federal agencies or to search 
for opportunities to leverage physical and administrative 
resources with their federal partners. And third, the agencies 
appear to collect only limited information on program outcomes, 
information that is necessary to determine whether this 
potential for overlap and fragmentation is resulting in 
ineffective or inefficient programs.
    Building on our past work, we are in the planning phase of 
a new, more in-depth review that will focus on a subset of 
these 80 programs, including a number of SBA programs. In fact, 
our current thinking is that we may focus on the 54 programs 
that fund entrepreneurial efforts. And this would include all 
19 SBA economic development programs. In this body of work we 
will further differentiate the programs. In addition, we will 
build upon previous work, such as those listed as related GAO 
products in our written statement, including our work on 
Women's Business Centers and programs to assist service-
disabled veteran-owned small businesses. We plan to evaluate 
how funds are used, identify additional opportunities for 
collaboration, determine and apply criteria for program 
consolidation, and assess, how program performance is measured.
    Chairman Graves and Ranking Member Velazquez, this 
concludes my prepared statement. I would be happy to answer any 
questions.
    [The statement of Mr. Shear follows:]
    Chairman Graves. Thank you, Mr. Shear. And I will now yield 
to Mr. Richmond. I think you are going to introduce our next 
witness.
    Mr. Richmond. Thank you, Mr. Chairman and Ranking Member.
    I have the great pleasure of introducing not only a 
constituent and a business owner in my district but a true 
friend. And that is Mr. Arnold Baker with Baker Ready Mix, who 
is the chairman of the National Black Chamber of Commerce and 
the CEO of Baker Ready Mix and Building Materials in New 
Orleans, Louisiana. Mr. Baker's successful small business has 
recently gone from only 10 employees to nearly 60. Mr. Baker is 
testifying on behalf of the National Black Chamber of Commerce, 
which has 140 affiliated chapters throughout the nation and 
reaches over 100,000 black-owned businesses and also Mr. Baker, 
on behalf of Congressman Landry and I--and I understand that 
you have recently expanded to his district--so on behalf of 
both of us, welcome. And we look forward to hearing your 
testimony.
    Chairman Graves. Mr. Baker.

                   STATEMENT OF ARNOLD BAKER

    Mr. Baker. Thank you, Congressman Richmond.
    Chairman Graves, Minority Leader Vasquez, and Congressman 
Richmond, distinguished members of this Committee, thank you 
for inviting the National Black Chamber of Commerce to 
participate in this most important hearing.
    The NBCC proudly represents the fastest growing segment of 
the American economy, black-owned businesses. We were 
incorporated in May 1993. When we were incorporated, the U.S. 
Census Bureau stated that there were 300,000 black-owned 
businesses doing 30 billion in sales annually. Today, the U.S. 
Census Bureau states that there are over 1.9 million black-
owned businesses doing over $137 billion annually. This 
fantastic growth has swelled our membership and made us the 
largest black business organization in the world. We have over 
160 chapters, with 70 percent located throughout the United 
States. Our database of black-owned firms exceeds 60,000 
businesses.
    The NBCC Business Development Committee is rapidly making 
new inroads and increasing the sales of our members. Several of 
our chapters are working closely with the SBA and have members 
benefitting from SBA-sponsored and/or supported programs. 
Despite this fantastic growth, we found that the federal 
government to be--I guess we found the actions of the federal 
government seem to be counter to this activity. With the 
exception of DOD contracts, of which we do not have the numbers 
for, in fiscal year 2010, black firms were awarded 3,994 
contracts, all federal agencies except for DOD as I shared 
earlier, which was a 16 percent decrease from fiscal year 2009 
and a paltry .3 percent of the total contract volume. We 
suspect DOD numbers to be no better.
    SBA lending is somewhat better but that is a variable 
decided upon by participating banks. For the past 20 years, 
small business entrepreneurs of this great nation generate 70 
percent of all new jobs in America. If you want more jobs, then 
support the development and expansion of more small businesses. 
We just met with two ambassadors from other countries who are 
replicating the efforts that we are doing here to create small 
businesses in their countries. The world is watching our small 
business development support system. Watching it and 
replicating it.
    Cutting support for small businesses programming at this 
time when the country needs jobs as the world is watching us to 
replicate us seems counterintuitive. A better funded and better 
staff-filled infrastructure for the SBA is critical to continue 
improvement of this nation's economy. We see no indication that 
cutting SBA funding is the right solution at this time as 
outreach and inclusion to the business community is so 
rudimentary and critical for our continued development.
    If we just look to the black business community, the latest 
census reports show that while the black business community was 
fast-growing, the majority of black businesses around the 
country employ one employee and generate less than $60,000 in 
gross revenues. That is according to our census.
    Other segments of the business community were not 
significantly more stable. This nation's small business 
community is still extremely fragile and they deserve a federal 
government that assists in their development.
    Since the 1990s, the manpower of the field offices for the 
SBA has greatly declined. At one time the New Orleans District 
Office had over 70 employees. When Katrina hit, there were 
fewer than 20 and it could not possibly service the needs of 
the local business population. The National Black Chamber of 
Commerce stepped up its activity. We made over 75 visits within 
the first three years and for the first three years also had 
our annual conventions there to bring attention to the issues 
and help bring resolutions to the table.
    The SBA and Women's Business Development Centers that they 
funded all collaborated and helped bring this to fruition 
through a host of outreach activities, information sharing, 
sharing of databases. I am proud to say that our newly opened 
Gulf Coast chapters claim to have affected over $3 billion in 
rebuilding contracts to the extent we are now opening a 
regional office of the National Black Chamber in New Orleans to 
help with further collaboration.
    I feel the need to specifically address the potential of 
private entrepreneurial development programs replacing current 
services provided by the SBA. There is a fear spreading that 
this may create a temporary duplication in some markets. We 
must not forget that a private company can and only will 
provide services that they can generate profits from. It is the 
nature of business. As soon as that service or as soon as that 
market or as soon as that target population becomes 
unprofitable, they have a fiduciary responsibility to cease 
those activities. It is the nature of business. In this case, 
it would be to eliminate a segment of the population that needs 
it the most.
    It would be disingenuous of me to also not state that our 
members have expressed great frustration with the SBA and some 
of their programs. That happened. Even my wife has frustration 
with me. I mean, she admits that. Our members, especially those 
in the Gulf South, bore the greatest impact of their loan 
program deficiencies and diminished inclusion efforts.
    I personally--when Katrina hit, I had five employees. I had 
one plant. I had five trucks. I produce concrete. And I had no 
idea what a PTAC was. I had never had a federal contract 
before. I had no clue. But it was through the assistance of--
fortunately, the Women's Business Development Center was one of 
the first centers that opened and I was actually able to garner 
information from there which led me to other pathways to where 
today I have four plants. I have 43 trucks. I have 58 employees 
and, you know, we are still growing. You know. I now have two 
congressmen.
    This Committee would do the country and the economy well by 
fighting for increased funding and bringing manpower back to 
the mid-1990s. So the subject of reducing duplication, it is a 
tough question. I mean, it is tough. However, cutting support 
at this time is simply not worth the risk to the small business 
community.
    I thank you for allowing us this time and I will be happy 
to answer any questions.
    [The statement of Mr. Baker follows:]
    Chairman Graves. Thank you, Mr. Baker.
    Next, I would like to introduce our witness, Jody Keenan. 
Ms. Keenan is the state director of the Virginia Small Business 
Development Center Network. Ms. Keenan is also a past chairman 
of the board of the Association of Small Business Development 
Centers, which is who she is representing today. Thank you for 
being here. I appreciate it.

                    STATEMENT OF JODY KEENAN

    Ms. Keenan. Chairman Graves, Ranking Member Velazquez, 
members of the Committee, thank you for inviting me to testify. 
Again, I am Jody Keenan and I am the director of the Virginia 
SBDC Network and past chairman of the ASBDC.
    For 30 years, SBDCs have been providing services to small 
business owners while developing an infrastructure dedicated to 
assist all small firms and providing them free consulting on 
how to improve their businesses. The result is a national 
network of over 900 locations with over 4,000 professional 
advisors who advise hundreds of thousands of small businesses 
in every state and territory.
    Roughly, half of our clients are new businesses and half 
are existing businesses. Last year, two percent of all new 
business starts were SBDC clients. SBDCs work with women 
entrepreneurs. More than 40 percent of our clients are women 
and six of the state Small Business of the Year winners were 
women-owned SBDC clients. SBDCs prioritize assistance to 
veterans. Approximately 10 percent of our clients are veterans 
and in Virginia we have a specialized program to assist them. 
This year we are honoring Colonel Perry Casto, who founded his 
firm a few years ago and now has 60 employees. Through our 
program we aggressively market to the veterans' community and 
guide them to our resources and services and other resources. 
Many SBDCs have similar programs.
    The SBDC outreach to minority and underserved communities 
is also significant. Our minority clientele is over 33 percent 
of our client base and our members support outreach programs 
all across the country. In New York, the SBDC hosts the 
organization for Latino entrepreneurs, and in Maryland, the 
SBDC supports the Branch Avenue Project, an inner city business 
restoration program.
    Virginia's network is an example of the broad reach SBDCs 
have. In addition to our veterans' outreach, we are co-located 
with the Women's Business Center of Northern Virginia, and we 
run the Small Town and Merchant Program in rural communities. 
We also train small businesses in procurement, international 
trade, and a host of other subjects.
    We always try to expand our services to adapt to a changing 
business environment. Through our association, SBDCs partner 
with firms like Intuit, Google, and Boefly, to bring innovative 
and efficient tools to small businesses for improving their 
operations that lead to growth and job creation.
    In order to give this Committee and Congress a better 
picture of what we offer, ASBDC is compiling a catalogue of our 
services. It is not complete yet, but as you can see, we are 
much more than business planning. In many states, we are a key 
provider of services, like in Missouri where the SBTDC is the 
Delta Regional Authority's business development provider.
    There are a few things that ASBDC believes need to be 
developed. First, there need to be reasonable, uniform 
standards for effectiveness of programs. Growth in sales, 
investment, and hiring are key indicators. Obtaining capital is 
usually the key measure. ASBDC believes that access to capital 
is vital, but if that financing is not leading to an improved 
bottom-line, it is just an output, not an outcome. We judge our 
success by helping our clients increase their sales, their job 
creation, and their financing. These metrics should be the 
building blocks for assessing the effectiveness of any small 
business assistance program. It is futile to compare programs 
and yet hold them to different standards.
    This goes with the need to share information. There is 
nothing more unproductive than collecting different data for 
different agencies in different formats. It does not matter who 
the information is for. Incompatible databases and inconsistent 
information are fundamentally inefficient. Federal agencies are 
required to gauge their performance by using and tracking 
outcome measures. If an agency operates entrepreneurial 
development programs they must focus on small business success.
    SBA does a good job of tracking SBDC performance. Every 
SBDC is subject to a full SBA financial review every other year 
on top of the audits from our hosts and the program offices. 
SBA reviews our client impact in addition to our own client 
impact surveys and our association's national impact survey. 
And we believe the best way to gauge our effectiveness is to 
ask our clients whether SBDC counseling is effective or not.
    On top of that we have our accreditation process that 
monitors the skills of our counselors and the strength of our 
management. The SBDC program was recognized in 2008 by OMB for 
its accountability and the quality of its performance data.
    Our final theme is cooperation. My network incorporates the 
Women's Business Center. Many SBDCs host SCORE, PTACs or VBOCs, 
yet programs arise that seem to duplicate the efforts of 
existing programs and ignore capabilities that are already in 
place. This is because people do not realize what is out there. 
We need to know the resources we have and how to leverage them 
to the best effect.
    In closing, thank you for letting me share our thoughts, 
and I look forward to your questions.
    [The statement of Ms. Keenan follows:]
    Chairman Graves. Thank you, Ms. Keenan.
    Our final witness is Denise Pickett. Ms. Pickett is the 
Executive Vice President at American Express OPEN. OPEN is 
American Express's business unit dedicated exclusively to 
supporting small business owners and is the leading card issuer 
in this segment. We appreciate you being here. We did get a 
vote called but I think we can hear your testimony.

                  STATEMENT OF DENISE PICKETT

    Ms. Pickett. Okay. Chairman Graves, Ranking Member 
Velazquez, and members of the Committee, thank you for allowing 
me to share a few thoughts with you today.
    Despite the enormous pressure the economy has put on small 
business, our research shows that small business owners are 
beginning to show optimism for the future. Nonetheless, they 
still face great challenges. I would like to discuss three of 
those--gaining and maintaining customers, acquiring knowledge 
and ideas to improve their business, and meeting financial 
needs. American Express has responded to each of these through 
programs, partnerships, and resources.
    To help address the first challenge, the need for more 
customers, OPEN has created several programs, two of which I 
would like to discuss today.
    First, we launched the Victory in Procurement program, or 
VIP in 2008, which was designed to help small businesses 
capitalize on the enormous opportunities in government 
contracting. VIP live events and websites give small businesses 
access to training and educational resources to assist 
throughout the contracting process. This includes providing 
access to coaching and mentoring and critical information about 
working with procurement officials and forming teaming 
relationships.
    Last year, OPEN engaged more than 150,000 small businesses 
through our VIP events and our VIP site. And in partnership 
with SCORE and other organizations, VIP gave these businesses 
tools to grow. Our Give Me Five program has focused on 
contracting for women. We provided a Train the Trainer session 
for over 100 representatives of the Women's Business Centers.
    The second program we created to generate more customers is 
Small Business Saturday. This national grassroots movement 
encourages consumers to shop at small businesses on the 
Saturday after Thanksgiving, which falls between Black Friday 
and Cyber Monday, two of the country's biggest annual shopping 
days. We relied heavily on Facebook to promote Small Business 
Saturday, since small businesses are increasingly turning to 
social media for business promotion.
    One point two million people joined the movement by liking 
Small Business Saturday, and small retailers experienced a 28 
percent increase in sales on American Express cards that 
Saturday, compared to the same day in 2009. This year we will 
be growing that movement further and we look forward to the 
continued support of this Committee as we build what we believe 
will become a holiday shopping institution to benefit small 
businesses in America.
    To address the second major challenge, which is the need 
for knowledge and information to grow, we created OPEN Forum, a 
website designed to empower all small businesses, not just our 
customers. It has become the number one online destination site 
for small businesses. OPEN Forum's mission is to provide three 
resources--information from experts and peers, education, and a 
true community of small business owners. While OPEN Forum 
delivers the most current and relevant information through 
articles and interviews, we are most proud of the community we 
have helped create. OPEN Forum's interactive nature has allowed 
us--has allowed small businesses to draw on the power of 
collective knowledge. It has even provided a platform through 
which government can interact with them, including an online 
event that allowed hundreds of thousands of small business 
owners to submit questions and interact directly with SBA 
Deputy Commissioner Marie Johns.
    Our core business addresses the third challenge, meeting 
financial needs. We give small businesses access to working 
capital, primarily through our small business pay-in-full 
charge cards and our credit cards. They provide purchasing 
power, flexibility, rewards, and savings on business services. 
In the first quarter of this year alone, small businesses spent 
almost $2 billion every week on their cards to buy goods and 
services they need to operate their businesses.
    We also made nearly $27 billion in credit available to our 
business customers through our lending products.
    In closing, we believe if the economy is to prosper, there 
is a great need to cultivate thriving small businesses and 
support their growth. And while we strongly believe in the 
results we have achieved, we feel when the public and private 
sector work together, small businesses of all sizes are going 
to benefit.
    We look forward to working with members of this committee 
and others in Congress to continue to help small business and 
the economy grow. I appreciate the opportunity to speak with 
you today. And I look forward to taking questions.
    [The statement of Ms. Pickett follows:]
    Chairman Graves. Thank you, Ms. Pickett.
    We are going to adjourn until his series of votes is over, 
which is approximately--I think there are five votes with a 
Motion to Recommit in there. So we will adjourn and be back 
just as soon as we can. Thank you.
    [Recess]
    Chairman Bartlett. Thank you very much for your patience. 
Our Subcommittee will reconvene.
    As is my practice, I will ask my questions last, hoping 
that someone else will have asked them so I do not have to ask 
them. I will now recognize Mrs. Velazquez for her questions.
    Ms. Velazquez. Thank you, Mr. Bartlett.
    Mr. Shear, the GAO recommended to the SBA to increase 
collaborative practices to develop compatible policies with 
other federal agencies. And this was recommended in 2007, again 
2008, and yet there is little evidence that this recommendation 
has been taken anywhere by SBA. Why is this not occurring in 
your judgment based on----
    Mr. Shear. There does not seem to be----
    Ms. Velazquez [continuing]. Is it on?
    Mr. Shear [continuing]. It is on. Yeah. Okay, sorry. Now 
can you hear me?
    Ms. Velazquez. Yes.
    Mr. Shear. Okay, I am sorry.
    With respect to SBA and USDA, every once in a while when we 
follow up with them they say they did develop an MOU so they 
have something in place, but then when we follow up further and 
ask are you taking that step further and actually developing 
compatible policies or ways to share responsibilities----
    Ms. Velazquez. Or to leverage resources.
    Mr. Shear. Leverage resources. We do not see evidence of 
that occurring. In this most recent work, and again we just 
took a little bit of time to touch on some economic development 
programs. We asked more broadly about collaborative practices 
and it seemed like there were some initiatives put on the table 
but there just does not seem to be the leadership to really 
take it further. So we see that in the veterans' area. We see 
it with USDA. We see it in a number of areas. So we do not 
really get a good explanation except to say we are working on 
it.
    Ms. Velazquez. There were 108,000 HUBZone contract actions 
in 2010, and in 70 percent of these cases the small business 
qualified for another SBA contracting program. With all the 
problems GAO has identified with the HUBZone program and that 
the majority of its participants qualify for another program, I 
would like to ask you what will happen. What will be the impact 
on contracting opportunities for small businesses if Congress 
eliminated the HUBZone program?
    Mr. Shear. I think you make a very important point here and 
one of the reasons--over the years when we have written about 
the various contracting programs and business development 
programs we always include a pie chart just to show that type 
of illustration--how much overlap there is in terms of those 
who qualify for one or more of the preferences. And if it was 
eliminated, it is hard to say because it has never really been 
an evaluation of what the HUBZone program provides, either in 
terms of a one-time study except for one study by the Office of 
Advocacy. There is some anecdotal evidence but it is hard to 
say what you would give up.
    The HUBZone program is more--it is based on location rather 
than the characteristics of the business. And in that sense, in 
that there is overlap among businesses, you know, businesses 
that qualify for more, it becomes more problematic in that 
there are not good performance measures out there. It is hard 
for this Committee and it is hard from a management standpoint 
for SBA to say where they should be using their resources. So 
if you eliminated the program, there would be some businesses 
that would no longer participate in Federal contracting.
    Ms. Velazquez. So what impact does the lack of this measure 
have on the HUBZone and other contracting programs? The lack of 
those measures implemented by the SBA.
    Mr. Shear. At some point I cannot answer the question as 
far as picking winners and losers among various programs. But 
in looking at our body of work on economic development 
programs, and in those that are confined to SBA, at some point 
I would think it would be a question that this Committee should 
be asking and that SBA would address as a management practice.
    It costs money and resources to run various programs. And 
so if you required resources to run programs and you are 
strained for resources, at some point you at least have to ask 
the question, do we want to keep all these separate programs 
operating? So that is a more general observation.
    Ms. Velazquez. I guess that you have been able to detect my 
frustration in previous hearings with SBA. And GAO's 
investigation showed fraud and abuse and waste on the HUBZone 
program.
    So for the Agency not to have any outcome measures in 
place, any metrics, it is just unbelievable. So my question to 
you is do you believe that the SBA is not implementing these 
measures because they are afraid that it will show that the 
program is not achieving its goal?
    Mr. Shear. You raise a very good observation and I cannot 
read into the minds of people at SBA. But at some point after 
being repeatedly told, and when we reached out in terms of what 
we call constructive engagement, we would actually help SBA 
develop performance measures. And after having interactions and 
having all these what I will call false starts, the question 
becomes what is the motivation to do this? The one observation 
I will make is one evaluation that was completed around the 
time that we--just after we completed our first audit at your 
request was by SBA's Office of Advocacy. It did not demonstrate 
that the program was really serving its purpose well. So there 
was one report since the time we finished our audit work that 
would suggest that the benefits from the program seem to be 
small but yet I cannot read the minds of people at SBA.
    Ms. Velazquez. Thank you.
    Ms. Pickett, there are many private entities that provide 
small business services which supplement federal and state 
efforts. Some believe that government funding is unnecessary 
and the market will create assistance if there is demand. My 
question is do you believe that private efforts alone can meet 
the need for entrepreneurial assistance?
    Ms. Pickett. So thank you, Congresswoman Velazquez.
    I would say that in our case we have many small business 
owners who have very different needs. They come in different 
industries, they come in different sizes, and they are at 
different stages. And those different needs suggest that both 
private and public programs need to work together and they 
cannot work alone to meet all of those needs. So in our 
experience I would say no, you need both programs working 
together, and the best hope we have for small businesses is if 
private, public and not-for-profit institutions work together 
to help meet the needs of small businesses.
    Ms. Velazquez. Okay. I have more questions but I will do it 
in the second round.
    Chairman Bartlett. Thank you. Before recognizing Mr. 
Richmond I would like to make a comment about HUBZones. It is 
not surprising that most of the HUBZone contractors would have 
qualified for a contract in some other category because the 
HUBZone contracts are open to any small business. The unique 
thing about HUBZone contracts is not who they are but where 
they are because the HUBZone contracts have to be in an area--I 
have a whole county that qualifies--that has high unemployment 
or low income levels. I have personally seen the benefits of 
moving a HUBZone contract to one of these areas. I have in my 
western-most county in Appalachia--a HUBZone company that moved 
there and they pay their people three times the average salary 
in that county. This clearly creates other jobs and lifts the 
whole county. So it is not surprising that HUBZone contractors 
would qualify to get the contract under some other category 
because it is open to anybody and everybody. It is not who they 
are; it is where they are that is important about the HUBZone 
contract. I think it is probably unique in that category. It is 
the only contracting we do with small business that is 
determined by where they contract rather than who they are.
    Let me now recognize Mr. Richmond.
    Mr. Richmond. Thank you, Mr. Bartlett.
    My first question will go to you, Mr. Baker. Part of what I 
am trying to assess is just the common sense and the day-to-day 
struggles of small businesses when dealing with the SBA. For 
example, I had someone in my office yesterday who, while trying 
to navigate the 8A application process, asked why will they not 
just put the status online where they can go into your pass 
code and find the update as opposed to staying online all day? 
So in your experience, especially after Katrina as businesses 
try to stand back up, how was your interaction with the SBA and 
how do you find the programs as you try to grow and hire more 
people?
    Mr. Baker. Thank you. In the immediate aftermath of 
Katrina, we found interaction to be, at best, difficult. You 
know, their resources were stretched. They were underfunded. 
They had an enormous task with new contracts being led and also 
administering various loan programs. And so it created a 
potentially detrimental situation for access for small 
businesses in the region. It was actually through--and that is 
why the Black Chamber stepped up and actually created 
throughout the Gulf South to help coordinate and work with not 
just the SBA but their business development centers, partnering 
with Southern University and the University of New Orleans 
Business Development Centers, we actually hosted events 
together.
    But it short of that, you know, I think we were able to as 
a region be able to do something that was a unique and 
generational opportunity to actually come together in a 
collaborative fashion to use a grassroots--truly grassroots 
communication and inclusionary effort to bring more people to 
the table of information. This included setting up computers in 
our offices so that businesses that did not even have homes, 
much less computers, had access to web information.
    But there are certainly many shortcomings in the delivery 
mechanisms but, you know, they are improving and I think as Ms. 
Pickett shared earlier, it is going to take a complete 
collaborative effort of the private sector and public sector to 
actually make a dent in this. I mean, the challenge is that 
large, that tremendous, and we are still trying to play catch-
up as a nation.
    Mr. Richmond. Next, for Ms. Pickett. Ms. Pickett, I know 
that you and American Express, that you both work with SCORE 
chapters and WBCs. If the SBA's Business Assistance Center 
budgets were to be cut at the federal level, do you think it 
would make it more difficult for SCORE and WBCs to attract the 
private sector or such private sector funding?
    Ms. Pickett. So I am certainly not an expert on the role 
that private sector funding plays in those organizations, but 
what I can tell you is that those organizations are very 
important to the programs that I described earlier and our 
ability to put them on. And they bring content to those 
programs and they bring one-on-one technical mentoring and 
coaching that we simply could not deliver without that 
partnership.
    Mr. Richmond. So it would hamper at least that 
collaborative and the deliverables?
    Ms. Pickett. It would certainly put our ability to partner 
in question if they did not have the funding they needed from 
their perspective.
    Mr. Richmond. And I guess my next question, and I have, I 
guess, a minute left, is for Ms. Keenan. Collaboration among 
the SBA's Business Assistance Centers has been sporadic. What 
efforts has your center made to improve such collaboration and 
what barriers still exist to further cooperation and 
collaboration?
    Ms. Keenan. Well, I can speak for Virginia. We, as I 
mentioned earlier, we have a Women's Business Center that is 
co-located with one of our SBDC offices in Northern Virginia 
and we do quite a lot of work referring clients and companies 
back and forth to their program as they refer programs back to 
ours. We also on some occasions have had SCORE counselors who 
have come out into the Northern Virginia area and set up office 
areas in our SBDCs as a way to help them reach into the 
suburban communities. And we have done this throughout Virginia 
as well, and in many other states the same partnerships happen.
    Some of the obstacles--was that your question then? What 
some of the obstacles are? Candidly, I think we have made an 
effort to overcome the obstacles but sometimes the obstacles 
are data tracking and just accountability. You know, SCORE, for 
instance, they have their metrics and goals to meet with a 
certain number of clients. We have our goals and metrics to 
meet with a certain number of clients. Our philosophy--my 
philosophy in Virginia has been there are more than enough 
businesses for all of us to serve. We are not serving 100 
percent of the businesses. So we do our best to make sure that 
when we start these engagements that everyone understands what 
type of business we are going to work with, what kinds of 
services each of us is going to provide so we are not tripping 
over one another, so we are not confusing the client. So I can 
speak to that in Virginia. That has happened and that has been 
our mantra.
    Mr. Richmond. Thank you. I yield back.
    Chairman Bartlett. Ms. Chu.
    Ms. Chu. Thank you.
    Well, I would like to ask Ms. Pickett from American 
Express, you have a program called Victory in Procurement for 
Small Business and that is for the general small businesses, 
but then you decided to do something above that for women 
entrepreneurs called Give Me Five. Now, there are some here who 
are saying SBDC and WBC would be duplicative but you apparently 
have not found your women's program to be duplicative. Why did 
you have a women's program above your regular small business 
procurement program?
    Ms. Pickett. So despite the fact that women-owned 
businesses are actually growing at a faster rate, they are 
actually not getting to the same size as male-owned businesses. 
And so we decided to have a program specifically designed. They 
have very unique needs, women-owned businesses. They generally 
have needs for negotiating skills. They have different needs as 
it pertains to financing. And I think that they also have 
different work-life balance needs in terms of running their own 
businesses. So we know that women-owned businesses have unique 
needs and we designed a program for them called Give Me Five.
    Give Me Five is not a substitute for the programs that are 
offered by some of these agencies. In fact, it provides an 
introductory level of how to get into federal government 
contracting, but I think for them to be really successful they 
need the ongoing support that are provided by the agencies that 
we have discussed here today.
    Ms. Chu. And then, Ms. Keenan, let me ask the SBDCs, of 
course, and the WBCs both coexist and some are saying that it 
is duplicative. However, it seems that WBCs focus on poorer 
clients with less education than SBDCs and that the Center for 
Women's Leadership found that 67 percent of the Women's 
Business Center clients came from households with income less 
than $50,000 and that 55 percent of the WBC clients had only a 
high school education or less. So if the WBC is removed and 
incorporated into SBDC, what would happen with this 
demographic? What would happen with minority entrepreneurs such 
as this?
    Ms. Keenan. Forty percent of our client base are women 
entrepreneurs. Thirty-three percent of our client base are 
minority entrepreneurs. So we would continue to serve that 
growing population within the SBDC program. In Northern 
Virginia, where our SBDC is co-located with the Women's 
Business Center, I think they would very easily be able to 
continue to deliver the audience that the Women's Business 
Center has been targeting.
    Ms. Chu. But how can you explain the difference in the 
demographics between the two populations?
    Ms. Keenan. I agree. I think that the Women's Business 
Centers do tend to focus--particularly in our Northern Virginia 
office, that is the one I am most intimately familiar with--
they do have some specialized services for new Americans who 
are women entrepreneurs. They also work with male entrepreneurs 
as well. And that partnership in Northern Virginia is the 
result of a collaboration with the Fairfax County Office of 
Economic Development and the Fairfax County Family Services, I 
think is the program. So in Northern Virginia, we would 
continue those relationships and work with that population 
without much of a hiccup in all honesty.
    Ms. Chu. Let me ask another question in another arena where 
duplication has been raised as an issue and that has to do with 
exporting assistance. In your testimony you mentioned that 
Small Business Development Centers are a key in the state's 
export assistance program. Now, in my opinion there is a lot of 
help that is needed in exporting. In California, the exports 
have risen 19.3 percent in 2010 to 143 billion, but 
California's exporters are small and do not venture far. Mexico 
and Canada are the top two countries where the state exports 
and yet there is so much potential.
    Now, the Committee has recommended rescinding $30 million 
in grant programs to states to help trade and export promotion. 
Is such funding duplicative of the work that you are already 
doing at SBDC?
    Ms. Keenan. In a couple of states, for example, 
Massachusetts and Illinois, the SBDC programs in those states 
are the premier export assistance provider on behalf of the 
states. So there is a lot of collaboration there. In Virginia, 
how we are working with the state in their response to the STEP 
funding is the state is really working with new-to-market 
companies, so firms that are already exporting to Mexico and 
Canada and helping them expand into their second or third 
country, and the SBDCs are working with--and we are developing 
a new initiative this summer--to work with new-to-export 
companies to identify and prepare firms who are not currently 
exporting to get into that pipeline to take advantage of the 
state services. So we are being very careful not to step on the 
products that are already out there in Virginia and helping 
kind of feed that pipeline which the state program just is not 
funded or resourced to do right now. So that is how we are 
really trying to make sure that the services are complimentary 
and expansive and not redoing what is already out there.
    Ms. Chu. So you are saying that they are actually not 
duplicative?
    Ms. Keenan. In Virginia they will not be duplicative. In 
Massachusetts and Illinois as two examples, the SBDC is the 
program that the state turns to to prepare companies for 
exporting, as well as to take them on exporting initiatives.
    Ms. Chu. Thank you.
    Chairman Bartlett. Ms. Velazquez, you had additional 
questions?
    Ms. Velazquez. Yes, I do.
    Ms. Keenan, in your testimony you indicated that there are 
programs and initiatives that seem to be--to duplicate the 
efforts of existing programs and basically some of those 
questions were asked by Ms. Chu. In recent years SBA has 
created two new programs, Emerging Leaders and Regional 
Innovative Clusters. Is this a good example of expenditure of 
tax funds or do SBDCs already provide these services?
    Ms. Keenan. I think some of the confusion in those new 
programs was what were they intending to achieve. So I think 
that the SBDCs are engaged in activities that support those 
initiatives, but it was very difficult for us to identify 
exactly what the goal was for those programs.
    Ms. Velazquez. Well, Emerging Leaders, for example, they 
select entrepreneurs for training. Do you do that?
    Ms. Keenan. Yes. Yes, ma'am.
    Ms. Velazquez. Mr. Baker, after Hurricane Katrina, you went 
to a local Women's Business Development Center to seek help. 
Right? Why did you choose that center and not an SBDC?
    Mr. Baker. In the immediate aftermath of Katrina there were 
only a few resources available. Fortunately, the Women's 
Business Center and the SBA office were located in areas that 
were not impacted by water and so they were functional early 
on, just as the Black Chamber was.
    Ms. Velazquez. Okay. Thank you.
    Ms. Keenan, according to SBA's data, the Women's Business 
Development Center assists over 160,000 small businesses at a 
cost of only 139 per business. Also, SBDCs help create over 
14,000 small businesses at a cost of over $9,000 per business. 
In your testimony you state that the foundation of the SBDC 
network is designed for and can accommodate expanded services. 
I understand that SBDCs have a broader scope for services for a 
variety of clientele, but why should we expand SBDCs' services 
when the cost for business is already much higher than other 
programs like WBDCs? Would it not make sense to encourage the 
expansion of WBDCs since they assist more businesses at a lower 
cost?
    Ms. Keenan. We have a larger footprint, so we have 900 
offices around the country that have been--those are invested 
costs already. That infrastructure is in place. We see a number 
of existing businesses as well. I do not know what the 
breakdown is for Women's Business Centers with existing versus 
start-up.
    Ms. Velazquez. This is data provided by SBA.
    Ms. Keenan. By SBA, right. Right. Okay. But I do not know 
the breakdown. I do know that our base of existing businesses 
that we have been serving, particularly in the past three or 
four years has really expanded. So I think that although we are 
working with start-up companies and helping businesses get 
started, we are spending a lot more time as well attending to 
existing companies and so that could have an impact on why 
those numbers look the way they do.
    Ms. Velazquez. My question is because some members would 
like to take the Women's Business Development Centers 
allocation and give it to SBDCs so that you have the 
infrastructure to provide the services and the clientele that 
is being served, as Ms. Chu pointed out, is more low income 
women and low income communities. But when we are considering 
programs in a cost efficient manner, we need to look at costs.
    Ms. Keenan. Right.
    Ms. Velazquez. And it seems to me that the Women's Business 
Development Centers are providing the services that you are 
providing. And this is not--I am not criticizing the Small 
Business Development Centers. What I am saying is that we just 
cannot pick winners and losers here when we know that you have 
a target clientele and the Women's Business Development Centers 
have another target clientele. And it is being served in quite 
a costly-efficient manner.
    Mr. Baker, do you believe that socially and economically 
disadvantaged business owners currently have adequate access to 
federal contracting opportunities? If not, what can be done to 
improve the situation?
    Mr. Baker. No, I do not believe that socially and 
economically disadvantaged businesses have adequate access to 
federal procurement opportunities. There are some--while it has 
certainly improved over the past few years, there is certainly 
a tremendous amount of work to be done in that arena. One 
shining example of where there has been a focused effort and 
federal procurement inclusion is in Mississippi where 
Congressman Thompson and the governor's office there--they 
actually made a commitment to formal inclusion that, just as an 
example, Mississippi has six PTAC offices whereas Louisiana has 
two. And just the results of that combined with bonding 
assistance programs and local collaboration with various 
chambers has actually increased the amount of black business 
contracting in the state by 40 percent. I mean, that is a 
tremendous impact but it shows that, you know, there is still a 
lot of work to be done but yet if there is a focused, funded, 
concentrated effort, you know, the results will definitely come 
to fruition.
    Ms. Velazquez. Okay. Thank you. Mr. Shear, I have my last 
question to you. And given the most recent natural disasters 
that we have been witness on television, I am concerned about 
the fact that in 2009, in the GAO report you found that the SBA 
had only met 13 of 26 requirements of the Small Business 
Disaster Response and Loan Improvements Act which was passed to 
make improvements in the aftermath of Katrina. Where does the 
agency stand on implementing these requirements? Do you know?
    Mr. Shear. At the time it was reported to you two years ago 
it was 13 out of 26. We are not as diligent at looking at 
legislative provisions as we are our own recommendations, but 
the last time we really got an assessment was one year ago. So 
this would have been one year after we reported to you, and at 
that time it had increased to 15 out of 26. Five of the 
provisions we did not think were relevant at the time because 
there has to be a triggering event for those five provisions to 
become effective. So the remaining six provisions we saw some 
movement by SBA but they were not implemented yet. And the ones 
that they seem to be most challenged with were the ones that 
involved using private sector lenders and private sector 
entities in reaching out when disasters strike.
    Ms. Velazquez. Thank you.
    Chairman Bartlett. Thank you very much. Let me recognize 
Mr. Hanna.
    Mr. Hanna. Thank you very much.
    Ms. Keenan, thank you for being here. Do you believe that 
business owners in general around, well, your area in 
particular, are overwhelmed by the number of programs that we 
have?
    Ms. Keenan. Yes.
    Mr. Hanna. What would you do about it?
    Ms. Keenan. Well, certainly not create any new ones. I 
mean, we spend a lot of time in our centers just educating our 
clients about who does what and why to come here instead of 
going there. And we also work on the other side to make sure we 
understand who the other programs are and collaborating and 
trying to define the piece of the spectrum that everyone is 
trying to serve. So, you know, short of not creating new ones 
and if possible encouraging better collaboration and 
coordination, that is the approach.
    Mr. Hanna. Do you find that people are leaving the building 
simply because they cannot cope with the complexity of it all? 
I mean, basically----
    Ms. Keenan. We hope that we do not send them out of the 
building----
    Mr. Hanna [continuing]. Right.
    Ms. Keenan [continuing]. More confused than when they came 
in. That is for sure. But, you know, certainly, if they come to 
us it is very often after they have been to a number of other 
places, whether--and I do not know if it is individuals or 
organizations or entities--and they are hearing a lot of you 
need to talk to Jody. You need to talk to Barbara. You need to 
talk to John. You need--so when they come in we try not to just 
shoot them down the pike somewhere else but really work to help 
them understand who does what and why they need to be with us 
or why they need to be at the Women's Business Center or why 
they need to be at PTAC. And we tend to pride ourselves on not 
just pushing someone on down the pike.
    Mr. Hanna. Thank you very much.
    Ms. Pickett, I had a couple of corporations and for many, 
many years and duplication was something, you would not even 
begin to tolerate. It becomes clear and obvious waste and the 
first target. Do you think there is a lot of that in your 
organization?
    Ms. Pickett. So in our organization we obviously spend a 
great deal of time making sure that we are efficient and 
effective in what we do and that is our obligation to do it and 
that is what we do in our organization.
    Mr. Hanna. So you are pretty well clean of that in your 
opinion?
    Ms. Pickett. We are as efficient and effective as we can 
be.
    Mr. Hanna. Thank you.
    Chairman Bartlett. Thank you.
    My understanding is that a major reason we have a number of 
programs is because we have identified a number of groups that 
we would like to help. It is not quite clear to me what we mean 
by duplication. Obviously, a wounded veteran comes in and they 
are a small business person, and they are a male, they could 
qualify under several different programs. But it is my 
understanding in watching this development now for nearly 20 
years, that every time we find a new group that is not being 
adequately served we create another program for that group. 
What do we mean by duplication? Do you have duplicative 
programs that serve wounded warriors or is your duplication the 
fact that you are serving both a black person, a small business 
person, and a wounded veteran.--It can be all three at one 
time, can they not? What kind of duplication are we talking 
about? And, if our goal is to service more small businesses and 
if we are not confusing them and piling on with this 
duplication, why is duplication a problem? If we want to cut 
our costs but then they also cut what we get done, why is 
duplication a problem for simply looking out to contact and 
serve more small business people?
    Mr. Shear. You have asked some very good questions and that 
is part of our challenge as an agency in looking at these 
issues generally and also with respect to what I am speaking 
about today as far as economic development programs. We see 
that there is overlap which could lead to potential duplication 
of services.
    Chairman Bartlett. But sir, if the duplication simply 
serves another small business, is not that what we want to do?
    Mr. Shear. If we have a situation where separate 
infrastructures are being created, and this is part of when we 
look forward when we try to determine principles that we could 
apply for when consolidation might be appropriate. We are 
looking at questions such as, are there separate 
infrastructures in place and are there so many different 
programs that are not harmonized? To bring up what 
Representative Hanna just brought up, the idea is how do you 
figure out all these different programs? And if it leads to 
confusion or if it leads to difficulty in rural areas of 
figuring out what do we turn to USDA for and what do we turn to 
SBA for, all those things we are looking for areas where there 
could be inefficiencies associated with multiple programs at 
multiple agencies serving similar interests.
    But let me make something really clear. When we look at 
questions such as--let us just take the three counseling and 
training programs at SBA. We do not view it that somehow there 
is an efficiency created ifi youi eliminate a program and stop 
serving there recipient. If you eliminate one program and just 
say, well, this is how much was appropriated for that program 
this year, efficiency is not evaluated. The types of things we 
will look into is that is there something about delivering the 
services that can be done more effectively either through 
increased collaboration among the three programs and the 
resource partners or possibly through certain reductions in the 
number of programs. We are looking for efficiencies in 
government and how services are being delivered. So we are 
looking at those types of questions.
    And so you are very right. We are reaching out. We are not 
passing judgment as far as how many resources are allocated 
toward reaching out to small businesses and different 
components of small businesses, but the question is the 
efficiency of that service delivery. That is what we are 
focusing on.
    Chairman Bartlett. So you are really focusing on efficiency 
rather than duplication. If you have duplicative programs, they 
are simply serving more small businesses, and if both of those 
programs are efficient, who should care?
    Mr. Shear. And the question becomes, for this Committee and 
for the Congress and for all of us, is to try to look at what 
demonstration is there that these programs are all efficiently 
providing services. And to do some comparison what, if 
anything, could be gained by combining programs or by expanding 
collaborative practices in how these programs are carried out 
in states and localities and in urban and rural areas. So that 
is really a major part of our focus. But ultimately it is a 
question of efficiency of service delivery and reaching out and 
serving the needs of small businesses and the needs of what 
Congress assesses as the priorities in reaching out to serve 
economic development activity.
    Chairman Bartlett. One of the other elements of our charter 
for this hearing was how private efforts can help meet the 
needs of businesses. As an example of this kind of question, 
our kids go out at Halloween and they do not Trick or Treat, 
they leave a basket, a bag in the home and they say if you will 
please put some nonperishable food in this we will come back 
and collect it and then we are going to make up food baskets 
for poor people. So we did that. And then the women who were 
involved in organizing this program called up the Welfare 
Society and they said we would like to know of some poor 
families because we have these food baskets. The welfare people 
were indignant. What do you mean poor families, needy families? 
What do you think we are here for? How private efforts can 
help? Are we crowding out private efforts by our multiple 
programs?
    Mr. Shear. I do not have an answer to that question but 
when we look at these various programs we do look for what 
resources are available. So I will just take this one example. 
The work that we have done in the past, looking at programs to 
help service disabled veterans start their own businesses. We 
know that there are state programs. We know there are local 
programs. We know that there are nonprofits all involved in 
that activity. And what we are looking for and what I think the 
Congress has been looking for, and it has been expressed in 
legislation, is the idea of how can we allow all those 
activities to really provide services where veterans know what 
is available to them to help to start or to grow their small 
businesses. So what information is out there? How are things 
being coordinated among various nonprofits, private entities, 
and government entities? And that is what I think that many of 
us are looking for.
    Chairman Bartlett. Yeah. In our desire to be helpful we may 
have limited the helpfulness of others, have we not?
    Ms. Velazquez, do you have other questions or comments 
before we close?
    Ms. Velazquez. No.
    Chairman Bartlett. Mr. Hanna, other questions or comments?
    Mr. Hanna. You do run a remarkable company.
    Ms. Pickett. Thank you.
    Mr. Hanna. I only know that because it was the first credit 
card I ever had in the '70s. So thank you for that. And I do 
not owe you anything, incidentally. My wife might.
    There is this kind of implicit assumption about government 
that it does everything more or less badly. And I wonder if 
sometimes we ask the wrong question, we assume that because we 
are the government and there are layers within that, and 
bureaucracy being what it is, that we could always do better. 
And that is probably true. But it does seem as though the 
opportunities on the street away from government are great but 
people--you said people come to you last--come to small 
business, Ms. Keenan, last.
    Ms. Keenan. Not always last but they do come to us.
    Mr. Hanna. What drives--I am curious--what drives them to 
your door that they cannot find someplace else?
    Ms. Keenan. Well, we get a lot of referrals from lending 
institutions and accounting professionals, for example. So a 
business will go into a lending institution looking for 
financing and they have not fully prepared their business plan 
or their financial projections. Or maybe they are just not 
really fundable at this point. So the lender will refer them to 
the SBDC because the lender himself or herself is not tasked or 
missioned or incentivized to help that business figure itself 
out. But the Small Business Development Center can help them do 
that.
    Mr. Hanna. So there is a big difference between being loan 
worthy and being potentially successful? I mean, there are a 
lot of people with good ideas that simply cannot get off the 
ground.
    Ms. Keenan. Right. Absolutely. Or good ideas and they are 
not quite sure how to get it off the ground. I mean, 
particularly in financing we are all familiar with getting a 
credit card or a car loan or a mortgage, but getting a 
commercial loan is a different animal. And if you have not done 
that before and are not sure how to go about it and you go into 
the lender, much like you would go into a mortgage broker or a 
banker looking for a mortgage, you are just not--you just do 
not have it all together right then. So that is where the SBDC 
in that case would help put everything together.
    Mr. Hanna. Indulge me for one moment if you would. What is 
your best success story?
    Ms. Keenan. Oh, we had a company that was a software 
developer that was acquired by Microsoft four years ago.
    Mr. Hanna. Good. Second best.
    Ms. Keenan. We have been working seriously with some 
spinoff companies out of the George Mason University Computer 
and Technology--Information Technology and Engineering. So a 
number of those companies have spun off out of the university 
and created 40 and 50 jobs in Northern Virginia and they are 
also positioned for acquisition. So those are some of our top 
success stories.
    Mr. Hanna. Thank you very much. I am good, sir.
    Ms. Velazquez. I just would like to ask a question to Ms. 
Keenan.
    Ms. Keenan. Yes, ma'am.
    Ms. Velazquez. You do workshops, right?
    Ms. Keenan. Yes, ma'am.
    Ms. Velazquez. I do workshops in my district and I work 
with the Women's Business Development Center, the Small 
Business Development Centers. Is it not true that because you 
work with the lending community, the financial institutions in 
a cluster and geographic area, you come to know which of those 
financial institutions serve best the needs of a potential 
business person, right, who comes to you? And then based on 
their business plan, based on their idea, if they want to start 
up a business you are better equipped to maybe match that 
borrower with a lender.
    Ms. Keenan. Absolutely. I mean, just like we work with the 
other organizations to know what they are doing, we certainly 
do that in the lending community as well.
    Ms. Velazquez. And because you are better equipped in that 
sense, capacity building and technical assistance is so key in 
the success of these potential businesses.
    Ms. Keenan. Absolutely. And that is what we hang our hat 
on.
    Ms. Velazquez. Mr. Shear, I think that one of the 
frustrations that we have when we talk about duplicative 
programs is the fact that there is this attitude of agencies 
not to establish clear measurements, right, and metrics, so 
that it will enable them to measure outcomes and decide which 
of the programs is better and some of the metrics that they 
have in place to determine what is working and what is not and 
what type of program we should get rid of, which one of those 
programs we should eliminate. Do you see that--lack of will 
from agencies to clearly establish those clear measurements and 
clear metrics that will enable them to decide which programs 
are delivering the service that they were supposed to deliver 
in a more cost efficient way?
    Mr. Shear. You have raised a tremendous question. There 
have certainly been attempts over the years, whether it is 
through Results Act or through different actions of Congress. 
Certainly through our audits we are trying to address that 
issue. Evaluation of how programs are working should be 
integral to the management of those programs. There has been 
progress in some places and not in others. And this stands out 
as being a major area. And a lot of times the reaction is the 
cost to make evaluations. But the response should not be to not 
do any evaluation at all. It might be hard to measure certain 
statistics on an annual basis but it might be important to do, 
such as coming out of the part reviews from a number of years 
ago where SBA actually did have some evaluation of SCORE, SBDC, 
and Women's Business Centers. So we are looking for that more 
evaluative framework to try to inform those decisions and we 
see that in this area.
    Ms. Velazquez. Thank you, Mr. Chair.
    Chairman Bartlett. Thank you all very much for your 
testimony. Thank you for your patience during a long series of 
votes.
    When the Committee has had a chance to review the hearing 
and the question and answer period, there may indeed be 
additional questions that we will need to ask for the record. 
We would appreciate it if you could be available to answer 
those questions.
    I ask unanimous consent that members have five legislative 
days to submit statements and supporting materials for the 
record. Without objection, so ordered.
    Thank you all again very much. And the hearing is now 
adjourned.
    [Whereupon, at 3:55 p.m., the Committee was adjourned.]



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