[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]




 
 SBA MANAGEMENT REVIEW: OVERSIGHT OF SBA'S ENTREPRENEURIAL DEVELOPMENT 
                                OFFICES

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

                                HEARING

                               before the

        SUBCOMMITTEE ON ECONOMIC GROWTH, TAX AND CAPITAL ACCESS

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                            FEBRUARY 2, 2016

                               __________

                               
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                                 
                               

            Small Business Committee Document Number 114-039
              Available via the GPO Website: www.fdsys.gov
              
              
              
              
                           _________ 
                                 
               U.S. GOVERNMENT PUBLISHING OFFICE
  99-714 PDF            WASHINGTON : 2016       
_________________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
      Internet:bookstore.gpo.gov. Phone:toll free (866)512-1800;DC area (202)512-1800
     Fax:(202) 512-2104 Mail:Stop IDCC,Washington,DC 20402-001             
              
              
              
              
                   HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                        RICHARD HANNA, New York
                         TIM HUELSKAMP, Kansas
                         CHRIS GIBSON, New York
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        CARLOS CURBELO, Florida
                          MIKE BOST, Illinois
                         CRESENT HARDY, Nevada
               NYDIA VELAZQUEZ, New York, Ranking Member
                         YVETTE CLARK, New York
                          JUDY CHU, California
                        JANICE HAHN, California
                     DONALD PAYNE, JR., New Jersey
                          GRACE MENG, New York
                       BRENDA LAWRENCE, Michigan
                       ALMA ADAMS, North Carolina
                      SETH MOULTON, Massachusetts
                           MARK TAKAI, Hawaii

                   Kevin Fitzpatrick, Staff Director
             Emily Murphy, Deputy Staff Director for Policy
            Jan Oliver, Deputy Staff Director for Operation
                      Barry Pineles, Chief Counsel
                  Michael Day, Minority Staff Director
                  
                  
                  
                  
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Tim Huelskamp...............................................     1
Hon. Judy Chu....................................................     2

                               WITNESSES

Ms. Tameka Montgomery, Associate Administrator, Office of 
  Entrepreneurial Development, Small Business Administration, 
  Washington, DC.................................................     3
Ms. Barb Carson, Associate Administrator, Office of Veterans 
  Business Development, Small Business Administration, 
  Washington, DC.................................................     5

                                APPENDIX

Prepared Statements:
    Ms. Tameka Montgomery, Associate Administrator, Office of 
      Entrepreneurial Development, Small Business Administration, 
      Washington, DC.............................................    20
    Ms. Barb Carson, Associate Administrator, Office of Veterans 
      Business Development, Small Business Administration, 
      Washington, DC.............................................    25
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    Ken Yancey, Chief Executive Officer, SCORE Association.......    28


 SBA MANAGEMENT REVIEW: OVERSIGHT OF SBA'S ENTREPRENEURIAL DEVELOPMENT 
                                OFFICES

                              ----------                              


                       TUESDAY, FEBRUARY 2, 2016

                  House of Representatives,
               Committee on Small Business,
  Subcommittee on Economic Growth, Tax and Capital 
                                            Access,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 11:00 a.m., in 
Room 2360, Rayburn House Office Building. Hon. Tim Huelskamp 
[chairman of the subcommittee] presiding.
    Present: Representatives Huelskamp, Brat, Radewagen, Kelly, 
Chu, Hahn, Payne, and Clarke.
    Chairman HUELSKAMP. Good morning. Thank you all for being 
with us today. I call this hearing to order.
    On this Subcommittee, we understand that small businesses 
are instrumental in strengthening our economy and restoring 
economic prosperity. Given the importance of small businesses, 
the Small Business Administration has been given the noble 
mission of aiding and counseling our entrepreneurs as they seek 
to start or grow their company. Because small businesses are 
the lifeblood of the local economy and my home district, 
Kansas's ``Big First,'' I want to stress how important this 
mission is and note as chairman of this Subcommittee, I look 
forward to working with my colleagues on both sides of the 
aisle and the SBA moving forward.
    Last month, we began a series of hearings to examine the 
SBA's management deficiencies within various offices, and 
today's hearing will focus on the Office of Entrepreneurial 
Development and the Office of Veterans' Business Development. 
Together, these two offices are primarily responsible for the 
entrepreneurial development programs meant to propel our small 
businesses. These efforts include statutorily authorized 
programs, such as Small Business Development Centers. I believe 
we have some representatives here from those entities, SCORE, 
Women's Business Centers, and Veterans' Business Outreach 
Centers. In addition, these offices also oversee a plethora of 
SBA-created initiatives, including regional clusters, Boots to 
Business, and entrepreneurial education.
    The necessity of unauthorized SBA-created initiatives has 
frequently been questioned on a bipartisan basis by this 
Committee. In the wake of the recent GAO report detailing SBA's 
management challenges, I am concerned that SBA is continuing to 
prioritize its wish list rather than ensuring taxpayer dollars 
are carefully spent on programs with proven performance 
records.
    Today we will hear from both the associated administrators 
of both these offices as they outline their resource 
management. This will allow us to examine how changes within 
these offices can ensure the SBA is effective in helping small 
firms without wasting Federal funds on duplicative programs.
    Thank you ladies for both being here, and I will now yield 
to the ranking member for her opening remarks.
    Ms. CHU. Thank you, Mr. Chair.
    One of the most vital roles performed by Small Business 
Administration offices is providing aspiring entrepreneurs and 
existing businesses with valuable counseling and other 
technical assistance. The agency's portfolio of entrepreneurial 
development can provide critical resources to entrepreneurs in 
this regard. Whether it is creating a business plan, advice for 
navigating the procurement process, help marketing a new 
product, assistance with international trade or any other 
myriad of topics, the SBA's entrepreneurial development 
programs can be invaluable for many small firms. It is so 
important these initiatives are functioning at their best to 
provide the highest quality of resources and services to small 
businesses across the country. The cornerstone of these 
programs is the agency's network of Small Business Development 
Centers, or SBDCs, spread throughout the nation. SBDCs offer 
small businesses with a broad range of entrepreneurial 
development services. Sixty-three lead centers manage 900 
outreach locations throughout the country. SBDCs are located at 
colleges, universities, chambers of commerce, and local 
economic development corporations, allowing them to harness 
local community resources.
    In a single year, small business development centers have 
helped 13,400 entrepreneurs launch new businesses, an average 
of 36 new businesses per day. 194,000 businesses received 
advice from SBDC, while 290,000 participants attended training 
sessions. In my district, we are fortunate enough to have two 
of these amazing centers servicing the San Gabriel Valley of 
Southern California. Clearly, SBDCs are leaving their mark as a 
vital part of our nation's entrepreneurial ecosystem.
    The SBA has also established efforts to connect young 
entrepreneurs with more experienced business men and women. The 
Service Corps of Retired Executives program, or SCORE, uses a 
network of volunteers to provide time, mentoring, and expertise 
as business counselors. Traditionally, retired former 
executives have provided most volunteer counseling services, 
but there has been a recent trend towards diversification 
within this program. Lately, involvement from young business 
owners has greatly increased, and I am hopeful that this trend 
strengthens the program for the future.
    Small businesses are diverse as the makeup of our nation. 
As such, many of the SBA's counseling initiatives are targeted 
toward specific demographic groups in our entrepreneurial 
community. For instance, there are over 100 women business 
centers spread throughout the country. In 2014, the centers 
reached 130,000 clients and helped 700 new businesses get up 
and running. It is critical that this program remains robust 
and continues to flourish.
    Even though female entrepreneurship is on the rise, there 
remains significant gaps between men and women-owned 
businesses. One recent study found businesses owned by men 
averaged 726,000 in receipts, versus 239,000 for women-owned 
firms. As more women turn to entrepreneurship as a career path, 
it is critical that this initiative remains in place to close 
gaps like this.
    Similarly, there are a number of SBA programs targeted to 
veterans. Most notably, the Veterans' Business Outreach 
Centers. 78,000 of our veterans tapped into this initiative in 
a single year. As our brave service members separate from 
service and look to launch new enterprises, the VBOC, along 
with Boots to Business and other veteran-oriented initiatives, 
can provide an important boost. With all of these programs, it 
is vital that taxpayer resources are being used to their 
maximum effect for our entrepreneurs.
    In its recent management review, the Government 
Accountability Office mad recommendations for process 
improvements at the SBA, including with the entrepreneurial 
development initiatives. I hope to hear today how SBA is making 
progress in that regard.
    I look forward to learning about the work SBA is doing to 
ensure all of these programs can be most impactful in 
connecting businesses in our communities with valuable 
resources. Entrepreneurs deserve all the help that they can get 
at SBA, and it can be instrumental in meeting that need.
    I would like to thank the witnesses for being here and 
offering their insight, and I yield back.
    Chairman HUELSKAMP. Thank you, Ranking Member Chu, for your 
opening statement.
    If Committee members have an opening statement prepared, I 
ask that they be submitted for the record.
    And for our witnesses, I would like to take a moment to 
explain the timing lights for you. You will each have 5 minutes 
to deliver your testimony. The light will start out as green. 
When you have 1 minute remaining, the light will turn yellow. 
Finally, at the end of your 5 minutes, it will turn red. Please 
try to adhere to that limit.
    And so with that, our first witness is Tameka Montgomery. 
Thank you for being here. The associate administrator for 
Entrepreneur Development within the Office of Entrepreneurial 
Development at the SBA. In this capacity, Ms. Montgomery is 
responsible for overseeing SBA's counseling and training 
programs for entrepreneurs. I appreciate you being with us 
today, and you may begin.

   STATEMENTS OF TAMEKA MONTGOMERY, ASSOCIATE ADMINISTRATOR, 
     OFFICE OF ENTREPRENEURIAL DEVELOPMENT, SMALL BUSINESS 
ADMINISTRATION; BARB CARSON, ASSOCIATE ADMINISTRATOR, OFFICE OF 
 VETERANS' BUSINESS DEVELOPMENT, SMALL BUSINESS ADMINISTRATION

                 STATEMENT OF TAMEKA MONTGOMERY

    Ms. MONTGOMERY. Thank you, Chairman Huelskamp, Ranking 
Member Chu, and members of the Subcommittee. Thank you for 
inviting me to testify before you today. I am excited to share 
with you the important work of the Office of Entrepreneurial 
Development, which is responsible for programmatic oversight of 
the Small Business Development Centers, Women's Business 
Centers, SCORE program, as well as other targeted initiatives, 
such as Emerging Leaders, Regional Innovation Clusters, the 
Learning Center, and Scale Up America.
    As a former SBDC center director, I would counsel my 
clients that they could not be all things to all people. 
However, in OED, we must meet the varying needs of America's 
entrepreneurial community. The diversity of our programs is 
reflective of this aim. Each program has a unique value and 
plays a key role in the entrepreneurial ecosystem.
    America's business landscape is changing. Women-owned 
businesses have grown at a rate of four times that of male-
owned; however, 90 percent of their companies do not have a 
single paid employee and their average annual gross receipts 
are $144,000, compared to businesses owned by men which 
generate $638,000. More concerning is that businesses owned by 
black and Hispanic women generate on average $28,000 and 
$53,000, respectively.
    Our Women's Business Centers serve a unique purpose by 
providing services that address the challenges of women 
entrepreneurs. Unlike any of our other programs, the WBC's core 
mission includes empowering low to moderate income women to 
become entrepreneurs. Currently, SBA manages 108,000 Women's 
Business Centers that train and counsel over 140,000 clients 
annually.
    SCORE, our office's longest standing program, has been 
providing mentorship to business owners for more than 50 years. 
SCORE is powered by a core of 11,000 volunteer mentors who play 
a critical role in helping to fill knowledge gaps that 
entrepreneurs encounter as they start and grow their 
businesses. SCORE volunteers offered more than 2 million hours 
to 349,000 clients last year.
    The SBDC program is our largest program with a footprint of 
more than 900 centers across the nation. SBDCs are uniquely 
suited to deliver long-term advising through ongoing one-on-one 
business services tailored to the needs of the business owner. 
SBDC's business advisors helped clients start more than 13,000 
new businesses and provided training and advising to more than 
450,000 entrepreneurs. SBDCs are also helping to advance the 
nation's trade agenda by helping small businesses access the 
global market.
    Observing a need to help underserved and underrepresented 
entrepreneurs scale up their businesses, we launched Scale Up 
America, to fill a gap of business assistance to smaller 
growth-oriented entrepreneurs. Although women and minorities 
represent the fastest growing segment of new entrepreneurs, 
their ventures are experiencing far less success. Data from the 
Census Bureau shows that minority-owned businesses generate on 
average $174,000 in gross receipts, compared to nonminority-
owned firms, which generate 552,000 in average gross receipts. 
The goal of Scale Up America is to equip more high-potential, 
growth-oriented entrepreneurs with the right tools to overcome 
barriers to growth.
    Small businesses drive innovation and play a critical role 
in local economic development. Our Regional Innovation Clusters 
connect businesses, suppliers, service providers and related 
institutions within a defined cluster. Currently, we fund 14 
clusters, such as an autonomous and unmanned systems cluster, a 
bioscience and technology cluster, and a smart grid cluster.
    While it is important that we are responsive to the 
changing needs of entrepreneurs, we also want to make sure that 
our programs are producing their intended outcomes. We have 
worked closely with our partners, the SBDCs, WBCs, and SCORE, 
to implement a collaborative evaluation methodology. Our office 
also consulted with the Association of Women's Business Centers 
to develop the first-ever survey to capture the outcomes of all 
WBC services. The insights gained from this survey will guide 
OED in our management and oversight of the WBC program.
    Additionally, we have embarked on the agency's first-ever 
economic impact evaluation piloted with the Scale Up 
initiative. The findings will be used to improve the 
effectiveness of this initiative, as well as provide us with a 
model that we will evaluate other programs.
    Thank you for the opportunity to testify before you today. 
I look forward to answering any questions.
    Chairman HUELSKAMP. Thank you, Ms. Montgomery. I appreciate 
your testimony.
    Our final witness is Barb Carson, the associate 
administrator for the Office of Veterans' Business Development 
within the SBA. In this capacity, Ms. Carson is responsible for 
all programs and policies related to veteran entrepreneurs. She 
is also currently a colonel in the U.S. Air Force Reserve. 
Thank you for your service. And thank you for being here today, 
and you may begin.

                    STATEMENT OF BARB CARSON

    Ms. CARSON. Good morning, Chairman Huelskamp, Ranking 
Member Chu, and distinguished members of the Subcommittee. 
Thank you very much for the opportunity to testify today on the 
U.S. Small Business Administration's continuing efforts to 
empower veteran entrepreneurship and small business ownership 
through programs and policies that maximize the availability of 
SBA services for veterans, service members, and their spouses. 
Our programs and policies target our nation's heroes and job 
creators. We are grateful for the continued support of the 
House Small Business Committee and this Subcommittee. We look 
forward to sharing our successes with you and addressing your 
questions.
    As small business owners, veterans continue to serve our 
country by creating critical employment opportunities and 
driving economic growth. They possess the skills, discipline, 
and leadership to start and operate successful businesses in 
their communities. Nearly 1 in 10 small businesses is currently 
veteran owned. Remarkably, although the overall number of 
veterans declined significantly between 2007 and 2012, the 
participation of veterans in business ownership was persistent. 
This is according to the 2012 census survey of business owners. 
During that period, the overall number of veteran-owned firms 
increased at a faster rate than nonveteran-owned firms. We also 
note that between 2007 and 2012, the number of women veteran-
owned firms increased by nearly 300 percent. All of this data 
may indicate strong entrepreneurial activity among post-9/11 
era veterans.
    My office is strongly encouraged by these trends in veteran 
entrepreneurship and is fully engaged in supporting them with 
quality programs and thoughtful policy initiatives that all 
cover SBA's primary missionaries of counseling and training, 
access to capital, and access to contracting opportunities.
    In Fiscal Year 2015, over 60,000 veterans received training 
and counseling from SBA's 15 Veterans' Business Outreach 
Centers. A prominent and enduring focus of the VBOC program is 
providing transition assistance services via SBA's 
administration of the entrepreneurship track of the Department 
of Defense Transition Assistance Program (TAP), which we call 
Boots to Business. Working through the interagency governance 
of TAP, and with our partner support, we were able to deliver 
Boots to Business to over 14,000 service members and their 
spouses in Fiscal Year 2015, and over 35,000 have been trained 
since the program's launch in January of 2013. Through an 
efficient and effective cooperative agreement with the 
Institute for Veterans and Military Families at Syracuse 
University, we provide these services to those service members 
who are disadvantaged by having to transition from an overseas 
installation.
    This year we reached several program milestones. First, we 
increased the percentage of modules being taught by VBOCs. 
Second, we implemented a Boots to Business specific outcomes 
assessment survey to determine the number and rate of business 
formation among the participants and get their feedback on the 
quality and future service needs. And third, we implemented an 
outreach campaign to increase the awareness and participation 
of military spouses as well as service members who seek to 
prepare for transition earlier in their careers as part of the 
Military Lifecycle Model. Working with Congress and our 
partners, we are proud now to offer Boots to Business to 
veterans of any era and their families with a program extension 
that we call Boots to Business Reboot.
    SBA also supports comprehensive entrepreneurial development 
programs specifically designed for women, veterans, and for 
service-disabled veterans. Over 65 percent of the graduates of 
these programs have started their own businesses.
    In Fiscal Year 2015, SBA will sustain the SBA Veterans' 
Advantage program and waive fees for veterans and their 
families who qualify for SBA Express 7(a) guaranteed loans of 
$350,000 and below, and reduce fees by half for SBA 7(a) 
guaranteed loans between $150,000 and $5 million.
    In 2015, lenders utilized SBA's 7(a) and 504 loan programs 
to make over 3,300 loans, totaling more than $1.38 billion to 
veteran-owned businesses. That is an 80 percent increase over 
2014. In the area of Federal contracting, the Federal 
Government in 2014 again exceeded a 3 percent goal for 
contracting with service-disabled veteran-owned small 
businesses. This was the third straight year. In 2016, my 
office is expanding its engagement strategy to Federal agency 
offices of small and disadvantaged business utilization to 
ensure that service-disabled veteran small business 
opportunities continue to grow.
    My office empowers veteran entrepreneurs who seek Federal 
procurement opportunities by building their capacity to compete 
and win contracts. SBA, through a cooperative agreement with 
the Montgomery County Chamber of Commerce Foundation, Veteran 
Institute for Procurement (VIP) is how we do this. VIP is an 
accelerator-like, in-residence, educational training program 
for veteran-owned businesses, which is instructed by private 
sector experts, government officials, and agency 
representatives.
    I thank you very much for the opportunity to testify before 
your Committee today. By supporting our work, you are mandating 
that the U.S. Government does all it should to provide American 
dream of business ownership to those who have fought and 
continue to fight every day to protect it. Thank you.
    Chairman HUELSKAMP. Thank you, Ms. Carson, for your 
testimony, and Ms. Montgomery. And we will begin questions. I 
first yield myself 5 minutes, and I have a number of questions.
    In your testimony, both of you have identified a number of 
data points, certainly plenty of numbers, and performance 
metrics are obviously important for Congress and agencies to 
evaluate programs, oftentimes competing programs in the same 
agency. It is my understanding that the Entrepreneurial 
Development Management Information System (EDMIS) is the 
performance database used by the SBA, but the recent upgrade 
has been essentially a failure. This is very troubling to me. 
First, who is responsible for overseeing this contract and 
getting the system updated? And second, what is the current 
status of EDMIS and what are the plans to update this system? 
And third, what conversations have you had with your resource 
partners about EDMIS?
    And with that, we will start, I guess, with Ms. Montgomery. 
If you can answer all of the above questions, or whatever you 
can answer. Then, we will see what Ms. Carson thinks about 
that. So with that, please answer the question.
    Ms. MONTGOMERY. Thank you for your question.
    Yes, EDMIS is our system in which we capture data. Really, 
it is output data from our partners. And so what that means is 
we capture the number of clients that our clients or our 
resource partners serve. We recognize that EDMIS needs an 
upgrade. Currently, there is not a contract. To answer your 
second question, currently, there is not an existing contract. 
Previously, there was an existing contract, and we recognize 
that the system that was being developed was not meeting the 
needs of our agency. And so now what we are doing moving 
forward is that we have brought on someone on our team who is 
solely committed to EDMIS, understanding what the challenges 
are, and then also helping us to identify what the correct path 
forward will be to improve the system and make sure that it is 
a system that is not only effective for SBA in capturing the 
data that we need, but then also for our resource partners 
inputting their data.
    Chairman HUELSKAMP. So the upgrade that I discussed that 
had already happened, you abandoned that and are looking at 
another upgrade, or are trying to actually finish the upgrade; 
is that correct?
    Ms. MONTGOMERY. Correct. Last year is when that particular 
upgrade had ceased.
    Chairman HUELSKAMP. And who was in charge of making the 
upgrade?
    Ms. MONTGOMERY. I was. I was.
    Chairman HUELSKAMP. And now you have filled a management 
position that will be directly responsible for this upgrade. 
And how much did you spend on the failed upgrade, and what are 
you anticipating to ask for Congress, how many dollars to do 
the upgrade right this time?
    Ms. MONTGOMERY. Yes. So one of the things that the 
contract, the initial contract, was about a million dollars for 
the initial upgrade. That contract had been moving forward 
prior to my moving into the role. However, it was clear that, 
as I said before, the system that was being developed was not 
going to be effective, and so we stopped it so as not to 
continue to waste government resources. As for how it will look 
moving forward, our tea member is looking at the existing 
system and will offer recommendations on whether or not does it 
require an upgrade to the existing system? Do we look to an 
off-the-shelf system? Do we create a new system? Or could it be 
a combination of those? We do not know yet but we have a person 
on the team who is working on identifying what the correct path 
forward is on EDMIS.
    Chairman HUELSKAMP. And if the upgrade failed, how do you 
compare the performance between obviously the statutorily 
authorized programs and these other initiatives that have not 
been approved by Congress, how are you able to say which ones 
are actually working?
    Ms. MONTGOMERY. Yes. So as I said earlier, EDMIS is a 
system that captures outputs. It is not an effective system to 
develop or to identify performance metrics or to, excuse me, to 
evaluate the effectiveness of programs. And so what we have 
done is we have been working with a third-party evaluator, and 
as I mentioned, our third-party evaluator has worked with our 
resource partners to come up with common performance metrics. 
We use the third-party evaluator to evaluate our Regional 
Innovation Clusters programs as well.
    Chairman HUELSKAMP. Ms. Montgomery, I am confused.
    Ms. MONTGOMERY. Yes.
    Chairman HUELSKAMP. So you have performance metrics outside 
the performance metric database, and you use that to evaluate 
the effectiveness of these programs? I am a little confused. So 
what is the purpose of the database?
    Ms. MONTGOMERY. As I said, the database is an effective 
tool. It captures data. So it captures the numbers of clients 
served, client demographics.
    Chairman HUELSKAMP. Well, I understand that. That is the 
data. The upgrade failed.
    Ms. MONTGOMERY. Yes.
    Chairman HUELSKAMP. You are not apparently capturing the 
data, so how do you evaluate the program if you do not have 
performance data that you have captured because the upgrade has 
failed?
    Ms. MONTGOMERY. So I think what I have not explained 
clearly is that we currently have EDMIS and the existing system 
currently collects that particular data as I mentioned before. 
What I was expressing is that as we look to move forward with 
EDMIS, one of the things that we have to evaluate and determine 
is that how do we look at gathering outcome measures and not 
just output measures? And so that is where the two things that 
we are working on. And so we recognize that EDMIS is effective 
for capturing outputs, but it is not the best system as it 
stands now to capture outcomes. And so in the meantime, what we 
have done is that we have worked with our partners and a third-
party evaluator to capture more detailed, evaluative impact 
information from the clients of our resource partners so that 
we can really understand and evaluate the outcomes of those 
clients after they have received services.
    Chairman HUELSKAMP. Thank you, Ms. Montgomery. I am out of 
time, but if you would provide the Subcommittee an explanation 
of what the upgrade is for, the data you are missing now, and 
how that will improve your evaluations, because it looks like 
you wasted a million dollars. I think I am still confused what 
exactly you were trying to do, and again, we do have a number 
of statutory authorized programs that have a long history of 
working and then you have these other initiatives which you 
spent most of your time talking about that I do not see that we 
had the data to compare those.
    So with that, I will yield 5 minutes for the ranking member 
for her questions. Thank you.
    Ms. CHU. Thank you.
    Ms. Montgomery, SBA resource partners, like the SCORE 
program, the Veterans' Outreach Center, and the Women's 
Business Center, provide a variety of services and counseling 
to small businesses on not only starting a small business but 
also the SBA programs that are available to them. And while 
these programs are constantly changing, SBA must also provide 
outreach about programmatic changes. In testimony, this 
Committee has learned that SBA has a way to go to successfully 
communicate with these partners. What steps is your office 
taking to increase the communication with SBA's resource 
partners?
    Ms. MONTGOMERY. Well, our resource partners are our direct 
grantees, and so as such, our program offices are in constant 
communications with our grantees, whether they are weekly 
regular calls, for example, on the SBDC side with the state 
directors, or with our WBCs. We also host with all of our 
resource partners, collaboratively we host quarterly resource 
partner calls in which we bring on the administrator to talk 
about what things are happening within the agency from a more 
broader level perspective, and we bring in some of the other 
offices that also come in and speak to our resource partners.
    Ms. CHU. Okay. Ms. Montgomery, SBA operates various pilot 
initiative programs, such as the regional clusters and the 
entrepreneurial education programs that provide training to 
businesses. Of course, we have our statutory programs that were 
established by Congress. But can you tell me what the merits 
are of the programs that are the initiatives not found through 
the statutory programs?
    Ms. MONTGOMERY. So as you mention, our Regional Innovation 
Clusters is one such program that we have been providing since 
about 2010, and one of the things that we have found is that 
the businesses that participate and receive assistance in the 
cluster, that we have seen them secure more patents, that they 
have received the targeted assistance to do commercialization 
on key products and services. We have seen a higher level of 
small businesses engage in their local economic clusters in 
their communities. And so additionally, we have a number of our 
clusters that collaborate with our resource partners to provide 
potential clients or even to assist in sharing assistance, 
providing technical assistance in other ways.
    Ms. CHU. Okay. Ms. Carson, I am a fan of the Boots to 
Business program because I think it provides resources to our 
veterans at a very critical time in their lives. And I know 
before that there was not that on-hands training before 
soldiers left their assignments and went out into the world, 
but the Boots to Business really corrects that, and they get 
that training before they leave.
    Now, I understand that this program is funded separately 
from the Veterans' Business Outreach Centers and is 
administered by various resource partners. With VBOCs having 
the specific mission of aiding our veterans with business 
training, has your office considered moving the program over to 
the centers fully?
    Ms. CARSON. Thank you for your question. Through Fiscal 
Year 2015, you are correct. The appropriation was in two 
separate categories--Veterans' Business Outreach Center and 
Boots to Business. In Fiscal Year 2016 that will no longer be 
the case, and so we can properly resource as needed. However, 
there are only 15 Veterans' Business Outreach Centers at this 
time, not nearly enough to serve the 160-plus military 
installations that we are serving with Boots to Business around 
the world, though we are focused, as I said in testimony, that 
VBOCs need to increase their participation in Boots to Business 
delivery, as that is by statute their primary responsibility to 
serve the transitioning service member.
    Ms. CHU. So what does that mean if you have only 15 VBOCs?
    Ms. CARSON. It means that my goal is to expand the 
Veterans' Business Outreach Center Program so that they can 
take a larger role across the United States. With the number of 
installations we have, which is over 150, I cannot possibly 
serve them solely with Veterans' Business Outreach Centers, 
which is why I am very proud that we have grant relationships 
with SBDC, SCORE, and Women's Business Centers, because of the 
diversity of that delivery model of Boots to Business at 
installations introduces service members to all the resources 
that they have in their community.
    Ms. CHU. Do you think it would be more efficient for VBOCs 
to administer the program or would it be more difficult to do 
so considering the number of installations that there are 
around the world?
    Ms. CARSON. As you said, the number of them within the 
United States makes it impossible at this time to serve solely 
with Veterans' Business Outreach Centers. And I think there are 
benefits to the diversity of the delivery among all resource 
partners. That is SBA, and they get an introduction to our full 
community.
    Ms. CHU. Thank you, and I yield back.
    Chairman HUELSKAMP. Thank you, ranking member.
    Next, I will recognize Representative Kelly for 5 minutes.
    Mr. KELLY. First of all, Ms. Carson, Colonel Carson, thank 
you for your service. I think that citizen soldiers are the 
backbone of this nation and have been since predating 1776, so 
thank you for your service.
    In August, I had the privilege of attending and operating 
the VBOC at Mississippi State University. At Mississippi 
University, Mississippi State University VBOC website, there 
are two main training programs being advertised--Boots to 
Business and Veteran Institute for Procurement (VIP). While 
Boots to Business is administered locally, VIP is administered 
at a centralized location. Mississippi State University 
currently administers veteran entrepreneurial services to 
Tennessee, Mississippi, Alabama, and Louisiana. Getting our 
veteran entrepreneurs from Region 4 to the Potomac, Maryland, 
where the VIP is held is cost prohibitive to many of my 
veterans.
    Ms. Carson, is your office working on a way to bring the 
VIP program to other places besides Maryland?
    Ms. CARSON. Thank you, sir, for your question. I have 
explored that possibility with the Veteran Institute for 
Procurement, and they have tested it once prior to their 
cooperative agreement with the Small Business Administration. 
And what they found is that most procurement decisions are made 
here in the Washington area, and they found that they could get 
the greatest participation from prime contractors, government 
officials here in this location. However, I have not closed the 
door to the idea that we do have some other central locations 
around the United States where we could replicate this program, 
perhaps in a different scale, but it could be done. So I have 
not given up on that opportunity, sir.
    Mr. KELLY. And Ms. Carson, you note in your testimony that 
in Fiscal Year 2015, 60,000 veterans received training and 
counseling from SBA's 15 VBOC centers. You go on to note that 
working through interagency governments of TAP and with our 
partner support, you are able to deliver Boots to Business to 
over 14,000 transitioning service members and military spouses 
in Fiscal Year 2015 and over 35,000 since the program's launch 
on January 1, 2013. However, I notice that there is nothing 
about the success of those veteran service members or military 
spouses after they participate in your program. This Committee 
and the GAO have noted the absence of performance metrics which 
are very important. Measuring the right performance metrics is 
the only way that you identify the right solutions and the 
right problems to get the solution to. And so why is SBA not 
tracking outcomes like business survivability or sales growth 
instead of what they are tracking now?
    Ms. CARSON. Sir, I will speak specifically to the Boots to 
Business. I am very proud that over the last 18 months, we have 
established finally a system of record at SBA so that we can 
collect veteran data to begin to get that. And also, as I noted 
in testimony, that I have also just been approved to launch an 
assessment survey for Boots to Business participants to 
understand what their business formation rate is. As you know, 
this is a new program with its first appropriation in 2014, 
although we did begin to test what would be the best practice 
in 2013. So it is early days, but I am very certain that we are 
on the right track, and I will start to get outcomes from that 
survey next month.
    Mr. KELLY. And just as a follow-up to that, what specific 
data are you looking to track?
    Ms. CARSON. First, I would like to know was it of use to 
them? The quality of the service is the very first indicator. 
Second, did it help them form a business? Third, I would like 
to know if they were able to better connect with SBA resources 
once they had had this course. It is hard to do without a 
control group, but I would like to say that it makes a 
difference to know about these resources before you are 
actually back in your community. This is the biggest difference 
between having nothing and having a transition when people are 
making critical decisions about whether they want to go to 
school, they want to get a job, or they would like to create 
their own job.
    Mr. KELLY. And this is more of a statement than a question, 
but you understand that the military and the Veterans' Business 
Outreach group, they are one of the best organizations, period, 
about not seeing race, color, sex, or anything else. As you and 
I both know from serving, we see green in the Army and you see 
blue in the Air Force. That is the only colors we care about, 
are green and blue. And so these are some of the brightest and 
smartest and hardworking people, and they understand how to 
achieve objectives when you give them to them. So I would just 
say make sure your data reflects that because if we are not 
getting success out of these folks, we are doing something 
wrong, because we have the right people to achieve that 
success, so we have to measure the right data to make sure that 
we are providing them what they need.
    And I yield back, Mr. Chairman.
    Chairman HUELSKAMP. Thank you, Representative Kelly.
    Next, I recognize Representative Payne for 5 minutes. The 
floor is yours.
    Mr. PAYNE. Thank you, Mr. Chair, and to our ranking member.
    Ms. Montgomery, in your testimony, you mentioned that the 
number of women-owned businesses has grown significantly to 
bypass the rate of male-owned businesses. However, you note 
that even though women are starting businesses, 90 percent of 
their companies do not have a single paid employees. When I 
speak to my constituents, one of their primary concerns is 
employment and financial prosperity. So can you give us 
specifics about the unique barriers or circumstances that 
women-owned businesses are facing that tend to inhibit them 
from being able to add employees, and what can we do to assist 
them in this area?
    Ms. MONTGOMERY. Thank you for your question.
    Yes. When we look at women-owned businesses, there are a 
number of challenges that women entrepreneurs have in scaling 
up and growing their businesses. One of the things that we find 
is that sometimes women do not believe that they can access the 
capital that they need to really grow their business, and we 
know that funding is very important for being able to grow a 
business. And so making sure that they have the right 
connections to the appropriate lenders, whether they are 
microlenders or traditional banks, is something that we work 
with business owners on.
    One of the interesting things we talk about with pay and 
women, is the ability to negotiate. That same ability to 
negotiate also continues as it relates to businesses. And so 
the great thing about Women's Business Centers and 
understanding kind of some of those key challenges, their 
training and their business assistance can really focus around 
addressing those unique needs of women.
    Mr. PAYNE. Thank you.
    Ms. Carson, also I would like to thank you for your service 
to this nation. We respect it and we appreciate it immensely.
    In your testimony, you also noted that the uptick in women-
owned firms stating that between 2007 and 2012, the number of 
women veteran-owned firms increased by nearly 300 percent. Can 
you tell us about any unique barriers that are particular to 
women veteran-owned firms?
    Ms. CARSON. Thank you, sir. It has been a privilege to 
serve, and I look forward to continuing that service.
    I agree with Associate Administrator Montgomery that access 
to capital continues to be a challenge for all women 
entrepreneurs. I do, however, think that this population, they 
recognize that they can negotiate. They have met many 
challenges head-on, and I think they are going to be strong 
entrepreneurs. They also happen over index, for example, in the 
Boots to Business participation. Although the overall service 
composition for women is in the high teens, we see it is over 
20 percent of our courses are women service members who want to 
take Boots to Business.
    Mr. PAYNE. So do you think that their experience in the 
Armed Services and the discipline and the criteria they have to 
meet in terms to serve helps them when they go into starting a 
business?
    Ms. CARSON. I could not reference a survey, sir, but from 
personal experience, I absolutely do think that it is the case.
    Mr. PAYNE. Yes. Are there experiences that they have that 
you could lend to women outside of that military experience 
that allows them to be able to negotiate and prosper?
    Ms. CARSON. I think that is a fantastic idea, and I already 
work closely with Erin Andrew of the Office of Women's Business 
Ownership to look for ways that our programs can learn from 
each other and also collaborate, and that is a perfect way that 
we could go forward in the future. Thank you.
    Mr. PAYNE. I think that is excellent. And I will yield back 
before the red light comes on.
    Chairman HUELSKAMP. Thank you, representative. I appreciate 
that.
    Next, I will yield 5 minutes to Representative Radewagen, 
and I appreciate keeping on the clock. Thank you. You have 5 
minutes.
    Ms. RADEWAGEN. Thank you, Mr. Chairman and Ranking Member 
Chu. I would like to welcome Ms. Montgomery and Colonel Carson 
as well. And this question is actually for both of you.
    In each of your respective areas, if the funding goes to 
the unauthorized SBA-created initiatives went instead to the 
authorized programs you oversee, how many more SBDCs, VBOCs, or 
similar Entrepreneurial Assistance Centers could have been 
opened or expanded instead?
    Ms. MONTGOMERY. Thank you for your question. The programs 
that I believe you are referring to, for example, our Regional 
Innovation Clusters, for example, those are programs that we 
award through a contract because we do not have grant authority 
for those programs. And so it is full and open competition, and 
in fact, we have a Women's Business Center in Alabama that runs 
a cluster. On our Scale Up initiative, we have a number of 
Small Business Development Centers that are actually the 
awardees of that particular program, and so they are delivering 
that service, as well as we have some WBCs. But all of our 
programs, all of our resource partners, have the ability or are 
able to pursue those opportunities with us. There is nothing 
that prohibits them from going after that funding.
    Ms. RADEWAGEN. As a follow-up, could the U.S. territories 
who are underserved by the SBA have been a possible location?
    Ms. MONTGOMERY. Yes. As I mentioned, it is full and open, 
and so we receive applications or proposals from communities, 
and it just depends on where they come from, but it is a full 
and open competition.
    Ms. RADEWAGEN. Colonel Carson, any comments?
    Ms. CARSON. Yes. I want to make sure that I understand the 
question that you asked first. But if you are speaking of 
programs, the unauthorized program perception of Boots to 
Business, is that the one that you would refer to, ma'am?
    Ms. RADEWAGEN. And others, yes.
    Ms. CARSON. And others. Okay. In my case then, we do have a 
statutory responsibility to participate in transition 
assistance programs with the Department of Defense. We do 
happen to call it Boots to Business. I believe that we are 
really efficiently providing that program at minimum cost, that 
it would still, even with great appropriation, have full and 
open competition for more veteran outreach centers, but I 
cannot do it fully in that manner to serve the transitioning 
service member population. But like Associate Administrator 
Montgomery, I do have fully open and competitive process for 
grants for those resource partners.
    Ms. RADEWAGEN. Thank you.
    Thank you, Mr. Chairman. I yield back.
    Chairman HUELSKAMP. I would like to recognize 
Representative Hahn for your 5 minutes.
    Ms. HAHN. Thank you, Mr. Chairman, Ranking Member Chu. 
Thanks for holding this hearing.
    One of the issues that we are grappling with in Los Angeles 
County is veteran homelessness, and we have at the last count, 
approximately 4,000 to 5,000 homeless veterans in Los Angeles 
County. Last week, Secretary McDonald of the VA came out to put 
his stamp of approval on a new master plan for the West LA VA 
Center, which will provide housing to get our veterans off the 
streets, but it is also going to be a place where more 
resources for the veterans are able to be accessed--health, 
legal services, addiction treatment. But also, there is a 
portion of that that they are talking about the idea of helping 
veterans become entrepreneurs because I think part of the new 
thinking is it is one thing to get our veterans off the street; 
it is another thing to prevent further homelessness by helping 
them start a business. So I think this is the sort of model 
that makes sense really around the country.
    So Colonel Carson, I was going to ask you, SBA has versions 
of this kind of resource hubs in the form of the 15 Veteran 
Outreach Centers across the nation, but apparently, the only 
center in California is up in Sacramento, and the majority of 
veterans live in Southern California, and most of those live in 
Los Angeles County. So since employment and entrepreneurship 
are other venues to prevent homelessness, how can you assure me 
that the veterans in Southern California are getting the 
training and resources and counseling that you are speaking 
about in these resource centers and what is the SBA and the 
Office of Veterans' Business Development doing to reach out to 
the veterans in Southern California? We are almost like two 
states in California--Northern California, Southern California. 
We have the most population in Southern California.
    Ms. CARSON. Yes. I recognize that that is a challenge, and 
in not being able to cover ever state as fully as we would hope 
is a gap that I must address, and I continue to do so. So it is 
a full and open competition for Veterans' Business Outreach 
Centers, and the one in Sacramento was quite competitive. I do 
share your concern that the veterans in Southern California 
must get the attention and service that they deserve. So I do 
count on Veterans' Business Outreach Centers, all of them, not 
just in California, to be excellent resource integrators, to 
make sure we know of all the resources that are available to 
veterans both through the SBA district offices in Southern 
California, the resource partners there, and I will also say 
that I am finalizing a plan right now to expand the Veterans' 
Business Outreach Center network because of an increase in 
appropriation that is not yet final.
    Ms. HAHN. Do you have a sense that the Southern California 
veterans are accessing the resource center in Sacramento?
    Ms. CARSON. Yes, I do, but I know I can do more, and 
because the Veterans' Business Outreach Center mission is tied 
really, the focus is on transitioning service members. You also 
have a high number of military installations there, and now I 
have better data, since we have been running the Boots to 
Business program, to understand the demand, to understand the 
existing veteran population and how we can better serve it. So 
I look forward to making a lot of progress.
    Ms. HAHN. Thank you. And I do think we have a great 
opportunity here because certainly for all of us, just the 
humane response is to get veterans and others off the streets, 
into shelter, but long-term, I think we have a great 
opportunity, whether it is women in minority-owned businesses, 
veterans-owned. Women veterans is a huge issue, and I think we 
have a great opportunity to transition them into the idea of 
being an entrepreneur and starting their own business, and thus 
really, you know, dictating the outcome of their own lives. So 
I think you have a real opportunity, and I would like to see 
you kind of look into this West Los Angeles VA Center and see 
if that might not be something that you could partner with.
    Ms. CARSON. And I would love to tell you if I have just 10 
seconds.
    Ms. HAHN. You do. You have 11. Oh, 10 now.
    Ms. CARSON. Oh, good. We are testing a program that 
integrates SBA resource with VA medical centers. I am testing 
it on the East Coast right now in three different sites to work 
with the VA Medical Center in their Compensated Benefits 
Therapy Program for Entrepreneurs. Some peer-to-peer veteran 
mentoring to start and launch small businesses, so I am 
absolutely happy to look at the West LA and test it there as 
well.
    Ms. HAHN. Great. Thank you.
    Ms. CARSON. Thank you.
    Chairman HUELSKAMP. Thanks. I represent Representative Brat 
for 5 minutes.
    Mr. BRAT. Thank you, Chairman. Thank you both for being 
with us today.
    I taught economics for 20 years to college kids, and so I 
am interested in all this entrepreneur stuff and I am all in 
favor of it. But whenever I see entrepreneur development, I 
almost get a little nervy because Adam Smith is my hero in the 
invisible hand, and so entrepreneurs are supposed to be the 
ones who have that precisability to be able to develop new 
business, see opportunities, take risk, and all that kind of 
thing. So now that government is going to come into play and 
train entrepreneurs, my radar goes up. I am all interested. And 
so make the best case you can for this. But what I really want 
to know is the Subcommittee is entrepreneur development with an 
arrow going toward economic growth. We are not doing so hot. 
Last quarter was 0.7 percent economic growth. And so I think 
the nation has more fundamental problems, and this is what I 
want to get to with you. The folks you are seeing, do you see 
other gaps that we could do a better job of? And my guess is it 
is K to 12. Right? I have freshmen coming in to my college 
classes. They do not know what a business is, for real. I have 
seniors going out sometimes that do not know what a business 
is. And then you guys get, and I get, and grad schools get 
people that want to be entrepreneurs; they do not know what a 
business is. And in higher ed, 90 percent of faculty think 
business is evil. That is kind of tongue-in-cheek. Right? But 
some of my colleagues are not in love with business. And so are 
you seeing any gaps? If we want to do the best thing for the 
people that are coming to you to be entrepreneurs, I want them 
to be entrepreneurs. Right? Business is the only shot that kids 
have. Right? That is the only shot for success. So we all want 
to make that happen. Are there major gaps in skills and resumes 
that we can do a better job of so that when they come to you 
they are ready to go? And I will just kind of set off with that 
question for both of you, whoever wants to go first.
    Ms. MONTGOMERY. Thank you for your question. I think you 
speak to something that is really interesting in that how do we 
cultivate an entrepreneurial mindset much earlier? And I think 
that that is important, because I think it does. K-12 12 is a 
great opportunity and a great time to get young people thinking 
in that way. And at SBA, we have been working on reaching out 
to millennials because we know that while millennials are the 
largest age cohort, they are actually starting businesses at a 
far lower rate than previous generations. And so I do think we 
have a great opportunity to inject and introduce 
entrepreneurship earlier than even the millennials. So there is 
an opportunity there that could help in the long term spur 
innovation and entrepreneurship here in our nation.
    Ms. CARSON. Sir, the population that I serve obviously is 
not younger than 18 years old, but there are definitely some 
benefits to veteran experience, and I would say those are 
assessing risk, discipline, and responsibility for one's 
actions, and those are essential to running a successful small 
business. Where I still see room for growth is a focus on 
business finance and personal finance as well and recognizing 
the decisions that one makes as a young adult could have 
serious complications as they try to start and grow a business.
    Mr. BRAT. That is good. In turn, anything curriculum-wise, 
any missing gaps? I mean, I tell my students, look, if you love 
plays and the arts and music or whatever, good. Follow your 
passion. Make sure you have got to do that. Right? But minor in 
accounting. Right? You have got to do both. Right? And do some 
Excel spreadsheets and learn about web design or whatever. 
Right? And you just give them this package. And if they do not 
have it, they are going to be hurting. Any just obvious 
shortfalls where we have to, I mean, you gave some skills 
analyzing risk and courage. Those are great virtues, but they 
are not sufficient. And so what I am trying to get at, what is 
the minimum in the schools? What can we really focus on to fill 
in some of these gaps?
    Ms. MONTGOMERY. I know that some of our Women's Business 
Centers, as well as some of our Small Business Development 
Centers recognize that gap, and they have been engaging from a 
high school perspective, taking young people through a 
curriculum that talks about a more entrepreneurial mindset 
because the likelihood that that young person who is in high 
school is going to actually start a business; rather, how do we 
help that individual have the mindset so that whether or not in 
the future they choose to start a business or they go work for 
someone, they have an entrepreneurial approach that helps them 
to be more effective. And in any situation, and in the future, 
when they come to the point of wanting to start a business, 
they can pull on what they have learned. And so I know, like I 
said, we have WBCs and SBDCs that have already begun to provide 
that type of service through training to young people across 
the nation.
    Mr. BRAT. That is great. I went over time but I was testing 
you both, and I can tell you both actually like business. So 
thank you very much. Very good.
    Chairman HUELSKAMP. Next, I will recognize Representative 
Clarke for 5 minutes.
    Ms. CLARKE. Thank you, Mr. Chairman, and I thank our 
ranking member. I thank our witnesses here today.
    Ms. Carson, in your testimony, you mentioned the Veteran 
Institute for Procurement Program, which you note is instructed 
by private sector experts and government officials. Could you 
expand a bit more on this program, and how long it has been in 
place, and what kinds of successes you have achieved?
    Ms. CARSON. Yes, ma'am. Thank you for your questions.
    I am very proud of this program, VIP. It is, as you said, a 
Montgomery County Chamber of Commerce foundation, and it has 
been funning for a number of years, but SBA has been involved 
as a cooperative agreement for just--we are on our second year. 
So the format of the program is it is at no cost to the veteran 
business. It is at a facility for three days. It is intensive. 
It is 27 hours of learning, and 80 percent of the attendees say 
that they make significant changes to their business practices 
after they have left the program. And the combination of 
instruction is they are prime contractors who give of their 
time to give and tell veteran business owners what would make 
them more competitive, the things that they are not doing that 
they could be doing, and what the landscape looks like for 
procurement, which is why it is central to this area where most 
of those big decisions are made. The agency officials that we 
bring in, they can be SBA procurement center representatives. 
They can be independent procurement decision-makers themselves, 
and they are also leaders like myself, the 8(a) program. So 
they get a full rounded perspective of everyone who is in the 
procurement landscape.
    Ms. CLARKE. So since your partnership, have you been able 
to sort of chart successes in actually obtaining contracts from 
individuals who have attended these intensive programs?
    Ms. CARSON. That is at the 1-year point after going to the 
program. Those members, those participants are surveyed, and we 
did just receive one, so I am happy to provide that to you.
    Ms. CLARKE. Okay. Very well.
    Ms. CARSON. Thank you.
    Ms. CLARKE. Ms. Montgomery, can you discuss a bit more 
detail the initiatives that your office has put in place to 
expand outreach to entrepreneurs, particularly to minority and 
women-owned businesses in underserved areas?
    Ms. MONTGOMERY. Thank you. I would love to.
    One program, and it is not really a program, but it is an 
initiative that we recently launched, and we partnered with the 
National Association of Government Guaranteed Lenders, 
recognizing that there are in underserved communities 
individuals obviously who want to start a business but do not 
know where to go and they do not have the relationship 
necessarily with SBA. They have not been introduced to SBA. And 
so what we have developed in partnership with NAGGL was, or is, 
called the Business Smart Toolkit. And basically, it is a 
downloadable--it is on our website--workshop that provides 
individuals with the basics around starting a business, how to 
establish strong banking relationships, and then where to 
connect with the local resources on the ground. And so this was 
done through a co-sponsorship with NAGGL, and the way that we 
have been able to deploy this and get it out into the broader 
community is by partnering with organizations who have those 
constituencies. So, for example, one of the organizations that 
we have partnered with is--the 100 Black Men of America is one 
of our partners. The National Association of Community Latino 
Builders is another one of our organizations that we have 
partnered with. So we have tried to partner with faith-based 
and nonfaith-based community organizations to make them aware 
of this resource that they can download to host a workshop, and 
then on how they can connect with our SBA district offices and 
how they can connect with a lender to come in and speak to 
their constituents.
    Ms. CLARKE. So that initiative seems to be a one-way 
initiative. How do you judge whether you have met success in 
connecting them with the lenders? Because that is the ultimate 
goal; right?
    Ms. MONTGOMERY. Yes. So with that particular effort, I like 
to say the goal is to educate and connect. And so in the 
Business Smart Toolkit, we provide them with guidance on how to 
host a workshop. And what we say is, it is three modules and we 
say as the host organization, you deliver the first module. And 
then the second module, which is about banking relationships, 
we provide them with contact with NAGGL, and we say contact 
NAGGL and they will identify a lender who will do the second 
module. And then we connect them with our SBA district offices, 
who will then deliver the third module. So that is how they are 
getting directly connected with SBA as well as with a lender.
    Ms. CLARKE. Have you been able to get a sense of how much 
this is being utilized, what kind of feedback you are getting 
on the ground in terms of the modules, and how that connects to 
the small business community in those particular areas?
    Ms. MONTGOMERY. We recently launched the Business Smart 
Toolkit in October of this year, and so it is just getting--I 
am sorry, October of last year. Excuse me. So it is just 
getting out into the broader community. And so, but the 
feedback that I have heard has been great. That people really 
like the information. That those organizations who are 
downloading it and using it, that they feel like the content is 
written at the right level. That it really does help them to 
connect their constituents with our resources, with SBA and 
with bankers. So we are getting great feedback, but it is still 
new.
    Ms. CLARKE. Still young.
    Ms. MONTGOMERY. Yes.
    Ms. CLARKE. Okay. Thank you, Mr. Chairman. I yield back.
    Chairman HUELSKAMP. Thank you, Subcommittee.
    I want to follow up though on one last question. I am 
trying to understand, Ms. Montgomery, your statement about your 
authorization for the grants, the competitive grants, and if 
you provide Committee documentation of your understanding where 
you have that authority, and I also remind you of the request 
for your performance metrics and the data that you are using 
for comparative purposes. But it is evident to me that both 
this Subcommittee and the SBA want to bolster the growth and 
development of entrepreneurs. However, our main concern that 
mismanagement at the SBA is resulting in the prioritization of 
its own initiatives, rather than ensuring scarce taxpayer 
dollars are carefully spent on the most effective programs with 
proven metrics.
    I hope that today's hearing will inspire the SBA to 
reexamine their efforts to truly align with GAO's 
recommendations and benefit our small businesses.
    And last, I ask unanimous consent that members have 5 
legislative days to submit statements and supporting materials 
for the record. Without objection, so ordered. This hearing is 
now adjourned.
    [Whereupon, at 12:02 p.m., the subcommittee was adjourned.]
                            A P P E N D I X


 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]   

    Chairman Huelskamp, Ranking Member Chu, and members of the 
Subcommittee, thank you for inviting me to testify before you 
about the SBA's Office of Entrepreneurial Development and my 
oversight of its encompassing programs.

    The Office of Entrepreneurial Development represents the 
third leg of SBA's support to entrepreneurs by ensuring that 
relevant and effective technical assistance, counseling, 
mentoring and training is delivered to our nation's small 
business owners. To accomplish this, my office is responsible 
for programmatic oversight of the Small Business Development 
Centers (SBDC), Women's Business Centers (WBC), and SCORE 
programs as well as other targeted entrepreneurial support 
initiatives such as Emerging Leaders, Regional Innovation 
Clusters, The Learning Center, and ScaleUp America. Our aim 
through the entirety of our programs and initiatives is to 
ensure that our nation's entrepreneurs find our services 
responsive and relevant to their needs of starting and growing 
successful small businesses. Research shows that 70% of small 
businesses that receive assistance survive more than five 
years. I applaud the House and Senate Appropriations 
Committees' recognition of the critical role business 
assistance programs play in the success of small businesses 
through their support of SBA's budget.

    As a former SBDC center director, I would often counsel my 
small business clients that they couldn't be all things to all 
people. However, as stewards of public resources, we understand 
that we must meet the changing and varying needs of America's 
dynamic entrepreneurial community of 28 million small 
businesses. The diversity of our programs is reflective of this 
aim. Each program has a unique value and plays a key role in 
ensuring a strong entrepreneurial ecosystem.

    As America's economy innovates and evolves, so do the needs 
of America's entrepreneurs. The most recent data from the 
Census Bureau tells us that the number of women-owned 
businesses has grown at a rate four times that of male-owned 
businesses in recent years, and they now represent 36% of our 
nation's businesses. However, while more women are starting 
businesses, 90% of their companies don't have a single paid 
employee and only 1.7% generate $1M or more in gross receipts. 
This is where our Women's Business Centers step in to serve a 
unique purpose by providing services that speak to the 
particular needs and challenges of women entrepreneurs. WBCs 
offer women entrepreneurs a community of support and services 
that encourages their growth and business success. Currently, 
SBA manages 108 women's business centers that train and counsel 
over 140,000 clients annually. Unlike any of our other 
programs, the WBCs' core mission is to empower low-to-moderate 
income women to become entrepreneurs. Our WBCs play a critical 
role in helping to level the playing field for women 
entrepreneurs who face unique obstacles in the world of 
business.

    In 2015, our Office of Women's Business Ownership launched 
InnovateHER, a national effort designed to identify and 
showcase products and services with potential for 
commercialization that have a measurable impact on the lives of 
women and families. This year this effort involved more than 
200 organizations that hosted InnovateHER pitch competitions 
across the nation. Additionally, in 2015 our office partnered 
with the Association of Women's Business Centers to develop the 
first ever survey to capture the outcomes of all WBC services. 
Results from this survey will be published later this year, and 
the insights gained from the survey will be used to guide OED 
in our management and oversight of the WBC program.

    SCORE, our office's longest-standing program, has been 
providing mentorship to business owners for more than 50 years. 
SCORE is powered by a corps of 11,000 volunteer mentors, most 
of whom have had successful careers in the private sector as 
executives and business owners. A SCORE mentor plays a critical 
role in helping to fill the knowledge gaps that entrepreneurs 
encounter as they start and grow their businesses. SCORE 
volunteer mentors volunteer more than 2,246,400 hours to 
349,539 clients in fiscal year 2015. Starting off in business 
or even tackling a new business challenge can feel like driving 
along a road through a dense fog; you can barely see shapes and 
you're straining to get clarity. Our SCORE mentors come 
alongside the entrepreneur to help guide them and they clear 
that fog so that the entrepreneur can see what's ahead.

    In 2015, the Small Business Development Centers (SBDCs) 
placed greater priority on helping long-term clients, who, we 
have found, achieve the highest business outcomes. SBDCs are 
uniquely suited to deliver long-term advising through ongoing 
one-on-one business services tailored to the needs of the 
individual business owner. The average time spent per client 
increased by 2.5% in 2015 and business outcomes have also 
increased. SBDCs' business advisors helped clients start more 
than 13,000 new businesses and provided training and advising 
to over 450,000 entrepreneurs of which 61,000 were ``long-
term'' clients who received 5 hours or more of face-to-face 
time with their advisor. SBDCs across the country continued to 
focus on programs and services designed to help underserved 
markets, emphasizing inclusive entrepreneurship along with the 
already vast array of services provided to their local small 
business markets.

    As I stated previously, the entirety of our programs are 
designed to meet the changing and diverse needs of 
entrepreneurs across the lifecycle of a small business.

    Since 2007, the Emerging Leaders program has sought to 
provide executive level training to entrepreneurs who come from 
underserved and underrepresented communities. Over the eight 
years that this program has existed, it has graduated more than 
3,300 executives providing them with more than 100 hours of 
training per cycle, In 2015, we focused on expanding the 
program from 24 to 48 sites. We also focused on expanding 
outreach to attract a diverse group of participants. This year 
we will again expand the program to add five more communities. 
Our recent data shows that 88% of participants maintained or 
added an average of 3 net new jobs. Additionally, these 
businesses provided a median annual salary for new employees of 
$40,000 and an average salary of $74,000. In addition, 39% of 
participants reported successfully securing financing for the 
businesses.

    Building on the success of Emerging Leaders as a cohort-
focused program, we launched ScaleUp America in 2014 to fill a 
gap of business assistance needs of smaller growth oriented 
entrepreneurs. These businesses are beyond start up and have a 
desire to grow but need targeted programming and assistance 
specifically focused on the unique needs and challenges of 
scaling a business. Additionally, this initiative has a 
particular focus on reaching underserved and underrepresented 
entrepreneurs.

    Although women and minorities represent the fastest growing 
segments of new entrepreneurs nationally, their ventures are 
generally smaller and experience far less success in terms of 
revenue and employee size. The most recent data from the Census 
Bureau shows that the average annual gross receipts of a woman 
owned business is $144,000, with businesses owned by Black and 
Hispanic women generating $28,000 and $53,000, respectively. By 
comparison, businesses owned by men generate an average of 
$638,000 in annual gross receipts. To further illustrate this 
need, minority owned businesses generate on average $174,000 in 
gross receipts as compared to non-minority owned firms which 
generate $552,000 in average gross receipts. Often these 
entrepreneurs lack access to growth capital, sufficient 
business networks, and the necessary management advice and 
training to increase their chances of success. The goal of 
ScaleUp America is to equip more high potential, growth 
oriented entrepreneurs with the right tools to overcome these 
barriers to growth. To serve this segment of the 
entrepreneurial marketplace, we have partnered with 
organizations with a keen commitment and focus on strengthening 
these entrepreneurs. In 2015 with the initial launch of the 
initiative, we also embarked on our first ever economic impact 
evaluation of this initiative. We have secured a third party 
evaluator that is not only capturing data on ScaleUp 
participants, but also a group of comparable small businesses 
that have not received the services of ScaleUp. The findings 
from this evaluation will be used to improve the effectiveness 
of this initiative as well as provide us with a model in which 
we will evaluate other programs that we manage.

    Small businesses drive innovation and play a critical role 
in local economic development. However, as local economic 
development efforts seek to build on their region's assets by 
encouraging industry clusters, small businesses face challenges 
navigating and gaining access to opportunities within the 
cluster. Our Regional Innovation Clusters (RICs) play a 
critical role in connecting businesses, suppliers, service 
providers and related institutions within a defined cluster. 
They ensure that local clusters are inclusive of small 
businesses so that they can effectively leverage the cluster's 
assets to commercialize new technologies and expand into new 
markets. The portfolio of SBA clusters ranges from smart grid 
technology in Illinois to flexible electronics in Northeast 
Ohio to advanced defense technologies in San Diego, California. 
In 2015, we funded three new clusters, increasing our portfolio 
from eleven to fourteen, adding an autonomous and unmanned 
systems cluster in both Southern Kansas and Oklahoma, a 
bioscience and technology cluster in St. Louis, Missouri and a 
wood products cluster in a coal affected community in 
Appalachian Ohio. While the makeup of our clusters is unique to 
each industry, they all seek to provide small business 
participants with services such as technology commercialization 
assistance, business development support, avenues to access 
capital, and networking opportunities with other cluster 
stakeholders.

    We take seriously our role as a steward of government 
resources and we want to ensure that our programs are producing 
the intended outcomes. Last year, we expanded our unit 
dedicated specifically to implementing and overseeing our data 
collection, program evaluation, and compliance efforts. 
Moreover this past year we worked closely with our partners--
the SBDCs, WBCs, and SCORE--to implement a collaborative 
evaluation methodology. Through this work, all partners agreed 
upon common measures that are defined and tracked in a 
consistent and uniform manner which are the basis of all future 
evaluations. These common measures are jobs created/retained, 
gross sales revenue, new business starts, capital obtained, 
customer service, and client demographics. This will provide 
all partners with a consistent way to communicate results with 
stakeholders.

    I hope I have given you a good picture of our thoughtful 
approach to program management, development, and evaluation 
which demonstrates our responsiveness to the diverse needs of 
today's entrepreneur.

    Thank you for the opportunity to testify before you today. 
I look forward to answering any questions you may have. Thank 
you.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]   


    Chairman Huelskamp, Ranking Member Chu, and distinguished 
Members of the Subcommittee, thank you for the opportunity to 
testify today on the U.S. Small Business Administration's (SBA) 
continuing efforts to empower veteran entrepreneurship and 
small business ownership through programs and policies that 
maximize the availability of SBA services for veterans, Service 
members, and their spouses.

    Our program and policies target our nation's heroes and job 
creators, and we are grateful for the continued support of the 
House Small Business Committee and this Subcommittee. We look 
forward to sharing our successes with you and addressing your 
questions.

    As small business owners, veterans continue to serve our 
country by creating critical employment opportunities and 
driving economic growth. They possess the skills, discipline, 
and leadership to start and operate successful businesses in 
their communities. Nearly one in ten small businesses is 
veteran-owned.

    Remarkably, though the overall number of veterans declined 
significantly between 2007 and 2012, the participation of 
veterans in business ownership was persistent according to the 
2012 Census Survey of Small Business Ownership. During that 
period the overall number of veteran owned firms increased at a 
faster rate than non-veteran owned firms. We also note that 
between 2007 and 2012 the number of women veteran-owned firms 
increased by nearly three hundred percent. All of this data may 
indicate strong entrepreneurial activity among the post 9/11 
era of veterans.

    My office is strongly encouraged by the trends in veteran 
entrepreneurship and is fully engaged in supporting then with 
quality programs and thoughtful policy initiatives covering 
SBA's primary mission areas of counseling and training, access 
to capital, and access to contracting opportunities.

    Counseling, Training, and Transition Services

    In fiscal year 2015 over 60,000 veterans received training 
and counseling from SBA's fifteen Veterans Business Outreach 
Centers (VBOC). A prominent and enduring focus of the VBOC 
program is providing transition services via SBA's 
administration of the Entrepreneurship Track of the Department 
of Defense's Transition Assistance Program (TAP)--known as 
Boots to Business.

    Working through the Interagency governance of TAP, and with 
our partners support, we were able to deliver Boots to Business 
(B2B) to over 14,000 transitioning service members and military 
spouses in fiscal year 2015, and over 35,000 since the 
program's launch January 1, 2013. Through an efficient and 
effective cooperative agreement with the Institute for Veterans 
and Military Families at Syracuse University, we provide these 
services to those service members disadvantaged by having to 
transition from an overseas installation. This year we reached 
several program milestones: 1) We increased the percentage of 
modules being taught by our VBOCs 2) We implemented a B2B-
specific outcomes assessment survey to determine the number and 
rate of business formation among participants and get their 
feedback on quality and future service needs; and, 3) We 
implemented an outreach campaign to increase the awareness and 
participation of military spouses as well as service members 
seeking to prepare for transition earlier in their careers as 
part of the Military Life Cycle model. And, working with the 
Congress and our partners, we are proud to now offer B2B to 
veterans of any era and their families; with a program 
extension we call Boots to Business: Reboot.

    SBA also supports comprehensive entrepreneurial development 
programs specifically designed for women veterans and service 
disabled veterans. Over 65% of the graduates of these programs 
have started their own business.

    ACCESS TO CAPITAL

    In FY 2016, SBA will sustain the SBA Veterans Advantage 
program and waive fees for veterans and their families 
qualifying for SBA Express 7(a) guaranteed loans of $350,000 
and below and reduce fees by half for SBA 7(a) guaranteed loans 
between $150,001 and $5 million. In 2015, lenders utilized the 
SBA's 7(a) & 504 loan programs to make 3,354 loans, totaling 
over $1.38 billion to veteran owned businesses--an 80% increase 
over 2014.

    CONTRACTING

    And, in the area of Federal Contracting, the Federal 
Government in 2014 exceeded the 3% goal for contracting with 
Service Disabled Veteran Owned Small Businesses for the third 
straight year. In 2016, OVBD is expanding its engagement 
strategy with Offices of Small and Disadvantaged Business 
Utilization in our sister agencies to ensure the service 
disabled veteran small businesses opportunities continue to 
grow.

    OVBD empowers veteran entrepreneurs who seek federal 
procurement opportunities by building their capacity to compete 
and win contracts. SBA, through a cooperative agreement with 
the Montgomery County Chamber of Commerce Foundation, supports 
the Veterans Institute for Procurement program (VIP). VIP is an 
accelerator-like in-residence educational training program for 
veteran-owned businesses, instructed by private sector experts, 
government officials, and agency representatives.

    Thank you for the opportunity to testify before your 
committee today. By supporting our work you are mandating that 
the United States Government does all it should to provide the 
American dream of business ownership to those that fought and 
continue to fight every day to protect it.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]