[Senate Report 106-214]
[From the U.S. Government Publishing Office]
Calendar No. 372
106th Congress Report
SENATE
1st Session 106-214
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WOMEN'S BUSINESS CENTERS SUSTAINABILITY ACT OF 1999
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November 2, 1999.--Ordered to be printed
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Mr. Bond, from the Committee on Small Business, submitted the following
R E P O R T
[To accompany S. 791]
On September 29, 1999, the Committee on Small Business
considered S. 791, the Women's Business Centers Sustainability
Act of 1999. The Committee adopted by unanimous voice votes a
substitute amendment offered by the Ranking Democrat, Senator
John Kerry, and an amendment offered by Senator Spencer Abraham
on Federal procurement opportunities for women-owned small
businesses. As amended, S. 791 would authorize a four-year
pilot program to allow Women's Business Centers to compete for
new five-year matching grants and additional changes in the
Women's Business Center program. Having considered S. 791, as
amended, the Committee reports favorably thereon without
further amendment and recommends that the bill do pass.
I. Introduction
The Women's Business Centers program at the Small Business
Administration (SBA) provides five-year grants, matched by non-
Federal dollars, to private-sector organizations to establish
business-training centers for women. Depending on the needs of
the individual communities being served, Centers teach women
the principles of finance, management and marketing, as well as
specialized topics such as how to obtain a Federal government
contract or how to start a home-based business. Women Business
Centers are located in rural, urban and suburban areas. Much of
their training and counseling assistance is directed toward
socially and economically disadvantaged women.
Congress started the Women's Business Centers program in
1988 following Congressional hearings that revealed the Federal
government was not meeting the needs of women entrepreneurs.
Testimony at that time revealed that women entrepreneurs faced
extreme difficulty gaining access to bank loans and venture
capital, had few opportunities to compete for Federal
government contracts, and had insufficient access to the kind
of business assistance they needed to compete in the
marketplace.
Through the Women's Business Program, specialized
assistance has steadily improved the resources available to
women. The program opened its first 12 centers in 1989. Ten
years later, women receive assistance at 81 centers in 47
states, the District of Columbia, Puerto Rico, and the Virgin
Islands. In addition to increasing self-sufficiency among
women, Women's Business Centers strengthen women's business
ownership overall and encourage local job creation. Over the
past decade, the number of women-owned businesses operating in
this country has grown by 103 percent to an estimated 9.1
million firms, generating $3.6 trillion in sales annually,
while employing more than 27.5 million workers.\1\ In 1998,
women-owned businesses made up more than one-third of the 23
million small businesses in the United States.
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\1\ Research from the National Foundation for Women Business Owners
(NFWBO)Women-Owned Businesses, Top 9 Million in 1999 (1999), Economic
clout increases as employment, revenues grow.
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In spite of the impressive growth, according to the data
from the 1998 Women's Economic Summit, women-owned businesses
account for only 18 percent of gross receipts from all small
businesses. Further, they are dramatically under-represented in
the nation's two most lucrative markets: corporate purchasing
and government contracting. According to the National
Foundation of Women Business Owners, in fiscal year 1998, only
2.21 percent of the $181 billion in federal prime contracts
went to women-owned businesses.\2\ As of 1999, women-owned
businesses accounted for 38 percent of all firms.\3\ Based on
this data and testimony from hearings, the Committee finds the
need for the Women's Business Centers continues, and it is
critical that we work to strengthen the infrastructure we have
invested in for the past decade.
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\2\ National Women's Business Council, 1999 NWBC Best Practices
Guide: Contracting with Women. Research conducted by the Office of
Federal Procurement Policy.
\3\ Research from the National Foundation for Women Business Owners
(NFWBO)Women-Owned Businesses, Top 9 Million in 1999 (1999), Economic
clout increases as employment, revenues grow.
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The ``Women's Business Centers Sustainability Act of 1999''
draws on testimony given before the Committee over the past
year. According to statements from the Association of Women's
Business Centers at a Committee hearing on March 16, 1999, and
at a Committee Roundtable on May 20, 1999, the Women's Business
Center program is in danger of losing effective Centers because
it has become increasingly difficult to raise the required non-
Federal matching funds. For most centers, the competition for
foundation and private-sector dollars as the result of mergers
and down-sizing has become increasingly stiff. Testimony from
the Association stressed that the loss of matching funds would
compound the problem because the centers would have to raise
twice as much money, and they would not have the leverage
brought by Federal matching funds to attract foundations and
private corporations to make donations.
Ms. Agnes Noonan, Executive Director of WESST Corp., the
Women's Business Center in Albuquerque, New Mexico, testified
before the Committee on March 16, 1999. She commented on the
possibility of charging higher fees to increase the Center's
income in order to reduce its reliance on public dollars:
``Though [such a] strategy may have made economic sense, it
conflicted directly with our mission of serving low-income
women * * *. If we were to target our services to women who
could afford to pay market consulting and training rates, then
we wouldclearly not be addressing the needs of low-income women
in New Mexico.'' \4\
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\4\ Testimony of Agnes Noonan, Executive Director of the Women's
Economic Self-Sufficiency Team (WESST Corp.) based in Albuquerque, New
Mexico, presented to the Senate Small Business Committee for a hearing
on the SBA's FY2000 Budget, Tuesday, March 16, 1999.
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Ms. Noonan also provided to the Committee important
information about the realities of fund-raising: ``Nationally,
only six percent of foundation money is earmarked for women,
and only a tiny portion of that goes to women's economic
development.'' \5\ Bank mergers further exacerbate the
situation because they are a primary source of funding for many
centers. According to testimony from the Association of Women's
Business Centers, its members have seen that when institutions
merge, whether they are banks or corporations, they rarely give
the combined sum of what the two single institutions gave
previously to Women's Business Centers.
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\5\ Testimony of Agnes Noonan, Executive Director of the Women's
Economic Self-Sufficiency Team (WESST Corp.) based in Albuquerque, New
Mexico, presented to the Senate Small Business Committee for a hearing
on the SBA's FY2000 Budget, Tuesday, March 16, 1999.
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While Federal funding should not be automatic, the
Committee finds graduating and graduated centers that provide
on-going services should be able to compete for a new cycle of
matching grants so that the Nation does not lose its investment
in the most effective centers. The ``Women's Business Centers
Sustainability Act of 1999,'' which was overwhelmingly approved
by the Committee, would establish a fair framework for past and
present Women's Business Centers to compete for limited Federal
grant dollars, while increasing SBA oversight to improve the
program.
II. Description of the Bill
The ``Women's Business Centers Sustainability Act of 1999''
addresses the funding constraints that are making it
increasingly difficult for Women's Business Centers to sustain
the level of services they provide and, in some instances, to
keep their doors open after they graduate from the Women's
Business Centers program and no longer receive federal matching
funds.
To help these centers, this legislation would establish a
four-year competitive grant pilot program that allows
graduating and graduated centers that offer on-going programs
and services to compete for another five years of matching
grants, known as ``sustainability grants.'' ``Graduating
centers'' are centers that are in the final year of their
initial five-year funding cycle. A ``graduated center'' is a
center that participated in the Women's Business Center program
and no longer receives program funds but is still actively
providing business programs and services to its local market.
In order to help the SBA manage the selection and award
process, the bill requires the SBA to issue the requests for
proposals (RFP) for new centers and centers competing for
sustainability grants at the same time. This provision is
intended to ensure that new centers and centers applying for
sustainability grants receive equal consideration during the
application review process, and that funds are appropriately
awarded.
The bill also includes three provisions that seek to assist
the SBA in its evaluation and selection of recompeting centers.
The first provision directs the SBA to provide a preference to
those Women's Business Centers that are in the final year of
their initial five-year grant from SBA. The bill provides a
priority to Centers in the last year of their initial five-year
grant to offset potential Federal funding constraints. After
the SBA has selected the most meritorious graduating centers,
remaining funds reserved for sustainability grants should be
targeted by the SBA to select the most meritorious graduated
centers for new grant awards.
In the second provision, the Committee intends for the
selection panel, based on the participation conditions
described in the bill, to judge how well a Center provided
service to its market under its initial five-year grant and how
it plans to serve its market during the next five years. As
part of this review, the Committee urges the SBA to reach out
to small business organizations that focus on women-owned
businesses, such as the Association of Women's Business Centers
and the National Association of Women Business Owners (NAWBO).
From these and other like-minded organizations, SBA should seek
their opinions and insight about the operation of the Women's
Business Center program and the applicants that are competing
for sustainability grants.
The third provision of the bill requires the SBA, as part
of the final selection process, to do a site visit of each
center competing for a sustainability grant. The Committee
feels strongly that site visits are an important tool to help
panel judges rank the centers and to improve oversight of the
program. Recognizing that site visits are expensive, the bill
limits site visits to only those centers being considered in
the final selection process rather than all centers applying,
and it authorizes not more than $275,000 per year can be used
for site visits and other uses.
sba needs to improve record keeping and oversight
This ``Women's Business Center Sustainability Act of 1999''
also increases oversight and review of the Women's Business
Centers. Following the introduction of S. 791, the General
Accounting Office (GAO) undertook an examination of the Women's
Business Center Program at the request of the Senate and House
Committees on Small Business. This examination included a
review of the program's records of the program maintained at
SBA and a survey of all past and present Women's Business
Centers. GAO found that more than two-thirds of the centers
that currently receive grant funds or that received funds in
the past continue to operate as Women's Business Centers. Most
that are continuing to operate after Federal support ceasedhave
continued to offer similar services to women business owners. This part
of the GAO report is very encouraging.
On the other hand, another part of the report from GAO is
discouraging. GAO investigators experienced difficulty
obtaining complete data about the program from the SBA because
of limitations of SBA's records and databases for program years
1989 through 1998. Information about Women's Business Centers
prior to 1996 was incomplete or unavailable. During its review
of information provided by SBA for 1996 and 1997, GAO had to
perform follow-up and additional analysis because the program
data was not complete. The failure of SBA to keep complete
program and financial records on Centers that are receiving SBA
grants funds is of concern to the Committee.
The Committee is also concerned about the apparent failure
of the Agency to undertake a thorough, ongoing analysis of the
financial and program reports it already receives on the
individual centers; therefore, Senator Kerry's substitute
amendment, that was unanimously adopted by the Committee,
included a provision that requires the SBA to send the Senate
and House Committees on Small Business a yearly Management
Report on the status of the program. This report would include
an annual programmatic and financial examination of each
Women's Business Center. Further, SBA is directed to make a
determination annually of the programmatic and financial
viability of each Women's Business Center. The Committee
believes this new statutory requirement will lead to better SBA
oversight and a stronger Women's Business Center Program.
The Committee understands that SBA's current practice is to
collect data on the number of women served who are socially and
economically disadvantaged. The Committee encourages the Agency
to continue collecting this data. To achieve this goal, it is
important that SBA track separately the data from both the
``intake form'' and ``follow-up survey'' that women
entrepreneurs fill out when they visit women's business centers
for help.
authorization levels
This bill incrementally raises over four years the annual
levels of authorized appropriations from $13 million in FY 1999
to $17 million in FY 2003. The Committee believes the higher
authorization levels are critical to ensure that Congress
provides adequate funds to support 45 existing centers, an
average of 12 recompeting centers, and an average of 12 new
centers per year.
The bill establishes very specific requirements for use of
available appropriations. First, of those amounts, the bill
reserves a percentage each fiscal year for sustainability
grants. While the bill does not specify a dollar amount for
each sustainability grant, it is expected to be generally less
than the grants for new centers, and SBA is expected to manage
the program accordingly. New centers and existing centers are
currently awarded matching grants of up to $150,000 per year.
Assuming an adequate appropriation, graduated and graduating
Centers are expected to be awarded matching grants of up to
$125,000. The Committee intends for the funds appropriated over
the four fiscal years of the pilot program to be available
until expended to permit funds to be carried over to the next
year of the pilot if insufficient qualified applications are
received in any year. Thus, the program can carry over
unobligated funds for use later in the pilot. Second, the bill
makes available up to $275,000 per year for the selection panel
expenses, post-award conference costs, and monitoring and
oversight costs.
procurement opportunities for women-owned businesses
Senator Abraham offered an amendment addressing Federal
procurement opportunities for women-owned small businesses. The
amendment, which was unanimously adopted by the Committee,
expresses the sense of the Senate that the General Accounting
Office (GAO) should conduct an audit on the federal procurement
system for the preceding three years. This audit should report
on all identifiable trends in Federal contracting that are
related to women-owned small businesses. Further, GAO is urged
to provide suggestions obtained from federal agencies as to how
the Federal government can reach the Congressionally mandated
five-percent procurement goal for women-owned small businesses.
It is difficult for the Committee to understand how the
women-owned small businesses segment of our economy can make up
38 percent of all small businesses, while this segment receives
only 2.2 percent of the $181 billion in Federal prime
contracts. In 1994, Congress passed into law a goal for women-
owned small businesses to receive at least 5 percent of the
total amount of Federal prime contract dollars. The Committee
is perplexed by the failure of the Federal agencies to meet
this goal and seeks to understand better the reasons for this
discrepancy.
III. Committee Vote
In compliance with rule XXVI(7)(b) of the Standing Rules of
the Senate, the following votes were recorded on September 28,
1999. A motion by Senator Bond to adopt an amendment by Senator
Abraham concerning Federal procurement women-owned small
business passed by unanimous voice vote. A motion by Senator
Bond to adopt the substitute amendment by Senator Kerry passed
by unanimous voice vote. A motion by Senator Kerry to adopt the
``Women's Business Center Sustainability Act of 1999,'' as
amended, was approved by a 17-1 recorded vote, with the
following Senators voting in the affirmative: Bond, Kerry,
Burns, Coverdell, Bennett, Snowe, Enzi, Fitzgerald, Crapo,
Abraham, Levin, Harkin, Lieberman, Wellstone, Cleland, Landrieu
and Edwards. Voting in the negative: Senator Voinovich.
IV. Evaluation of Regulatory Impact
In compliance with rule XXVI(11)(b) of the Standing Rules
of the Senate, it is the opinion of the Committee that no
significant additional regulatory impact will be incurred in
carrying out the provisions of this legislation. There will be
no additional impact on the personal privacy of companies or
individuals who utilize the services provided.
V. Changes in Existing Law
In the opinion of the Committee, it is necessary to
dispense with the requirement of rule XXVI (12) of the Standing
Rules of the Senate in order to expedite the business of the
Senate.
VI. Cost Estimate
In compliance with rule XXVI(11)(a)(1) of the Standing
Rules of the Senate, the Committee estimates the cost of the
legislation will be equal to the amounts indicated by the
Congressional Budget Office in the following letter.
U.S. Congress,
Congressional Budget Office,
Washington, DC, October 5, 1999.
Hon. Christopher S. Bond,
Chairman, Committee on Small Business,
U.S. Senate, Washington, DC 20510
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 791, the Women's
Business Centers Sustainability Act of 1999.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Mark Hadley
(for federal costs), and Shelley Finlayson (for state and local
impact).
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
S. 791--Women's Business Centers Sustainability Act of 1999
Summary: Women's Business Centers train and counsel women
in the skills necessary to launch their own businesses. Current
law authorizes appropriations of $11 million a year for Women's
Business Centers. S. 791 would increase the amounts authorized
for fiscal year 2000 through 2003, but would repeal the
authorization for subsequent years. The bill also would
establish a pilot program to provide grants to such centers
beyond their initial five-year projects. The bill would clarify
that Women's Business Centers must be private nonprofit
organizations. Finally, S. 791 would direct the Small Business
Administration (SBA) to determine whether each center is
programmatically and financially viable, and would allow SBA to
use a small portion of the authorized amounts for
administrative expenses.
Assuming appropriation of the authorized amounts, CBO
estimates that S. 791 would increase net outlays by $9 million
over the 2000-2004 period, relative to the currently authorized
level. S. 791 would not affect direct spending or receipts;
therefore, pay-as-you-go procedures would not apply.
S. 791 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would impose no costs on state, local, or tribal
governments. Any expenditures made by these governments to
provide the nonfederal matching funds or in-kind contributions
to Women's Business Centers in their jurisdictions would be
incurred voluntarily.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 791 is shown in the following table. For
purposes of this estimate, CBO assumes that historical spending
rates for this program will continue and appropriations will be
provided near the start of each fiscal year. The costs of this
legislation fall within budget function 370 (commerce and
housing credit).
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By fiscal year, in millions of dollars--
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2000 2001 2002 2003 2004
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SPENDING SUBJECT TO APPROPRIATIONS
Spending for Women's Business Centers under current law:
Authorization level\1\......................................... 11 11 11 11 11
Estimated outlays.............................................. 9 10 11 11 11
Proposed changes:
Authorization level............................................ 2 3 5 6 -11
Estimated outlays.............................................. 1 3 3 5 -3
Spending for Women's Business Centers under S. 791:
Authorization level............................................ 13 14 16 17 0
Estimated outlays.............................................. 10 13 14 16 8
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\1\ The amount shown reflect the amounts authorized to be appropriated under current law.
Pay-As-You-Go Considerations: None.
Intergovernmental and private-sector impact: S. 791
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments. Any expenditures made by these governments
to provide the nonfederal matching funds or in-kind
contributions to Women's Business Centers in their
jurisdictions would be incurred voluntarily.
Previous CBO estimate: On October 4, 1999, CBO transmitted
a cost estimate for H.R. 1497, the Women's Centers
Sustainability Act of 1999, as ordered reported by the House
Committee on Small Business on September 30, 1999. Differences
between the two estimates reflect differences between the two
bills. CBO estimated that implementing H.R. 1497 would increase
net outlays by $2 million over the 2000-2004 period, as
compared to S. 791's estimated increase of $9 million over that
period.
Estimate prepared by: Federal Costs: Mark Hadley, Impact on
State, Local, and Tribal Governments: Shelley Finlayson.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
VII. Section-By-Section Analysis
The bill amends Section 29 of the Small Business Act to
create a four-year pilot program that allows Women's Business
Centers to compete for another five-year matching grant, known
as a sustainability grant.
Section 1. Short title
The Act is entitled the ``Women's Business Centers
Sustainability Act of 1999.''
Section 2. Private nonprofit organizations
This section amends the act to clarify that all Women's
Business Centers must be private nonprofit organizations
(501(c) organizations) instead of private organizations.
Section 3. Increased management oversight and review of Women's
Business Centers
This section directs the SBA to do an annual programmatic
and financial examination of each center and then to analyze
the results to determine whether the center is programmatically
and financially viable. SBA can withhold grant extensions or
grant renewals if the centers do not provide information
required, if the information is inadequate, or if the results
of the examination are poor. SBA is directed to report annually
to the Senate and House Committees on Small Business on the
effectiveness of the program.
Section 4. Women's Business Centers sustainability pilot program
Subsection (a)(1) establishes a four-year competitive grant
pilot program. Each grant cycle is for five fiscal years.
Eligible applicants would be any private nonprofit organization
that had previously received a grant under this program.
Subsection (a)(2) describes the conditions that need to be
met for a private nonprofit organization to receive a
sustainability grant.
Subsection (a)(3) sets forth the conditions for reviewing
grant applications, and the data collection requirements that
must be met by the grant recipients. SBA is required to retain
all applications submitted under this section for at least ten
years.
Subsection (a)(4) establishes the matching requirement.
Centers must raise cash or in-kind contributions from non-
Federal sources. Consistent with the last three years of the
initial five-year grant, centers must raise the equivalent of
one non-Federal dollar for each Federal dollar of assistance
received under this section.
Subsection (a)(5) requires the SBA to issue all requests
for proposals (proposals to establish new centers and proposals
to receive sustainability grants under the pilot program) at
the same time. This provision is intended to ensure that new
centers and sustained centers receive equal consideration
during the application review process, and that funds are
appropriately awarded.
Subsection (b) sets forth the authorization for
appropriations for the Women's Business Center Program for
Fiscal Years 2000--2003.
Subsection (b)(1) incrementally raises over four years the
annual appropriations from $13 million in FY 1999 to $17
million in FY 2003. The Committee intends for the funds
appropriated to be available until spent or September 30, 2003,
whichever is earlier.
Subsection (b)(2) sets aside the equivalent of $275,000 per
year for the Office of Women's Business Ownership to use for
selection panel costs including site visits of all final
contenders for sustainability grants, post-award conferences
and oversight costs.
Subsection (b)(3) reserves specific percentages of funds
appropriated each year to fund sustainability grants under the
pilot program. The subsection also sets forth exceptions for
the use of unobligated funds. Funds for sustainability grants
that are not awarded to graduating centers shall be used for
sustainability grants to graduated centers. Should funds under
this subsection remain available after funding sustainability
grants for qualified graduating and graduated centers, this
amount may be used for new centers or to expand programs to
meet the needs of a market.
Subsection (c) directs the SBA to issue guidelines to
implement this Act within 30 days of enactment.
Section 5. Effective date
This section establishes that this Act takes effect on
October 1, 1999.