Small Business Administration: Management Practices Have Improved
for the Women's Business Center Program (13-JUN-01, GAO-01-791R).
								 
This report examines the Small Business Administration's (SBA)	 
management of its Women's Business Center Program. Since the	 
issuance of GAO's 1999 report, GAO found that the two offices	 
that administer the Women's  Business Center Program, the Office 
of Women's Business Ownership (the program office) and the Office
of Procurement and Grants Management (the grants office), have	 
addressed the weaknesses in their management of the program. For 
example, files from the program office that GAO reviewed were	 
generally complete and the few documents that GAO did not find	 
intially were provided promptly. In addition, the program office 
was able to provide a variety of historical documents for 1999	 
and 2000, and the program office and grants office had taken	 
steps to improve coordination with each other, including	 
developing improved recordkeeping practices.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-791R					        
    ACCNO:   A01183						        
  TITLE:     Small Business Administration: Management Practices Have 
             Improved for the Women's Business Center Program                 
     DATE:   06/13/2001 
  SUBJECT:   Small business assistance				 
	     Women-owned businesses				 
	     SBA Women's Business Center Program		 

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GAO-01-791R
     
GAO- 01- 791R SBA?s Women?s Business Center Program United States General
Accounting Office

Washington, DC 20548

June 13, 2001 The Honorable Ernest F. Hollings Chairman The Honorable Judd
Gregg Ranking Minority Member Subcommittee on Commerce, Justice, State and
the Judiciary Committee on Appropriations United States Senate

Subject: Small Business Administration: Management Practices Have Improved
for the Women?s Business Center Program

This letter responds to the mandate in your Committee's report for fiscal
year 2001 that we follow up on several issues related to the Small Business
Administration?s (SBA) management of its Women?s Business Center Program. In
September 1999, we wrote a letter to SBA?s Administrator, which pointed out
weaknesses in program oversight and accountability. 1 We noticed these
weaknesses while performing an informational review for the Senate Committee
on Small Business, 2 which at that time was preparing reauthorization
legislation. 3 You asked us to determine whether SBA has addressed these
weaknesses by (1) collecting and maintaining complete program files, (2)
preserving historical data for the 1999 and 2000 reporting periods, and (3)
improving coordination between the two offices that administer the program.
The Office of Women?s Business Ownership (the program office) administers
the Women?s Business Center Program and maintains records on the centers?
operations and transactions. The Office of Procurement and Grants Management
(the grants office) is responsible for monitoring the centers? financial
activities and transactions and maintaining data related to the centers?
operations.

1 Women?s Business Center Program: Incomplete Program Records and Financial
Data (GAO/ RCED- 99- 277R, Sept. 15, 1999). 2 Small Business Administration:
Information on the Women?s Business Center Program (GAO/ RCED- 99- 278R,
Sept. 02, 1999). 3 The Women?s Business Centers Sustainability Act of 1999
(Pub. L. No. 106- 165 (1999)).

GAO- 01- 791R SBA?s Women?s Business Center Program Page 2 Results in Brief

Overall, we found that since we issued our 1999 report, the two offices that
administer the Women's Business Center Program addressed the weaknesses in
their management of the program.

! Files from the program office that we reviewed for this update were
generally complete, and the few documents that we did not find initially
were provided promptly. Similarly, the grants office, which maintains a set
of files on the centers for fiscal and grant compliance purposes, was able
to provide the files that we requested. In general, these files included the
data necessary to assist the office in making decisions related to the
fiscal soundness of the centers. The program office has designated five
existing staff members as portfolio managers who periodically visit the
centers, collect and maintain program reports and ensure that program files
are complete. In addition, SBA?s district office staff has been given a
greater role in monitoring and assessing the centers? activities and
transactions.

! The program office was able to provide us with a variety of historical
documents for 1999 and 2000. This information included copies of summaries
and evaluations used during the grant selection process and a complete
listing of the amounts of funding the centers withdrew during the program
year.

! The program office and the grants office have taken steps to improve
coordination with each other, including developing improved recordkeeping
practices. We believe that this action improved the two offices' capability
to more promptly provide us with requested files, than during our previous
review. As a result, we are making no recommendations in this report.

Background

The Women?s Business Center Program, which is located within SBA?s Office of
Entrepreneurial Development, was established in 1989 to provide long- term
training, counseling, networking, and mentoring to women who own businesses
or are potential entrepreneurs. The program?s primary purpose is to assist
in eliminating obstacles to developing and maintaining businesses owned and
controlled by women. The program has continued to expand since 1989 and has
undergone several reauthorizations in the years since its inception. 4

Private nonprofit organizations are eligible to apply for funds to set up
centers, and successful applicants are awarded cooperative agreements for a
maximum of ten years. 5 Grant recipients are required to raise matching
funds (some of which can be in- kind contributions) from non- federal
sources. According to the program office, the

4 The Women?s Business Development Act of 1991, the Small Business
Reauthorization Acts of 1994 and 1997, the Women?s Business Center
Amendments Act of 1999, and the Women?s Business Centers Sustainability Act
of 1999. 5 The Women?s Business Centers Sustainability Act of 1999
established a pilot program under which SBA awards centers ?sustainability
grants? on a competitive basis to graduated centers (i. e., those centers
that have substantially completed the initial 5- year status), for an
additional 5- year project. The act also increased review and oversight of
the centers.

GAO- 01- 791R SBA?s Women?s Business Center Program Page 3

program had an appropriated budget of $12 million for the program year 2000
reporting cycle and issued a total of 68 grants to new and existing centers.
As of February 2001, there were 65 grantees actively participating in the
program. Three of the grantees terminated their agreements because of
financial or programmatic issues. For the 1999 reporting cycle, with an
appropriated budget of $8 million, a total of 59 grants were awarded and two
centers were terminated, resulting in a total of 57 grantees.

Procedures for Collecting and Maintaining Program Records and Other
Management Practices Have Been Tightened

Out of a total of 65 active centers for program year 2000, we reviewed 15
from the program office?s files. As shown in table 1, we found that most of
the documents the program office considers essential to assessing a center?s
viability were in the files. On the basis of our discussions with program
staff and our review of the documents, we determined that the program
office?s essential documents are performance reports, quarterly site visit
reports, financial status reports, and the Annual Programmatic and Financial
Status reports. In the few instances when we did not find certain documents,
program officials were able to provide the reports within 24 hours, and
sometimes within an hour. Also, if the centers did not submit particular
reports or examination results, the officials were able to account for the
missing documents. For example, the July 1999 quarterly site visit was not
conducted for one center because it did not open until September 1999. This
efficiency is in marked contrast to our 1999 review, when we were unable to
find several of the program reports during the file review, and program
officials did not provide the reports until several weeks later.

In addition, we found that although the grants office files do not
necessarily contain the same documents as the program office?s files, they
generally do include documents that grants office officials believe are
crucial for making funding decisions. For example, the grants office files
did not include quarterly site visit reports, which are narrative reports
about a center?s activities that are submitted by representatives from SBA?s
district offices. However, according to a senior official from the grants
office, these reports are not included because the grants management
specialists primarily rely on financial status reports, the Annual
Programmatic and Financial Status reports, and other documents to make their
decisions about the disbursement of funds and grant compliance. 6 Also,
while we found that many of the semiannual performance reports were filed,
the grants office senior official did not consider these reports to be as
essential for decision- making purposes. As shown in table 1, our review of
the grants office files showed that most of the financial status and Annual
Programmatic and Financial Status reports were filed, and in the few cases
where they were not, the officials were able to provide us with the required
reports.

6 Other documents include payment requests and actual expenditure reports.

GAO- 01- 791R SBA?s Women?s Business Center Program Page 4

Table 1: Program Documents Maintained in Women?s Business Centers? Files:

Number of documents we initially found in the program file a Documents that
centers are required to submit

Program office Grants

office

December 31, 1999 Financial Status Reports 14 of 15 15 of 15 June 30, 2000
Financial Status Reports 14 13 December 31, 1999 Semi- Annual Reports 14 12
June 30, 2000 Semiannual Reports 14 14 Annual Programmatic and Financial
Status Examination Reports 15 14 Quarterly Site Visit Reports

July to September 1999 14 b October to December 1999 13 b January to March
2000 12 b

a We reviewed 15 program files from each office. The program office and
grants management officials provided or accounted for the documents that we
did not find during our initial file review. b The grants management
specialists do not rely on these reports for decision- making purposes.

Source: GAO Analysis of SBA files.

The program office has also established measures designed to increase the
likelihood that the centers and SBA?s district office staff will submit
essential reports on a timely basis. The program office has designated
existing staff members as portfolio managers, who in conjunction with their
other duties, 7 are responsible for maintaining program files, including
checking up when reports are not received on time. To encourage compliance,
portfolio managers may warn the staff of the centers that funding can be
held up if the centers do not comply with the reporting requirements. SBA
has also implemented a plan wherein the portfolio managers will eventually
make site visits to all of the centers to gain first- hand knowledge of the
centers? operations, including any factors that could interfere with timely
and accurate reporting.

Since our initial review, based on our observations, the program office has
begun storing the centers? critical program documents in separate binders.
For example, financial status reports are centralized in one binder, so that
it is not necessary to go through each program folder to obtain them. This
system facilitates reviews of program documents. In addition, the Deputy
Assistant Administrator of the program office told us that in order to
ensure that the programs are fiscally sound and are functioning smoothly,
District Office Technical Representatives have been given an

7 Portfolio managers? other duties include activities such as database
management, budget analysis, scheduling, and conference coordination.

GAO- 01- 791R SBA?s Women?s Business Center Program Page 5

increased role in assessing the centers? performance. 8 The program office
pays for the representatives to come to SBA headquarters each year to
receive intensive training in monitoring the centers? programmatic and
financial activities. The program office also pays for the representatives
to make quarterly site visits to centers that are located in remote areas.
However, according to a program office senior official, funding delays have
occasionally prevented the program office from financing quarterly site
visits on a timely basis.

The Program Office Has Maintained Historical Program Data for Reporting
Cycles 1999 and 2000

For our 1999 review, the Committee directed us to provide certain historical
data on the centers for the years 1989 through 1998. However, we found that
this data had not been consistently maintained. For the current review, the
program office was able to provide us with a variety of historical data for
1999 and 2000. These data included copies of summaries and evaluations used
during the grant selection process and a complete listing of the amounts of
funding the centers withdrew during the program year. The program office
preserves these data on paper and computer diskettes.

Efforts Have Been Made to Enhance Coordination Between the Program and
Grants Offices

From our review, we determined that the program office has taken steps to
strengthen its interaction with the grants office in administering the
program. For example, the centers are now required to send financial status
reports to both offices instead of just to the program office. A senior
official from the program office said that language in the grant application
packages has been revised to reflect this change.

In addition, to help the grants office maintain up- to- date data on the
centers, the program office?s portfolio managers regularly provide the
grants office with program documents. This measure serves as a backup in
case the centers do not send the required information directly to the grants
office.

Finally, the program and grants offices now maintain separate sets of files
for each center. We found that during our prior review, the offices shared
program files and did not have a tracking system to indicate which office
had possession of a file at a given time.

We believe that this new practice of maintaining separate files has made a
difference in timeliness with which we were provided with documents. During
this review, we received the requested files much more promptly than we did
during our prior review.

8 The Technical Representatives are located in SBA?s district offices and
are responsible for ensuring that the centers are achieving agreed upon
milestones and complying with the terms of their grant agreements. The
representatives assess the centers through quarterly site visits and the
Annual Programmatic and Financial Status reports. The representatives also
have other duties and responsibilities not related to the centers.

GAO- 01- 791R SBA?s Women?s Business Center Program Page 6 Agency Comments

We provided a draft of our report to SBA for its review and comment. SBA
thanked us for our positive remarks about the improvements in its management
of the program. SBA's comments are in enclosure I.

Scope and Methodology

We randomly selected 15 Women?s Business Center program files from the
program office for review and then selected the same 15 files from the
grants office in SBA headquarters. We documented whether the forms and
reports that each office considers essential to its decision- making
responsibilities were in the files. Furthermore, we examined summary
documents related to the centers? grant selection process and statistical
data to determine if historical records were being maintained. We also
talked with management staff in both offices to determine the processes for
collecting and maintaining records, preserving historical records, and
coordinating responsibilities. In addition, we reviewed a variety of program
documents that included data such as a description of the process for
submitting reports and documents and the duties of the program and grants
offices as they relate to the Women?s Business Center Program. We conducted
our work from February through May 2001 in accordance with generally
accepted government auditing standards.

-- -- -- - We are sending copies of this letter to the Chairman and the
Ranking Minority Member of the House Committee on Appropriations,
Subcommittee on Commerce, Justice, State and the Judiciary, and related
agencies, other interested congressional committees, and the Acting
Administrator, Small Business Administration. We will also make copies
available to others on request. The letter is also available on GAO's home
page at http:// www. gao. gov.

Please contact me at (202) 512- 8678 if you or your staff have additional
questions about this letter. Major contributors to this product were Susan
Campbell, Joan Conway, and Cheri Truett.

Richard J. Hillman Director, Financial Markets and Community Investment

Enclosure

GAO- 01- 791R SBA?s Women?s Business Center Program Page 7

Enclosure I (250012)
*** End of document. ***