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EXPANDING OPPORTUNITIES FOR WOMEN

ENTREPRENEURS: THE FUTURE OF WOMEN’S

SMALL BUSINESS PROGRAMS

HEARING

BEFORE THE

COMMITTEE ON SMALL BUSINESS

AND ENTREPRENEURSHIP

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

September 20, 2007

Printed for the use of the Committee on Small Business and Entrepreneurship

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Available via the World Wide Web: http://www.access.gpo/gov/congress/senate

(II)

COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

JOHN F. KERRY, Massachusetts, Chairman

CARL LEVIN, Michigan

TOM HARKIN, Iowa

JOSEPH I. LIEBERMAN, Connecticut

MARY LANDRIEU, Louisiana

MARIA CANTWELL, Washington

EVAN BAYH, Indiana

MARK PRYOR, Arkansas

BENJAMIN L. CARDIN, Maryland

JON TESTER, Montana

OLYMPIA J. SNOWE, Maine

CHRISTOPHER S. BOND, Missouri

NORMAN COLEMAN, Minnesota

DAVID VITTER, Louisiana

ELIZABETH DOLE, North Carolina

JOHN THUNE, South Dakota

BOB CORKER, Tennessee

MICHAEL B. ENZI, Wyoming

JOHNNY ISAKSON, Georgia

NAOMI BAUM, Democratic Staff Director

WALLACE HSUEH, Republican Staff Director

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CONTENTS

Page

OPENING STATEMENTS

Kerry, the Honorable John F., Chairman, Committee on Small Business

and Entrepreneurship, and a United States Senator from Massachusetts .... 1

Snowe, the Honorable Olympia J., Ranking Member, a United States Senator

from Maine ........................................................................................................... 3

Dole, the Honorable Elizabeth, a United States Senator from North Carolina . 8

Enzi, the Honorable Michael B., a United States Senator from Wyoming ......... 9

WITNESS TESTIMONY

Shear, William B., Director, Financial Markets and Community Investment,

U.S. Government Accountability Office, Washington, DC ................................ 10

Ritt, Debra S., Assistant Inspector General for Auditing, U.S. Small Business

Administration, Washington, DC ........................................................................ 28

Prakash, Anoop, Associate Administrator for Entrepreneurial Development,

U.S. Small Business Administration, Washington, DC .................................... 37

Goldsmith, Wendi, president, Bioengineering Group, Salem, MA ...................... 56

Almeida, Ann Marie, president and chief executive officer, Association of

Women’s Business Centers, Camden, ME ......................................................... 64

Bratton, Rosemary, executive director, Wyoming Women’s Business Center,

Laramie, WY ......................................................................................................... 73

King, Gale, owner, Treats by Gale, LLC, Burke, VA ............................................ 85

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Almeida, Ann Marie

Testimony .......................................................................................................... 64

Prepared statement .......................................................................................... 67

Responses to post-hearing questions from:

Senator Snowe ........................................................................................... 113

Senator Enzi .............................................................................................. 114

Bratton, Rosemary

Testimony .......................................................................................................... 73

Prepared statement w/attachments ................................................................ 77

Responses to post-hearing questions from:

Senator Snowe ........................................................................................... 110

Senator Enzi .............................................................................................. 111

Dole, the Honorable Elizabeth

Opening statement ........................................................................................... 8

Enzi, the Honorable Michael B.

Opening statement ........................................................................................... 9

Post-hearing questions posed to:

Wendi Goldsmith ....................................................................................... 109

Rosemary Bratton ..................................................................................... 111

Almeida, Ann Marie .................................................................................. 114

Goldsmith, Wendi

Testimony .......................................................................................................... 56

Prepared statement .......................................................................................... 60

Responses to post-hearing questions from:

Senator Snowe ........................................................................................... 107

Senator Enzi .............................................................................................. 109

Page

IV

Kerry, the Honorable John

Opening Statement ........................................................................................... 1

Post-hearing questions posed to:

Anoop Prakash .......................................................................................... 96

William B. Shear ....................................................................................... 101

Debra S. Ritt .............................................................................................. 104

King, Gale

Testimony .......................................................................................................... 85

Prepared statement .......................................................................................... 87

Lieberman, the Honorable Joseph I.

Post-hearing questions posed to Anoop Prakash ........................................... 98

Prakash, Anoop

Testimony .......................................................................................................... 37

Prepared statement .......................................................................................... 40

Responses to post-hearing questions from:

Chairman Kerry ........................................................................................ 96

Senator Lieberman .................................................................................... 98

Senator Snowe ........................................................................................... 99

Ritt, Debra S.

Testimony .......................................................................................................... 28

Prepared statement .......................................................................................... 30

Responses to post-hearing questions from:

Chairman Kerry ........................................................................................ 104

Senator Snowe ........................................................................................... 106

Shear, William B.

Testimony .......................................................................................................... 10

Prepared statement .......................................................................................... 12

Responses to post-hearing questions from:

Chairman Kerry ........................................................................................ 101

Senator Snowe ........................................................................................... 103

Snowe, the Honorable Olympia J.

Opening statement ........................................................................................... 3

Letter to the Hon. Steven Preston, SBA ......................................................... 5

Post-hearing questions posed to:

Anoop Prakash .......................................................................................... 99

William B. Shear ....................................................................................... 103

Debra S. Ritt .............................................................................................. 106

Wendi Goldsmith ....................................................................................... 107

Rosemary Bratton ..................................................................................... 110

Ann Marie Almeida ................................................................................... 113

COMMENTS FOR THE RECORD

Mackey, ML, CEO, Beacon Interactive Systems, Cambridge, MA ...................... 118

The Women’s Business Center Program List ........................................................ 121

Draft report on the audit of grant disbursements to Women’s Business Centers, Office of Inspector General, U.S. Small Business Administration .......... 122

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EXPANDING OPPORTUNITIES FOR WOMEN

ENTREPRENEURS: THE FUTURE OF WOMEN’S

SMALL BUSINESS PROGRAMS

THURSDAY, SEPTEMBER 20, 2007

UNITED STATES SENATE,

COMMITTEE ON SMALL BUSINESS AND

ENTREPRENEURSHIP,

Washington, DC.

The Committee met, pursuant to notice, at 10:04 a.m., in room

428–A, Russell Senate Office Building, the Honorable John F.

Kerry (Chairman of the Committee) presiding.

Present: Senators Kerry, Snowe, Enzi, Dole, and Thune.

OPENING STATEMENT OF THE HONORABLE JOHN F. KERRY,

CHAIRMAN, SENATE COMMITTEE ON SMALL BUSINESS

AND ENTREPRENEURSHIP, AND A UNITED STATES SENATOR

FROM MASSACHUSETTS

Chairman KERRY. We will officially come to order, though you

are the most orderly group yet in the year. Either that, or you are

all asleep; I don’t know.

[Laughter.]

Chairman KERRY. Welcome. We are glad to have you here and

delighted to be able to have this oversight hearing this morning.

I want to thank all of our witnesses for coming here to discuss the

issues that are being faced by women small business owners all

across the country today.

I particularly want to recognize Wendi Goldsmith, the president

of Bioengineering Group, who traveled down here from Salem. I am

glad to see you here and look forward to your testimony about your

experiences in trying to contract with the Federal Government.

This is a classic oversight hearing. It has certain detail and specificity to it, but this is the purpose of committee oversight on a

topic of enormous importance to women all across the country,

whether they are in small business or not, because it is really a microcosm of the kinds of problems that women face in a lot of sectors

of endeavor.

Today, there are 7.7 million women-owned firms in the United

States. That means that nearly one-third of all the private firms

in our country are owned by women, and these firms generate more

than $1 trillion in sales and employ more than 7 million people. In

Massachusetts alone, 189,000 firms are contributing $30 billion to

the economy and employing 177,000 individuals. And these numbers are on the rise. Women-owned firms increased by 43 percent

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over the last decade, almost double the increase of firms overall in

the country, making them obviously a very important part of our

Nation’s economic well-being.

But despite the good news and the tremendous growth, womenowned small businesses still continue to have markedly lower revenue and fewer employees than firms, even comparable ones,

owned by men. For instance, only 16 percent of firms with employees are owned by women. In addition, although 6 percent of businesses owned by men have revenues of $1 million or more, only 3

percent of all women-owned firms do so. Women-owned firms also

account for less than 3 percent of all Federal contracts even though

they comprise 30 percent of all privately-held firms. That is obviously an unacceptable ratio.

So today, we are going to be focusing on two programs which

were specifically designed by the Congress, signed into law by the

President, and are today the law of the land, and they are designed

to help more women overcome hurdles and become successful entrepreneurs—the Women’s Business Center Program and the Women’s Procurement Program.

Now, the Women’s Business Center Program has been invaluable

in helping women succeed in business, especially economically and

socially disadvantaged women. No center, I think, has done more

to help women in Massachusetts than the Center for Women in Enterprise. Its leader, Donna Good, is not only a friend to women in

Massachusetts, but also to this Committee, and she has shared the

concerns of her clients with us on a number of occasions.

Although the Women’s Business Center Program has been a tremendous resource for women, our Committee on both sides of the

aisle has heard from centers that red tape and bureaucracy have

been the norm in their dealings with the SBA. Late grant payments from the SBA, sometimes even a year or more late, and a

lack of clear guidelines have threatened to weaken the program.

Two recent investigations will shed some light on these allegations. Bill Shear of the Government Accountability Office is here to

discuss the Women’s Business Center Program’s overall strengths

and weaknesses, while Debra Ritt from the SBA’s Inspector General’s Office will discuss their recent investigation of the Women’s

Business Center Program. I requested this IG investigation after

hearing story after story of late payments to Women’s Business

Centers.

We are also going to discuss the implementation of legislation

signed into law in May to make permanent funding available to established centers. Back in 1999, when Senator Snowe and I succeeded in getting the Sustainability Pilot Program signed into law,

getting centers a maximum of 10 years of funding, it was in response to calls from Women’s Business Centers that they needed

continuing Federal funding beyond the initial 5 years in order to

succeed. And since we were seeing tremendous success in that relationship and jobs were being created and revenue was being created, it made sense, obviously, to try to extend that.

Since these centers target low-income women and they are unable to charge large fees for participation, ongoing Federal funding

is, therefore, critical to many of these centers. Now that we have

ensured that Women’s Business Centers can continue to apply for

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Federal funding beyond the initial 10 years, we need to get this law

implemented now. Established Women’s Business Centers should

not have to wait another year because of bureaucratic delays.

Women have also been waiting for the Federal Government to

make good on its commitment to implement the Women’s Procurement Program. There is just a glaring question of why it has taken

7 years for the Bush administration to put this program in place.

It is insulting. It demonstrates a complete lack of respect and a

lack of belief both in the Congress of good law, as well as the benefits of this program.

Women-owned businesses accounted for less than 3 percent of all

Federal contracting dollars last year, despite the fact that they

comprise over 30 percent of all firms. Congress created the Women’s Business Procurement Program so that we can help more

women-owned firms break into Federal contracting. The Administration has just plain been MIA on this. Failure to implement the

Women’s Procurement Program has cost women businesses at least

$6 billion in lost contracts. It is hard to describe the impact that

$6 billion would make on a lot of folks who are out there struggling

to make ends meet, struggling to survive, struggling to make a

business succeed, and playing by the rules. When bureaucratic inefficiency or stubborn ideology or something gets in the way, it just

sends a terrible message to everybody and makes us all look bad.

In May, I urged the SBA to properly use the Rand Disparity

Study as they implemented the Women’s Procurement Program. In

a July hearing, SBA Associate Administrator Paul Hsu said that

the program would be in place by the end of this fiscal year. Well,

September 30 is just around the corner and women small business

owners deserve to know exactly what is happening with this program, as does the Congress.

Women entrepreneurs have made enormous strides in the last 20

years. The 45 percent increase in sales among women-owned firms

in Massachusetts alone, in the last decade, is just one example. But

to ensure that women get their fair share of Federal contracts and

overcome the ever-present barriers to accessing capital and business networks, programs such as the Women’s Business Centers

and the Women’s Procurement Program play an invaluable role. So

it is essential that the SBA implement these programs and administer them fairly. I look forward to hearing from our witnesses and

turn now to my Ranking Member, Senator Snowe.

OPENING STATEMENT OF THE HONORABLE OLYMPIA J.

SNOWE, RANKING MEMBER, AND A UNITED STATES

SENATOR FROM MAINE

Senator SNOWE. Thank you very much, Chairman Kerry, for

holding this timely hearing concerning the SBA’s administration of

the Women’s Business Centers and the Women’s Small Business

Procurement Program, as well as for your steadfast leadership that

is so instrumental to this debate.

I would also like to welcome our witnesses here today. This is a

critical hearing when it comes to the Women’s Business Centers.

I know there are a number of issues that we have to explore that

have been underscored by Chairman Kerry here this morning. I

most especially want to welcome Ann Marie Almeida, who is the

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executive director of the Women’s Business Center who has come

here from Maine to testify and I appreciate, Ann Marie, that you

are here.

We are gathered here this morning to probe why the SBA has

failed to provide women entrepreneurs with the assistance that

they require and deserve, and that is also consistent with funding

and statutory obligations. As Ranking Member of this Committee,

I have consistently supported women-owned businesses, as have all

the Committee Members here. We recognize that women make tremendous contributions to our economy. In fact, women-owned businesses are the fastest-growing segment of our economy. As I have

traveled across my State on many main-street tours, what I see repeatedly and consistently are women-owned businesses. These

women’s business owners are revitalizing so many communities

throughout the State.

As a reflection of their success, on May 25, 2007, President Bush

signed into law a bill which included a provision that was offered

by Chairman Kerry and myself along with Senator Sununu, which

impacted the SBA’s Women’s Business Centers. To that end, I

would like to include for the record, unanimous consent, a letter

that was sent by Senator Sununu along with Senator Murkowski,

Senator Lott, Senator Gregg, and Senator Domenici to the SBA

also underscoring their deep dissatisfaction with the failure of the

SBA to administer the new law that was passed last spring.

[The letter referenced above follows:]

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Senator SNOWE. The legislation was designed to create a 3-year

renewal grant program for Women’s Business Centers. Regrettably,

the SBA has misinterpreted this measure and delayed issuing critical funds to women business owners seeking assistance. This

morning, I certainly want to make clear, and hopefully we will

make clear to the SBA, that they must execute the renewal grant

program as soon as possible so that women business owners quickly receive the Federal funding they rightly deserve under the new

law.

Making great strides nationwide, women-owned businesses have

breathed new life into our economy, creating jobs with pace-setting

results. Certainly that is true in my State of Maine, as Ann Marie

Almeida, I know, will testify, which is a forerunner for womenowned businesses. Maine has more than 63,000 women-owned

firms creating 75,000 jobs and spurring more than $9 billion in

sales.

Furthermore, there are 10.4 million women-owned businesses nationwide employing more than 12.8 million Americans and generating $1.9 trillion in revenue nationally. Women are an economic

powerhouse.

So given these tremendous statistics, it begs the question as to

why the SBA is not paving the way for women-owned entrepreneurs? The latest reports on these issues from the U.S. Government Accountability Office and the SBA Inspector General couldn’t

be more instructive. We will raise these issues here this morning.

It is deeply disturbing, for example, that the draft Inspector General’s report indicates that the SBA has disbursed over 500 payments to the Women’s Business Centers for both new and sustainability grants, but only 25 percent of those payments—about 127

of those 500 grants—were made within the agency’s and the Office

of Management and Budget’s goal of 30 days. The remaining 75

percent of those grants were disbursed between 30 and 300 days

from the date the SBA received the payment request.

So clearly, there are some serious and significant problems with

respect to the way the Small Business Administration is administering the program and delivering the payments in a timely basis

to the Women’s Business Centers. I certainly want to press SBA on

why there are these untimely distributions of these funds to Women’s Business Centers. I think it is unacceptable and, frankly, cannot continue.

Furthermore, individual centers have expressed concerns with

the evaluation process and the dearth of transparency by the Small

Business Administration in terms of how they are ranked to receive these initial grants. The SBA’s 2008 budget submission asserts that the agency’s processes have become more customer-focused and simplified. This morning, the SBA must provide clarification in terms of how they have made this process more simple,

customer-focused and have included transparency in the process.

Finally, I remain extremely concerned about the SBA’s 6-year

delay in implementing—6 years I might add, and repeat, 6-year

delay of the Women’s Contracting Set-Aside Program. At a previous

Committee hearing in July, the SBA firmly pledged to finally implement this long overdue program by the end of this fiscal year.

Well, Mr. Chairman, as we know, the current fiscal year ends in

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10 days. So this morning, I look forward to a status update from

the SBA on this vital matter for women business owners in America.

I think we are all committed to multiplying the success of

women-owned businesses across our country with the economic opportunities and advancements that are achieved because of the

leadership and the resolve of the entrepreneurial women. Therefore, the SBA should be playing a leadership role in that regard.

That is why I think it is deeply regrettable that we are seeing the

intransigence and the reluctance to administer these programs consistent with the intent and the spirit and the obligations under the

law.

Thank you, Mr. Chairman.

Chairman KERRY. Thank you very much, Senator Snowe.

Senator Dole, Senator Enzi, do you have opening statements you

want to make?

Senator DOLE. Yes, if I may.

Chairman KERRY. Senator Dole.

OPENING STATEMENT OF THE HONORABLE ELIZABETH DOLE,

A UNITED STATES SENATOR FROM NORTH CAROLINA

Senator DOLE. Chairman Kerry, thank you very much, Ranking

Member Snowe, for convening this morning’s hearing on expanding

opportunities for women business owners and entrepreneurs. I

want to thank all of the panelists who are with us today for sharing your expertise and your time with us.

Not that long ago, in fact, Senator Snowe and I remember working together 25 years ago when I was in the executive branch and

she was in the legislative branch in the House of Representatives,

and what we were doing were identifying and helping to eliminate

vestiges of discrimination in rules and regulations as they applied

to women. So it was not all that long ago that women often faced

an arduous, uphill battle to succeed in a business world that,

frankly, was dominated by men. This was attributed in part to

women’s lack of access to vital resources and information needed

to start and grow a successful business.

But in recent years, the Women’s Business Center Program at

the Small Business Administration has been a driving force behind

positive trends in women-owned business statistics. Women’s Business Centers around the country, with grants from SBA, are helping women overcome obstacles and pursue their own dreams of

business ownership.

In North Carolina, where I come from, the number of privatelyheld majority women-owned firms grew by 61 percent between

1997 and 2006. This growth is significantly larger than the overall

increase of 39 percent that occurred for privately-held firms during

the same time period. The tremendous growth of women-owned

businesses in North Carolina is linked to the enactment of the

Women’s Business Ownership Act of 1998, which authorized the

Women’s Business Center Program. But problems exist, as we have

heard. It is important that this Committee constantly work to ensure that initiatives like the Women’s Business Center Program

are operating effectively and as intended.

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To this end, I applaud the hard work of you, Chairman Kerry

and Vice Chair Snowe, for getting Senate Amendment 187 passed

and signed into law earlier this year. The 3-year renewal program

truly is essential to keeping Women’s Business Centers operational. I strongly encourage the SBA to fully implement this program in a timely manner.

Centers across the Nation must receive the necessary funding to

carry out their mission, and changes are needed to address these

specific problems that have already been raised. No question, potential and current women business owners are critical to our overall economy, which thrives on the activity of our Nation’s small

businesses. I look forward to working with my colleagues and the

SBA to build on and improve the Women’s Business Center Program. Thank you.

Chairman KERRY. Thank you, Senator Dole. Thank you for your

comments for Senator Snowe and me, and thank you for your comments on the program.

Senator Enzi.

OPENING STATEMENT OF THE HONORABLE MICHAEL B. ENZI,

A UNITED STATES SENATOR FROM WYOMING

Senator ENZI. Mr. Chairman, I want to thank you for holding

this hearing. I want to commend the two of you for the Amendment

187 and the effect that that could have and should have, and I am

pleased that we will hear testimony today that will allow us to better understand the condition of the programs that are supposed to

assist women in starting and operating their own small businesses.

I do think that that is one of the best ways, one of the most hopeful

ways that we have of closing the pay gap.

It has long been known that women wishing to start their own

small businesses face significant challenges. The Women’s Business

Center Program has been successful in improving opportunities for

women to enter small business ownership, and I hope that this

hearing will be able to reveal the areas of greatest need where

these programs can be improved.

I am especially pleased today to welcome a former small business

owner from Wyoming who currently serves as the executive director of the Wyoming Women’s Business Center. Since 1999, Rosemary Bratton has worked to establish and operate the Wyoming

Women’s Business Center in Laramie. Starting as a project of the

Wyoming Coalition Against Domestic Violence and Sexual Assault,

this has emerged recently as a distinct and separate organization

that has worked to meet the needs of working women across Wyoming. Ms. Bratton will be able to share with us valuable insight

about her experience at starting a business center in a rural State

like Wyoming and working with the Small Business Administration

Office of Women’s Business Ownership.

My experience as a small business owner tells me that providing

consistent and reliable service to your customers is what keeps you

in business. Women’s Business Centers have reported success in

providing services to women when centers are given the appropriate resources. They have to have consistent and reliable service,

as well, to stay in business. Lately, these centers have not received

the support in a consistent manner. I trust these proceedings will

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provide the Members of this Committee with a better idea of how

business can be improved with the business centers.

I also look forward to hearing about the status of the Women’s

Procurement Program. For some time, the implementation of that

program has been delayed, and I am interested to know when the

set-aside for women-owned businesses will be available. I cannot

overemphasize the importance of providing women-owned small

businesses access to Federal contracting opportunities. Procurement can be a difficult and overwhelming process for small businesses who have limited resources.

I thank you for holding this hearing.

Chairman KERRY. Thank you very much, Senator Enzi. I appreciate it.

Administrator Prakash, if you don’t mind, I want to have Mr.

Shear and Ms. Ritt testify first. That gives you an opportunity to

respond to them, rather than the other way around, where we just

ask a lot more questions because of their testimony. I know you are

going to make your statement.

Mr. PRAKASH. That would be fine.

Chairman KERRY. Mr. Shear, why don’t you begin and then Ms.

Ritt.

STATEMENT OF WILLIAM B. SHEAR, DIRECTOR, FINANCIAL

MARKETS AND COMMUNITY INVESTMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE, WASHINGTON, DC

Mr. SHEAR. Mr. Chairman, Senator Snowe, and Members of the

Committee, I am pleased to be here this morning to discuss the

Women’s Business Center Program. The WBC Program provides

long-term training, counseling, networking, and mentoring to

women entrepreneurs, especially those who are socially and economically disadvantaged.

Congress created the WBC Program in part due to the finding

that existing business assistance programs for small business owners were not considered adequate to address women’s needs. But

concerns have also been raised about whether SBA’s business assistance programs are duplicating each other’s efforts. The two

other primary business assistance programs that SBA administers

are the Small Business Development Center and SCORE Programs. Under the terms of the SBA award, WBCs are required to

coordinate with local SBDCs and SCORE chapters when appropriate.

This testimony provides preliminary views based on ongoing

work. I will discuss, first, the uncertainties associated with the

funding process for WBCs; second, SBA’s oversight of the WBC

Program, including policies and procedures for monitoring compliance with program requirements; and third, the services that

WBCs provide to small businesses and actions that SBA and WBCs

have taken to avoid duplication of the services offered by the WBC,

SBDC, and SCORE Programs.

In summary, first, until 2007, WBCs were funded on a temporary

basis with the expectation that the centers would become self-sustaining. In the most recent period prior to 2007, beginning in 1999,

Congress created a Sustainability Pilot Program to extend funding

an additional 5 years, allowing successful WBCs to receive SBA

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funding for a total of 10 years. However, WBCs continue to face

funding uncertainties. To address these funding uncertainties, recent legislation for the WBC Program replaced the Sustainability

Pilot Program with 3-year renewable grants to WBCs that graduated from the program after 10 years, as well as the current program participants.

With respect to our second objective, although SBA has always

had procedures in place to monitor WBCs’ performance and use of

Federal funds, staff shortages from the agency’s downsizing and

limited communication may hinder SBA’s oversight efforts. SBA relies extensively on District Office Technical Representatives, called

DOTRs, to oversee WBCs, but these staff members also have other

job responsibilities and may not have the needed expertise to conduct some oversight procedures. In addition, some WBCs also cited

communication problems. For example, some WBCs told us that

SBA did not provide sufficient feedback on their performance.

Third, we found that WBCs we spoke with focused on a different

type of client than the SBDCs and SCORE chapters in their areas.

Consistent with the WBC Program’s statutory authority and SBA

requirements, WBCs generally tailor services to meet the needs of

economically and socially disadvantaged women. In addition, SBA’s

study of WBCs showed that they tended to serve clients with businesses that had fewer employees and lower revenues than clients

of SBDCs and SCORE. However, based on our review, WBCs appear to lack guidance and information from SBA on how to successfully carry out their coordination efforts. Therefore, opportunities

for SBA to help improve coordination, especially for WBCs that

might find coordination difficult, appear to be present.

Mr. Chairman, this concludes my statement. I would be pleased

to answer any questions.

[The prepared statement of Mr. Shear follows:]

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Chairman KERRY. Thank you very much, Mr. Shear. That was a

good summary.

Ms. Ritt.

STATEMENT OF DEBRA S. RITT, ASSISTANT INSPECTOR GENERAL FOR AUDITING, U.S. SMALL BUSINESS ADMINISTRATION, WASHINGTON, DC

Ms. RITT. Chairman Kerry, Ranking Member Snowe, and Members of the Committee, I am pleased to be here today to discuss the

Small Business Administration’s grant program for Women’s Business Centers. My testimony is based on work we recently completed at the Chairman’s request that examined concerns raised by

many of the Senators about the timeliness of grant disbursements.

I will address the extent of payment delays, their causes and possible solutions, as well as share our observations about opportunities to streamline the grant award process.

SBA awards two types of grants under the program, new grants

that are competitively awarded and funded for up to 5 years, and

sustainability grants, which provide another 5 years of funding.

Our audit disclosed that SBA was consistently late in disbursing

grant funds and that the percentage of current delays had increased from the previous year. In fiscal year 2006, SBA disbursed

only 25 percent of grant payments within OMB’s goal of 30 days,

and in fiscal year 2005, only 40 percent were disbursed timely. The

remaining payments were disbursed between 30 days and up to a

year following receipt of payment requests.

Not all payment delays were the fault of SBA, however. Some requests were incomplete or contained errors due to the complexity

of the required documentation or failure to follow agency guidance.

That aside, we identified four major reasons for late payments,

most of which were a consequence of poor coordination and communication between SBA’s Program Office, which performs an initial

review of the payment request, and its Grants Office, which provides the final approval to draw down awarded funds.

First, payment delays were caused by the agency’s varying interpretation of the payment requirements. The Program and Grants

Offices differed in their understanding of the information needed

for payment and often provided centers with inaccurate or conflicting information. The two offices also did not collaborate fully in

the development of program handbooks used to guide WBCs

through the payment process and introduced new requirements

that were not communicated to the centers.

We believe the Program and Grants Offices should enter into a

formal agreement on the proper interpretation of the payment requirements and the process for updating them and communicating

changes to WBCs. Alternatively, SBA should consider placing grant

specialists within the Program Office or outsourcing the grants

payment function.

Secondly, the ability of either office to reject payment requests

resulted in the denial of payment before both offices had completed

their reviews. For example, payment requests were rejected by the

Program Office and returned to the WBC only to be rejected a second time by the Grants Office upon resubmission. These rejections

caused a cascading delay in the approval of subsequent requests,

29

as past payments had to be disbursed before new ones could be approved.

We recommend that both offices complete their reviews before rejecting a payment to reduce the constant shuffling of paperwork between their offices, as well as between the agency and the WBCs.

A third cause for delays related to payment requests being returned and resubmitted through the mail when corrections were

needed. SBA also denied payment no matter how small the error.

For example, the Grants Office rejected a request over a $30 expense that was charged to the wrong line item. Automating the application process would expedite the filing of requests and prevent

them from becoming lost in the mail. Automated checks could also

be performed to ensure that the applications were complete and

free of mathematical errors before submission.

Finally, SBA lacked an effective tracking mechanism to identify

when a payment request was received, where it was in the process,

and whether the request was processed timely. Each office reviewing the payment request maintains separate logs which prevented

tracking of the requests through the full review and approval cycle.

A centralized payment tracking system would improve SBA’s ability to manage the timeliness of its reviews and respond to center

inquiries.

While not the focus of our review, we also would like to share

a few observations about opportunities we saw to streamline the

grant award process. We believe the grant opportunity can be announced earlier in the year. SBA generally delays posting of the

announcement until after it receives its appropriations—when it

knows how much funding will be available and the percentage to

be apportioned to sustainability grants. However, the announcement is largely boilerplate and the funding levels and formulas are

not required information to post the grant opportunity.

Next, organizations responsible for approving the grant announcement should conduct their reviews concurrently. Before SBA

can announce the grant opportunity, the Program and Grants Offices, as well as counsel must review the appropriations language

and announcement to ensure that any changes in requirements are

identified and accurately reflected in the announcement. These reviews generally take up to 3 to 4 months, as one office has to complete its review before the next office’s review can begin.

Lastly, SBA should evaluate proposals involving option year

funding earlier in the year. We noted that SBA places all returning

grantees on the same evaluation schedule as new entrants, even

though they do not compete for funding. Because SBA only needs

to verify that the WBC is performing in accordance with its preapproved plan, it can evaluate its performance earlier in the year

so that once the center provides an acceptable budget and appropriations are received, the grantees can request payment.

Mr. Chairman, this concludes my statement and I would be

happy to answer any questions that you have.

[The prepared statement of Ms. Ritt follows:]

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Chairman KERRY. Thank you very much, Ms. Ritt. We appreciate

it.

Administrator Prakash.

STATEMENT OF ANOOP PRAKASH, ASSOCIATE ADMINISTRATOR FOR ENTREPRENEURIAL DEVELOPMENT, U.S.

SMALL BUSINESS ADMINISTRATION, WASHINGTON, DC

Mr. PRAKASH. Chairman Kerry, Ranking Member Snowe, and

Members of the Committee, thank you for the opportunity to be

here with you today to speak about SBA’s programs in women’s entrepreneur and small business. I am Anoop Prakash. I am the Associate Administrator for the Office of Entrepreneurial Development, and I have been in the office since May of 2007.

I am very proud to be supporting the dynamic social entrepreneurs that lead the network of Women’s Business Centers.

Today, the centers account for 10 percent of the total clients served

by my office’s programs, and in total, they receive 11 percent of the

entrepreneurial development grant funds.

These centers do differentiate themselves, as my colleague here

on the panel from GAO has said, by going beyond the task of small

business development counseling and also creating a community of

mutually-supporting women entrepreneurs, counselors, and mentors in their communities. I have had the privilege and opportunity

to meet with Women’s Business Center directors and counselors

and several Women’s Business Center owners to understand and

speak about women’s entrepreneurship and the state of our programs today. While the majority of my discussions have been overwhelmingly positive, I am keenly aware of the management challenges that have resulted in grant disbursement backlogs, delays,

and unnecessary challenges for the recipients. Some of these delays

have also periodically placed the Women’s Business Centers in financially difficult circumstances.

My spoken remarks today will focus on the management challenges associated with the program, and second, I will speak specifically to our plan to implement the legislation regarding graduated Women’s Business Centers.

As you know, over the course of the program’s life, the number

of Women’s Business Centers has grown steadily, starting with 13

centers in 1989 and 96 centers receiving funds in fiscal year 2007.

An additional 26 centers have previously graduated from the program and will now be able to apply for funds in fiscal year 2008.

While the size of the network has grown, the SBA resources assigned to manage and provide service to those centers has declined

and the result has been a program that has outgrown the manual

paper-based procedures and policies currently used by the agency

to administer the program.

In early fiscal year 2007, in response to Women’s Business Center concerns, the agency did begin to examine its processes. It did

identify bottlenecks and took some steps to fix and rectify some of

the delays in the payment process. These changes did result in

more efficient processing of pay requests. However, there are still

considerable improvements we can make to better serve our grantees.

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My office has spent a great amount of time understanding the

customer service, the management and performance issues facing

the Women’s Business Center Program as it continues to grow. As

recently as last week, we hosted a focus group meeting with senior

leaders of 10 Women’s Business Centers and a representative from

the Association of Women’s Business Centers to understand what

is working and what is not, and we did come away with a rich set

of concerns and recommendations to inform our way forward.

We have also studied best practices and Centers of Excellence

across the Federal Government and how other agencies manage

similar grant disbursement programs more effectively, and we have

received briefings and cost estimates as to how we might move to

something more streamlined.

And lastly, we have worked closely with the Inspector General’s

Office, and we fully embrace the IG’s report and recommendations.

These will further clarify some of the issues and inform our efforts

by providing us a series of recommendations which will greatly improve the process for all.

It is clear to all involved that the program, policies, and procedures, as currently administered by the SBA, require a focused reengineering effort to automate the exchange of forms and information, to streamline the number of reviews, and reduce the touchpoints within the agency that has resulted in some of these delays.

We have begun this effort and are committed to completing the reengineering process in time to effect and enhance the performance

of the program in the new fiscal year.

I would now like to address the Committee regarding our plans

to implement the legislation that was included in the U.S. Troops

Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act of 2007. First, I would like to be very

clear that the agency has not purposefully stalled in implementing

the legislation. From our General Counsel’s interpretation, the determination was made that we could not implement the new legislation in fiscal year 2007. The legislation repealed the Sustainability Program effective October 1 of 2007, and by our General

Counsel’s reading, we could not implement Section M until Section

L had been repealed.

I would like to acknowledge that the Committee’s most recent

letter to the agency, which we received yesterday, clarified the intent of the legislation’s provisions regarding graduating center priority, and we concur with your continued support of the performance-based nature of the program going forward. I have full faith

we can resolve any remaining issues requiring clarification in a

manner satisfactory to all.

Now, I also want to be clear that our intent is to implement this

legislation immediately and continue to ensure the funding is an

effective and reliable mechanism for the most deserving centers

across the country. I wanted to also take this opportunity to walk

through what I think is a very achievable timeline for the agency

to do so, and this timeline is very much informed by the Inspector

General’s recommendations to move the grant process earlier in the

fiscal year.

First, we would issue program announcements for both the new

and the renewal grants within the first 60 days of fiscal year 2008.

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Second, we would publish the program announcements for 30

days to allow for sufficient time for Women’s Business Centers to

react to the requirements, ask questions, and prepare their applications. We have found that anything less than 30 days does not provide Women’s Business Centers an appropriate opportunity to respond to the program announcement.

Once the applications are received, we will complete the competitive selection of all new and all renewal grants inside of 30 additional days, which includes the 1- to 2-week time lag that we have

to undergo as we receive all grant packages from grants.gov. Thus,

we are hopeful that in 120 days, we will be prepared to issue the

notice of award again, as soon as practicable, once we receive confirmation of appropriations. So inside of 120 days, again, the SBA

will have completed all of its work to get these grants ready for notice of award.

The SBA is committed to furthering our positive impact on

women and business across our lending and Government contracting and technical assistance programs. Again, we have begun

the process towards greater transparency and accountability but

there is still more work to be done to improve our customer service,

especially with regards to the grant disbursements to the Women’s

Business Centers.

We welcome the findings of the Inspector General to inform our

way forward and I look forward to working with my colleagues at

the agency and the Committee in the coming months to implement

both the IG’s recommendations and the legislation with urgency.

Chairman Kerry, thank you. This concludes my testimony.

[The prepared statement of Mr. Prakash follows:]

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Chairman KERRY. Thank you, Mr. Prakash. We appreciate it.

With respect to the 120 days, when does that begin to toll?

Mr. PRAKASH. That begins today, sir.

Chairman KERRY. Only today? So it is 120 days from today?

Mr. PRAKASH. Correct.

Chairman KERRY. Why would it not have been previous to today?

I don’t quite understand that. Why would the bell toll starting

today?

Mr. PRAKASH. Senator, as legislation was passed, we did receive

notice of the legislation passing about 2 weeks after the bill had

been signed. We looked at it, and we did get the General Counsel’s

response, again, that we could not implement the program until

after October 1 due to the section that talked about repealing Section L on October 1 and then moving forward with Section M.

Again, the legislation was——

Chairman KERRY. I know there was a disagreement, and there

now isn’t a disagreement, but I suppose the question—I don’t want

to waste a lot of time going back into what the reasoning was—

but it is pretty hard to understand why, based on what we were

trying to do and on the intent which you all agree with now, there

wouldn’t have been a simple interpretation that we were looking

for and the paragraph that we passed in order to change the process was, in fact, the operative paragraph.

Mr. PRAKASH. Senator, I think the intent was clarified for us

with the exchange of communications between the Committee and

our agency. Again, we received that clarification, and we are ready

to move forward.

Chairman KERRY. The IG report recommends two very easy

fixes. One, putting training in handbook and program changes online, which it seems to me is sort of a no-brainer in today’s world,

and allowing Women’s Business Centers to provide missing or incomplete sections of their application without resubmitting an entirely new application. Are you prepared to implement both of

those?

Mr. PRAKASH. Yes, I am, Senator.

Chairman KERRY. Is there any reason why the agency needed to

be prodded from outside to do that?

Mr. PRAKASH. Senator, I can only speak to what I believe is a

long history of, again, the program ramping from 13 centers to 96

and the processes and policies not ramping with it. So I don’t believe there is any reason we can’t fix it, and again, we embrace this

Committee’s efforts to engage the IG to highlight some of these

areas that just were not being necessarily watched.

Chairman KERRY. You know, one of the things that I think bothers Senator Snowe and me—and we have had reversing roles here

for a period of time—there just seems to be a constant process

where you all come up here and you get prodded by the Committee

and you sit there and you say, ‘‘Boy, that sounds good. Yes, we are

going to do that going forward,’’ et cetera, and we are sort of always having to ask you to do something or push you to do something or prod you to do something. Of course, in these hearings, it

always makes a lot of sense, and then we go back to this struggle.

I think there is a frustration level with this, that Members of the

Committee on both sides feel. Where is the proactive sort of visionVerDate 11-MAY-2000 10:27 Sep 22, 2008 Jkt 041801 PO 00000 Frm 00050 Fmt 6633 Sfmt 6633 C:\DOCS\41801.TXT DianeA PsN: DianeA
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ary leadership where you come up here and tell us, here is what

we are doing to make life easier for these folks?

Mr. PRAKASH. Senator, I certainly can’t speak for my colleagues

who have been here before. I have been in the office since May and

immediately——

Chairman KERRY. That is the other thing that happens. We keep

getting people sent up here who have had about a month at the

agency.

Mr. PRAKASH. Senator, I can tell you that the Administrator,

having finished his first year, in my estimation, has provided visionary leadership and given me full autonomy to fix this issue and

streamline other programs that are also under my purview, including the Small Business Development Centers and SCORE.

Chairman KERRY. What is going to happen with respect to the

complaint from many of the folks that they get sent back and forth

between the offices in SBA? The IG report specifically mentions

communication and coordination problems with the Women’s Business Ownership and the Grants Management Office. Are you undertaking steps to guarantee that that coordination is present

where it hasn’t been?

Mr. PRAKASH. Yes, Senator. I can tell you that right now, there

are just far too many touch points within the agency that are creating the opportunity for paperwork to be lost, for misinterpretation of requests, for a different response to different Women’s Business Centers. We are going to standardize that and limit the touch

points. I am already exploring ways that we can look at some of

the Centers of Excellence around Government. We have spoken to

several that manage much larger grant programs than even the

Women’s Business Centers and we feel that would be a great option. It will allow transparency. It will allow Women’s Business

Centers to work with an automated system, have full transparency

as to where their case is or where their application is, and——

Chairman KERRY. Well, that would be terrific. I mean, the sooner

you can get something like that, the happier a lot of people would

be.

What about the changing requirements that the report also talks

about before the centers get grants, these requirements constantly

changing and then there is a delay as a consequence?

Mr. PRAKASH. I think the requirements changing is a byproduct

of the fact that there are two offices within the agency today working with the Women’s Business Centers. Again, the IG report identified the Office of Women’s Business Ownership, which sits in the

Office of Entrepreneurial Development, which is my office, and

then there is the Division of Procurement and Grants Management. The two offices have not communicated well. They have,

therefore, had these communications with the Women’s Business

Centers which at times have been inconsistent, depending on which

office was leading those communications.

Chairman KERRY. Is that clarified now?

Mr. PRAKASH. We are keenly aware of it and have been keenly

aware of it. I think the IG report, frankly, helps us get our arms

around it and address it immediately, whereas before, some of

these issues are longtime management, people, and cultural issues

that are hard to address.

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Chairman KERRY. Well, do you believe the money will get to the

centers faster now?

Mr. PRAKASH. Based on what we have reviewed as far as other

programs that are out there in the Federal Government, they are

telling us that in their automated systems, they range anywhere

from 3 to 15 days.

Chairman KERRY. With respect to the procurement program, it

is supposed to be in place less than 2 weeks from today. Will it be?

Mr. PRAKASH. Senator, what the SBA has done to move that forward, we have submitted the draft final version of the rule to

OMB. That was submitted on April 23. It is currently in the interagency process that is managed by OMB. We are hopeful we will

get a response soon, but as you know, it is a complex rule. It is

not a typical rule. And they are commenting basically on—the 24

agencies that effectively have procurement programs have to all

make comments on the impact of a Women’s Procurement Program.

Chairman KERRY. In other words, it won’t be in place in 2

weeks?

Mr. PRAKASH. I couldn’t say. I can’t speak for OMB——

Chairman KERRY. Well, if you don’t have a rule, if you don’t even

have a rule yet, you haven’t got any implementation orders or anything.

Mr. PRAKASH. The draft rule is written and has been submitted.

Again, it is——

Chairman KERRY. Well, this is April, you said, right?

Mr. PRAKASH. Correct, Senator.

Chairman KERRY. So what happened in May, June, July, August?

Mr. PRAKASH. It has been reviewed by 24 different agencies, Senator. I can’t speak for the pace at which those agencies can review.

Chairman KERRY. Well, do deadlines mean anything?

Mr. PRAKASH. I think they do, sir.

Chairman KERRY. What do they mean?

Mr. PRAKASH. I think the deadline, the intent, and I again can’t

speak for my colleague, was to make sure that we were doing everything as an agency possible to move this forward. What we had

to do and follow the process of rulemaking is to submit our rule to

OMB. Again, we cannot control process and progress, although we

are doing everything we can to track it and move it along.

Chairman KERRY. Well, I am not sure what—I am going to talk

to Senator Snowe and try to figure out with her what we think we

ought to do here. Because I have got to tell you, I mean, she said

6 years. I said 7. I guess it depends on when we begin to count.

But call it 6. Call it 5. Call it 4. It is just disgraceful. I know you

weren’t there then, but it is disgraceful. This sort of a complete indifference to the law, to a sort of pride in job and in accomplishment. I don’t know what it is. It is either an indifference, or an arrogance. It is one or the other. But either way, it is pretty unacceptable, when you say April, whether there were 5 or 6 years prior

to April, where this thing has been sitting out there.

I think this Committee really ought to think about what we can

and ought to do to have the Administrator up here and have whoever is responsible for this up here to talk about it, if it can’t get

49

implemented. It has got to get implemented. You don’t want to

miss another $6 billion of procurement opportunity. I don’t know.

We have got to figure out what we are going to do, and we will figure it out.

Are we going to anticipate that this SBA implementation is going

to actually address all of the disparities that have been present in

the statistics we have seen in this?

Mr. PRAKASH. Senator, I believe you are referring to the Rand

study?

Chairman KERRY. Yes.

Mr. PRAKASH. I have not personally read the Rand report. I have

been briefed on its findings.

Chairman KERRY. Do you know which set of statistics are being

used to create the program?

Mr. PRAKASH. At this time, there is an active dialogue on that.

What has been placed for comment is the opportunity for agencies

to weigh in on the effect of either rule on moving forward with a

program.

Chairman KERRY. Senator Snowe.

Senator SNOWE. Thank you, Mr. Chairman.

Well, as you can detect, it is a deep-seated frustrating with the

way the SBA has consistently approached the Women’s Business

Centers and the Women’s Procurement Programs and Set-Aside

Program. Obviously, it does display a complacency or a disregard

for the value of those programs and women entrepreneurs.

There was a recent training conference here in Washington with

the SBA and the Association of Women’s Business Centers where

there was a lot of conversation about all of this. I think those conversations are illustrative of the failure of the SBA to implement

the 3-year renewal program. I mean, it seemed to me that was

pretty obvious how the new grants should be implemented and it

is just hard to understand as to why, exactly, the SBA refused to

do it. It was clear under the law that the SBA could have moved

forward.

There is a general feeling that there is a disconnect between SBA

and the Women’s Business Centers in terms of attitude, philosophy, and the culture at SBA. This disconnect is reflected in the

way the agency treats this program. I can understand why there

would be this widespread sentiment among these participants, in

terms of the attitude of the SBA towards the Women’s Business

Centers Program, because there have been repeated setbacks to the

program, certainly illustrated by the contracting set-aside. It is just

almost hard to imagine you don’t implement something for 61⁄2

years. So here we are.

So you can understand why we feel the way we do today. I guess

I would like to just get a clearer picture this morning in terms of

exactly what is going to occur, step by step, one, with the renewal

program. It wasn’t necessary to have the announcement of grants

before they could apply. But I would like to know, step by step, the

implementation plan for the renewal grants and what we can expect by when. So can you give us, first, an understanding when the

steps will be implemented exactly?

Mr. PRAKASH. Yes, Senator. Absolutely.

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Senator SNOWE. And two, what are you doing now to prepare for

the new program? When do you plan to publish the announcement

of new sustainability grants? Is that going to be soon?

Mr. PRAKASH. The current winners, or this year’s grant recipients?

Senator SNOWE. The new ones.

Mr. PRAKASH. The new ones. I will speak to that.

Senator SNOWE. OK. And how soon will these awards be made

after the enactment of the appropriations for 2008, because obviously there is considerable lag time. So can you give us a complete

picture in terms of the implementation of these renewal grants,

and also speak to the overall attitude, because you can understand

it is a compounding effect after a while.

Mr. PRAKASH. Absolutely.

Senator SNOWE. Will you also speak to Mr. Shear’s issue that

there a difference in philosophy, between SBDCs, SCORE and

Women’s Business Centers in terms of clients served? There are obviously some issues here that need to be resolved.

Mr. PRAKASH. Great. Thank you, Senator. I will speak first to

your earlier comment about the training conference. I attended the

Women’s Business Ownership and AWBC conferences as we were

co-hosting, and I did ask Ann Marie Almeida, who is executive director of AWBC, to convene a focus group of center directors so I

could speak to them personally with our Office of Women’s Business Ownership management outside the room and to get some

real candid and curt feedback, and I did. I really appreciated some

of the experiences that they have had. I was, frankly, embarrassed

by some of them, and I was very happy to also hear from them

some real concrete solutions and ideas that they had that would

enrich not only their ability to do their work, but also allow us to

maintain some semblance of due diligence that is required by the

legislation. So I did hear them, and it is from that discussion and

from the IG’s report that we have a number of recommendations.

One of the historic trends in this program has—because the

amount of sustainability funding and appropriations prior to the

new legislation varied from year to year, there was an admittedly

conservative approach by the agency to wait for appropriations so

they knew how much money was available. I believe we now hear

from the IG, and I have looked at it closely, we believe we can get

those program announcements out much more quickly, and again,

we will just have to wait for notice of award upon appropriations.

As I mentioned previously, the first step in implementing this is

to issue the new program announcements. We are underway in

looking at the previous program announcement. As you read in the

IG testimony and from the GAO testimony, the previous program

announcement itself needs to be revised significantly, not only to

reflect the new legislation, but also just to, I believe, revamp and

retune the requirements that we put on the applicants for the

grants.

I am proposing that that will take us 60 days. It takes us 60

days, one, because we internally have to rewrite these program announcements. We have to review them. We would like to get comment from the AWBCs to make sure that they can have a chance

to look at it and give us some informed comment before we go pubVerDate 11-MAY-2000 10:27 Sep 22, 2008 Jkt 041801 PO 00000 Frm 00054 Fmt 6633 Sfmt 6633 C:\DOCS\41801.TXT DianeA PsN: DianeA
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lic with something that they are not supportive of. And we also

have to get the internal clearances from the Office of General

Counsel to make sure we are not asking for something that we cannot legally ask for in an application. So that is a 60-day process

that we are committed to follow, and again, we are talking in the

next 60 days, not after the next fiscal year.

We will then publish those program announcements as per the

previous plan to publish. Program announcements have in the

past—historically been published for 30 days and we have found

that that is the optimal amount of time for Women’s Business Centers to receive the announcement, react to it, consider the requirements, assemble them, ask any clarifying questions, and then submit those applications. In the past, we have actually gotten feedback that 30 days wasn’t enough, that we may want to keep it open

for longer. However, we think, in most cases, 30 days has been a

manageable amount of time for most Women’s Business Centers to

get their package together in time.

Once we have published that program announcement, 30 days

will pass. We will have received new grant and sustainability or,

excuse me, renewal grant applications. We will then have to review

all applications received, which at this point we do receive a significant amount of applications. This year we received 60 applications

for the new center grant opportunity. So that is a significant selection process. Again, I want to bring that back down to 30 days, lock

people in a room, have them read every application, and score it

right there on the spot, and make sure we get those done and

turned around in a timely manner.

And that is the 120-day process in which we will be ready once

appropriations hits, as soon as practicable after that point from a

legal perspective to issue the notice of award.

Senator SNOWE. Mr. Shear or Ms. Ritt, can you comment on

what Mr. Prakash has just mentioned, anything based on your review that you think is consistent or inconsistent with what you

have identified as problems?

Mr. SHEAR. Can I start with——

Senator SNOWE. Yes.

Mr. SHEAR [continuing]. What I will call the coordination issue

among the three programs, if I could go through each point there,

the oversight issue and then implementing the renewable grants?

Could I go in that order?

Senator SNOWE. Yes.

Mr. SHEAR. OK. Thank you. On the coordination issue, something that shows up over and over again is the failure to use technology and to come up with clear, formal, structured guidance that

in this case WBCs could use to help facilitate their coordination.

We observed some very, what could be called, best practices or

promising practices used by WBCs in coordinating in their own

areas, and we also had some who just said, we are challenged by

this and we are looking for guidance from SBA. One of the promising practices is in our written testimony, an example from Wisconsin, but there are many more. And just at the real simple level,

use of a Web application and trying to use technology to create

some structure could provide some guidance. I think that this is

what the Women’s Business Centers are looking for, and it is what

52

is really called upon if SBA has these requirements, and they are

statutory requirements. So some of that could start at a very simple level, but it involves use of technology.

As far as the oversight issue, it is a question of resources and

expertise. I know it is just meant as kind of an expression, we are

going to lock people in a room to look at applications, but the question is of having a structure in place and part of that can involve

technology. Part of it can just be, let us come up with a plan on

how we are going to do this and coordinate these offices. Over the

course of time that we have done our review on the reimbursement

question which we have deferred to the IG, there was basically one

change the District Office Technical Representatives used to be involved with reimbursement. So that has changed in the last year.

But it is a very tiny move.

So I would hope that this proactive approach he is talking about

for looking at the oversight issue could be improved. Technology

could be improved, that capacity, training needed for the DOTRs,

a rationalization of how much they can have on their plate at any

one time. We would hope that those were things that they could

look at proactively.

On the funding issue, I am glad to hear for the first time that

they are consulting with other agencies as far as how they could

get the funds out in the absence of an appropriation. Basically,

based on our knowledge of programs—and we do look across the

Government—our discussions with our appropriations lawyers,

agencies do things all the time where they are going through a

grant application process with the idea that they can go through

the application process with the understanding that they have to

wait for the appropriation to actually expend the funds. We would

hope that they would be able to learn some lessons from what

other agencies do in this area because basically you have a number

of policy choices here, and if the policy choice is what it seems to

be, there are actions that can be taken.

Senator SNOWE. Well, you raise a very important point about

structure, and specificity, and the need for a definite program in

place to address these issues. Rather than just sort of casual ad hoc

management, Mr. Prakash, I think that Mr. Shear makes a very

good point that there needs to be some certainty and predictability

to the type of structure and program in place. In order to realize

results and deadlines, and whatever else is necessary requires certainty. That doesn’t sound like that is what is going to happen. It

is just going to be, hopefully it is going to work, but maybe not.

You have got to hold people to deadlines. I appreciate it. Thank

you.

Chairman KERRY. Thank you, Senator Snowe.

Senator Enzi.

Senator ENZI. Thank you, Mr. Chairman. Ms. Ritt, your written

testimony reveals some troubling statistics regarding the ability of

SBA to make payments in a timely manner. Could you give us

some specificity on how this problem has affected the operation of

the centers that you investigated and maybe give us some idea of

whether it is possible for SBA to announce grant opportunities earlier in the fiscal year and how that would help?

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Ms. RITT. Sure, Senator. Some of the things that we heard from

the Women’s Business Centers that we surveyed was that the payment delays were so egregious in some instances that they had to

turn to bank lines of credit or to their parent organizations for

funding. In some cases, they had to lay off staff, curtail operations—that sort of thing.

I think that there are many opportunities to streamline the process. Like we said in the report, first of all, doing concurrent reviews

of each year’s appropriation and the grant announcement, those reviews could probably be completed within a month.

And then I think they also need to decouple the evaluation of existing Women’s Business Centers who are returning every year for

the remaining years on their grant from the evaluation process

that they use for new entrants into the program. The returning

centers do not need to compete for funding. All that is required is

an evaluation of their performance, and some of that information

comes at year end because they have to determine the impact that

the centers have had by surveying their customers, and then they

have to approve the budget that the centers submit. So for the majority of these centers, I would see that they could probably get an

award within—or get the payments within 3 months. The new centers, however, would have to submit a brand new proposal and go

through a more rigorous evaluation process.

Senator ENZI. I am glad to see Mr. Prakash taking some notes

there.

Mr. Shear, your study found a significant number of centers expressed a concern about communication with the SBA. Did centers

indicate whether these difficulties extended to the regional offices,

and does feedback differ between the centers that have graduated,

versus those that have recently been established?

Mr. SHEAR. The concerns tend to be that there are these monthly

conference calls and the centers don’t find them to be really an effective means to get feedback on their performance and other matters. I will go back to the idea of having something structured and

formal in place because certain operations can greatly lead to improvements in such interaction.

There are certainly concerns about District Office Technical Representatives that are stretched too thin and may not have the appropriate expertise, things that I would say are related to the reimbursement issue that the IG’s Office has taken the lead on.

As far as whether new, versus those who have graduated, where

most of our interaction has been with those that are still in the

new and new sustainable grants, as far as differences there, I really can’t say that we have any finding as far as which ones expressed more concern about the lack of communication and structure.

Senator ENZI. Thank you. My time has almost expired. I yield

back.

Chairman KERRY. Thank you, Senator Enzi. I appreciate it.

Senator Thune.

Senator THUNE. Thank you, Mr. Chairman and Senator Snowe,

for holding the hearing today, and I appreciate the testimony of our

witnesses and thank the panels for joining us today, as well. I

think these are effective forums for us as Members of Congress to

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better understand the critical role that women play in our Nation’s

economy. It also provides us with an opportunity to ensure that the

programs that we have created are successful, that they help those

who need it the most and that they are not overly burdensome.

The good news is the availability of opportunities to women businesses has been improving in recent years. Currently in my State

of South Dakota, just over 38 percent of all privately-held firms are

at least 50 percent women-owned. These women-owned firms generate $4.6 billion in revenue annually and employ about 37,000

people.

While those statistics are impressive, more work still needs to be

done and this is especially true in South Dakota and other rural

States where we have smaller populations and larger distances

that sometimes make it difficult for individuals to transform a good

idea into a successful business.

So I again want to thank our witnesses for being here today, for

being willing to testify before the Committee. Your input along

with that of our constituents gives us a good information base on

which to draw when we make important policy decisions, and those

decisions hopefully will continue to help strengthen America’s

women-owned small businesses.

I just have a couple of questions I would like to pose to this

panel. First, to Mr. Prakash, the IG report spends a great deal of

time discussing the divide that exists between the Program and

Grant Offices, and I guess my question is, do other programs have

this dual processing, and if so, do they run into similar problems?

Mr. PRAKASH. Senator, thank you for the question. I think all the

grant programs and contracting programs go through the division

of programs and grants management. I will say that it varies

throughout the agency. I think my fellow panelist from the GAO

has spoken to leveraging technology, leveraging different structures

to manage a grant and contracting program, and depending on how

manual or paper-based the process is, how many hand-offs have to

go down to grants management. I think you will find that it varies,

but most cases where there is a double touch-point, there are

issues and challenges in coordination and communication.

Senator THUNE. Ms. Ritt and Mr. Shear, you both discuss how

communication problems between the SBA and the WBC, Women’s

Business Centers, are a continuing problem. In conducting the research, did either of you learn in what way WBCs would prefer to

have this communication improve?

Mr. SHEAR. Yes, I will go first. It is clear to us what the WBCs

find less useful, which is relying on the monthly conference calls

which they don’t think is that good of a forum for all types of communications, they are asking for structure and guidance and it is

not clear that they are getting consistent guidance and coordination, those type of issues. It is from that—this is still ongoing work

for us, but I would say in terms of the recommendations that we

plan to make, we expect to make in our final report when it is

issued will be what we think are ways, based on the input we have

received from WBCs and others, that we think could help this process. But more of what we have received is what could be called

challenges associated with the current processes.

Senator THUNE. I am sorry. Ms. Ritt, did you want to respond?

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Ms. RITT. Yes. I just wanted to say that we did a survey of the

Women’s Business Centers and they had many good suggestions.

Many of them thought that automating the process would prevent

their paperwork from getting lost in the mail because that was a

big source of frustration, having to resubmit things multiple times.

They thought using Web-based instructions and guidance would be

a good way to communicate changes in requirements. And I think

they favored the idea of more transparency so that when they

called someone, they could find out the status of their request. So

a tracking system that would let them know where it was in the

process would be very helpful.

Senator THUNE. Mr. Shear, I am sure you have already answered

this question, but when is your final report?

Mr. SHEAR. I haven’t answered it yet, actually. We plan to issue

it by the middle of November—there will be a period of time where

we will be providing a draft report to SBA for comment, and that

is an important part of our process, to get their comments and incorporate those comments into our final report. Then we plan to

issue it in the middle of November.

Senator THUNE. We will look forward to seeing that final report

when it is ready.

Mr. SHEAR. Thank you.

Senator THUNE. Thank you, Mr. Chairman.

Chairman KERRY. Thank you, Senator Thune.

Mr. Prakash, 120 days is January 18. I am inviting you back

today, and I hope you will accept today to be back here before the

end of January to review with us where we are with respect to

these issues.

Mr. PRAKASH. Senator, I would be happy to.

Chairman KERRY. And I am also going to be issuing an invitation

to the Administrator to be here at that time to also review the

other issues the Committee has raised in the oversight hearings to

date with respect to emergency, the disaster assistance lending, the

procurement target goals overall, and other issues where we have

had almost a similar kind of lapse, if you will, or gap between what

the law is and what the SBA has done.

All of us on the Committee recognize that Mr. Preston is working

hard to achieve these things. He came into a situation that was difficult. We understand that. But that will be well more than a year

that he will then have had the helm of the agency, and I think it

is important for the entire small business community to know

where we stand with respect to all of the issues that have been

raised in the context of oversight this year.

So I just want to serve that notice to the agency, and I think it

is fair to say that the Committee would expect the budget requests

for next year’s budget to reflect what you have talked about in

terms of shortfalls and inability to do the job. We don’t want to

come in here and be told, you know, the budget is short, or we are

not able to do it. It is time for this entity to live up to the expectation that the law requires and that the community is waiting for.

Senator Snowe, while you were gone, I said 120 days is January

18 and before the end of January, we are going to revisit these and

the other issues that the Committee has, and I think that is fair

notice to you and the Administrator. I think it is a fair expectation.

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Mr. PRAKASH. We welcome the opportunity to return and tell you

how we have improved the program.

Chairman KERRY. Good. On that note, we ask for the second

panel, please. Thank you very, very much, each of you. We appreciate it.

Thank you all for coming. Thanks for your patience. We appreciate it.

Ms. Goldsmith, we will begin with you and we will just run right

down the table. Thank you all.

STATEMENT OF WENDI GOLDSMITH, PRESIDENT,

BIOENGINEERING GROUP, SALEM, MA

Ms. GOLDSMITH. Good morning. Thank you all for inviting me. I

am really honored to provide some testimony that can hopefully influence and help advance the Women’s Procurement Program in

particular.

I have 15 years of experience as a business owner and Federal

contractor, and I can speak from that experience and hopefully

share some——

Chairman KERRY. Could you pull the microphone a little closer,

Ms. Goldsmith——

Ms. GOLDSMITH. Sure.

Chairman KERRY [continuing]. And Mr. Prakash, I appreciate

your staying to listen.

Ms. GOLDSMITH. My company began working on small-scale

projects tied to wetland restoration and river and coastal flood protection providing certain research and development and technical

training to the U.S. Army Corps of Engineers through their Waterways Experiment Station. We work for other clients, too. And over

the years, due to their technology transfer agency function at the

Waterways Experiment Station, we were introduced to a number

of other Corps of Engineers districts.

We began small, performing small engineering projects, mostly

on a pilot scale, but over the years, we were afforded incremental

opportunity to take on larger responsibilities. Within the last year,

we formed a joined venture with ARCADIS, the Dutch-owned firm

regarded globally for their expertise in sea defense engineering,

and our joint venture has received $200 million worth of contracts

to date with the U.S. Army Corps of Engineers focused on planning, design, and construction management of improved hurricane

protection infrastructure and related coastal wetland repair in Louisiana.

I have been told by the Corps of Engineers that our $150 million

contract is the single largest Federal civil engineering contract ever

awarded, so clearly this is a success story for women-led business

enterprise.

My firm is essentially an engineering company, but we are not

conventional civil engineers. We are an interactive team of ecologists, earth scientists, landscape architects, and engineers from different disciplines. We don’t just plan, design, and oversee the execution of various large land development and public infrastructure

projects. We help involve the community in the decisionmaking

process and we all work together to achieve environmentally beneficial, sustainable outcomes. We see each project budget as an opVerDate 11-MAY-2000 10:27 Sep 22, 2008 Jkt 041801 PO 00000 Frm 00060 Fmt 6633 Sfmt 6633 C:\DOCS\41801.TXT DianeA PsN: DianeA
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portunity to leave the human and ecological communities in better

shape, and we pursue the triple bottom line of economic, social, and

ecological benefits in relation to project costs. We find this approach avoids many problems, wins support from many corners,

and most of all, leaves the project team really proud of our results.

It is extremely unusual for an engineering firm to be founded

and managed by a woman, and a non-engineer at that, and I believe our culture, which is unique, is in fact influenced by my leadership style as a woman, fostering communication and participation by people with differing perspectives. In short, I see women

leadership in business as a plus.

Regarding any constraints, I can speak best about my personal

experience in the industry in which I have spent my career, and

believe it or not, the engineering and construction world is still

heavily dominated by men. Although women have become increasingly involved, the number of women in decisionmaking roles remains quite small, and in the first decade of my career, I estimate

that fewer than 2 percent of decisionmakers who were involved in

selecting, approving, or managing contracts awarded to my firm

were women, and typically those women were, in fact, relatively

new to their roles and wielding less influence than their male counterparts.

This is important because as an engineering consultant, selection

is based not on price, but on assessment of qualifications, and most

importantly, on relationships and past track record. It is virtually

impossible to win work through a competitive process without a

level of comfort that comes through personal relationships, be they

long-term relationships—going to school together, working together

or what have you, or the rapidly-formed relationships that can be

developed in a sales and marketing process. In my early career, I

often faced situations where I was selling to a group of people who

did not look like me, and it was an uphill process.

One way that small business typically gained experience, especially in Government contracting, is through teaming with large

businesses and other businesses, and of course, there are requirements for large businesses to share work appropriately through

subcontracting plans. However, women still face disproportionate

hurdles in forming teaming relationships with large firms and at

times actually suffer some unfair costs because of how these programs are set up.

In many cases, small firms are recruited onto teams to help win

work as called for in contract solicitations. We appear in the proposals, often at great expense to the small and minority and

women-owned businesses due to the work related to researching

and compiling proposal materials, only to never actually receive

work under the contract. I cringe to recount how many times that

happened to my firm and to tally how much money, namely hundreds of thousands of dollars my firm involuntarily contributed in

order to help other firms win and perform work, while we received

none or sometimes a token amount.

I can also say there were certainly cases where the relationships

were fair and responsible and helped really build that track record

through teaming. But the times when we were treated unfairly and

at great cost to us were not any kind of exception, they were an

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oft repeated pattern, and I believe, in fact, this pattern is inadvertently caused by current small business subcontracting program

structures.

One key step to changing this pattern and relieving womenowned firms of the extra burden of participating in these proposal

efforts that yield no subcontracting fruit is to promote prime contracting opportunities directly for qualified women-owned firms

through set-asides and other means.

Additionally, the small business community and, in particular,

women-owned firms would welcome greater enforcement of existing

small business subcontracting rules so that our efforts don’t fail to

bear fruit.

In my view, sole-source contracting is also a valuable tool to

boost the position of women-owned business. I experienced solesource contracting, first by virtue of being recognized for providing

truly unique technical expertise that could only be accessed by the

Government that way, and then later, through 8(a) status which

afforded my firm sole-source contract access.

By gaining Government contracts through these mechanisms, I

continued to grow and evolve my business, build relationships, and

establish the technical track record that allowed me to, in turn, advance through other channels, including outside the Federal market.

The 8(a) program also facilitated two mentor-protege relationships over the last 6 years which helped provide management, financial and technical support during challenging periods of growth

for my business. Similar mechanisms, I am confident, would be

very beneficial to other women-owned business.

In addition to benefitting the business who receives sole-source

contracts, I would also like to point out what has often been a clear

advantage for the clients who access our firm that way. Solesourcing affords the chance to openly negotiate a set of services,

often through thoughtful collaboration between the user and the

service provider. The conventional approach to contracting typically

forces a separation between the contractor and the end user, and

this approach can typically dampen innovation, or tailored problem

solving, generally inviting or even enforcing that the methods used

to perform the work will be established methods, not innovative

ones.

My firm has performed some first-of-a-kind work, some urgent

deadline-driven project facilitation, and other high-performance

consulting and design services for agencies that could not have

accessed the level of quality, creativity, and efficiency through conventional acquisition methods. For instance, we have led the Department of Homeland Security through the process of incorporating green building principles into their new facilities by performing an award-winning level of detailed design and cost estimating work, and we also found ourselves guiding and clarifying

for our client, along the way, how and why the green building approach differs from conventional design decisionmaking, and generally helping to advance the green building policy within the agency through our outreach efforts.

In another case, we performed the stakeholder coordination and

due diligence process for a transfer of 62,000 acres of Special ConVerDate 11-MAY-2000 10:27 Sep 22, 2008 Jkt 041801 PO 00000 Frm 00062 Fmt 6633 Sfmt 6633 C:\DOCS\41801.TXT DianeA PsN: DianeA
59

servation Land in California. This land transfer had been stalled

in the Army BRAC process for 15 years and our innovative and tailored approach helped the Army Corps solve their thorny issue,

while saving time and money to the Government.

These examples illustrate how sole sourcing can benefit Federal

interests, not only the firms receiving the contacts.

I would like to recommend and support any measures that will

help other qualified women business owners take their vision of

success and their commitment to problem solving into the Federal

marketplace with improved policies to help reduce the burdens

they will face along the way. All entrepreneurs bravely face risks,

and now would be a good time to clear away some of the special

obstacles that interfere with women conducting business in the

Federal sector. We are going to serve the country well, and not only

by performing and keeping with expectations, but in many cases by

exceeding and redefining them.

Thank you very much.

[The prepared statement of Ms. Goldsmith follows:]

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Chairman KERRY. Thank you very much. Congratulations to you

on what you have created. I will tell you, we have heard stories of

these small entities that are used, literally used by larger ones to

meet the qualifications and get contracts, and then they never see

any of the work or any of the money. It is an issue the Committee

needs to do some thinking about to see how we can create some accountability with respect to that.

Ms. Almeida.

STATEMENT OF ANN MARIE ALMEIDA, PRESIDENT AND CHIEF

EXECUTIVE OFFICER, ASSOCIATION OF WOMEN’S BUSINESS

CENTERS, CAMDEN, ME

Ms. ALMEIDA. Honorable John Kerry, Chairman, the Honorable

Senator Snowe, Ranking Member, Members of the Senate Committee on Small Business and Entrepreneurship, and your amazing

staff members, greetings from Maine. My name is Ann Marie

Almeida, and I am president and CEO of the Association of Women’s Business Centers, and I am honored and pleased to participate

today, both to thank the Members for their steadfast and continuing support for women entrepreneurship and also to raise some

important issues for the Committee to consider with the SBA as we

move forward.

I also submitted written testimony, which I would like to be read

into the record, if you might.

Chairman KERRY. Everybody’s testimony will be put into the

record in full, and if everybody can just summarize in about 5 minutes, it would be helpful.

Ms. ALMEIDA. Great. That is all I am going to do.

I also want to thank the GAO and the IG. Their comments and

their recommendations are spot on from the comments that I hear

from the field. I am also interested in that January 18 update, so

thank you for requesting that.

The AWBC is a national nonprofit organization representing

Women’s Business Centers and the women and men we serve. We

were founded in 1998 to support entrepreneurial development for

women as a way to achieve self-sufficiency, create wealth, and expand participation in community economic development through

training, education, technical assistance, mentoring, developing

and financing opportunities. The vision of the AWBC is a world

where economic justice, wealth, and well-being is realized through

the collective leadership and power of successful entrepreneurial

women and now men. We are the organizing force of Women’s

Business Centers and the people we serve. Together in this place

of hope, under this dome of possibility and in the halls of civil engagement, we are invited to interrupt the status quo and provide

solutions and visions for our fellow Americans, and I am honored

and pleased to thank you all for your good work.

In the wake of our recent Women’s Business Centers Entrepreneurial Leadership and Training Conference that we had last week

here in the District of Columbia, I bring rousing unanimous and

heartfelt thanks from the leaders of the Women’s Business Centers

representing each of our 50 States for the introduction of the

amendment to what became public law and provided permanent

funding to the Women’s Business Center Program. Our special

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thanks to Senators Kerry, Snowe, and Sununu for introducing the

amendment and for working for its passage.

The Women’s Business Centers have a remarkable record of

achievement over the past 19 years. This year, and in years past,

we continue to provide counseling to over 150,000 clients annually,

emphasizing outreach to the economically-disadvantaged women

and women of color. We are also now proud to report that 20 percent of our clients are men. They are smartening up.

Results from the research conducted by the National Women’s

Business Council documents that the WBCs provide a staggering

15-to-1 return of investment on Federal tax dollars in businesses

launched, revenues generated, and jobs created. You can’t get a

better ROI anywhere, as far as I know.

But in our dealings with the SBA, we have often been treated

like a stepchild. With the passage of the legislation in May, we finally feel recognized for the hard work that WSBCs have accomplished over the past 19 years and we are grateful this program is

now made permanent. It empowers our conversations with you and

the SBA.

On the heels of this hope, we would like to address three specific

issues that need your attention and certainly have our concern.

One is the unequal and non-transparent level of funding for individual WBCs. Two is the lack of communication and uneven application of performance standards in evaluations. And three, significant delays in grant disbursements for WBCs.

One, the permanent funding allocation should be consistent and

transparent. We constantly hear that the amount of grants awarded not only varies significantly across centers, but vary year to

year within each center. We realize that part of this variance may

be the appropriations level, but appropriations have been nearly

flat for the past several years. The SBA has put in a tiering system

for peer center funding, but the formula for tiering is not clear. The

SBA is neither communicating the amounts of upcoming disbursements to centers nor the reasons why the amounts vary from each

year and across centers. More clarity and transparency is essential.

We had a conference this year, had roundtable last week and had

roundtable discussions, and what we hear from the field are simply

this. Clarify tiering. I am quoting, ‘‘Clarify how to move to the top

centers. Specify the factors that you use in weighting WBCs. We

suggest a quality assurance program. Do away with the tiering.

Give people the 150K if that is what is promised. If the centers

aren’t performing, put them on probation or let them go. Transparency must be communicated in all tiers.’’

Two, performance-based funding allocations should be communicated clearly and evenly. WBCs have struggled in recent years

with a great deal of uncertainty, not only regarding whether they

receive funding, but how much they will receive. The new legislation removes that uncertainty. It also will help to curtail the ‘‘black

box’’ approach that has been recently taken up by the SBA with respect to per center funding decisionmaking. The centers also tell

us, again from the field, I quote, ‘‘We need transparency in how

milestones and benchmarks are set. Focus on results in addition to

the numbers coming through the doors. Performance criteria

should be in line with the center’s population and not cookie-cutter.

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Accept input from the WBCs for performance criteria. The performance needs to be transparent at all levels. Standardize the milestones and performance goals based on market size. We urge the

Committee to clarify the performance standards.’’

Three, program disbursements should be made in a timely manner. We believe that both the names of the grant recipients and the

value of the awards should be made public. The SBA has not fully

disclosed this information. We suggest that these deadlines be established during the time when the SBA will disburse the awards.

In recent years, many WBCs have waited months, sometimes until

the end of their very fiscal year before they receive funds, even

though they are still providing services. This puts our members, all

of whom are relatively small nonprofits, in severe cash crunch flow.

This has not set good money management examples for the center

clients and it violates the Federal Government’s Prompt Payment

Act. We urge the Committee to communicate directly with the SBA

on this matter.

The cry for improved payment process rings loudly across metropolitan, urban, and rural areas where Women’s Business Centers

continue to provide services on scarce resources. They are asking

for streamlining the process for submission and payment in a timely manner. ‘‘The manual and antiquated cumbersome system needs

to be upgraded, as we have heard, to be online, automated, speeded

up. The turn-around time needs to be turned around. Be able to

submit electronically and able to navigate the system.’’

While many Business Centers have noted improvement in the

payment process, there is still room for improvement. An executive

of the Women’s Business Center in Chicago bitterly notes that she

has reluctantly given the U.S. Government an interest-free loan of

$220,000 for the 2 years while she has waited for her reimbursements.

There are so many success stories that breathe life into the numbers that Senator Snowe stated around the State of Maine. The

Women’s Business Centers have not only an economic impact on

our State, but across the Nation, and in fact, we believe that their

efforts are not only revitalizing communities and villages but, in

fact, are helping to restore peace.

We thank the Members of the Senate Committee on Small Business for your longstanding support. We thank you for your recommended $16.8 million in appropriations and for all your efforts.

We are in solid agreement that the SBA procurement process is

long overdue, long overdue. We are honored to be here with you

today, and we welcome any collaborative conversations. Thanks so

much.

[The prepared statement of Ms. Almeida follows:]

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Chairman KERRY. Thank you. Thank you for your energy and

passion for this. We love it and we appreciate it very, very much.

Ms. Bratton, we are very happy that you have traveled from Wyoming, love the work you are doing there. It is impressive. We appreciate your being here. I just want to take a moment, because I

have just been called by Senator Reid, and I need to go over to the

floor for a moment and I apologize. Senator Snowe will preside in

my absence, and I hope I can get back. I don’t know. It depends

on what is happening. But I want to thank you up front for your

work and turning that early effort into a nonprofit, which is pretty

impressive, and the work itself is very important.

And Ms. King, I wish you had brought some of those cookies.

Ms. KING. We will send some.

Chairman KERRY. Well, I hope so. I happen to be a chocolate chip

addict.

Ms. KING. I will make a note of that.

Chairman KERRY. But I am also very impressed with what you

are doing. We are so appreciative for all of you for taking the time

to be here, for putting these issues on the table. It is enormously

helpful and I know Mr. Prakash and others are listening carefully.

We look forward to trying to facilitate what you are trying to do

and your testimony is very important.

We are going to leave the record open so that colleagues who

aren’t able to be here right now because of conflicting hearings and

meetings will be able to submit some questions, conceivably, in

writing if they want to. We will leave the record open to do that.

Again, thank you, and I do apologize to my colleagues and to you.

Thank you.

STATEMENT OF ROSEMARY BRATTON, EXECUTIVE DIRECTOR,

WYOMING WOMEN’S BUSINESS CENTER, LARAMIE, WY

Ms. BRATTON. Thank you, Mr. Chairman. Members of the Committee, I do appreciate the opportunity to appear before you today.

As our Senator Enzi from Wyoming mentioned, the Women’s Business Center began as a project of the Wyoming Coalition Against

Domestic Violence and Sexual Assault while I was executive director of that organization, and I can honestly say that it was my vision and my personal experience that led to the creation of the

Women’s Business Center.

Long before I began my career in the field of working with survivors of domestic violence and sexual assault, I experienced firsthand the economic struggles that many women in Wyoming endure

and the success that can come from small business ownership.

After a failed marriage and faced with caring for my three boys as

a single parent with few resources, I started a cleaning company

in Story, WY. We were called Mopsy and Dusty, the Cleaning Company. No house too big, no pad too small, from floor to ceiling, we

cleaned it all. On some days, I was Mopsy. On other days, I was

Dusty. And on many, many days, I was both.

In addition to Mopsy and Dusty, to further increase our income,

I made and sold purses created from recycled jeans. The success of

my small businesses enabled me to raise my children and earn a

college degree. The experience began for me a commitment to work

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as an advocate for women who are socially and economically disadvantaged.

The combination of rural character, geographic obstacles, and

harsh climate creates economic distress for many Wyoming residents. Our economy, however, has been improving, although the

high-paying minerals extraction employs primarily men. Work that

is traditionally considered women’s work—nursing, teaching, office

work—is still undervalued, with wages for these positions much

lower in Wyoming than in other States. The gender-based disparity

in Wyoming continues to be the highest in the Nation, with the average Wyoming woman earning 57 percent to 67 percent of what

a man earns for full-time, year-round work.

While Wyoming’s vastness contributes to its natural beauty, it

also creates isolation that keeps women business owners from

meeting, networking, and sharing information. Wyoming Women’s

Business Center programs include a microlending program, individual development accounts where we can match savings for lowincome individuals, Works of Wyoming, business technical assistance training, counseling, networking opportunities, personal financial management training and counseling, Internet training.

There is still a strong need for rural frontier Women’s Business

Centers. The Wyoming Women’s Business Centers is not only vitally necessary to the economy of Wyoming, but also appeals to the

personal interest by helping women forge better lives for themselves and their children in the State with the highest gender wage

gap in the Nation.

I would now like to speak to you briefly about our experience

with SBA’s Office of Women’s Business Ownership. In 1999, the

Coalition was awarded a 5-year grant. From the inception of the

Wyoming Women’s Business Center as a projection of the Coalition,

our goal was to eventually separate and become an independent,

private 501(c)(3). While we were a project of the Coalition, we operated as a distinct entity with separate accounting, separate grant

writing and fundraising, and separate physical locations.

Our last application as a Coalition project with OWBO was for

a sustainability grant in 2004. On October 1 of last year, we officially separated with our application as a nonprofit corporation to

the State of Wyoming. In March of 2007, we received our determination letter and were in a position to apply as a new Women’s

Business Centers with OWBO for the physical year 2007–2008

funding.

I would like to mention that throughout the process of our separating from the Coalition, we were in communication with SBA’s

district office in Casper, as well as the OWBO office in the District

of Columbia. With the separation from the Coalition, we were no

longer eligible for sustainability funding, but were assured, although certainly not promised, that we would be in a favorable position when we applied as a new center, whether that was for the

current year funding or future funding.

Although I have never actually seen the rule or the statute, we

were told that SBA couldn’t have the sustainability funding follow

the Women’s Business Centers as it would be considered passthrough funding from one nonprofit to another and that that is illegal. And of course, with the new legislation, graduated, established

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centers receive funding priority, and I need to add here—which

was not in my written testimony—that I absolutely support that

decision. So even though in reality we are an established center,

according to OWBO, we are no longer eligible for sustainability

funding.

We submitted our grant application to Grants.gov on May 22,

2007. To date, I have heard nothing official about the status of our

grant. In August, as I was preparing our budget for our next fiscal

year, I called the OWBO office, talked with someone there on staff,

and was told simply that Wyoming was not funded. At that time,

I was told that the grant review process was conducted by an independent committee and that funding was based on a point system.

When I inquired about a priority being given for States without

SBA-funded Women’s Business Centers, I was told that that was

no longer a consideration, so I was left to believe that our grant

did not rise to the top six based on the point system.

I discussed with our DOTR in the SBA District Office in Casper

about how helpful it would be if I knew where our proposal was

weak. Last week, she e-mailed OWBO and asked that question.

Her response was that Wyoming’s grant was incomplete and, therefore, not considered at all, that we had not submitted the technical

proposal to Grants.gov.

After numerous phone calls with Grants.gov and much research

on their part, it was determined that our grant proposal was received by Grants.gov, retrieved and validated, then submitted to

OWBO, where it was retrieved by them. During this process, I was

in touch with both Senator Enzi’s and Senator Snowe’s offices, who

made inquiries to OWBO about Wyoming’s grant. Subsequently, I

was invited by the Committee to be here.

I was writing this testimony on Monday afternoon. I learned on

Monday morning that OWBO staff e-mailed our SBA office in Casper to say that they had found our grant application, that it was

complete, and that it would be evaluated by a panel as soon as possible. In a later conversation, OWBO staff indicated that if our proposal was strong, with points higher than the lowest of the six new

centers scheduled to receive funding, that one of them would be

eliminated from funding, and we would be included.

This is very troubling to me for several reasons. What would

have happened if I had not contacted Members of this Committee?

While I realize that it is more likely that we will not be funded,

what happens to the Women’s Business Centers who attended the

post-award mandatory training last week and now one of them will

be defunded? Were there other applications that were simply lost?

And what level of tenacity is required to get honest answers from

OWBO?

There have been other challenges with OWBO over the years. I

realize I am way over my time, so I will make this brief. I don’t

think that I can add much to what has already been highlighted

for you.

One of the things that we did based, on the loss of reports and

reimbursement request, is that we instituted a practice where we

would send all of our written documentation by a carrier where we

would get an electronic signature verification just to insure that it

got there, but we still continued to make numerous copies of our

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reports because we knew even with the electronic signature we

would have to be sending it back again.

And you might be wondering why with all of these problems we

would want to apply again for OWBO funding, and we did carefully

consider the frustrations that we have experienced. We have enjoyed a truly positive working relationship with SBA in Casper,

with the Association of Women’s Business Centers, and with the

SBA’s Microenterprise Development Branch. We have secured

State general funding for the required matching dollars for both

OWBO and the Microloan Program. And then there is always the

hope that OWBO will provide us with consistency and respect.

Today, I have more hope than I have in the past. And there was

a sense of pride and accomplishment that we were funded by

OWBO. The most important consideration is the increased services

we can provide for women entrepreneurs in Wyoming. We could

hire staff to make Works of Wyoming a strong studio incubator and

provide the needed staff to offer services in other parts of the State.

For me personally, I want, as highlighted again in my written

testimony, for Liz to have the support she needs for her coffee/tea

house. I want Joan to have the support she needs for her trash

management service. I want Lucinda’s art gallery in Sheridan, Wyoming, to continue to be the amazing success that it is now. I want

Cowlick and Hooves Beauty Salon in Powell, Wyoming, to continue

to be successful. And I want a woman cleaning houses and making

purses in rural frontier Wyoming to know that there is a Women’s

Business Center that values her work and will provide her with encouragement, counseling, financial resources, networking, and mentoring with other amazing Wyoming women.

Thank you very much.

[The prepared statement of Ms. Bratton follows with supporting

documents:]

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Senator SNOWE [presiding]. Thank you. I couldn’t agree more.

Ms. King.

STATEMENT OF GALE KING, OWNER, TREATS BY GALE, LLC,

BURKE, VA

Ms. KING. Honorable Olympia J. Snowe, Ranking Member, and

other Members of the Senate Committee on Small Business and

Entrepreneurship, my name is Gale King. I am the proud owner

of Treats by Gale, LLC, a home-based business in Burke, VA. I was

born in Barbados and came to the United States with my mother

when I was 12 years old. I attended local schools and graduated

from James Madison University in 1990.

When I was laid off in 2004 from my technical job at a local dotcom, it was my third layoff. I was a single mom with two children

in elementary school and I decided to start my own business. I

wanted to be in control of my own livelihood. Since I always loved

baking, my friends suggested I start Treats by Gale. Like many

first-time entrepreneurs, I decided what my product was. I would

sell cookies and cakes. I printed out my own free business cards online from Vista Print and assumed the orders and the money would

come.

After 6 months, I had only made $200. I realized I needed to do

something different, but I had no idea where to turn. I was advised

by several small business owners I met through networking events

to seek out the resources of the Women’s Business Center of Northern Virginia. There, I finally found the information and the support

that I needed.

Over the past 3 years at the Women’s Business Center, I have

taken advantage of many programs, including the ABCs of starting

a business. In this class, I learned about the various business entities, the importance of writing a business plan and protecting my

personal assets, the commitment required by my family members,

and the many resources that the center had to offer.

Business planning and financing for growth, a class that was

taught by the senior vice president of a local bank where I learned

the details of writing my business plan and the importance of developing a relationship with my bank manager.

Tax planning and bookkeeping, and marketing legal and risk

planning, two other classes in their business tool kit series where

I learned from CPAs, insurance experts, and attorneys about various aspects of business development.

The nxlevel class for business start-ups, a nationally recognized

12-week program where I had the support of my instructor and

classmates. They helped me write my business plan each week. In

class, I met my package designers and lots of other great professional volunteers.

QuickBooks Pro, where I used their computer lab to use the software for my business accounting.

First Friday networking breakfasts, they were a wonderful place

to learn to network properly and partner with other women business owners. For example, I met Emily Murphy of Emily’s Teas,

and for the past 2 years, I have provided the baked goods for her

educational tea parties.

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The free one-on-one technical assistance counseling, where I

worked with counselors on my marketing plan, understanding my

cash flow, and the importance of developing my own market niche

by studying my client demographics.

The SBA’s Small Office Home Office Loan program where I received two loans totaling $25,000 which I used to purchase new

equipment and a delivery van.

The Annual Women Entrepreneurs Expo, where I learned how to

effectively exhibit my products to other business owners. I also love

the center because it rents out its meeting rooms at a low cost to

home-based businesses. It gave me an affordable, professional

meeting space for my open houses, and I have also gotten great

publicity and exposure.

When ‘‘Recipe for Success,’’ a program featuring Al Roker on the

Food Network, called my center director, I got a telephone interview with the show’s producer and almost got on TV, and here I

am now talking to you.

When I started Treats by Gale, there was no way I could afford

the services of a business consultant or a coach. Through the Women’s Business Center, I have learned from insurance agents, lawyers, bankers, marketing specialists, and accountants. These people

all shared their expertise with me. I cannot imagine what I would

have done without this resource. The Women’s Business Center

staff, they have been cheerleaders in my success, and they have

been motivators during challenges.

My business has grown over the years and I am very proud of

my customer list. I have longstanding contracts with the Shakespeare Theater, the Folger Library, Woolly Mammoth Theater, and

Hyatt Regency on Capitol Hill. I now have more business than I

can handle on my own and I am in the process of interviewing baking assistants. I am happy that I am not only able to support my

family, but I am now able to employ others. In 2006, I gross over

$45,000, and in the first 8 months of this year I have already

grossed that same amount.

Whenever I meet someone starting out in business, I always recommend that they visit the Women’s Business Center. Starting a

business is really overwhelming and there is lots of bad information out there. When I send someone to the Women’s Business Center, I know they will get their questions answered and they will get

a good foundation on which to build their business dream.

Thank you for your time.

[The prepared statement of Ms. King follows:]

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Senator SNOWE. Thank you. Thank you all for your very impressive testimony and your outstanding examples of what women entrepreneurs are all about and what we should be celebrating. That

is why we want to rectify and clear the path of the barriers and

impediments within the SBA that doesn’t allow you to flourish and

to help other women flourish. This is what it is all about. We are

really trying to get to the heart of the issues, I am sorry, Ms.

Bratton, that you have gone through the ordeal on securing funding for the Women’s Business Center. I think that is deeply regrettable. Wyoming certainly deserves one. I will start with you.

When you talk about the gender earning disparity in Wyoming,

do you think that the Women’s Business Center would help to ease

that disparity by providing the kind of services that would encourage entrepreneurship? I know in the State of Maine, as Ms.

Almeida has already indicated, Maine has certainly been not only

a small business model, but also for women-owned small businesses.

Ms. BRATTON. Senator Snowe and Members of the Committee, I

do see small business ownership as an alternative to the low-wage,

sometimes dead end, non-benefitted jobs that are available in our

State for women. I also support the non-traditional work that is

being done in our State for women moving into more of those positions that have typically been held by men.

However, there are many women, and I am one of them, I don’t

want to drive a truck or work on an oil rig. I would be far more

content doing something which in the past would have been considered women’s work. So I think we do provide that alternative, and

it doesn’t mean that it is going to lift someone out of poverty immediately. But many times, people living with low incomes, they income patch. So they might have a couple of jobs where they earn

wages, sometimes three jobs where they earn wages, and I have always thought if one of those jobs could be their own small business

that will feed their family while it makes their heart sing, then

that is a good alternative for them.

Senator SNOWE. Has this been typical of your experience with

SBA, the one that you just illustrated?

Ms. BRATTON. I have never had a grant that I submitted be lost

before. I have experienced a long period of time between submitting

a grant and learning whether or not we were actually funded.

There were some years when we were funded through the Coalition

that we would attend the mandatory post-awards meeting without

ever having actually received our notice of award, but we would

just trust that we were going to be funded, and we would make our

plans to attend the meeting.

As far as things being lost, long delays in getting reimbursement,

yes, that has been true through the years. We are one of those centers where we did have a line of credit because we were never able

to actually receive our funding in time to meet the most important

thing, payroll for our staff. So we certainly had that experience.

We also—one of the things I would like to add is that the 641s,

which are the client intake forms which we have available online

now in Wyoming—we are very technology-based—we are required

to have an original signature before that client intake form can be

counted by SBA. So that means someone will e-mail it to us, fax

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it to us. We have to send it back in order to get an original signature, which wastes a lot of our valuable time. We are a staff of only

21⁄2 people and we are serving the entire State of Wyoming. Without continued funding from SBA, we will continue to be 21⁄2 people.

So we use technology as much as we can to streamline our work

so that we can continue to serve the entire State.

The same way with counseling records. Counseling records have

to be documented in writing in each person’s file. We are not allowed to do that electronically, and I don’t really understand what

all the reasons are for this, but that is what we have been told

through the years.

Senator SNOWE. Thank you. Ms. Almeida, you listed—and I know

we have had many conversations on this, many of these issues, the

numerous difficulties with the entire implementation of the program with respect to the funding, the new renewal grants and so

on. Can you tell me what you think of what you heard in the previous panel from Mr. Prakash and Mr. Shear and Ms. Ritt? Do you

think we have addressed all these issues, or that they will be addressed systematically from what you heard? Where are the omissions, or where do you agree?

Ms. ALMEIDA. I have hope that they will actually meet their 120-

day deadline, but like you and the Committee, the centers that I

hear from are anxious that they will meet their mark. There is a

great deal of concern about why didn’t it happen when it was implemented. Everyone was sort of geared up and ready to respond

and now we have 16 centers that are out of the system and then

another 9 that have just left. So for us, it is heartbreaking because

there is a gap in services for those areas.

Based on history, we have a certain measure of pessimism, but

I have to say that the Women’s Business Centers and the AWBC,

as Mr. Prakash had suggested, that we work together to figure out

why isn’t this happening. There has always been a willingness on

all of our parts to make it work. I mean, that was the intention

of the legislation that you were so brilliant in implementing.

So I think in all cases, there needs to be communication and

transparency in the process. We seem to work so hard for legislation and then get cut out of the implementation process and that

doesn’t make any sense to us. Since we know what needs to happen, why not include us in the process of implementation? And yet

this is the first time we have heard an invitation to do that.

Senator SNOWE. So this has been the first time?

Ms. ALMEIDA. Yes.

Senator SNOWE. It has not happened in the past?

Ms. ALMEIDA. No, not for the implementation process. I know

that both your staff and Senator Kerry’s staff have asked for an

implementation plan. We have not been invited to help work together. This was—is the first time that he has gathered a group

of people together and said, how do we do this? And I think the

time is right now. There is a considerable level of hope in the country now across the Women’s Business Centers instead of being in

the land of the living dead, because each year we were in this

nightmare of funding. So there is a willingness, and even though

everyone is busy, there is a capacity to help them implement a

process that can work because we are on the ground.

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Senator SNOWE. Well, it sounds like there is universal dissatisfaction with SBA, with the way in which they have approached

and treated Women’s Business Centers. I mean, I think that is

abundantly clear. From what you heard today, you are encouraged,

more encouraged——

Ms. ALMEIDA. I am more encouraged because I have to believe

their words. I am more encouraged that the invitation was presented to us. Now we will have to follow up to make sure that that

really happens.

Senator SNOWE. OK.

Ms. ALMEIDA. And I am hoping that we have communication

with your staff to make sure it does.

Senator SNOWE. Absolutely, and I think that we should have a

status report in that regard——

Ms. ALMEIDA. Great.

Senator SNOWE [continuing]. Both from SBA, but also from your

experience and how they approach you and your interaction.

Ms. ALMEIDA. I am happy to do that.

Senator SNOWE. We just started a vote, so I am going to be

quick. Ms. King, just tell me very quickly, what was your best result from the Women’s Business Center? What services were the

most important to you to make you obviously very successful?

Ms. KING. The one-on-one counseling, that time where, as opposed to being in a classroom where there is a broad scenario,

where we were able to focus in on my situation, on my financial

statement, on my customers, on my business. I realize that that is

a limited resource, so the fact that someone did take their time to

spend that time with me, something that would have cost $300 an

hour if I had tried to do it on my own, was invaluable for me to

start focusing on the correct types of customers to launch my business forward.

Senator SNOWE. So they gave you very critical information in

which to move forward?

Ms. KING. Right. Individual attention is very important.

Senator SNOWE. And individual attention, the one-on-one.

Ms. KING. Yes.

Senator SNOWE. Ms. Goldsmith, I know you are in a more maledominated industry. Were Women’s Business Centers and SBA’s

services beneficial to you in any way?

Ms. GOLDSMITH. The SBA service centers have been, as has the

SBA lending programs. We haven’t made use of the Women’s Business Centers, but certainly the 8(a) and Small Business Procurement Programs have afforded us an opportunity to enter into the

Federal contracting arena, and based on our success within those,

I would certainly look very much forward to an equally successful

Women’s Procurement Program.

Senator SNOWE. I think that is remarkable, because there are

many challenges within those programs and that you have been

able to insert yourself in that process effectively is outstanding. Securing Government contracts has been one of the biggest challenges we have had with respect to that program for any small

business, let alone women-owned small business and disadvantaged small business and so on. If you can give us any ideas in

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terms of how we can improve it, as well, that would be certainly

welcomed.

Ms. GOLDSMITH. I would be glad to continue in any ongoing dialogue.

Senator SNOWE. Because Government contracting is a door-opener for so many businesses, given the amount of money that the

U.S. Government issues in Federal contracts, 300 to 400 billion dollars is very, very important. That is money that is going to be

spent. The question is how do we best help to participate in that

program to be eligible to receive Federal contracts.

Senator Enzi.

Senator ENZI. Thank you, Madam Chairman. First of all, I want

to thank Mr. Prakash for staying for this part of the process. Quite

often after people testify, they leave. I am sure you have to be inspired, as we are, to hear these stories, some of the difficulties, but

also some of the successes.

Ms. King, I am very impressed with what you have been able to

do. I consider you to be one of the great inventors. You have invented a business, and you have made it successful with help of

other people, and it is that networking that really does help anybody that is in business.

Ms. Bratton, I appreciate your comments that show not only

what has happened to Wyoming, but also to bring some attention

to rural businesses. We are a little bit more rural than most of the

other States, so we are a good example for that. I appreciated your

comments about what I consider to be true small businesses. I have

often commented in this Committee that that is where the owner

of the business sweeps the sidewalk, cleans the toilets, does the accounting, and waits on customers, and definitely not in that order.

[Laughter.]

Senator ENZI. There are a lot of small businesses out there that

can make a real difference and that can close that gender gap and

I really appreciate the people that are willing to take the risks, like

you, Ms. Goldsmith. I hope that we can change some of the rules

and perspectives, and your testimony will help to do that, so that

it isn’t just a sham process. That is what the Small Business Administration is supposed to be helping on, too. That has been very

helpful.

Since we do have a vote scheduled, and, in fact, the five lights

up there indicate that it is almost over, we are going to have to

leave. I will submit some questions for each of you in writing, and

since I am the only accountant in the Senate, some of them will

be more detailed than the general public would be interested in

hearing. But it will be information that will help us in our decisions and in forwarding information to the Small Business Administration so that we can improve things.

Thank you so much for testifying.

Senator SNOWE. Thank you, Senator Enzi, and I want to thank

all of you for your exceptional testimony in helping us and guiding

us through this process with the Small Business Administration. I,

too, want to thank you, Mr. Prakash, for being here today and sitting through the testimony to get a sense of the concerns. These

women here are extraordinary examples of what can be accomplished if we continue to cultivate women-owned businesses and do

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everything we can to ensure that they have the resources that they

deserve.

So I want to thank you all for being here, and Mr. Shear and Ms.

Ritt, thank you very much for being here, for your contributions,

as well. We are going to get to the bottom to try to resolve some

of these fundamental issues so that others don’t experience what

you have, Ms. Bratton.

Thank you. This hearing is adjourned.

[Whereupon, at 12:06 p.m., the Committee was adjourned.]

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APPENDIX MATERIAL SUBMITTED

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RESPONSES BY ANOOP PRAKASH TO QUESTIONS FROM CHAIRMAN JOHN F. KERRY

I. WOMEN’S BUSINESS CENTERS

Question 1. I am concerned about reports that Women’s Business Centers are not

clearly being told the criteria for their evaluations or why they receive a particular

score. Since funding levels are based on the score, please explain:

• What is the criteria for evaluating a center?

• How are the criteria and the center score communicated to the center?

• Also, will this criteria change with implementation of the new permanent funding program or vary for graduated versus new centers?

Answer. We are in process of reviewing and revising our proposed evaluation criteria of Women’s Business Centers to ensure that the intent of the program is being

met, and that there is increased transparency and clarity for applying centers.

The new Program Announcement will articulate the criteria, which reflect a policy

for strategic investment in development of women’s entrepreneurship that is market-driven. Selection of new centers will be evaluated based on market need and key

organizational success factors.

Continued funding for existing (and returning centers) will be awarded based on

successful past performance, in addition to key organizational success factors and

market need—defined primarily by the center’s ability and accountability to meet

the grant performance criteria and the ability to serve the market as agreed.

Upon completion of our evaluation and ranking, we will provide all centers written notice of their total score and the award range as soon as practicable upon completion of the proposal evaluations.

Question 2. Your written testimony states that SBA budget cuts have made it

more difficult to manage the Women’s Business Center program and have been the

cause of delayed funding and paperwork problems. You also mentioned in your testimony the eightfold increase in funding for this program in the last 18 years. Although that is true, the program has been flat-funded for the last 7 years.

• What changes has the agency made to compensate for budget cuts?

Answer. Our approach is to pursue improvements in program efficiency, by

streamlining processes and adopting automated approaches to processing grant and

pay requests, and consolidating redundant functions across grant programs. We believe these steps will achieve the appropriate balance between existing resources

and OWBO’s ability to administer the program at an exceptional level.

Question 2a. Women’s Business Centers have asked us why SBA can’t eliminate

the incredible paperwork burden and have an on-line system. Is this something you

are considering?

Answer. Better use of technology and payment processing centers of excellence are

at the forefront of our evaluation.

Question 3. I am glad to hear that the SBA is taking steps to get money to the

centers faster and glad that the SBA is embracing the IG’s report. The centers complain that they get sent back and forth between offices in SBA. The IG report specifically mentions communication and coordination problems within SBA’s Office of

Women’s Business Ownership and its grants management office.

• What is SBA doing to coordinate these offices?

• How are women’s business centers supposed to get paid? Please detail all steps

in the payment process.

Answer. Today, the Division of Procurement and Grants Management (DPGM) is

responsible for budget and final invoice approval. DPGM establishes payment and

documentation criteria. The Office of Women’s Business Ownership (OWBO) is responsible for reviewing payment requests from the WBCs for documentation sufficiency prior to DPGNI’s final review and payment approval. Sufficient documentation criteria are established primarily by DPGM.

The SBA continues to evaluate the invoicing process utilizing lean six sigma

standards to guide improvements. An internal collaborative work team between

DPGM and OWBO has been formed to further simples and standardize the

invoicing process.

Question 4. According to the IG, the SBA’s requirements for grants are far greater

than is required by OMB.

• Why are these additional requirements necessary?

• Is SBA looking to reduce these requirements, in any way, thereby, reducing the

work for SBA and WBCs?

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Answer. As the new program announcement is developed, we will explore every

opportunity to reduce the overall program requirements, while maintaining adequate internal financial controls for the program. Best practices from other grant

programs within SBA (e.g., SBDC program) and across government will inform the

approach.

In addition, the SBA continues to evaluate the invoicing process utilizing lean six

sigma standards to guide improvements. An internal collaborative work team between DPGM and OWBO has been formed to further simplify and standardize the

invoicing process.

II. IMPLEMENTATION OF RENEWAL GRANT LEGISLATION

Question 5. I was pleased to hear that you plan to implement the new permanent

funding for graduated centers by January 18, 2008, and I look forward to working

with you to do so.

• What is the SBA’s plan for implementation?

Answer. We established a 120-day timeframe (from the date of the September

hearing) for the new program announcement development, dissemination, review

and award process. We expect to have our evaluation of applications complete by

mid-January.

Question 5a. Will centers in renewal status be eligible to receive funding for costs

incurred prior to receiving the award? It is my understanding that this is done by

other agencies. It would help WBCs tremendously.

Answer. We will evaluate the OMB rules for grant making to assess this possibility, If possible, please provide the specific examples of programs and contacts for

where this is done, so we might follow up to learn whether those approaches are

applicable to this program.

Question 5b. How soon after Congress appropriates funds can we expect to see

centers in the program for more than 10 years begin receiving grant money from

the SBA?

Answer. Our goal is to have the selection and notices to centers made at the end

of the 120-day timeframe, subject to the availability of funding. Whenever appropriation is confirmed, we will engage our newly established payment process, to include advance-funding requests at the beginning of the grant.

Question 6. The IG Report says that SBA could decrease the time it takes to

award grants by adjusting the schedule of the grant application reviews, so that returning grantees are reviewed at a different time. I am told that this would smooth

out the burden on SBA at any given point, making it easier on SBA personnel and

decreasing the time until grants are distributed.

• Is the SBA planning to do this? If not, why?

Answer. SBA has published three program announcements on grants.gov that will

close January 24, 2008. Evaluation and review for all renewable and initial grant

applications will be conducted simultaneously, with an anticipated completion of the

process by March 1.

Question 7. According to the IG, the grant process for graduated centers can be

different than that for new centers.

• In light of the fact that graduated centers have an established record (and thereby a clear record of whether they have met their goals and are effective), does SBA

plan to streamline the process in any way? It is my understanding that doing so

would reduce the burden on SBA and WBCs.

Answer. We are developing program announcement and grant criteria that will

be based on the most transparent and efficient method to award and distribute

funding to all WBCs, including the centers ‘‘rejoining’’ the national network.

Question 8. The IG Report says that SBA could decrease the time it takes to

award grants by: 1) announcing the grant opportunity in the first quarter of the fiscal year and 2) having the different SBA offices review the grant language at the

same time.

• Is the SBA planning to make these changes? If not, why?

Answer. Yes.

Question 9. We are committed to helping these centers get their funding and wish

to work with you in order to see that happen.

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• What can this Committee do to help you implement the new legislation as

quickly as possible?

Answer. [No answer was provided by press time.]

III. WOMENS PROCUREMENT PLAN

Question 10. At our contracting hearing in July, SBA testified that the Agency

would implement the Women-Owned Small Business Federal Contracting Assistance Program by the end of this fiscal year. We are now into the new fiscal year

and implementation still has not occurred.

• Can you tell us where SBA is in the process of implementing this program?

Answer. SBA has prepared a Proposed Rule containing the procedures for implementation of Section 8(m) of the Small Business Act and incorporating the industries in which women-owned small businesses are underrepresented or substantially

underrepresented in the Federal Procurement arena. This Proposed Rule was submitted to the Office of Management and Budge (OMB) for review. The OMB has

now completed their review and, on December 20, 2007, the agency submitted the

proposed rule to the Federal Register for publication, providing for a 60 day period

for public comment. This time allows interested parties, and the public as a whole,

the opportunity to comment on the Proposed Rule and in this case, the proposed

implementation of Section 8(m).

Question 11. Of critical importance to me is what set of statistics the SBA is using

to formulate the program. The RAND study analyzed women’s contracting in several

different ways, and I am concerned that SBA will choose to use statistics which will

lead the agency to create a procurement program that only applies to a few industries. That would make a mockery of what we have been fighting for, for all these

years.

• Can you tell the Committee which set of statistics are being used to create the

program? Can we expect that SBA will construct a program that addresses all disparities?

Answer. The SBA is relying on the findings of the RAND Corporation Study, an

independent analysis that determined in which Federal procurement areas women

are underrepresented or substantially underrepresented.

Question 12. The President’s budget request for Fiscal Year 2008 did not include

any funds specifically for implementing the Women-Owned Small Business Federal

Contracting Assistance Program.

• What is the estimated cost for implementing this program, and how does the

SBA plan to fund the cost?

Answer. The estimated costs for implementing this program and SBA’s plan will

be addressed in the rule.

Question 12a. Did the Administrator request funds to implement this program?

Answer. As Congress has not authorized any office within the SBA to specifically

manage this program, the Office of Government Contracting and Business Development will include these duties within the current structure and personnel allocation.

Further, the SBA did not request additional funds for this program and will use the

currently allocated Agency budget.

RESPONSES BY ANOOP PRAKASH TO QUESTIONS FROM SENATOR JOSEPH I. LIEBERMAN

Question 1. You mention in your testimony that the ability of OED to administer

the Women’s Business Centers Program as well as its other programs has been adversely affected by an overall decline in the agency’s budget. Given the rise in complaints about SBA, and the fact that Federal funding for SBA has declined in real

dollars since fiscal year 2001, do you think your office has sufficient resources to

complete its mission?

Answer. Yes. Our approach is to pursue improvements in program efficiency, by

streamlining processes and adopting automated approaches to processing grant and

pay requests, and consolidating redundant functions across grant programs. We believe these steps will achieve the appropriate balance between existing resources

and their ability to administer the program at an exceptional level.

Question 2. Ms. Ritt’s written testimony cites a lack of coordination between

OWBO and DPGM as a reason for much of the delay in grant payments to WBCs.

She reports that each office reviews requests separately and often uses different

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standards in evaluation grant requests. These procedures seem complex and arbitrary, and I fear this kind of needless bureaucratic morass will discourage many

meritorious WBCs from applying for grants. What steps has your office undertaken

to increase communication between the two offices? Have you attempted to develop

an integrated plan for WBC grants requests? Has any thought been given to having

both offices review requests together, or at least concurrently?

Answer. The SBA continues to evaluate the invoicing process utilizing lean six

sigma standards to guide improvements. An internal collaborative work team between DPGM and OWBO has been formed to further simplify and standardize the

invoicing process. We have also hired an expert consultant to guide this process improvement team.

Question 3. One complaint I have heard a lot about from small business owners

and other interested parties is that, due to budget cuts, many SBA field offices have

either cut their staff or had them transferred to Washington. This personnel reduction has greatly reduced the level of service these offices can provide to small business owners in their community. Mr. Shear’s testimony indicates that due to these

cuts, the district office of technical representatives (DOTRS) assigned to oversee

local WBCs have too many other responsibilities and lack the expertise to effectively

oversee and assist the WBCs. Could you tell me about some of the efforts your office

is undertaking to address these complaints and to restore the quality of service and

oversight provided by the field offices?

Answer. We have detailed to SBA central office a senior DOTR from Vermont to

guide our improvements in the areas of technical training and relationship management for our field representatives. A workgroup of DOTRs are developing the work

plan for us to follow. We are also working with the Field Advisory Council to improve communications with the District Directors in this regard.

RESPONSES BY ANOOP PRAKASH TO QUESTIONS FROM SENATOR OLYMPIA J. SNOWE

Question 1. What problems does the SBA anticipate in creating the new evaluation criteria and requirements for the new 3 year renewable grant program which

were created as part of the ‘‘Troop Readiness, Veterans’ Care, Katrina Recovery and

Iraq Accountability Appropriations Act of 2007’’? What is the SBA doing to prevent

these difficulties?

Answer. The SBA anticipates no problems in developing new evaluation criteria

and requirements in response to the new legislation. We are on pace to meet the

time commitments made during the September 20, 2007 hearing

Question 2. The SBA’s testimony states that the SBA has taken six steps since

March 2007 to improve the processing of WBC grant disbursements. What performance metrics is the SBA using to prove these steps are successful?

Answer. A new partnership with the Department of Health and Human Services—Grants Payment Management System, will convert the current paper-based

reimbursement payment process to an automated payment advance system, with

two major reconciliation points—one at mid year and one at year-end closeout. The

advance system, with appropriate checks and balances, will provide a remedy for

grantee’s with cash-flow concerns. Our objective is to meet the OMB prompt payment standards of 30 days or less, and respond in a similar timeframe if there are

questions or issues with the payment request.

Question 3. What steps is the SBA taking to address centers’ concerns about ranking criteria? What is the SBA doing to make the ranking criteria, for the new renewable grants as well as the other WBC grants, based on relevant, fair, understandable, and transparent measures?

Answer. We are in process of reviewing and revising our proposal of evaluation

criteria to ensure that the intent of the program is being met, and that there is increased transparency and clarity for applying centers.

The new Program Announcement will articulate a policy for strategic investment

in development of women’s entrepreneurship that is market driven. Selection of new

centers will be evaluated based on market need and key organizational success factors.

Continued funding for existing (and returning centers) will be awarded based on

successful past performance, in addition to key organizational success factors and

market need—defined primarily by the center’s ability and accountability to meet

the grant performance criteria and the ability to serve the market as agreed.

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Question 4. Moving forward, what specific recommendations does the SBA have

for ensuring that new and rural centers will be funded in the coming years?

Answer. The new Program Announcement will articulate a policy for strategic investment of resources that is market driven. Selection of new centers will be evaluated based on market need and the service gaps or growth opportunities identified

in the current portfolio of Women’s Business Centers.

Question 5. Will the SBA need additional appropriations to continue to expand the

WBC program? If so how much additional funding would be necessary? Will the

SBA be able to open new centers if additional funding is not provided? Please explain why or why not and all the possibilities for expanding the WBC program.

Answer. The program’s intent is to seed and develop centers in areas of greatest

need, and we believe the current levels of funding achieve that intent.

Question 6. What should be done to help rural women’s business centers expand

their services to women’s businesses?

Answer. Rural-based Women’s Business Centers face unique challenges in getting

WBC services to their clients. These challenges will be factored into the new selection and funding criteria.

Question 7. How is the SBA leveraging technology to help rural centers better

meet the needs of their women business owners? What else should be done to help

rural centers use technology to their advantage?

Answer. The SBA has identified best practices within all of its resource partner

networks that exemplify innovative use of technology in service delivery. We are

working to improve the dissemination of these best practices throughout the networks. We have also recently invested in several new web-based assessments and

training modules to support entrepreneurs not able to receive local counseling assistance. These investments have already drawn significant attention from entrepreneurs, with over 1300 entrepreneurs daily utilizing these tools. Further, we believe a key organizational success factor in evaluating center applications is the

leadership experience with technology and the presence of a technology-based element to their center’s service strategy.

Question 8. What kind of training and assistance is SBA providing to WBCs to

aid them in their fundraising efforts?

Answer. At the most recent national post award conference for WBCs and DOT&

in early September, several opportunities were created for WBCs to hear speakers

and dialog on this issue. We will continue to provide guidance and educational opportunities for WBC directors that help them expand partnerships, leverage additional funds for their centers, and achieve an appropriate balance between program

delivery responsibilities and program development opportunities. It should also be

noted that fundraising is not an allowable cost under grants law. Therefore, SBA

faces stringent legal constraints with regard to using appropriated or grant funds

to pay costs associated with providing training on fundraising to WBCs.

Question 9. Without appropriate monitoring and enforcement, prime contractors

often fail to follow through with their promised plans to award small business subcontracts. What steps should the SBA take to monitor and enforce the plans for subcontracting with women-owned small businesses?

Answer. The SBA is taking the same precautions to monitor and enforce plans

for subcontracting for women-owned small businesses as it does with all other small

businesses. For instance, the recent SBA recertification regulation that requires

companies with Federal contracts to recertify, their size status as ‘‘small businesses.’’ This will increase opportunities for more small businesses, including those

that are women-owned, to receive contracts from the Federal Government.

In addition, subcontracting plans are reviewed by both contracting officers and

SBA prior to contract award. Furthermore, SBA’s Commercial Market Representatives (CMRs) are available to assist small businesses, including women-owned small

businesses, with subcontracting opportunities.

Question 10. As a result of the lack of monitoring by the SBA’s and other agencies’

contracting personnel women-owned small businesses, as well as other small businesses become frustrated and discouraged from pursuing Federal subcontracting opportunities. What is the SBA specifically doing to ensure women-owned small businesses continue to pursue subcontracting opportunities?

Answer. The SBA is committed to furthering our positive impact on women in

business across our contracting programs. Additional resources for women are available through SBDCs, WBC, SCORE, PTACs (at DoD facilities—Procurement TechVerDate 11-MAY-2000 10:27 Sep 22, 2008 Jkt 041801 PO 00000 Frm 00104 Fmt 6601 Sfmt 6601 C:\DOCS\41801.TXT DianeA PsN: DianeA
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nical Access Centers). Furthermore, all agencies have Offices of Small Disadvantaged Business Utilization (OSBDU) and within the OSDBU, there are often women’s business advocates.

Each of these can make a difference and can encourage more women-owned businesses to join the Federal contracting system. More women-owned businesses in the

system should directly translate into more contracting dollars going to womenowned small businesses.

Question 11. What is your agency doing to increase Federal contracting opportunities for women-owned small businesses?

Answer. SBA’s semi-annual scorecard of the other procuring Agencies is a great

example of the Agency’s plan to increase Federal contracting opportunities. The

scorecard is providing transparency and accountability for the procuring agencies.

It is publicly calling on them to achieve all of their small business goals, including

focusing 5 percent of all contracting dollars to women-owned small businesses.

Question 12. At a recent hearing in the House Small Business Committee, Administrator Preston stated the SBA has recently submitted a new rule, relating to the

women’s contracting set-aside program, for interagency review, The Administrator

stated that it will take at least another 90 days before a response is given. The

women’s contracting set-aside pro gram was enacted nearly 7 years ago. How much

longer will it sake fop the law to be implemented? What other steps is SBA taking

to ensure the law is implemented immediately following the 90 days?

Answer. The proposed rule has been submitted to the Federal Register for publication. The public will now have an opportunity to comment on the Proposed Rule

for a period of 60 days. Upon completion of those 60 days, SBA will review and respond to all of the comments received in a final rule. Since we have just started

the public comment period, any estimation of an implementation date is premature.

RESPONSES BY WILLIAM B. SHEAR TO QUESTIONS FROM SENATOR JOHN F. KERRY

Question 1. As you outline in your testimony, the lack of certainty over funding

is one of the most critical problems facing Women’s Business Centers, as it has been

since the program was first implemented. In your opinion, to what degree was this

lack of certainty detrimental to the ability of Women’s Business Centers to fulfill

their purpose, to assist women entrepreneurs and business owners, particularly

those of lesser means? In your opinion, is the new legislation an improvement over

the old system?

Answer. Concerns about funding were common among the WBCs that we spoke

with. For example, some WBCs in both the regular and sustainability programs said

that they were concerned about their ability to continue operations after losing SBA

support. In addition, OMB reported in its Program Assessment Rating Tool (PART)

that frequent changes in the WBC program’s funding structure, delays in extending

sustainability funding, and uncertainty about the future had created challenges for

the program. The new legislation, which provides continuous funding for WBCs

through renewable 3–year awards, directly addresses concerns WBCs expressed

about a lack of long-term or permanent support from SBA. Nevertheless, SBA may

encounter some challenges going forward. For example, it is unknown how the new

awards will impact SBA’s ability to fund new centers.

Question 2. In your investigation you looked into SBA oversight over the WBC

program. What is your opinion of SBA’s current oversight of the program—is it effective? Are there ways of improving it that would maintain oversight, while decreasing the burden on SBA and the centers?

Answer. The oversight process that SBA has in place, as well as the performancebased aspect of the WBC program, are intended to assist WBCs in complying with

the requirements of the program and in carrying out its mission. However, SBA

faces challenges in its oversight of WBCs, including imbalances in its staff resources

to oversee the program and ineffective communication with the centers. SBA has an

opportunity to increase the effectiveness of its oversight by ensuring that the centers receive clear and timely guidance. While our work did not include an assessment of WBC compliance, oversight and the assurance of WBC compliance could be

improved by addressing the challenges we identified. For example, better communication between SBA and WBCs about program requirements could improve the

oversight process.

Question 3. According to GAO and the Office of the IG, communication within

SBA and between SBA and the centers is a major problem. Do you have any recVerDate 11-MAY-2000 10:27 Sep 22, 2008 Jkt 041801 PO 00000 Frm 00105 Fmt 6601 Sfmt 6601 C:\DOCS\41801.TXT DianeA PsN: DianeA
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ommendations for addressing the communication problems? Is using the web a good

idea?

Answer. WBCs we spoke with cited several communication issues with SBA. In

addition, a separate study we cited in our testimony found that over half of the 52

WBCs surveyed said that SBA could improve its communication with them. We

think that effective communication among SBA’s offices that oversee the program

and between SBA and the centers is essential in ensuring that the program is

achieving its goals. To this end, SBA should make use of available technology, including the Internet, in its efforts to communicate program requirements and other

key information. We anticipate making a recommendation to address this issue in

our final report.

Question 4. Women’s Business Centers have complained about the unclear criteria

upon which they are evaluated. As someone who has looked at the program very

closely, what do you think are fair and accurate benchmarks for evaluating the performance of a center?

Answer. Some WBCs told us that SBA did not provide them with feedback on

their performance or that SBA’s criteria for determining annual award amounts

were not clear. When we followed up with SBA, agency officials told us that they

were aware of this concern and would provide regular feedback to the centers going

forward. They also said that they were working toward making the WBC evaluation

process more transparent. We think that SBA’s performance-based funding process

encourages high performance among the centers. Although we did not assess SBA’s

specific performance benchmarks for WBCs, we think that making the process more

transparent and improving communication with WBCs about their performance

would improve the process for evaluating the performance of centers.

Question 5. You mention that, oftentimes, Women’s Business Centers are not able

to coordinate with SBDCs and SCORE in a way that benefit all of the SBA programs involved. Based on what you have learned from your study of Women’s Business Centers, do you feel that it is possible to create synergy between those programs? What measures can SBA take to reduce duplication of services and highlight

the unique nature of each particular program?

Answer. In line with the WBC program’s mission, we found that the WBCs we

spoke with focused on serving women, including those that were socially and economically disadvantaged. Additionally, representatives from the WBC, SBDC, and

SCORE programs that we spoke with, as well as SBA officials, often differentiated

the programs by a typical client with regard to stage of business or the type of assistance needed. In our testimony, we also note that an SBA study found that WBC

clients tended to have fewer employees and smaller revenues than clients of other

SBA business assistance programs. However, in some instances, WBC clients may

be able to benefit from services that a local SBDC or SCORE chapter offers and vice

versa. In some markets, we found evidence that program representatives were very

aware of what each program offered and saw examples of active coordination to

meet the needs of small business clients. For example, five co-located SBDCs and

WBCs we contacted shared administrative support and leveraged counseling staff

in order to better serve clients. Although local markets vary, SBA could make sure

that others understand each program’s uniqueness and provide examples of promising practices to highlight coordination opportunities and reduce the potential for

duplication. We anticipate making a recommendation to address this issue in our

final report.

Question 6. Another major issue that you address in your testimony is that the

District Office Technical Representative charged with carrying out oversight of the

Women’s Business Centers often lack the expertise necessary to effectively do this

work or have so many other responsibilities that they cannot dedicate the time necessary to do it properly. Do you think that it is possible, within the current SBA

structure, to allocate personnel specifically to the role of overseeing Women’s Business Centers? What role should the District Office play?

Answer. In our review, we found that some District Office Technical Representatives have too many responsibilities overall or lack expertise in certain areas to

carry out WBC oversight effectively. Nevertheless, district office staff can have a

useful role in oversight because they are closer to the centers, are more likely to

be knowledgeable about the communities in which they operate, and are able to conduct site visits. Though SBA faces agency wide challenges as a result of downsizing,

we believe SBA can achieve effective oversight with an appropriate allocation of responsibilities between headquarters and district office staff. We anticipate making

a recommendation to address this issue in our final report.

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Question 7. As you are aware, the new legislation alters the funding structure for

Women’s Business Centers, allowing the centers to apply for a Renewal Grant every

3 years, with no limit to the number of years they can receive grants. Based on your

review of the Women’s Business Center program and your expert knowledge of the

SBA, what suggestions or recommendations can you make for implementing this as

quickly as possible?

Answer. SBA can begin the application review process for fiscal year 2008 prior

to receiving its appropriation. In addition, SBA could develop a structured approach

to implementing the new program that provides a timeline or plan for updating the

award announcements, incorporating changes it may have in the application process, and specifying how coordination among relevant SBA offices shall occur. Since

the goal of the new legislation is to implement continuous funding for WBCs, SBA

could also consider giving some priority to facilitate uninterrupted funding for centers that graduated at the end of fiscal year 2007 and are eligible to continue in

the program.

RESPONSES BY WILLIAM B. SHEAR TO QUESTIONS FROM SENATOR OLYMPIA J. SNOWE

Question 1. With the creation of the renewable grants enacted in the Troop Readiness, Veterans’ Care, Katrina Recovery and Iraq Accountability Appropriations Act

of 2007, the SBA will be required to rank and evaluate all of the existing centers

as well as all of the graduated centers. What steps is the SBA taking to address

centers’ concerns about ranking criteria? What is the SBA doing to make the ranking criteria, for the new renewable grants as well as the other WBC grants, based

on relevant, fair, understandable, and transparent measures that will be used in the

evaluation process?

Answer. With regard to implementing the new renewable 3-year awards, SBA officials told us that they anticipate revising certain criteria to incorporate the new program structure and the mixed pool of applicants. At the time of our review, SBA

was still reviewing the criteria. However, some WBCs told us that SBA did not provide them with feedback on their performance or that SBA’s criteria for determining

annual award amounts were not clear. When we followed up with SBA, agency officials told us that they were aware of this concern and would take steps to make

the WBC program’s performance-based funding process more transparent.

Question 2. In its testimony, the GAO stated that centers felt the SBA did not

provide sufficient feedback on center performance. What changes should the SBA

make to better evaluate centers and help centers understand how to improve their

performance?

Answer. Some WBCs told us that the lack of feedback regarding their performance was a concern. This concern was part of a broader issue among WBCs about

SBA’s communication with them. We asked SBA officials about providing the centers with performance feedback and they told us that in the past, they provided

feedback when the WBC needed to make a correction. They also said that they were

aware that the centers had this concern and would provide regular feedback to the

centers going forward.

Question 3. Without specific guidance from the SBA, have Women’s Business Centers taken steps to coordinate with Small Business Development Centers and

SCORE on their own initiative? If so, please describe these steps.

Answer. Some WBCs have coordinated with SBDCs and SCORE in local markets

using a variety of approaches. For example, a WBC in Wisconsin that was working

with SBDC, SCORE, and other small business assistance providers to develop a detailed triage system for small business clients so that the providers could divide resources and systematically determine where to refer clients. Under a memorandum

of understanding, WBC, SBDC, and SCORE representatives in South Carolina organized informal groups with other area small business providers to plan events, coordinate services, or facilitate training. In several locations, WBCs were co-located

or shared space with SBDCs and SCORE chapters. Co-located WBCs were often

able to benefit from reduced overhead costs that came from shared facilities and office space. For example, in California, a WBC that was co-located with an SBDC

often referred clients to SBDC counselors if WBC counselors were not available in

order to maximize resources and better serve small business clients.

Question 4. Would a detailed SBA plan explaining coordination efforts between its

business assistance programs reduce uncertainties in the duplication of services?

Why or why not?

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Answer. A detailed plan that included information on promising practices and examples of successful coordination would help to reduce uncertainties and would also

facilitate and encourage coordination efforts. Recognizing that local markets vary,

successful coordination strategies can also vary between different markets depending on factors such as the programs available in a given area, specific program offerings, and the level of interaction between program representatives. Increased awareness of each program’s services at the local level could facilitate coordination and

reduce the potential for duplication. We anticipate making a recommendation to address this issue in our final report.

Question 5. Given the various SBA technical assistance programs serve different

clientele, why would duplication be an issue?

Answer. In general, the potential for duplication could still be an issue because

all of the programs offer counseling and training services and small business clients

do not always know which program best meets their needs. Because local markets

vary, there may also be more potential for duplication between the services that

WBC, SBDC, and SCORE offer in some areas than others. In their efforts to coordinate and avoid duplication, SBA’s technical assistance programs may also find opportunities to leverage resources. For example, WBC clients may be able to benefit

from services that a local SBDC or SCORE chapter offers and vice versa. Overall,

small business clients would be best served where the programs and SBA coordinate

to serve businesses at all stages of development and with a variety of needs, and

where potential clients have a clear understanding of which program can best meet

their needs at any given time.

RESPONSES BY DEBRA S. RITT TO QUESTIONS FROM CHAIRMAN JOHN F. KERRY

Question 1. Based on your work at other Federal agencies and reviews of the practices in other offices at SBA,

• Are the grant problems with Women’s Business Centers typical? How does the

Women’s Business Center office compare to other offices in SBA?

Answer. The grant problems experienced by Women’s Business Centers (WBCs)

are not typical of other grant programs administered by SBA. Authorizing legislation requires that WBC grants be administered by SBA’s Office of Women’s Business Ownership (the program office). However, we found that both the program office and SBA’s Division of Procurement and Grants Management (the grants office)

share responsibility for processing the grant awards and payment requests. Our

audit determined that problems experienced by WBCs in receiving timely payment

resulted from disagreements between the program office and the grants office in

their understanding of the information that WBCs must submit to get paid. In contrast to the WBC program, both the Small Business Development Center grants and

earmarked grants are disbursed more timely than the WBC grants.

Question 2. Your written testimony says that offices within SBA did not work together to develop payment requirements in the program manuals. It is my understanding that these manuals are distributed to Women’s Business Centers during

mandatory training.

• How good are these manuals—do they include all the necessary information?

Does every center have one?

• What additional information should be included that is not?

• Do you have any suggestions for how best to communicate manual changes to

the centers?

Answer. Annually SBA updates the WBC program manuals to reflect the most

current eligibility and payment requirements. The manuals are fairly comprehensive and user-friendly. However, we noted that last year the grants office was not

sufficiently involved in developing the manuals, which resulted in the omission of

some payment requirements. It also led to an open disagreement between the grants

office and the program office during WBC training and throughout the 2007 grant

administration process. For example, the manuals did not stipulate that WBCs must

submit original supporting documents and original signatures. The manuals also

provided conflicting and unclear requirements about the reporting of changes in center personnel to SBA. For example, one section of the manual instructed WBCs to

submit the names of all personnel changes to SBA, while another section advised

that only changes in key personnel must be reported. The manual also did not adequately define key personnel.

Program manuals are provided to only those Women’s Business Centers who attend annual training. We found that after the manuals were distributed to WBCs

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and training conducted, the program and grants offices introduced new requirements for payment requests. These changes were not always communicated to

WBCs in time for them to make required changes to their payment requests nor

were the manuals updated.

Our report recommends that the manuals, and any updated information, be posted on SBA’s website so that the latest, most comprehensive information is available

to all WBCs.

Question 3. Women’s Business Centers have complained about the unclear criteria

upon which they are evaluated. As someone who has looked at the program very

closely:

• Do you agree that there has been confusion about the evaluation criteria and

how WBCs are scored? Is that a problem? • Based on your familiarity with the program, what criteria do you believe would

be fair and accurate for evaluating these centers?

Answer. Because our audit focused primarily on the processing of grant payments,

we did not evaluate SBA’s communication of its grant evaluation criteria or determine whether the criteria were fair and accurate. However, we did note that SBA’s

grant solicitation announcement includes the criteria that the Agency will be using

to evaluate WBC grant proposals, as required by the authorizing legislation.

Question 4. Mr. Bill Shear from the Government Accountability Office testified

that the District Office Technical Representative (DOTR) charged with carrying out

oversight of the Women’s Business Centers often lack the expertise necessary to effectively do this work or have so many other responsibilities that they cannot dedicate the time necessary to do it properly.

• Did you find this to be a problem?

• If so, what role should the district office play?

Answer. We have some indications from previous audits that SBA’s district offices

may be understaffed and that district employees have many collateral duties. In

2003 the OIG also reported that district personnel assigned to perform oversight of

a Texas WBC did not have the financial background or proper training to perform

financial reviews of the WBC. SBA relies heavily; however, on DOTRs to carry out

many WBC program responsibilities even though they have other full-time responsibilities. In March 2007, the SBA’s Office of Women’s Business Ownership (the

WBC program office) relieved the DOTRs of duties associated with reviewing and

certifying payment requests, and assumed those responsibilities exclusively at SBA

Headquarters. While DOTRs no longer review and certify payment requests, they

continue to oversee the activities and operations of local WBCs in their districts.

The role that district offices should play in the WBC program is currently evaluated by the Agency. Recently, the Associate Administrator for Entrepreneurial Development established a task force to examine all roles and responsibilities associated with the award and administration of WBC grants. Part of that examination

will include a review of DOTRs’ roles and responsibilities.

Question 5. With your in-depth knowledge of the grant making process perhaps

you can give some advice to the Agency on how to include centers newly eligible

for funding in the next round of grants.

• Can you outline a timetable for how SBA could administer the grant process

for new and older centers? • Is it true that pre-award costs can be eligible for reimbursement?

• Also, is it true that different requirements can be used for each program—the

new centers versus the permanent funding for existing centers? • Although centers are required to meet their goals and show that they are effectively providing services, is competition required for distributing grants such as

these? How do other agencies handle similar situations?

Answer. A timetable for the award of the renewable grants is currently being developed by the Associate Administrator for Entrepreneurship Development to ensure

that the grants are awarded by January, 2008, as requested by the committee. In

general, we believe that SBA could more expeditiously award WBC grants for both

new and established centers, according to the following timetable:

• Post the grant solicitation or formal announcement by October 31 of each fiscal

year for a minimum of 30 days. Additionally, this announcement could be augmented by a year-round publication on SBA’s website of the availability of WBC

grants, much like student grant programs are advertised all year, with stated deadlines (i.e., cutoff dates) and requirements for application.

• Review the proposals and make selections by late December.

• Announce grant awards by mid-January.

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Based on information obtained from OMB, pre-award costs can be eligible for reimbursement provided that they are specifically addressed in the grant opportunity

announcement.

Different application requirements can be used for new versus existing centers.

Older centers only need to submit information on their past performance and budget, whereas new centers must furnish greater detail about their 5-year plan with

clear goals and time-phased activities, a milestone chart, a list of the types of training and counseling offered, and the required certifications.

According to appropriations law, whether a grant program is competitive depends

on whether the grants are mandatory or discretionary. In a mandatory grant program, grant awards are usually directed to one or more classes of prospective recipients who must meet specific eligibility criteria. These grants are often awarded on

the basis of statutory formulas. The concept of competition generally applies to discretionary grants. The Federal Grant and Cooperative Agreement Act encourages

competition in order to identify and fund the best possible projects to achieve program objectives. The WBC grant program is a discretionary program where the centers compete annually for the maximum award amount.

Further, the authorizing legislation for the WBC program specifically required

that sustainability grants be competed simultaneously with requests for proposals

from new and returning entrants in the first 5 years of the grant program. While

not specifically requiring competition for new entrants and for returning entrants

in the first 5 years, the authorizing language included a requirement that SBA

evaluate and rank applicants in accordance with predetermined selection criteria

that were to be stated in terms of relative importance and be made publicly available in each grant solicitation for applications. In addition, the authorizing legislation required the Office of Women’s Business Ownership to select applicants to participate in the program, and required that SBA consider a center’s past performance

before awarding grants.

Other agencies, like SBA, follow appropriations law governing the award and administration of mandatory and discretionary grants.

Question 6. Are there any other changes or suggestions that you would recommend for implementing this new law and improving the process for WBCs and

the SBA?

Answer. First, SBA should decouple its evaluation of new entrants from that of

established WBCs seeking renewal grants or option year funding as established centers should not have to submit the same amount and type of information that is

required from new entrants. If a center is already in the program and returning for

option year funding or applying for a renewal grant, SBA already has historical performance data for that center. Therefore, SBA should adjust its evaluation requirements to better match the maturity of the center. Further, placing all returning

grantees on the same evaluation schedule as new entrants requires the expenditure

of substantial resources, for example, to evaluate potentially over 100 proposals

every year, and unnecessarily delays returning grantees from requesting payment

earlier in the year.

RESPONSES BY DEBRA S. RITT TO QUESTIONS FROM SENATOR OLYMPIA J. SNOWE

Question 1. Provisions in the Troop Readiness, Veterans’ Care, Katrina recovery

and Iraq Accountability Appropriations Act of 2007 require the SBA to create the

Women’s Business Centers 3 year renewable grant program in fiscal year 2008.

What problems does the SBA IG anticipate the SBA may have by implementing the

3 year renewable grant programs and what should the SBA do to prevent these difficulties?

Answer. SBA will be challenged to meet the January 2008 commitment for the

award of renewable grants. This is because SBA has to re-engineer its award process, publish evaluation criteria for the 2008 grants, post the announcement, wait 30

days for proposals, and then evaluate the proposals and select awardees. As of November 1, 2007, SBA had not posted the request for proposals.

Further, it is anticipated that since the 2008 grantees will be announced in January, SBA will be disbursing both the 2007 and 2008 grants concurrently upon receipt of payment requests from the WBCs. This volume of payment requests may

be difficult for SBA to process timely.

Question 2. Why are timely payments to Women’s Business Centers so difficult

for the SBA to achieve? How should SBA reduce these delays?

Answer. Our audit determined that timely payments to WBCs were difficult for

SBA to achieve because of poor coordination and communications between two SBA

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offices that processed payment requests, the inability of these two offices to work

in an integrated fashion, and flaws in the payment process itself that caused paperwork to be rejected or lost. To ensure that grant funds are disbursed more timely,

our report made several recommendations to either streamline or automate the

processing of payment requests, including that the Associate Administrator of Entrepreneurial Development:

• Enter into a Memorandum of Understanding (MOU) requiring collaborative development of criteria and an interpretation of payment requirements for complete

and appropriate submittals, agreement on criteria changes, and agreement on respective roles and responsibilities in rejecting payment requests. If an acceptable

agreement cannot be reached, either place grants specialists within the program office or outsource the WBC grants reimbursement function. • Annually develop and provide WBCs a consolidated checklist of payment requirements and supporting documentation to ensure payment requests are complete. • Establish a change control process to prevent or minimize changes made to payment requirements after the grant award, and to ensure that handbooks and information required on the payment request forms are appropriately updated. • Automate the payment request review and approval process to the fullest extent

possible. Leverage existing grants office automation capabilities and apply them to

the WBC grants, tailoring the process as needed to meet the requirements of both

SBA offices as contained in the signed MOU. In the meantime, ensure that all

issues are identified before returning the payment requests for correction so that

WBCs only have to submit one set of corrections. • Permit WBCs to provide missing, incomplete or incorrect sections of their payment requests so that the complete request package does not have to be returned

to WBCs and resubmitted to avoid restarts of the payment review process. Also disburse all funds except those costs that are in question to enable WBCs to get partial

payments until their requests can be fully resolved.

• Enable web access by WBCs to the training, handbooks and program changes.

• Develop and post a complete log of payment review events on a secure passwordprotected website for viewing by WBCs and both SBA’s program and grants offices

so that WBCs can determine the status of their pay requests and can match their

requests to specific invoices; and the Agency can monitor the timeliness of processing actions.

Question 2. Does the SBA have sufficient procedures in place to recreate consistency and accurate check payment to Women’s Business Centers going forward? Is

the SBA sufficiently using technology to help streamline this process and reduce the

wait time for check payment?

Answer. Our audit found that SBA lacked sufficient procedures to ensure consistent and accurate payment of WBCs going forward. Our audit disclosed that SBA

rejected payment requests before both the program and grants offices completed

their reviews of the request, creating multiple restarts of the payment process.

When payment requests were rejected, the entire original package, and corrected

versions were mailed back and forth between SBA and the WBCs instead of only

correcting the document(s) affected. Both offices also differed in their interpretations

of the payment requirements. The Agency’s lack of a tracking system to identify

when the payment request is received, reviewed, and paid, also contributed to

delays. We understand that SBA is in the process of revising its WBC grants disbursement processes and procedures and expects to have these changes finalized by

January 15, 2008. Until these changes are implemented, we expect that payment

delays will continue to plague the program.

RESPONSES BY WENDI GOLDSMITH TO QUESTIONS FROM SENATOR OLYMPIA J. SNOWE

Question 1. On July 18, 2007, the SBA stated at a recent contracting hearing before this Committee that women-owned small business contracts accounted for $11.6

billion in fiscal year 2006 and 3.4 percent of total Federal procurement, an increase

of $1.4 billion (or 0.3 percent) over fiscal year 2005. What can the SBA do, in addition to implementing the women contracting set-aside program, to further increase

women-owned small business contracting opportunities?

Answer. My key recommendation is to establish a set-aside program, but also to

include sole-sourcing measures similar to the 8(a) program. As discussed in my answer above, there can be a catch–22 situation where the women owned business

needs proven experience in order to compete, even on a set-aside basis, for additional work.

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Question 2. The government needs to quantify women’s participation in government contracting in order to determine if, and by how much, women’s contribution

levels are increasing or decreasing. Which contracting measurement, numbers of

dollars or number of contracts, should be used to measure women participation levels in government contracting? Please explain the benefits of your recommended

measurement method.

Answer. I believe that numbers of contracts is important because it ensures that

a variety of contracts, across a full spectrum of NAICS codes, are being used. It is

this number of contracts that will allow women owned firms to build experience,

and in my view this is the best way to track performance of the program. However

in the final assessment, I believe that the dollar value of contracts awarded to

women owned firms must stand as the key measurement, and I believe that the goal

should be significantly higher than the present goal, and that the progress toward

increasing the level of funds directed toward women owned firms should more closely reflect demographic parity.

Question 3. Your website states that innovation is critical in your ecological planning work. How have you, as a small business owner, been able to think outside

the box on ecological restoration, in ways that larger companies have not?

Answer. Thank you for asking this question! I know from experience that the staff

we attract and retain, and the relationships we cultivate with our clients is very

different from large firms’. When you are solidly established and have a lot to lose,

it is natural to avoid risks and potential conflicts, and stick to conservative approaches. There has long been a perceived and often very real antagonism between

pragmatic engineers and idealistic environmentalists. Hence it has been innately

risky for engineering institutions to embrace ecologically attuned methods, and even

when they try, environmental stakeholders have been slow to accept and believe

their attempts. It has been possible for the Bioengineering Group, as a small business, and as a firm with key leaders who are themselves rooted in both the pragmatic and the idealistic realms, to define specific approaches and processes to build

concensus and integrate ecological functions into engineering solutions. We have

brought these skills to serve various Federal clients over the years, and I firmly believe that the small business programs that have allowed us to develop our capabilities and our client relationships have benefited not only our firm, but chiefly our

clients. Small business breeds innovation and resourceful problem-solving and our

spin on this has been ecologically based interdisciplinary planning and design solutions.

Question 4. You mentioned that you’d like to see greater enforcement of subcontracting rules so that small businesses are not exploited by larger firms. Have you

contacted SBA with your concerns about specific cases of exploitation? If so, and

what was SBA’s response?

Answer. I have contacted SBA on various occasions to discuss this issue but have

not received help from them. One reason I realize is that without some comprehensive data on how the full set of contractors is fulfilling their small business commitments, it is difficult to single out specific firms and situation for intervention. Currently I understand that no such dataset exists, though I have heard rumor of some

data being collected by certain agencies for their own use. Also I should note that

the SBA personnel I have discussed this issue with lack knowledge and familiarity

with my industry and have appeared to me to lack tact in addressing such matters.

I have, on two occasions, dropped the matter due to my concern that SBA intervention would backfire and cause damage to my contracting relationship, and potentially a ripple effect spreading to other firms. There is not simple way for me as

a small business owner to blow the whistle on my prime contractor for failing to

use me as promised without being identified as the ‘‘complainer’’. However I fully

support the use of systematic enforcement of subcontracting plans including random

rigorous review and evaluation of subcontrating performance including anonymous

interview with small business subcontractors to air complaints and make suggestions. I would assume that if penalties were severe, and new contract awards made

tightly contingent on past subcontracting performance (there is a growing but still

weak awareness that this topic matters in the selection process). Also the key loophole is that the subcontracting plan only applies if work is subcontracting at all,

and currently small businesses are used to flesh out a strong competitive proposal,

then the large business often self-performs the vast majority of the work, rather

than adhering to prior worksplit provisions with subcontractors. Federal subcontracting program rules do not address this problem, though perhaps this should be

changed so that prior worksplit commitments be shared with the government and

used for measurement of performance.

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RESPONSES BY WENDI GOLDSMITH TO QUESTIONS FROM SENATOR MICHAEL B. ENZI

Question 1. During the hearing, you commented about the difficulties of finding

a starting point in the government procurement process. Your point was especially

well taken when you described the specific challenges of being awarded contracts

in the field of engineering. What efforts on behalf of the Small Business Administration and the Women’s Business Center might better facilitate the needs of women

seeking business through competitive bidding processes?

Answer. In order to build the level of experience needed for women business owners to compete successfully for Federal contracts, especially in highly technical fields

such as engineering, it may well be necessary to use both sole-source and set-aside

measures. In my own business experience, without the possibility of gaining experience through sole source opportunities, my success would have been doubtful. Setaside opportunities may provide a suitably sheltered climate for women owned firms

to compete, but in my experience, these channels do not work well unless prior experience of a targeted nature can be demonstrated—hence a catch 22 situation where

you need to have experience to get experience. As I described earlier, small firms

often spend considerable resources participating as subconsultants for proposal

preparation, only to wind up getting little or no work from the contracts, so unfortunately gaining experience that way has proven uncertain and costly. I would like

to believe that through greater involvement by SBA and/or Womens Business Centers in providing oversight and accountability to subcontracting programs, including

advocacy and enforcement when there are problems, that the situation could be corrected. However sole sourcing and set-asides simplifies the problem by putting

women business owners in charge of the work, rather than wrangling for their portion.

Question 2. I was pleased to learn that you found great success in sole source contracting and the Mentor-Protege program. From your experience, in what ways can

the Mentor-Protege program and opportunities for sole source contracting be improved?

Answer. Much as outlined above, it would often be helpful to have advocacy and

enforcement support through SBA or the WBCs to cultivate better use and understanding of both sole-sourcing mechanisms, and also of navigating Mentor-Protege

relationships. In my experience I found that Federal contracting officers remain inconsistently informed to this day about suitability and methods for issuing solesource 8(a) contracts, and the situation is worse when marketing directly to many

end users who have less training and react with fear to sole-sourcing which sounds

‘‘to easy and too good to be true, therefore it must be fishy’’. In my experience SBA

personnel have refused to assist in these situations, citing that it is the responsibility of the 8(a) firm to conduct marketing, and the SBA simply approves the sole

source contract action. In my experience, though, the problem is often that the end

user is not comfortable even initiating this step do to poor information and high levels of suspicion and discomfort. In one instance a year ago a user recommended to

a superior that my firm receive a sole source contract for which we were eminently

suited, and the supervisor’s reaction was discomfort and reluctance. The end user

contacted that agency’s ethics officer and/general counsel to verify that the approach

was appropriate, but the supervisor still rejected it, based on various faulty statement about the sole-sourcing being inappropriate. Worst of all the interaction created a lot of bad blood between various parties. Earlier in my career I experienced

frequent obstacles due to misinformation but with the highly practiced negotiation

skills and program knowledge I now possess, these obstacles still exist. It would be

helpful to have an ombudsman or similar resource to call upon in such instances

to clarify facts and most importantly smooth out any suspicions or fears of ethics

violations before they spin out of control. My main recommendation for the MentorProtege program is that SBA could establish a tutorial for Mentor-Protege relationship kick-offs, and a forum for firms with Mentor-Protege relationship experience to

aid small firms in identifying and selecting Mentors. In my experience large firms

do not automatically adopt an attitude of support and cooperation to aid and collaborate with their Proteges, but rather fall into long-standing patterns of strongarming small business as is typical in subcontracting relationships. Even when

some large firm staff grasp the nature of the Mentor-Protege relationship, other key

staff typically fail to understand and act appropriately. I believe that improvements

could be made through an outreach program that features a set of relationship

guidelines, and most importantly shared case studies of top performers and weak

performers. After all we entrepreneurs large and small like to excel, and if educated

about the highly mutual and supportive Mentor-Protege strategies that lead to great

shared benefit, most would pick that outcome over the alternative of greed, manipuVerDate 11-MAY-2000 10:27 Sep 22, 2008 Jkt 041801 PO 00000 Frm 00113 Fmt 6601 Sfmt 6601 C:\DOCS\41801.TXT DianeA PsN: DianeA
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lation, and even destructive behavior that I know from experience can otherwise

occur.

RESPONSES BY ROSEMARY BRATTON TO QUESTIONS FROM

SENATOR OLYMPIA J. SNOWE

Question 1. Today, women-owned businesses are the fastest-growing segment of

the economy; they comprise roughly a third of all businesses and are represented

across all industrial categories. However, women-owned businesses are of much

smaller scale in size and continue to generate significantly lower incomes than businesses owned by men. According to the Small Business Administration’s Office of

Advocacy, the average firm owned by a woman generates only 78 percent of the

profit of the comparable business owned by a man. Please explain these trends. Why

are more women-owned businesses developing at much smaller scales, and with significantly lower profit margins than businesses owned by men? What factors could

be contributing to this disparity? What policies could Congress enact to rectify this

disparity?

Answer. Women owned businesses and other small business need specific contracting assistance on an immediate need basis. RFP’s should be user friendly with

adequate time to respond. In addition, a national help line call center needs to be

in place for small business owners to get immediate answers and contracting assistance when preparing a RFP. A nationwide call center could be staffed with employees who can assist clients through the bidding process on an as needed basis. Without this specialized assistance clients lose the opportunity to participate. These services should be available during regular business hours across all U.S. time zones.

Creating a program for WBC’s to actually ‘‘certify’’ women owned business on a recognizable national basis would assist with contracting opportunities. Currently

women owned businesses must pay large amounts of money to private firms to become ‘‘certified’’. It is our experience that businesses operated by women are not

those that are traditionally operated by men making a comparison difficult. Women

in Wyoming are less likely to borrow adequate capital because they are perceived

by the banking community as less qualified due to their lack of personal capital investment and tangible assets to be pledged as collateral.

Question 2. According to the National Women’s Business Council, 9 out of 10

women business owners want to expand their business and 83 percent want to increase their firm’s profitability. Yet, only 3 percent of these businesses generate one

million or more in annual revenues. Why are women finding it difficult to expand

their businesses? What specific steps would you recommend that Congress and the

SBA take to address these difficulties?

Answer. The lack of specific duties to be performed by the various SBA funded

organizations (WBC, SBDC, SCORE) provide for overlap of services. This overlap

confuses small business owners by requesting assistance from all organizations at

once instead of having orderly steps to proceed with specific assistance from each

organization. The specific scopes of work covered by each organization would allow

SBA to better track each funded organizations’ effectiveness and facilitate better decisionmaking for the funded organizations in the future. Please refer to Appendix

A for further breakdown of suggested categories and scale of the term ‘‘small business’’. Rural business owners whether male or female have very different challenges

than urban areas in expanding their small businesses. Often there are few available

workers to expand except for those businesses who franchise to other communities

or become high tech on line.

Question 3. Currently, four more rural states—Wyoming, Montana, Idaho, and

Kentucky—do not have SBA funded Women’s Business Centers. What should be

done to help rural states secure SBA funded women’s business centers or expand

their existing services to women’s business owners?

Answer. Rural states also have unique challenges for program delivery to entrepreneurs. One organization cannot provide all the services to all the small businesses. Streamlining SBA funded program organizations to develop specific scopes

of work to guide entrepreneurs through each level of business planning, management and troubleshooting will create organized series of steps for each entrepreneur. The rural entrepreneur will know what services are available from each

organization and request services accordingly. It is Imperative that every rural state

have at least one SBA funded women’s business center. Increased funding for additional staff members to handle rural areas is necessary to maintain a high level of

service. Question 4 plays a large role in rural areas.

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Question 4. How is the SBA leveraging technology to help rural centers better

meet the needs of their women business owners? What else should SBA do to help

rural centers use technology to their advantage?

Response. Technology availability is a requirement for rural centers. The first concern to be addressed before we discuss availability of technology based information

to clients is the technology available from SBA to the individual centers for program

management.

(a) Edmis II brought about many changes in reporting to SBA. The problem with

Edmis 11 is that it did not include and address the need for a cohesive reporting

and client management system throughout the organization of SBA and all the

WBC’s. Edmis 11 needs to be upgraded to include a complete client management

system to track counseling, training, projects, microloans, and client information

such as annual sales and earnings along with jobs and employee salary information.

This client management system could be created to automatically generate the needed reports to SBA as well as reports for each center to track their progress. The

new system could have a client reporting module that could be placed on each center’s website to annually report their financial information that would feed directly

into the client management data base for tracking by the SBA and the centers. The

time wasted with administrative duties could be cut by more than half for SBA and

WBC employees. This time could be better utilized assisting the taxpayers (our clients). SBA would have instant access to the same information as the centers. Information sharing is a necessity to make sound decisions based on properly compiled

information, not a hodgepodge of information filtering in from individual centers

based on their system reporting capabilities. This consistent client management

data base would prove useful in implementing best practices for the entire network

of Women’s Business Centers.

(b) Rural client technology is imperative to effectively serve rural clients. Traveling hundreds of miles to attend a specific training is not feasible for most small

business owners (especially during the winter months in Wyoming). Online training

technology must be made available through the use of Learning Management System (LMS) software. The SBA has the power to negotiate a contract with a LMS

provider to make this type of online learning available to all centers. The online

training could also be converted to CD to mail to clients living in rural areas that

don’t have access to high speed internet capabilities. The SBA could negotiate a reduced price to make this type of software affordable for all centers. Currently, having a website is a requirement to being a WBC, so providing online training would

not be an issue if the LMS software was affordable. LMS software providers offer

extensive training and support which could be made available to the individual centers.

RESPONSES BY ROSEMARY BRATTON TO QUESTIONS FROM SENATOR MICHAEL B. ENZI

Question 1. The hearing revealed that women’s business centers have experienced

continued difficulties with receiving feedback on the status and outcome of grant applications from the Small Business Administration. In addition to receiving little or

no feedback on applications, concerns about the transparency of the grant scoring

process have also continued. What experiences have you had in receiving responses

on grant applications?

Answer. We were told by OWBO that the sustainability funding that we were receiving as a project of the Wyoming Coalition Against Domestic Violence and Sexual

Assault (WCADVSA) could not follow us as we separated and formed our own 501c3.

OWBO had known from our inception that we planned to separate and encouraged

us to become independent. Although I have never actually seen the rule or statute,

according to OWBO the original grant was made to the WCADVSA and to have the

funding follow us as a separate 501c3 would be considered pass through funding

and is illegal. While we were never guaranteed that we would be funded as a new

center we were told that we would be in a ‘‘favorable’’ position based on our years

of providing excellent services. We applied as a new center in May of 2007 and as

of today, November 1, 2007 I have not received any ‘‘official’’ notification of the status of our grant. Unofficially I was told by staff from the SBA District Office in Casper on 9/27 at a conference that we scored high but not as high as the 6 new centers

that OWBO is funding. Also, I did receive a copy of the email that was sent to our

district office on 9/21/07 indicating that our grant would not be funded and that the

official notices would be mailed soon.

In August as I was preparing our budget for our next fiscal year I finally called

the OWBO office, talked with someone there on staff and was told simply that Wyoming was not funded. I discussed with our DOTR in Casper about how helpful it

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would be if I knew where our proposal was weak, she emailed OWBO and asked

that question. The response from OWBO was that our grant was incomplete and

therefore, not considered at all because we had not submitted the technical proposal

to Grants.gov.

After numerous phone calls with Grants.gov and much research on their part, it

was determined that our grant proposal was complete, was received by Grants.gov,

retrieved and validated, then submitted to OWBO where it was retrieved by that

office. I later learned from our district office that OWBO had found our grant application that it was complete and that it would be evaluated by the panel as soon

as possible. OWBO staff also indicated that if our proposal was strong, with points

higher than the lowest of the 6 new centers scheduled to receive funding, then one

of those centers would be eliminated for funding and we would be funded instead.

This was very troubling for several reasons. What would have happened if I had

not contacted members of the Small Business Committee? What a devastating impact on one of the 6 newly funded centers to have already attended the mandatory

post award training and then not receive funding! Were there other applications

that were simply lost? What level of tenacity is required to get honest answers from

OWBO? Maybe the answer to that question is testifying before the Senate Committee on Small Business and Entrepreneurship? In fact it may take more that testifying for as I mentioned before it is now November 1 and I have never heard anything directly from OWBO about grant.

Question 2. A question that I wanted to ask you and have placed in the record

pertains to the unique challenges of serving rural areas. I found your comments on

the need to improve the electronic signature portion of the applications especially

helpful. I am concerned about the Office of Women Business Opportunities not allowing counseling information to be kept electronically. Could you please describe

the difficulties you have faced working with your clients across Wyoming in keeping

and doing business with physical documents?

Answer. Two issues need to be addressed with this question. First the original signature requirement for form 641 and second, the paper files for forms 641 and 888.

(a) Many WBC’s have the ‘‘client intake form’’ (form 641) on their websites. This

practice allows the clients to complete the form and email it directly to the center.

Unfortunately, SBA still requires original signatures. This requirement means the

center must print and mail the form 641 back to the client to sign and return before

they can be considered a client. This practice is cumbersome, time consuming and

expensive to the center, not to mention burdensome on the client that has taken

the time to complete the form electronically and return the form via email. This requirement adds to client confusion and frustration. We have found many clients fail

to return the form with an original signature which creates WBC employee time to

follow-up with the client, not to mention long distance phone charges for rural

WBC’s. We feel the act of completing the online form 641 and emailing it to the

center should constitute the client’s intent to request our services. A statement

could be added to the form requiring a response from the client accepting the terms

and conditions stated on the form 641 including the release of liability.

(b) The paper copy of form 641 and 888 requirement wastes time and requires

double duty by WBC staff. Most centers have some sort of a client management system that can be accessed by all staff members. Rural centers usually have outreach

offices throughout their area so the computerized client management system is essential for assisting clients at all locations. The requirement of paper files simply

does not work for rural centers because the paper files do not offer the flexibility

of outreach staff members to review case files on the clients. Proper computer backup routines and storage of offsite back-ups create a user friendly environment as

well as prepare a center for any disaster that may occur. Paper files are highly destructible in a disaster such as fire, flood, tornado, etc.

APPENDIX A

Sliding Scale Small Business Definition

Level Four Level Three Level Two Level One

Sales: > 10,000,000

Employees: > 250

Sales: 5,000,000 to

9,999,999.

Employees: 100 to 249

Sales: 1,000,000 to

4,999,999.

Employees: 50 to 99

Sales: < 1,000,000

Employees: < 50

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Steps to Success

Step One—WBC Step Two—SBDC Step Three—SCORE

Nascent entrepreneurs with little or no

business experience. Feasibility and

initial planning stages. Centers offer

basic business training and counseling programs and credit management. Access to capital.

Start-up through existing business

ownership. Business plan assistance. SBDC offers advanced business training and counseling programs..

Existing business owners needing specialized technical assistance. Trouble shooting customized to each individual business.

RESPONSES BY GALE KING TO QUESTIONS FROM SENATOR OLYMPIA J. SNOWE

Question 1. How specifically do Women Small Business Centers help women entrepreneurs gain confidence in their entrepreneurial abilities to overcome social barriers?

Answer. Women Small Business Centers provide information, successful examples, a supportive environment, mentors and encourage peer relationships. All these

things contribute to confidence.

Question 2. Why are women finding it difficult to expand their businesses? What

specific steps would you recommend that Congress and the SBA take to address

these difficulties?

Answer. Women find it difficult for several reasons. They are the prime caregiver

in their families and often have to sacrifice the time required to grow their business

to the needs of their families. There is guilt associated with balancing family and

business expectations. Women also fear rejection and failure, it is safer not to try

than to have to recover from obstacles. We also are unaware of many of the funding

options available to us. Finally, we lack information on how to take our business

beyond the ‘‘mom and pop’’ stage of growth.

Congress and SBA can help with education on funding for business growth including assistance with the application process. Education on business growth practices

is needed. Some suggested subjects: strategic planning, corporate structure, building

your core team. I am not sure how you can help with the family stresses and the

fears associated with business expansion

RESPONSES BY ANN MARIE ALMEIDA TO QUESTIONS FROM

SENATOR OLYMPIA J. SNOWE

Question 1. Today, women owned businesses are the fastest-growing segment of

the economy; they comprise roughly a third of all businesses and are represented

across all industrial categories. However, women-owned businesses are of much

smaller scale in size and continue to generate significantly lower incomes than businesses owned by men. According to the Small Business Administration’s Office of

Advocacy, the average firm owned by a woman generates only 78 percent of the

profit of comparable business owned by man. Please explain these trends. Why are

more women-owned businesses developing at much smaller scales, and with significantly lower profit margins than businesses owned by men? What factors could be

contributing to this disparity? What policies could Congress enact to rectify this disparity?

Answer. While women owned business are developing at a faster rate in the economy, the matter of scale is a factor. Possible contributing exogenous factors include

limited access to capitol; ineffective and limiting Federal procurement policies; market and corporate myopia to fully engage with women-owned business; limited access to networks to gain greater market interest, and the gender commitment to

provide greater access to employee benefits thereby reducing business profits.

Potential policy solutions: Improved Procurement Policies and adoption of Senate

Snowe’s Small Business Procurement Program; widespread and greater support by

the Administration and the SBA to provide equal access to education; and both

words and actions from that agency that underscore their understanding of the importance and impact of women’s entrepreneurship in the U.S.

Question 2. The SBA Office of Advocacy has recently published a report that highlights the difference between men and women entrepreneurs. One of the differences

highlighted in the study was the venture size of a startup business. According to

the report, women startup business with lower levels of initial employment and capVerDate 11-MAY-2000 10:27 Sep 22, 2008 Jkt 041801 PO 00000 Frm 00117 Fmt 6601 Sfmt 6601 C:\DOCS\41801.TXT DianeA PsN: DianeA
114

italization than men. The report further concludes that these results are due to lack

of larger-scaled business opportunities and the financial resources necessary to develop women-owned businesses. In your experience, is there a lack of opportunities

and financial resources available to women to start-up and develop larger-scaled

businesses? Why or why not? Please explain.

Answer. In a report underwritten and distributed by the Ewing Marian Kauffman

Foundation which examined access to venture capital and angel financing, the results indicated two findings that I thought were particularly interesting: one,

women are still only receiving 2–3 percent of the venture capital funds and those

percentages remain stagnant; and two, the majority of venture capital deals are

made through referrals via a fairly closed system of networks. The majority of

women business owners do not have access to these networks of influence.

Question 3. Last month, the SBA Office of Advocacy announced an ambitious new

regulatory reform initiative, the ‘‘Regulatory Review and Reform,’’ or ‘‘r3’’ initiative.

The r3 initiative would help the Office of Advocacy identify the existing Federal

rules that are imposing a significant and potentially unintended burdens on small

businesses—in Maine and across the country. According to the Office of Advocacy,

very small firms with fewer than 20 employees annually spend nearly 45 percent

more per employee than larger firms to comply with Federal regulations. What specific Federal regulations are unduly burdening women-owned small businesses from

creating jobs and driving the economy? Which regulations should the r3 initiative

suggest that Agencies review to mitigate small business burdens?

Answer. For the most part, regulations that impede the growth of small businesses impact both women- and men-owned firms. Setting low employment thresholds for environmental regulations, family and medical leave, and other paperwork

requirements are the areas of greatest interest to the women’s business community.

Setting the threshold too low for these types of requirements can impede small business growth—as owners may decide not to add jobs if doing so will add significantly

to their paperwork burden or put them into a more onerous category for regulatory

compliance.

Question 4. In your opinion, are there duplications in the services provided by

Women Business Centers, Small Business Development Centers and SCORE? What

services are offered by Women Business Centers that are not found in these other

business assistance programs? Should the SBA provide a detailed plan of guidelines

in coordination efforts between these SBA business assistance centers? Why or why

not?

Answer. Research results coordinated by the SBA along with data provided by the

GAO continue to underscore that there is not a duplication of services provided by

the WBCs, SCORE or SBDCs.

As detailed in the SBA longitudinal research, as well as research published by the

National Women’s Business Council and the Association of Women’s Business Centers, and the Center for Women’s Business Research, Women’s Business Centers

provide long-term, full scope training curriculum similar to an Executive MBA program. The multi-week training programs also introduce women entrepreneurs with

a full scope of advisors such as bankers, accountants, attorneys, organizational development consultants, insurance and financial planners and others to vet the business training process that ultimately delivers a bankable business plan. Networking, mentoring and an extended range of business trainings and services such

as access to loans and loan packaging are also elements of the Women’s Business

Centers services. One of the singular elements that distinguish the Women’s Business Programs from all entrepreneurial training programs is its commitment to relationship building. In fact, the effective currency that sustains the longevity of the

women’s business centers and successfully supports its clients is this relationshipbased training. In fact, in the study completed by Babson College regarding the effectiveness of WBC’s women business centers are characterized with the capacity to

deliver and support a cycle of business creation.

RESPONSES BY ANN MARIE ALMEIDA TO QUESTIONS FROM SENATOR MICHAEL B. ENZI

Question 1. I appreciated your testimony that highlighted the need to make the

grant process more transparent by allowing the public to access information regarding the results of applications. For the record, could you please elaborate as to how

the disclosure of this information can improve the operation of Women Business

Centers and their applications?

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Answer. By increased transparency we mean two things: first, that the SBA’s Office of Women’s Business Ownership be clearer about the timing and scheduling of

its annual request for grant proposals; and second, that the criteria for evaluation

and the distribution of the grant amounts be shared openly with all applicants. In

recent years the grant announcements have not been made on a regular schedule,

and not enough time is given for responding to the RFPs. Second, it has been unclear how the awards decisions have been made, and if grant winners are receiving

equal amounts. Having a clearly identified point or rating system, and sharing the

amounts of all of the grants will improve the quality of future applications, thus

benefiting the entire program—as well as the taxpayer.

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