ENTREPRENEURIAL 

ASSISTANCE

Efficiency and 

Effectiveness of 

Fragmented Programs Are 

Unclear 

Statement of William B. Shear, Director 

Financial Markets and Community Investment

Testimony 

Before the Committee on Small Business 

and Entrepreneurship, U.S. Senate

For Release on Delivery 

Expected at 10:00 a.m. EDT

Thursday, March 29, 2012

GAO-12-601T

United States Government Accountability Office

GAO
 

Page 1 GAO-12-601T Entrepreneurial Assistance

Chair Landrieu, Ranking Member Snowe, and Members of the 

Committee:

I am pleased to be here today to discuss our work on overlap, 

fragmentation, and potential duplication in economic development 

programs. Over the past year, we have issued a series of reports on 

potential duplication among federal economic development programs.1

Most recently in February 2012 we reported new information on the 

existence of overlap and fragmentation among those federal economic 

development programs that support entrepreneurs.2 Specifically, we 

focused our analysis on 53 of the 80 economic development programs at 

the Departments of Commerce (Commerce), Housing and Urban 

Development (HUD), Agriculture (USDA), and the Small Business 

Administration (SBA) that fund entrepreneurial assistance because these 

programs appear to overlap the most.3 According to agency officials, 

these programs, which typically fund a variety of activities in addition to 

supporting entrepreneurs, spent an estimated $2.6 billion in enacted 

appropriations on economic development efforts in fiscal year 2010.4

 

1

GAO, Opportunities to Reduce Potential Duplication in Government Programs, Save Tax 

Dollars, and Enhance Revenue, GAO-11-318SP (Washington D.C.: Mar. 1, 2011) and 

Efficiency and Effectiveness of Fragmented Economic Development Programs Are 

Unclear, GAO-11-477R (Washington, D.C.: May 19, 2011). 

2

GAO, 2012 Annual Report: Opportunities to Reduce Duplication, Overlap and 

Fragmentation, Achieve Savings, and Enhance Revenue, GAO-12-342SP (Washington 

D.C.: Feb. 28, 2012).

3

The number of programs administered by Commerce, HUD, SBA, and USDA that were 

identified in GAO-11-477R as supporting entrepreneurial efforts decreased from 54 to 53 

because Commerce merged its Minority Business Opportunity Center program and

Minority Business Enterprise Center program into one program that is now called Minority 

Business Center. In addition, two of the original Commerce programs identified in our 

March and May 2011 reports—Community Trade Adjustment Assistance and Research 

and Evaluation—have been replaced with two other Commerce programs—Trade 

Adjustment Assistance for Firms and the Economic Development-Support for Planning 

Organizations—because one of the original programs had temporary funding and the 

other original program was misclassified as an economic development program. The two 

new Commerce programs that have been added should have been included in the March 

and May 2011 reports, according to Commerce officials. 

4

We excluded the portion of the Community Development Block Grant funding that HUD 

reported is not used to support economic development. The total enacted appropriations 

for these 53 programs was about $5.6 billion for fiscal year 2010. 

 
 

Page 2 GAO-12-601T Entrepreneurial Assistance

Economic development programs, if effective, can develop and expand 

businesses, and thus contribute to the nation’s economic growth. 

However, the ways that these programs are administered could lead to 

inefficient delivery of services to entrepreneurs, such as requiring 

recipients to fill out applications to multiple agencies with varying program 

requirements, and could compromise the government’s ability to 

effectively provide the needed service and meet the shared goals of the 

programs.

My testimony today is based on information on these 53 programs that is 

discussed in our recent February 2012 report. Specifically, this testimony 

discusses our work to date on (1) the extent of overlap and fragmentation 

among these programs and (2) the availability of meaningful performance 

information on these 53 programs. Because we have ongoing work that 

will be issued later this year, we also provide an overview of the nature of 

our ongoing work.

In summary, based on our work to date, we have found that

• Programs that support entrepreneurs overlap based not only on their 

shared purpose of serving entrepreneurs but also on the type of 

assistance they offer. Much of the overlap and fragmentation among 

these 53 programs is concentrated among programs that support 

economically distressed and disadvantaged areas and programs that 

assist disadvantaged and small businesses. In addition, many of 

these economic development programs also operate in both urban 

and rural areas.5

• While most (45) of the 53 economic development programs that 

support entrepreneurs have reasonable performance measures and 

tend to meet their annual performance goals, few evaluation studies 

have been completed and little evaluative information exists that 

assesses the programs’ effectiveness.

As we continue our ongoing work, we are conducting additional analyses 

of these 53 programs to determine, among other things, (1) what support 

do federal economic development programs provide to entrepreneurs and 

 

5

While the definition of rural can vary among programs, USDA’s typically defines it as 

covering areas with population limits ranging from less than 2,500 to 50,000.
 

Page 3 GAO-12-601T Entrepreneurial Assistance

to what extent the programs are duplicative, overlapping, or fragmented; 

(2) the effects on entrepreneurs and the steps agencies have taken to 

address any duplication, overlap, or fragmentation; and (3) the extent to 

which these programs have established and met performance goals and 

been evaluated for effectiveness.

For our February 2012 report, which this testimony is based on, we 

focused our analysis on the 53 economic development programs at 

Commerce, HUD, USDA, and SBA that fund entrepreneurial assistance 

because these programs appeared to overlap the most. We examined the 

extent to which the federal government’s efforts to support entrepreneurs 

overlap among these numerous, fragmented programs by examining their 

missions, goals, services provided, and targeted beneficiaries and areas. 

We also collected information on performance measures that the 

agencies collect to track the performance of each of the 53 programs, and 

any evaluation studies conducted or commissioned by the agencies 

evaluating the effectiveness of these programs. This process included 

meeting with agency officials to corroborate the publicly available 

information. We also determined the reasonableness of the performance 

measures by assessing each measure against agency strategic goals 

and specific program missions to determine the extent to which they are 

aligned. The work on which this statement is based was performed from 

June 2011 through February 2012 in accordance with generally accepted 

government auditing standards. Those standards require that we plan 

and perform the audit to obtain sufficient, appropriate evidence to provide 

a reasonable basis for our findings and conclusions based on our audit 

objectives. We believe that the evidence obtained provides a reasonable 

basis for our findings and conclusions based on our audit objectives.

Based on a review of the missions and other related program information 

for these 53 programs, we determined that these programs overlap based 

not only on their shared purpose of serving entrepreneurs but also on the 

type of assistance they offer. The programs generally can be grouped 

according to at least one of three types of assistance that address 

different entrepreneurial needs: help obtaining (1) technical assistance, 

(2) financial assistance, and (3) government contracts. Many of the 

Programs that 

Support 

Entrepreneurs 

Overlap and Are 

Fragmented
 

Page 4 GAO-12-601T Entrepreneurial Assistance

programs can provide more than one type of assistance, and most focus 

on technical and/or financial assistance:6

• Technical assistance: Thirty-six programs distributed across the four 

agencies provide technical assistance, including business training and 

counseling and research and development support.

• Financial assistance: Thirty-three programs distributed across the four 

agencies support entrepreneurs through financial assistance in the 

form of grants and loans.

• Government contracting assistance: Seven programs distributed 

between two of the four agencies support entrepreneurs by helping 

them qualify for federal procurement opportunities.

Table 1 illustrates overlap among programs that provide entrepreneurial 

assistance in terms of the type of assistance they provide. For example, 

SBA administers 10 of the 36 programs distributed across the four 

agencies that provide technical assistance, including business training 

and counseling and research and development support. The agency also 

administers 10 of the 33 programs distributed across the four agencies 

that support entrepreneurs through financial assistance in the form of 

grants and loans, and five of the seven programs that provide 

government contracting assistance to entrepreneurs. Appendix I lists the 

programs GAO identified that may have similar or overlapping objectives, 

provide similar services or be fragmented across government missions. 

Overlap and fragmentation may not necessarily lead to actual duplication, 

and some degree of overlap and duplication may be justified.

 

6

SBA administers the two programs that solely provide entrepreneurs with assistance in 

obtaining government contracts: the HUBZone program, which supports small businesses 

located in economically distressed areas, and the Procurement Assistance to Small 

Businesses program, which serves small businesses located in any area.
 

Page 5 GAO-12-601T Entrepreneurial Assistance 

Table 1: 53 Programs That Support Entrepreneurs, by Type of Assistance, as of 

September 30, 2011a

 HUD SBA USDA Commerce Totalb

Technical assistance only 2 6 5 4 17

Financial assistance only 3 5 5 13

Technical and financial assistance only 7 3 4 2 16

Government contracting assistance only 2 2

Technical and government 

contracting only 

1 1

Financial and government 

contracting only 

2 2

Technical, financial, and government 

contracting assistance 

 2 2

Total 12 19 14 8 53

Source: GAO analysis of information provided by Commerce, HUD, USDA, and SBA. 

Notes: 

a

Some of the programs may not have received funding in fiscal year 2011. 

b

The 36 technical assistance programs include those in the following categories: technical assistance 

only; technical and financial assistance only; technical, financial, and government contracting 

assistance; and technical and government contracting assistance only. The 33 financial assistance 

programs include those in the following categories: financial assistance only; technical and financial 

assistance only; technical, financial, and government contracting assistance; and financial and 

government contracting assistance only. The seven government contracting assistance programs 

include those in the following categories: government contracting assistance only, technical and 

government contracting assistance only, financial and government contracting assistance only, and 

technical, financial, and government contracting assistance. 

Furthermore, we found that much of the overlap and fragmentation 

among these 53 programs is concentrated among those that support 

economically distressed and disadvantaged areas and programs that 

assist disadvantaged and small businesses (see fig. 1 below). For 

example, 32 programs provide technical assistance to small businesses, 

including all 10 of the SBA programs that provide technical assistance. In 

addition, 33 programs provide technical assistance to businesses located 

in economically distressed areas, including 10 SBA programs providing 

such assistance. 
 

Page 6 GAO-12-601T Entrepreneurial Assistance

Figure 1: Programs That Provide Technical and Financial Assistance, by Type of 

Business and Community Served, as of September 30, 2011

Note: Some of the programs may not have received funding in fiscal year 2011. 

The number of programs that support entrepreneurs—53—and the 

overlap among these programs raise questions about whether a 

fragmented system is the most effective way to support entrepreneurs. By 

exploring alternatives, agencies may be able to determine whether there 

are more efficient ways to continue to serve the unique needs of 

entrepreneurs, including consolidating various programs. In ongoing 

work, we plan to examine the extent of potential duplication among these 

programs as well as determine the effects of this fragmented system on 

the delivery of technical assistance to entrepreneurs.

To address issues arising from potential overlap and fragmentation in 

economic development programs, we previously identified collaborative 

practices agencies should consider implementing in order to maximize 

performance and results of federal programs that share common 

outcomes. Our work to date shows that Commerce, USDA, and SBA 

have taken initial steps to implement at least one of the collaborative 

practices—defining and articulating common outcomes for some of their 

related programs. For example, in April 2010 USDA and SBA signed a 

memorandum of understanding (MOU) in response to GAO’s 

recommendation that the agencies establish a formal approach to 

encourage further collaboration. The MOU defined and articulated a 

common outcome focused on improving service delivery to small 

businesses in underserved rural areas. Under the MOU, USDA and SBA 
 

Page 7 GAO-12-601T Entrepreneurial Assistance

agreed that their field offices would advise potential borrowers of the 

other agency’s programs that may meet their small business financing 

needs and coordinate the referral of small business applicants to one 

another where appropriate, work to make each agency’s programs more 

complementary by minimizing differences in program fees and processing 

and closing procedures, and develop joint training seminars on each 

agency’s programs. In addition, USDA and SBA agreed to measure 

progress under the MOU. USDA’s April 2011 survey of state directors 

indicates progress under the MOU in several areas, including field offices 

advising borrowers of SBA’s programs, referring borrowers to SBA and its 

resource partners, and exploring ways to make USDA and SBA programs 

more complementary. However, we have not received comparable 

information from SBA indicating progress in this area. In addition, HUD, 

USDA, and SBA have provided limited evidence that they have taken 

steps to develop compatible policies or procedures with other federal 

agencies, or to search for opportunities to leverage physical and 

administrative resources with their federal partners.

Based on our work to date, we found that 45 of the 53 economic 

development programs we identified that support entrepreneurs have 

reasonable performance measures and tend to meet their annual 

performance goals; however, the four agencies have either never 

conducted a performance evaluation or have conducted only one in the 

past decade for 39 of the 53 programs. Based on our review, we found 

that in the past 10 years SBA has conducted seven performance 

evaluation studies on some of its programs. Three of the seven 

evaluations have examined SBA’s three main counseling and training 

programs. In order to effectively evaluate and oversee the services being 

provided, Congress and the agencies need meaningful performance 

information such as performance measures and evaluation studies. This 

information is needed to help decision makers identify ways to make 

more informed decisions about allocating increasingly scarce resources 

among overlapping programs. Specifically, performance measures can 

provide information on an agency’s progress toward meeting certain 

program and agencywide strategic goals, expressed as measurable 

performance standards. In contrast, program evaluations are systematic 

ways to assess a broader range of information on program performance. 

As a result, evaluation studies can help identify which programs are 

effective or not, explain why goals were not met and identify strategies for 

meeting unmet goals, and estimate what would have occurred in the 

absence of the program.

Agencies Lack 

Meaningful 

Information on the 

Effectiveness of 

Programs that 

Support 

Entrepreneurs
 

Page 8 GAO-12-601T Entrepreneurial Assistance

Without results from program evaluations and performance measurement 

data, agencies lack the ability to measure the overall impact of these 

programs, and decision makers lack information that could help them to 

identify programs that could be better structured and improve the 

efficiency with which the government provides these services. Moreover, 

the Office of Management and Budget (OMB) has recently been required

to coordinate with agencies to ensure that they better track the results of 

their programs. Specifically, the GPRA Modernization Act of 2010 

(GPRAMA) requires OMB to work with agencies to, among other things, 

develop outcome-oriented goals for certain crosscutting policy areas; 

GPRAMA also requires agencies to report annually on how these goals

will be achieved.7 Other GPRAMA requirements could lead to improved

coordination and collaboration among agencies. For instance, GPRAMA 

requires each agency to identify the various organizations and program 

activities—both within and external to the agency—that contribute to each 

agency’s goal. In ongoing work, we plan to determine reasons why the 

agencies (1) do not conduct more routine evaluations of these programs 

and (2) have not established and do not track performance measures for 

8 of the 53 programs.

As mentioned earlier, our ongoing work focuses on, among other things, 

(1) what support do federal economic development programs provide to 

entrepreneurs and to what extent the programs are duplicative, 

overlapping, or fragmented; (2) the effects on entrepreneurs and the 

steps agencies have taken to address any duplication, overlap, or 

fragmentation; and (3) the extent to which these programs have 

established and met performance goals and been evaluated for 

effectiveness. To examine the support federal economic development 

programs provide to entrepreneurs and to what extent the programs are 

duplicative, overlapping, or fragmented, we will review information on the 

activities and services that the agencies conduct to administer each of the 

53 programs, as well as associated budget information for each program.

We will also evaluate the agencies’ methods for tracking the activities 

conducted, services provided, and associated costs against criteria that 

we have established related to internal control standards. To identify the 

effects of technical assistance provided to entrepreneurs and the steps 

agencies have taken to address any duplication, overlap, or 

 

7

Pub. L. No. 111-352 (2011).

Framework for 

Ongoing Analysis
 

Page 9 GAO-12-601T Entrepreneurial Assistance

fragmentation, we will, among other things, conduct interviews with 

federal agency and regional commission officials, SBA resource partners 

such as Small Business Development Centers and SCORE, 

entrepreneurs, and state and local partners in select areas across the 

U.S., including in rural areas. During these interviews we will determine 

how the federal agencies collaborate to support entrepreneurs, identify 

any reported lessons learned from these collaborative efforts, as well as 

challenges they face to collaboratively support entrepreneurs. We will 

also obtain their views on the negative effects that the overlapping, 

fragmented, or duplicative programs have on the efficient delivery of 

services to entrepreneurs. Finally, we will interview program officials to 

determine the reasons why the agencies do not conduct more evaluation 

studies.

Chair Landrieu and Ranking Member Snowe, this concludes my prepared 

statement. I would be happy to answer any questions at this time.

For further information on this testimony, please contact me at (202) 512-

8678 or shearw@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this statement. Key contributors to this testimony include Marshall 

Hamlett and Triana McNeil, Assistant Directors; Cindy Gilbert; Geoff King; 

John McGrail; Jennifer Schwartz; and Karen Villafana.

Contacts and Staff 

Acknowledgements
Appendix I: List of Programs That Support 

Entrepreneurs and Related Budgetary 

Information

Page 10 GAO-12-601T Entrepreneurial Assistance

Agency Program FY 2010 obligations

Department of Commerce

Grants for Public Works and Economic Development 

Facilities

$158,930,000

Economic Development/ Support for Planning Organizations 31,391,000 

Economic Development/ Technical Assistance 9,800,000 

Economic Adjustment Assistance 45,270,000 

Trade Adjustment Assistance 18,987,000 

Global Climate Change Mitigation Incentive Fund 25,000,000 

Minority Business Centers (merged the former Minority 

Business Enterprise Centers and Minority Business 

Opportunity Center programs) 

10,113,693 

Native American Business Enterprise Centers 1,351,500 

U.S. Department of Agriculture 

Empowerment Zones 500,000 

Woody Biomass Utilization Grant Program 5,000,000 

1890 Land Grant Institutions Rural Entrepreneurial Outreach 

Program/Rural Business Entrepreneur Development 

Initiative/BISNET

0 

Small Business Innovation Research 22,000,000 

Biomass Research and Development Initiative Competitive 

Grants Program

0 

Value Added Producer Grants 19,400,000 

Agriculture Innovation Center 0 

Small Socially-Disadvantaged Producer Grants 3,500,000 

Intermediary Re-lending 8,500,000 

Business and Industry Loans 52,900,000 

Rural Business Enterprise Grants 38,700,000 

Rural Cooperative Development Grants 8,300,000 

Rural Business Opportunity Grants 2,500,000 

Rural Microentrepreneur Assistance Program 9,000,000 

Department of Housing and Urban 

Development

Community Development Block Grant (CDBG)/Entitlement 

Grants

2,760,223,970 

CDBG/Special Purpose/Insular Areas 6,930,000 

CDBG/States 1,176,594,747 

CDBG/Non-entitlement CDBG Grants in Hawaii 5,791,797 

CDBG/Brownfields Economic Development Initiative 17,500,000 

CDBG/Section 108 Loan Guarantees 6,000,000 

Appendix I: List of Programs That Support 

Entrepreneurs and Related Budgetary 

Information 
Appendix I: List of Programs That Support 

Entrepreneurs and Related Budgetary 

Information

Page 11 GAO-12-601T Entrepreneurial Assistance

Agency Program FY 2010 obligations

Section 4 Capacity Building for Affordable Housing and 

Community Development

50,000,000 

Rural Innovation Fund 25,000,000 

CDBG Disaster Recovery Grants 100,000,000 

Indian CDBG 65,000,000 

Hispanic Serving Institutions Assisting Communities 6,250,000 

Alaska Native/Native Hawaiian Institutions Assisting 

Communities

3,265,000 

Small Business Administration

8(a) Business Development Program 56,817,000

7(j) Technical Assistance 3,275,000 

Procurement Assistance to Small Businesses 3,164,000 

Small Business Investment Companies 24,262,000 

7(a) Loan Program 518,869,000 

Surety Bond Guarantee Program 0 

SCORE 7,000,000 

Small Business Development Centers 112,624,000 

504 Loan Program 70,645,000 

Women’s Business Centers 13,997,000 

Veterans’ Business Outreach Centers 2,500,000

Microloan Program 42,901,000

PRIME 8,000,000

New Markets Venture Capital Program 0 

7(a) Export Loan Guarantees 0 

HUBZone 2,189,000

Small Business Technology Transfer Program 0 

Small Business Innovation Research Program 0 

Federal and State Technology Partnership Program 2,000,000

Total $5,561,941,707 

(250673)
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