On September 20, the Senate Small Business and Entrepreneurship Committee held a hearing on issues facing women small business owners. The hearing focused on the funding of Women’s Business Centers and the implementation of the Women’s Procurement Program under the Entrepreneurial Development Act (S.1671).
Chair John Kerry (D-MA) said, “Although the Women’s Business Centers program has been a tremendous resource for women, our committee has heard from the business centers that red tape and bureaucracy have been the norm in their dealings with the Small Business Administration (SBA). Late grants payments from the SBA, sometimes even a year or more late, and a lack of clear guidelines have threatened to weaken the program.” Sen. Kerry continued, “To ensure 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 Women’s Procurement Program will continue to play a valuable role. It is essential that the SBA implement these programs quickly and administer them fairly.”
Ranking Member Olympia Snowe (R-ME) said, “I recognize that women-owned businesses unquestionably make tremendous contributions to our economy. As a reflection of their success, on May 25, 2007, President Bush signed into law a bill (P.L. 110-28), which included a Kerry-Snowe-Sununu provision impacting the SBA’s Women’s Business Center program. This legislation…created a three-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.” Sen. Snowe added, “I want to make clear that the SBA must execute the renewal grant program as soon as possible so that women business owners can receive the federal funding they rightly deserve under the new law…I want to press SBA on why there is untimely distribution of SBA funds to Women’s Business Centers.”
Debra Ritt, assistant inspector general for Auditing at the Small Business Administration, addressed the SBA’s late grant disbursements to numerous Women’s Business Centers. “We found that SBA was consistently late in disbursing grant funds, and that the percentage of late payments in FY2006 had increased from the previous year. In FY2006, SBA disbursed over 500 payments to Women’s Business Centers for both new and sustainability grants, but only 25 percent of these payments were made within the Office of Management and Budget’s goal of 30 days. The remaining 75 percent were disbursed from 30 to 353 days following the receipt of payment requests. By comparison, 40 percent of grant payments made in FY2005 were on time.” Ms. Ritt continued, “We identified four major reasons for late payments, most of which were a consequence of poor coordination and communication between the two SBA offices that process payment requests [at] the Office of Women’s Business Ownership (the program office) and the Division of Procurement and Grants Management (the grants office)…While not all of the delays were SBA’s responsibility, we noted that the underlying reasons were largely associated with the following issues: the agency’s interpretation of the payment requirements frequently changed after grant awards; rejection of payment requests frequently occurred before both the program and grant offices completed their reviews, creating multiple restarts; payment requests were returned and resubmitted through the mail when corrections were needed and SBA held up the entire payment regardless of the size of the error; and SBA lacks an effective tracking system for monitoring the status of pay requests.
Anoop Prakash, associate administrator of the Office of Entrepreneurial Development, explained the late grant disbursements: “While the size of the network has grown, including an eightfold increase in appropriated funds over 18 years, the SBA resources assigned to manage and provide services to the portfolio of centers, namely the Office of Women’s Business Ownership (OWBO) and Division of Procurement and Grants Management (DPGM), have declined due to decreases in the overall agency budget. The result has been a program that has outgrown the initial set of policies and manual, paper-based procedures, and an agency program office that has had challenges managing the enormous amount of reimbursement requests and oversight paperwork generated in supporting the 96 centers in the program under the current process.” Mr. Prakash continued, “It is clear to all involved that the program policies and procedures, as administered by the OWBO and DPGM, require a focused re-engineering effort to automate the exchange of forms and information, and streamline the number of reviews and touch-points within the agency. We are committed to engaging in the re-engineering process immediately, in time to affect and enhance the performance of the program in the new fiscal year.”
Ann Marie Almeida, president and chief executive officer of the Association of Women’s Business Centers, shared her frustration with the interactions between SBA and WBCs. Ms. Almeida provided three recommendations to help improve relations between the two: “per-center funding allocations should be consistent and transparent; performance-based funding allocations should be communicated clearly and applied evenly; and program grants disbursements should be made in a timely manner.” Ms. Almeida added, “We believe that both the names of the grant recipients and the value of the awards should be made public…We suggest, further, though, that there be a deadline established during which time the SBA should disburse the program awards. In recent years, many WBCs have waited months, often until the very end of the fiscal year before they receive the funds for the services that they were delivering throughout the course of the year. This puts our members, all of whom are relatively small nonprofit organizations, in a severe cash flow crunch. This does not set a good money management example to the Center’s clients, and it violates the federal government’s Prompt Payment Act.”
Rosemary Bratton, executive director of the Wyoming Women’s Business Center; Wendi Goldsmith, president of the Bioengineering Group; Gale King, owner of Treats by Gale, LLC; and William B. Shear, director of Financial Markets and Community Investments at the U.S. Government Accountability Office, also testified.
