Small Business Administration
Opportunities Exist to Improve Oversight of Women's Business Centers and Coordination among SBA's Business Assistance Programs Gao ID: GAO-08-49 November 16, 2007The Women's Business Center (WBC) Program provides training and counseling services to women entrepreneurs, especially those who are socially and economically disadvantaged. In fiscal year 2007, the Small Business Administration (SBA) funded awards to 99 WBCs. However, Congress and WBCs expressed concerns about the uncertain nature of the program's funding structure. Concerns have also been raised about whether the WBC and two other SBA programs, the Small Business Development Center (SBDC) and SCORE programs, duplicate services. This report addresses (1) uncertainties associated with the funding process for WBCs; (2) SBA's oversight of the WBC program; and (3) actions that SBA and WBCs have taken to avoid duplication among the WBC, SBDC, and SCORE programs. GAO reviewed policies, procedures, examinations, and studies related to the funding, oversight, and services of WBCs and interviewed SBA, WBC, SBDC, and SCORE officials.
Until 2007, SBA funded WBCs for up to 10 years, at which time it was expected that they would become self-sustaining. Specifically, since 1997, SBA has made annual awards to WBCs for up to 5 years. Because of concerns that WBCs could not sustain operations without continued SBA funding, in 1999, Congress created a pilot program to extend funding an additional 5 years. Due to continued uncertainty about WBCs' ability to sustain operations without SBA funding, in May 2007, Congress passed legislation authorizing renewable 3-year awards to WBCs that "graduated" from the program after 10 years and to current program participants. Like the current awards, the 3-year awards are competitive. SBA is revising its award process and plans to provide the 3-year awards in fiscal year 2008. Though SBA has oversight procedures in place to monitor WBCs' performance and use of federal funds, GAO found indications that staff shortages from the agency's downsizing and ineffective communication was hindering SBA's oversight efforts. SBA relies extensively on district office staff to oversee WBCs, but these staff members have other agency responsibilities and may not have the needed expertise to conduct some WBC oversight procedures. SBA provides annual training and has taken steps to adjust its oversight procedures to adapt to staffing changes, but concerns remain. Some WBCs also cited problems with communication, and one study reported that 54 percent of 52 WBCs responding to its survey said that SBA could improve its communication with the centers. Ineffective communication led to confusion among some WBCs about how to meet program requirements. Under the terms of the WBC award, SBA requires WBCs to coordinate with local SBDCs and SCORE chapters. However, GAO found that SBA provided limited guidance or information on successful coordination. Most of the WBCs that GAO spoke with explained that in some situations they referred clients to an SBDC or SCORE counselor, and some WBCs took steps to more actively coordinate with local SBDCs and SCORE chapters to avoid duplication and leverage resources. Still, some WBCs said that coordinating services was difficult, as the programs have similar performance measures and could end up competing for clients. Such concerns thwart coordination efforts and could increase the risk of duplication in some geographic areas.
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Director: Team: Phone:GAO-08-49, Small Business Administration: Opportunities Exist to Improve Oversight of Women's Business Centers and Coordination among SBA's Business Assistance Programs
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
November 2007:
Small Business Administration:
Opportunities Exist to Improve Oversight of Women's Business Centers
and Coordination among SBA's Business Assistance Programs:
Women's Business Centers:
GAO-08-49:
GAO Highlights:
Highlights of GAO-08-49, a report to congressional requesters.
Why GAO Did This Study:
The Women‘s Business Center (WBC) Program provides training and
counseling services to women entrepreneurs, especially those who are
socially and economically disadvantaged. In fiscal year 2007, the Small
Business Administration (SBA) funded awards to 99 WBCs. However,
Congress and WBCs expressed concerns about the uncertain nature of the
program‘s funding structure. Concerns have also been raised about
whether the WBC and two other SBA programs, the Small Business
Development Center (SBDC) and SCORE programs, duplicate services. This
report addresses (1) uncertainties associated with the funding process
for WBCs; (2) SBA‘s oversight of the WBC program; and (3) actions that
SBA and WBCs have taken to avoid duplication among the WBC, SBDC, and
SCORE programs. GAO reviewed policies, procedures, examinations, and
studies related to the funding, oversight, and services of WBCs and
interviewed SBA, WBC, SBDC, and SCORE officials.
What GAO Found:
Until 2007, SBA funded WBCs for up to 10 years, at which time it was
expected that they would become self-sustaining. Specifically, since
1997, SBA has made annual awards to WBCs for up to 5 years. Because of
concerns that WBCs could not sustain operations without continued SBA
funding, in 1999, Congress created a pilot program to extend funding an
additional 5 years. Due to continued uncertainty about WBCs‘ ability to
sustain operations without SBA funding, in May 2007, Congress passed
legislation authorizing renewable 3-year awards to WBCs that
’graduated“ from the program after 10 years and to current program
participants. Like the current awards, the 3-year awards are
competitive. SBA is revising its award process and plans to provide the
3-year awards in fiscal year 2008 (see figure below).
Though SBA has oversight procedures in place to monitor WBCs‘
performance and use of federal funds, GAO found indications that staff
shortages from the agency‘s downsizing and ineffective communication
was hindering SBA‘s oversight efforts. SBA relies extensively on
district office staff to oversee WBCs, but these staff members have
other agency responsibilities and may not have the needed expertise to
conduct some WBC oversight procedures. SBA provides annual training and
has taken steps to adjust its oversight procedures to adapt to staffing
changes, but concerns remain. Some WBCs also cited problems with
communication, and one study reported that 54 percent of 52 WBCs
responding to its survey said that SBA could improve its communication
with the centers. Ineffective communication led to confusion among some
WBCs about how to meet program requirements.
Under the terms of the WBC award, SBA requires WBCs to coordinate with
local SBDCs and SCORE chapters. However, GAO found that SBA provided
limited guidance or information on successful coordination. Most of the
WBCs that GAO spoke with explained that in some situations they
referred clients to an SBDC or SCORE counselor, and some WBCs took
steps to more actively coordinate with local SBDCs and SCORE chapters
to avoid duplication and leverage resources. Still, some WBCs said that
coordinating services was difficult, as the programs have similar
performance measures and could end up competing for clients. Such
concerns thwart coordination efforts and could increase the risk of
duplication in some geographic areas.
Figure: Women's Business Center Program Legislative Timeline:
This figure is a women's business center legislative timeline between
1988 and 2007. A few years are highlighted on the timeline:
1998: The Women's Business Ownership Act of 1988 attended the Small
Business Act to create the Women's Business Center (WBC) program with
demonstration projects that would expire in 1991;
1991: The Women's Business Development Act of 1991 made WBC's 3-year
projects;
1997: The Small Business Reauthorization Act of 1997 extended WBC
projects to 5 years.
1999: The Women's Business Centers Sustainability Act of 1999 created 5-
year sustainability pilot projects awarded to WBC's that had completed
the first 5-year project;
2007: The U.S. Troops Readiness, Veterans' Care, Katrina Recovery, and
Iraq Accountability Appropriations Act amended the Small Business Act
to repeal the sustainability pilot program and to permit WBC's to
receive SBA funding on a continual basis.
[See PDF for image]
Source: GAO analysis of WBC program legislation.
[End of figure]
What GAO Recommends:
To improve oversight of WBCs, GAO recommends that SBA reassess the
responsibilities assigned to district office staff and develop a
communication strategy. GAO also recommends that SBA provide guidance
to facilitate coordination among its business assistance programs. SBA
had no comments on a draft of this report.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.GAO-08-49]. For more information, contact
William B. Shear at (202) 512-8678 or shearw@gao.gov
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Recent Legislation Addressed Concerns about the WBC Program's Funding:
SBA Has Oversight Procedures in Place, but Imbalances in Its Staff
Resources and Ineffective Communication with WBCs Have Hindered Their
Effectiveness:
WBCs Make Some Efforts to Coordinate with SBDCs and SCORE, but SBA
Provides Limited Guidance to Support These Efforts:
Conclusions:
Recommendations for Executive Action:
Agency Comments:
Appendix I: Scope and Methodology:
Appendix II: Studies Evaluating the Impact of WBCs:
Appendix III:GAO Contact and Staff Acknowledgments:
Tables:
Table 1: WBC Program Legislative Changes by Center Status:
Table 2: Examples of SBA's Fiscal Year 2007 Output and Outcome
Performance Measures for WBCs:
Table 3: Locations of Site Visits and Telephone Interviews with WBCs
and SBDCs:
Table 4: Assessment of Four Studies of WBCs:
Figures:
Figure 1: WBCs in SBA's Program in Fiscal Year 2007:
Figure 2: WBC Program Legislative Timeline:
Figure 3: WBC Coordination Efforts:
Abbreviations:
CPA: certified public accountant:
DOTR: District Office Technical Representative:
DPGM: Division of Procurement and Grants Management:
EDMIS: Entrepreneurial Development Management Information System:
OED: Office of Entrepreneurial Development:
OIG: Office of Inspector General:
OWBO: Office of Women's Business Ownership:
PART: Program Assessment Rating Tool:
SBA: Small Business Administration:
SBDC: Small Business Development Center:
SCORE: formerly Service Corps of Retired Executives:
WBC: Women's Business Center:
WBOR: Women's Business Ownership Representative:
United States Government Accountability Office:
Washington, DC 20548:
November 16, 2007:
The Honorable Steve Chabot:
Ranking Member:
Committee on Small Business:
House of Representatives:
The Honorable John F. Kerry:
Chairman:
Committee on Small Business and Entrepreneurship:
United States Senate:
The Honorable Olympia J. Snowe:
Ranking Member:
Committee on Small Business and Entrepreneurship:
United States Senate:
The Honorable Donald A. Manzullo:
House of Representatives:
The Women's Business Center (WBC) program, one of several business
assistance programs offered by the Small Business Administration (SBA),
provides long-term training, counseling, networking, and mentoring to
women entrepreneurs, especially those who are socially and economically
disadvantaged. In 1989 when the program began, SBA funded 13
WBCs.[Footnote 1] Since then, the program has grown considerably. With
a budget of approximately $12 million in fiscal year 2007, SBA funded
awards to 99 WBCs in amounts ranging from $90,000 to $150,000.
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. Private nonprofit
organizations are eligible to apply for funds to set up WBCs, and
successful applicants are awarded cooperative agreements to carry out
program activities under the oversight of SBA's Office of Women's
Business Ownership (OWBO) in SBA's Office of Entrepreneurial
Development (OED).[Footnote 2] However, Congress and WBCs participating
in the program have expressed concerns about the centers' ability to
continue operating without SBA funding and about the uncertain funding
structure of the program. Congress has made changes to the WBC program
in several reauthorizations to extend the program since it was first
established in 1988. In its 1999 reauthorization, Congress made a
significant change by establishing the sustainability pilot program to
make funding available to WBCs after the initial 5-year funding limit,
which many believed did not offer WBCs enough time to become self-
sustaining. Because the pilot also had a 5-year limit, WBCs could no
longer receive funding from SBA after 10 years, and the pilot raised
additional concerns because of uncertainty about its reauthorization
and funding.[Footnote 3] In May 2007, to address the uncertainties
about the pilot program, Congress replaced it by allowing WBCs--
including those that had "graduated" from the program--to receive 3-
year renewable awards.[Footnote 4]
While there have been changes in the WBC program's funding structure,
the budget available for WBC awards has remained relatively constant
for the past 5 years. During that same time, SBA has downsized and has
fewer agency resources. Concerns have also been raised about whether
SBA's business assistance programs are duplicating each other's
efforts. In a previous report, we noted the need for the federal
government, during this time of constrained resources, to reexamine
federal programs that may have overlapping missions and
responsibilities.[Footnote 5] The two other primary business assistance
programs that SBA administers are the Small Business Development Center
(SBDC) and SCORE (formerly called the Service Corps of Retired
Executives) programs. These programs also provide training and
counseling services to aspiring and existing small business owners but
are not expected to target a particular group. Under the terms of the
SBA award, WBCs are required to coordinate with local SBDCs and SCORE
chapters when appropriate.
To assist you in oversight of SBA programs and because of your interest
in the WBC program, you requested that we evaluate key issues related
to the program, including funding for WBCs and the potential for
duplication among the WBC, SBDC, and SCORE programs. Accordingly, this
report addresses (1) the uncertainties associated with the funding
process for WBCs; (2) SBA's oversight of the WBC program, including
policies and procedures for monitoring compliance with program
requirements and assessing program effectiveness; and (3) the services
that WBCs provide to small businesses and actions that SBA and WBCs
have taken to avoid duplicating the services offered by the SBDC and
SCORE programs.
To address these objectives, we reviewed the legislative history of the
WBC program, our previous reports, SBA's policies and procedures for
administering the program, and studies of the program conducted by SBA,
SBA's Office of Inspector General, and external organizations. For 7 of
the 10 WBCs that we visited, we reviewed documentation that SBA uses to
oversee WBCs and interviewed WBC officials about their services,
relationship with SBA, and coordination with SBDCs and SCORE. We also
interviewed SBA officials about the WBC, SBDC, and SCORE programs. In
addition, we compared the statutory authority for the three programs;
interviewed a random sample of 17 WBCs about their services,
relationship with SBA, and coordination with SBDCs and SCORE; and
visited 6 SBDCs and the SCORE national office.
We conducted our work in California, Georgia, Illinois, Maryland,
Massachusetts, Virginia, and Washington, D.C. between August 2006 and
November 2007 in accordance with generally accepted government auditing
standards. Appendix I discusses our scope and methodology in greater
detail.
Results in Brief:
Recent legislation has addressed concerns about the uncertainty of
funding WBCs. Until 2007, SBA funded WBCs on a temporary basis for up
to 10 years at which time it was expected that the centers would become
self-sustaining. When the WBC program was created by Congress in 1988,
it began as a demonstration project that ended in 1991. In 1991,
Congress authorized 3-year projects and in 1997, Congress authorized
SBA to make annual awards to WBCs for up to 5 years. Because of
concerns that WBCs could not sustain operations without continued SBA
funding, in 1999, Congress created a pilot program to extend funding an
additional 5 years, allowing successful WBCs to receive SBA funding for
a total of 10 years. However, WBCs continued to face funding
uncertainties. First, because WBCs sometimes established their
operations with SBA funds and depended on SBA funds to leverage other
support, many were concerned about whether they could continue
operations after 5 to 10 years of receiving SBA funding. Second, the
sustainability funding was a pilot program that had to be reauthorized
each year, creating uncertainty about whether there was a commitment to
continue the program. In 2007, the Office of Management and Budget
(OMB) reported in its Program Assessment Rating Tool (PART) that
frequent changes by Congress in the WBC program's funding structure,
delays in extending sustainability funding, and uncertainty about the
future had created challenges for the program.[Footnote 6] Recent
legislation for the WBC program replaced the sustainability pilot
program with 3-year renewable awards. WBCs that have graduated from the
program after 10 years as well as those currently in the regular and
sustainability pilot programs will be able to compete for the new
awards. The new funding structure could increase competition, however,
and exactly how much funding will be available in each future 3-year
cycle is unclear. But the increased competition also provides an
opportunity for SBA to continue funding high performing centers.
Because the WBC program is a competitive discretionary award program,
WBCs in the program compete annually for the maximum award amount but
continue to receive SBA funds for the length of the project, as long as
their performance is satisfactory. SBA has criteria for ranking new
applicants and existing program participants for awards and is revising
its award process to incorporate the new program changes.
SBA has developed written procedures for assessing the performance and
financial management activities of WBCs, but imbalances in its
allocation of staff resources and ineffective communication limit
assurances that WBCs are in compliance and meeting the program's
requirements. To ensure that WBCs are meeting these requirements, SBA
conducts semiannual programmatic and financial examinations and
requires that WBCs submit quarterly reports on program activities,
progress in meeting annual performance goals, and financial expenses
that qualify for SBA reimbursement. SBA relies heavily on district
office technical representatives (DOTR) to carry out oversight
responsibilities, but we found indications that the current allocation
of responsibilities was not effective, given the staff levels and
expertise in SBA's district offices. First, some DOTRs may have too
many responsibilities to be effective, particularly since they have
other full-time agency responsibilities in addition to overseeing WBCs
in their districts. Second, DOTRs conduct WBC programmatic and
financial examinations for SBA, but some DOTRs lack the expertise to
conduct the financial component of these examinations. Third, although
most WBCs we interviewed spoke positively of their relationship with
their DOTR, several told us that the reduction in district office
staffing related to SBA's downsizing in recent years had led to staff
changes. As a result, some of the newer DOTRs might not have relevant
oversight experience. SBA has taken some steps to adjust program
oversight procedures to adapt to its limited staff resources, but DOTRs
continue to have a wide range of responsibilities and could be
challenged in carrying them out effectively. In addition, some WBCs
told us that communication with SBA headquarters officials did not
provide what they needed to meet program requirements. One study that
we reviewed reported that 54 percent of 52 WBCs responding to its
survey said that SBA could improve its communication with the centers.
To communicate with WBCs, OWBO conducts monthly conference calls with
WBCs and DOTRs and uses e-mail to communicate policy changes and to
request information. Some WBCs cited problems with these efforts. For
example, some WBCs said that the conference calls were not a
comfortable forum for asking questions and that clarifying SBA's
changing program requirements was difficult. Also, several WBCs said
that SBA had provided inconsistent information on setting annual
performance goals and had not provided sufficient feedback on their
performance. Ineffective communication led to confusion among WBCs
about program requirements and increases the risk that they will not be
in compliance with the requirements.
We found that the WBCs we spoke with focused on a different type of
client than the SBDCs and SCORE chapters in their areas, that several
WBCs actively coordinated with the other programs to avoid duplicating
services, and that other WBCs were concerned about how to coordinate.
Consistent with the WBC program's statutory authority and SBA
requirements, WBCs tailor services to meet the needs of socially and
economically disadvantaged women. SBA's study of WBCs showed that they
tended to serve clients with businesses that had fewer employees and
lower revenues than SBDC and SCORE clients. As described in the terms
of the SBA award, WBCs are required to coordinate with local SBDCs and
SCORE chapters. In addition, SBA officials told us that they expected
district offices to ensure that the programs did not duplicate each
other. However, based on our review, WBCs lacked guidance and
information from SBA on how to successfully carry out their
coordination efforts. Most of the WBCs that we spoke with explained
that in some situations they referred clients to an SBDC or SCORE
counselor, and some WBCs also took steps to more actively coordinate
with local SBDCs and SCORE chapters to avoid duplication and leverage
resources. We learned that WBCs used a variety of approaches to
facilitate coordination, such as memorandums of understanding,
information-sharing meetings, and colocating staff and services.
However, some WBCs told us that they faced challenges in coordinating
services with SBDC and SCORE, in part because the programs have similar
performance measures, and this could result in competition among the
service providers in some locations. We also found that on some
occasions SBA encouraged WBCs to provide services that were similar to
services already provided by SBDCs in their district. Such challenges
thwart coordination efforts and could increase the risk of duplication
in some geographic areas.
To ensure that SBA's oversight procedures for the WBC program are
effective, we recommend that SBA reassess the responsibilities for
oversight allocated to DOTRs. To improve communication with WBCs and to
ensure that they understand program requirements, we recommend that SBA
develop a communication strategy that would provide consistent
information to WBCs. We are also recommending that SBA develop guidance
on how its business assistance programs, including the WBC, SBDC, and
SCORE programs, can effectively coordinate services and avoid
duplication. We provided SBA with a draft of this report for review and
comment. SBA provided no comments on the draft report or its
recommendations.
Background:
The WBC program is administered through OWBO. The program was
established by the Women's Business Ownership Act of 1988 to provide
long-term training, counseling, networking, and mentoring to women who
own businesses or are potential entrepreneurs after Congress found that
existing business assistance programs for small business owners were
not addressing women's needs. The program's goal is to add more well-
trained women entrepreneurs to the U.S. business community and to
specifically target services to women who are socially and economically
disadvantaged. In fiscal year 2007, SBA funded 99 WBCs throughout the
United States and its territories (fig. 1).
Figure 1: WBCs in SBA's Program in Fiscal Year 2007:
This figure is a map showing WBC's in SBA's program in fiscal year
2007.
[See PDF for image]
Source: SBA (data); Art Explosion (map).
Note: Nine of the 99 centers in SBA's program graduated at the end of
fiscal year 2007. Not shown are one WBC in San Juan, Puerto Rico and
one in Pago Pago, American Samoa.
[End of figure]
Private nonprofit organizations are eligible to apply for funds to set
up WBCs, and successful applicants are initially awarded cooperative
agreements for a maximum of 5 years. WBCs must raise matching funds
from nonfederal sources such as state and local public funds, private
individuals, corporations and foundations, and program income derived
from WBC services.[Footnote 7] In the first 2 years of the 5-year
award, each WBC is required to match SBA award funding at 1 nonfederal
dollar for each 2 federal dollars. In the last 3 years, the match is 1
nonfederal dollar for each federal dollar. Award amounts may vary
depending upon a WBC's location, staff size, project objectives,
performance, and agency priorities. However, awards cannot exceed
$150,000 each fiscal year per recipient.
WBC funding is performance-based, and each additional 12-month budget
period beyond the initial award may be exercised at SBA's discretion.
Among the factors involved in deciding whether to exercise an option
for continued funding are the availability of funds, the extent to
which past WBC funds have been spent, and satisfactory performance
against SBA-established performance measures, including the number of
clients served and jobs created. SBA requires WBCs to provide this
performance data in quarterly reports.
Under the sustainability pilot program, WBCs that had been receiving
funding for 5 years could receive sustainability awards for an
additional 5 years. Criteria for receiving awards under the pilot
program were similar to those for receiving the initial awards. WBCs
were assessed on their record of performance and had to provide
nonfederal matching funds equal to 1 dollar for each federal dollar.
Unlike the WBC regular award, WBC sustainability award amounts could
not exceed $125,000 each fiscal year per recipient. As noted earlier,
Congress recently replaced these sustainability awards with 3-year
renewable awards. SBA has not yet begun making these new awards, which
are a maximum of $150,000 each year per recipient.
In addition to the WBC program, SBA's SBDC and SCORE programs also
provide training and counseling services to small business clients. The
SBDC program was created by Congress in 1980. SBDC services include,
but are not limited to, assisting prospective and existing small
businesses with financial, marketing, production, organization,
engineering, and technical problems and feasibility studies. Each state
and U.S. territory has a lead organization that sponsors and manages
the SBDC program. The lead organization coordinates program services
offered to small businesses through a network of centers and satellite
locations in each state that are located at colleges, universities,
vocational schools, chambers of commerce, and economic development
corporations. In fiscal year 2007, the SBDC program received $87
million to make awards to 63 lead SBDCs throughout the United
States.[Footnote 8]
The SCORE program was founded in 1964 as a nonprofit organization.
Under the Small Business Act, as amended, SCORE is sponsored by and may
receive appropriations through SBA. The SCORE program is designed to
provide free expert advice to prospective and existing small businesses
in all aspects of business formation, advancement, and problem solving.
SCORE counselors are volunteers who assist clients through a Web site,
SCORE chapter offices, SBA district offices, and other establishments.
In fiscal year 2007, the SCORE program received $5 million to support
its activities and currently has 389 chapters throughout the United
States.
SBA's Office of Small Business Development Centers and Office of
Business and Community Initiatives are components of OED, along with
OWBO, and oversee the SBDC and SCORE programs, respectively. SBA's
Division of Procurement and Grants Management (DPGM) monitors financial
activities and transactions and maintains award files for most of SBA's
award programs.[Footnote 9] The Office of SBDCs has its own grants
specialists that conduct similar activities. With respect to the WBC
program, DPGM is involved in, among other aspects, reviewing and making
decisions on new WBC applications, providing final approval for all
contracts, analyzing proposed budgets and negotiating budgets with
OWBO, issuing modifications to terms and conditions of awards,
reviewing matching funds documentation, and reviewing WBC financial
reports and payment requests to authorize payment.
Recent Legislation Addressed Concerns about the WBC Program's Funding:
Before Congress passed recent legislation addressing concerns about
long-term funding for WBCs, the WBC program's funding structure had
been in flux since its inception in 1988. In establishing the WBC
program in 1988, Congress authorized SBA to help private nonprofit
organizations conduct projects that benefit small business concerns
owned and controlled by women. The 1988 act allowed for SBA to fund
demonstration projects that terminated in 1991. However, in 1991,
Congress authorized SBA to make awards for 3-year projects, and in
1997, Congress authorized SBA to make awards to WBCs for 5-year
projects. In its 1999 reauthorization of the WBC program, as noted
earlier, Congress added 5-year sustainability funding for WBCs that
successfully completed 5-year projects to provide additional time for
the centers to become self-sustaining (fig. 2). WBCs continue to
receive SBA funds for the 5-year period as long as their performance is
satisfactory although under the performance-based system, the award
amount can vary from year to year.
Figure 2: WBC Program Legislative Timeline:
This figure is a women's business center legislative timeline between
1988 and 2007. A few years are highlighted on the timeline:
1998: The Women's Business Ownership Act of 1988 attended the Small
Business Act to create the Women's Business Center (WBC) program with
demonstration projects that would expire in 1991;
1991: The Women's Business Development Act of 1991 made WBC's 3-year
projects;
1997: The Small Business Reauthorization Act of 1997 extended WBC
projects to 5 years.
1999: The Women's Business Centers Sustainability Act of 1999 created 5-
year sustainability pilot projects awarded to WBC's that had completed
the first 5-year project;
2007: The U.S. Troops Readiness, Veterans' Care, Katrina Recovery, and
Iraq Accountability Appropriations Act amended the Small Business Act
to repeal the sustainability pilot program and to permit WBC's to
receive SBA funding on a continual basis.
[See PDF for image]
Source: GAO analysis of WBC program legislation.
[End of figure]
WBCs that we spoke with identified two related factors that had largely
been responsible for their funding uncertainties. First, because until
recently the WBC program offered limited-term funding--in contrast to
the SBDC and SCORE programs, which receive continuous funding--WBCs
graduated from SBA support after 5 or 10 years. Second, Congress did
not make the additional 5-year term for sustainability funding
permanent. Instead, Congress extended the pilot program with each SBA
reauthorization, raising concerns among the WBCs about its commitment
to the program. Several WBCs that we spoke with expressed concern about
the funding term limits and pointed out that the SBDC and SCORE
programs did not have the same limits, even though SBA also administers
those programs. Some WBCs in both the regular and sustainability
programs also said that they were concerned about their ability to
continue operations after losing SBA support. Because WBCs sometimes
established their operations with SBA funds and depended on SBA funds
to leverage other support, many were concerned about their ability to
continue operations after 5 to 10 years of receiving SBA funding. One
center that was receiving sustainability funds said that long-term
funding would allow WBCs to continue operating without concerns of an
end date after taking years to develop a valuable program. The center
director added that a short-term program was less practical for the
service that the WBC program provides, because it takes time to have
client successes. Another center that graduated from SBA's program in
2007 told us that although SBA funding had decreased each fiscal year,
the WBC's membership in SBA's program and the funds it received were
beneficial to the center's ongoing success. One center president said
that seamless funding for the program would greatly benefit centers
that were meeting the needs of their communities, and the director of
another center that was in the process of applying for sustainability
funding told us that she was anxious to see the recent legislative
changes that would make SBA funding for WBCs permanent. A district
office official that we spoke with echoed the WBCs' concern about
sustainability, noting that the long-term viability of the WBC he
oversaw might be threatened after the center graduated from SBA's
program in 2007.
The WBC program's funding structure also created uncertainty that
limited SBA's ability to manage the program effectively. OMB's 2007
PART report found that frequent changes by Congress in the WBC
program's funding structure, delays in extending sustainability
funding, and uncertainty about the future had created challenges for
the program.[Footnote 10] OMB's report also noted that SBA had taken
steps to foster more consistent management of the WBC program, but
added that long-term planning was problematic because of the program's
funding structure. When we spoke with officials at OMB, they emphasized
that SBA appeared to be making a significant effort to assist WBCs,
given the program's limitations. The officials also noted that the
funding challenges that WBCs faced after graduating from the
sustainability pilot could be related to the fact that these
organizations operated resource-intensive programs and collected
nominal revenues in program fees, largely because of their focus on
economically disadvantaged clients, causing them to rely heavily on
external support.
SBA will fund WBCs through the project term, subject to availability of
funds, and our review indicates that WBCs that perform satisfactorily
will continue to receive funds until they complete the program. SBA
officials provided us with a list of eight centers that had terminated
prior to completing the program and noted that the program had funded a
total 150 WBCs since its inception. However, SBA officials in
headquarters and the district offices were aware of the challenges WBCs
faced in planning annual budgets without knowing how much they would
receive or whether sustainability funds would continue to be available.
According to SBA, two of the eight centers that left the program did so
as a result of challenges securing matching funds, and one WBC not
included in SBA's list left the program during our review, in part due
to funding challenges. In discussing the WBC program's limited-term
funding, some SBA district office officials emphasized that the agency
had invested in creating successful WBCs and should be working to make
those that performed well permanent SBA partners.
As we have seen, recent legislation for the WBC program replaces the
sustainability pilot program with 3-year renewable awards, providing an
opportunity for SBA to continue funding WBCs. Current program
participants and those that have successfully graduated will be
eligible to apply for continuous funding through these 3-year awards
(table 1). SBA officials told us that by the end of fiscal year 2007,
21 WBCs that have graduated since the beginning of the program would be
eligible to apply for the renewable awards. The award process will
remain competitive, and the maximum amount for renewable awards will be
$150,000 each year per recipient, as in the first 5 years of the WBC
program. Also, the number of organizations competing could increase,
but SBA's annual budget for the WBC program may not increase beyond the
approximate $12 million provided in the past 5 years. However,
increased award competition provides an opportunity for SBA to continue
funding high-performing centers. Prior to the new program changes, SBA
officials emphasized that the WBC program is the agency's only
performance-based program and said that they believed this fact
provided an incentive for WBCs to continuously improve. Because the WBC
program is a competitive discretionary award program, WBCs in the
program compete annually for the maximum award amount but continue to
receive SBA funds for the length of the project as long as their
performance is satisfactory. SBA has criteria for ranking new award
applicants and performance-based criteria for placing existing program
participants into three funding categories for annual awards. In
September 2007, SBA made WBC awards for fiscal year 2007 to fund
activities in fiscal year 2008, and SBA officials told us that they
plan to begin providing the 3-year renewable awards in fiscal year 2008
as soon as practicable after appropriations are received.
Table 1: WBC Program Legislative Changes by Center Status:
WBC status: New program applicants;
Old program: Eligible to apply for an initial 5-year term;
New program: Eligible to apply for an initial 5-year term.
WBC status: Award recipients in the regular program;
Old program: Eligible to apply for a second 5-year term after
successful completion of the initial 5-year term;
New program: Eligible to apply for renewable 3-year awards after
successful completion of the initial 5- year term.
WBC status: Award recipients in the sustainability pilot program;
Old program: Graduate from sustainability after successful completion
of the second 5-year term;
New program: Eligible to apply for renewable 3- year awards after
successful completion of the second 5-year term.
WBC status: Centers that successfully graduated from the sustainability
pilot program;
Old program: N/A;
New program: Eligible to apply for renewable 3-year awards.
Source: SBA; The U.S. Troop Readiness, Veterans' Care, Katrina
Recovery, and Iraq Accountability Appropriations Act, 2007.
[End of table]
As a result of the new legislation, which allows graduated WBCs to
reenter the pool of applicants for continuous funding and changes the
existing 5-year sustainability project terms going forward, SBA has
begun revising its existing WBC award process. SBA officials said that
they would have to create a new program announcement and update other
documents to reflect the new program structure, and that they also
anticipated revising the qualifying criteria and adding new
considerations because they expected the competition for awards to
increase with the availability of continuous funding.
SBA Has Oversight Procedures in Place, but Imbalances in Its Staff
Resources and Ineffective Communication with WBCs Have Hindered Their
Effectiveness:
SBA has developed oversight procedures for the WBC program, but
imbalances in the agency's staff resources for WBC oversight and
ineffective communication with WBCs reduce the effectiveness of these
procedures. SBA's oversight of WBCs includes ongoing assessments for
performance-based funding, as required by the act authorizing the
program; and SBA has requirements for WBCs to report quarterly on their
program activities, performance, and finances. Although SBA had these
oversight procedures in place, its staff resources for the WBC program
have been limited, with the agency relying heavily on district office
staff who may have too many responsibilities or lack relevant
experience and training. Also, ineffective communication with WBCs has
led to confusion about how to meet program requirements and on how
their performance is being assessed.
SBA's Oversight of WBCs Includes Ongoing Performance Assessments and
Reporting Requirements:
We found that SBA had developed written procedures for assessing the
performance and financial management activities of WBCs and had taken
steps to measure the WBC program's effectiveness. Since 1997, as a
condition of continued funding, SBA has been required to assess WBCs'
performance at least annually through programmatic and financial
examinations, and SBA District Office Technical Representatives (DOTR)
conduct these examinations semiannually, typically on site at the WBC
location.[Footnote 11] SBA's policies and procedures for the WBC
program require the district office to make a recommendation on
continued SBA funding for the WBC in the final or second examination
report each year. As an added measure, SBA also requires WBCs to have
an independent certified public accountant (CPA) certify the condition
of their financial management system each year as part of the final
programmatic and financial examination. We reviewed fiscal year 2006
final examination reports for 7 of the 10 WBCs that we visited and
verified that the examination included a checklist of questions on the
WBC's personnel and facilities, financial management--including details
of the funding match, data collection, program activities, and Web site
support and other Internet activity. None of the examination reports
that we reviewed included a recommendation from the district office
that SBA discontinue funding to the WBC.
In addition to conducting semiannual examinations, SBA requires that
WBCs submit quarterly reports on their program activities, performance,
and financial status and transactions. Quarterly program activity
reports include data on counseling, training, and information
transfers; and SBA requires WBCs to report these data directly through
its Entrepreneurial Development Management Information System (EDMIS)
database.[Footnote 12] Most of the WBCs that we spoke with said that
they tracked and maintained program data in a separate internal
database and later uploaded the data to EDMIS for SBA reporting. The
information that WBCs are required to provide in quarterly performance
reports includes the WBCs' actual accomplishments, compared with their
performance goals for the reporting period; actual budget expenditures,
compared with an estimated budget; cost of client fees; success
stories; and names of WBC personnel and board members. Fourth quarter
performance reports must also include a summary of the year's
activities and economic impact data that the WBCs collect from their
clients, such as number of business start-ups, number of jobs created,
and gross receipts. SBA reports some of these data in its annual
performance reports to Congress through several output and outcome
measures that are meant to reflect the WBC program's performance and
effectiveness (table 2). Quarterly financial reports detail the WBCs'
financial status and program expenses that qualify for SBA payment
under the terms of the award. Fourth quarter financial reports may
include adjustments to previous financial reports for the program year.
Quarterly reporting is directly tied to the WBCs' ability to access
their award funds. OWBO and DPGM review WBC quarterly reports and
separate award payment requests, and DPGM has the authority to
authorize WBC requests for advance or reimbursement payments.
Table 2: Examples of SBA's Fiscal Year 2007 Output and Outcome
Performance Measures for WBCs:
Outputs:
* Increase in total number of clients counseled and trained;
* Increase in total number of clients counseled and trained online;
* Total number of counseling and training hours;
Outcomes:
* Number of start-up business concerns formed;
* Gross receipts of assisted concerns;
* Employment increases or decreases of assisted concerns;
* Increases or decreases in profits of assisted concerns.
Source: SBA.
[End of table]
As noted, SBA reports to Congress annually on the performance of the
WBC program. In addition to collecting output and outcome data from
WBCs, and as part of a broader impact assessment of its business
assistance programs, in 2004 SBA initiated a 3-year longitudinal study
of the WBC program that surveys the program's clients. In our review of
the WBC portion of reports for the first 2 years of the study, we found
that although the study had a sound design, low response rates from WBC
clients in the second report may limit SBA's ability to generalize the
results to all WBCs. Appendix II includes additional information on our
review of SBA's study and other studies assessing the economic impact
of WBCs and discusses the difficulty of obtaining high response rates
from private citizens for voluntary surveys.
SBA Has Limited Staff Resources for the WBC Program and Relies Heavily
on District Office Staff Who May Have Too Many Responsibilities or Lack
Relevant Experience and Training:
Within OWBO, program managers monitor a caseload of WBCs that are
grouped by geographic region and perform a variety of functions such as
communicating with the centers and DOTRs, reviewing WBC documents and
maintaining a project file for each center, and coordinating with DPGM
on funding matters. However, SBA relies heavily on its district
offices, and specifically DOTRs, to carry out many WBC program
responsibilities, although OED and OWBO do not have direct supervision
of district office staff. Rather, SBA's Office of Field Operations
oversees the district offices and district directors assign
responsibilities to individual staff. In 2001, we reported that DOTRs
had been given an increased role in assessing WBCs' performance to
ensure that the programs were fiscally sound and functioning smoothly.
To this end, we reported that DOTRs were receiving intensive training
each year at the postaward conference at SBA headquarters on how to
monitor the WBCs' programmatic and financial activities. As noted
earlier, DOTRs are expected to conduct the WBCs' programmatic and
financial examinations semiannually, but they also have other WBC
program duties and other full-time agency responsibilities. District
directors assign the role of DOTR as a collateral duty to district
office staff, and DOTRs whom we met with held separate positions as
business development specialists and assistant district directors. SBA
has a list of 23 responsibilities for DOTRs, some of which involve
oversight, including (1) reviewing WBCs' requests for project
revisions, (2) determining the extent to which WBCs are meeting the
match requirement, (3) reviewing the scope and quality of services
provided to clients, (4) reviewing all WBC signage and media, and (5)
helping to resolve problems. According to the list of responsibilities
provided to us, DOTRs are also expected to act as advocates for the
WBCs within their district. Some of the responsibilities related to
this role include (1) ensuring that the district office displays and
distributes WBC brochures; (2) collecting success stories from WBCs to
be used for publicizing the program; and (3) including WBCs in district
office conferences, workshops, and other events for women business
owners. SBA officials told us that ideally DOTRs should focus on the
oversight responsibilities and act as a liaison between WBCs and the
district office. In the past, district offices also had a Women's
Business Ownership Representative (WBOR) who would act as an advocate
for all activities involving women's business issues. However, SBA
officials and some district offices that we spoke with said that this
role was often performed by the same person who was the DOTR. OED and
OWBO officials said that since they do not control the assignment of
staff responsibilities, they could not influence whether a district
office employee acted both as an overseer and advocate for WBCs.
The DOTR's total responsibilities for the WBC program appear to be
substantial, particularly since these responsibilities are part of a
collateral role. Given SBA's downsizing in recent years, some DOTRs may
have more responsibilities than they had in the past, making it more
challenging to perform their WBC program duties effectively. Others new
to the role may lack the necessary experience and training or carry out
DOTR responsibilities by default. For example, an assistant district
director, who was familiar with the WBC in his district, told us that
he had performed the role of DOTR for less than a year. He also said
that he had previously supervised the DOTR, WBOR, and two other
positions. The DOTR had retired in fiscal year 2005, and another staff
member who had filled the position temporarily was no longer with SBA.
The WBOR had also left the agency, and neither position had been
filled. Although most WBCs we interviewed spoke positively of their
relationship with their DOTR, several told us that reductions in
district office staff had led to changes, including assigning DOTR
responsibilities to a different district office staff member. DOTRs
still attend required training for the WBC program annually at SBA
headquarters, and SBA provides them with a handbook to assist them in
performing their duties. However, three of the six DOTRs that we spoke
with said that SBA's training for DOTRs in WBC oversight had not always
been adequate. One DOTR said that there had been recent improvements
but that past training assumed that new DOTRs had prior knowledge of
the WBC program. The other two DOTRs made similar statements, with one
pointing out that a lack of guidance had led to challenges in
monitoring the WBC in her district at the time that she first assumed
the role of DOTR. In one location, the DOTR and other district office
staff told us specifically that they did not feel that DOTRs were
adequately trained to conduct the financial component of WBC
programmatic and financial examinations, adding that SBA headquarters
had previously coordinated financial examinations for WBCs.[Footnote
13]
A 2003 SBA Office of Inspector General (OIG) audit of a Texas WBC found
that the center had misused award funds and that SBA had not adequately
monitored its financial and accounting operations.[Footnote 14] The OIG
report on the audit specifically noted that the SBA reviewer had
concluded that the center had a good financial and client tracking
record system, in contrast with the audit's finding that the center's
financial reporting lacked the standards reasonably expected of such an
entity. The report also noted that the district office personnel
assigned to perform oversight of the WBC did not have the financial
background or proper training to perform financial reviews. When we
followed up with OWBO officials, they said that SBA added the 2004
requirement that a CPA review WBCs' financial records annually both
because the agency recognized that some DOTRs lacked this expertise and
because there had been isolated incidents of mismanagement of WBC award
funds. The CPA reviewing a WBC's records must complete and sign a
statement in the final examination report stating whether the records
were found to be acceptable in accordance with federal standards. OWBO
officials also told us that they were coordinating with SBA's Office of
SBDCs to use SBDC financial examiners for these on-site financial
reviews of WBCs, but added that recently there had not been enough
staff to do all of the reviews. The officials also said that OED was
reviewing how future financial audits for all of SBA's business
assistance programs would be conducted.
When we reviewed examination reports for 7 of the 10 WBCs that we
visited, we found some inconsistencies that may suggest the need for
more practical and ongoing DOTR training. First, in one report, the
DOTR noted that the funding match requirement did not apply to a WBC
because the center did not charge fees for SBA-sponsored programs and
therefore did not generate funds from such programs. As noted
previously, SBA's funding match requirement applies to all WBCs in its
program, with the ratio changing from 1 nonfederal dollar for each 2
federal dollars in years one and two to 1 nonfederal dollar for each
federal dollar in year three and thereafter. We followed up with the
WBC, and the center director verified that the WBC did charge fees for
WBC program offerings and was meeting its match requirement. Second, we
found that most of the final examination reports did not include a
CPA's statement and that two reports included a note stating that the
certification would be forthcoming because the CPA was unavailable on
the review (examination) date.
We found that SBA had taken some steps to adapt WBC program oversight
procedures to its limited staff resources and to increase efficiency in
some areas. For example, until January 2006 DOTRs conducted
programmatic and financial examinations quarterly, and SBA switched to
semiannual examinations to conserve its staff resources. SBA officials
told us that staff resources for WBC program oversight had been
strained for some time, and that OWBO recently received approval to
fill two vacant positions and was currently determining the roles and
responsibilities for these new staff. OWBO currently has five program
managers that monitor a caseload of between 15 and 30 centers each. In
March 2007, SBA also revised its reporting procedures for WBCs to
streamline communication and to reduce review and processing times. For
example, WBCs previously submitted original payment requests to the
DOTR for review and recommendation, the DOTR forwarded the paperwork to
OWBO for review and recommendation, and OWBO then forwarded the
paperwork to DPGM for approval. As a result of complaints from WBCs and
DOTRs regarding delayed award payments and misplaced WBC paperwork, SBA
revised this procedure, and WBCs now submit original payment requests
directly to OWBO. OWBO reviews the paperwork and makes a recommendation
for payment, forwarding the paperwork to DPGM for authorization and
notifying the DOTR and WBC of the recommendation. Both WBCs and DOTRs
that we spoke with following SBA's revision of its payment request
procedure said that the new procedure had significantly improved
communication.
The new procedures also improved payment turnaround times. Many of the
WBCs that we spoke with mentioned that they had experienced challenges
with receiving payments in a timely manner. As noted, SBA was aware of
this issue. During the course of our review, the SBA OIG conducted a
study looking at award disbursements to WBCs for fiscal years 2004
through 2007, surveying 21 of the 99 centers in SBA's program in fiscal
year 2007. The OIG's preliminary report, which was based on responses
received from 18 of the centers, found that in fiscal years 2005 and
2006, the majority of SBA's payments to WBCs were not made in a timely
manner.[Footnote 15] The study did not determine the percentage of
payment delays that were caused by SBA's untimely processing or the
percentage that were caused by errors the WBCs may have made in
submitting their paperwork. However, the OIG is making recommendations
for SBA to improve its reimbursement process. In a September 2007
congressional testimony addressing the challenges facing the WBC
program, the Associate Administrator for OED pointed out that while the
size of the WBC network had grown from an initial 13 centers in 1989,
SBA's resources assigned to OWBO and DPGM had declined due to
reductions in SBA's overall budget. He also noted that as a result, the
WBC program had outgrown its original set of policies and procedures,
and OWBO faced challenges in managing and supporting the program.
Continued imbalances in SBA's staff resources for the WBC program,
including the agency's significant reliance on DOTRs, could reduce
assurances that its oversight of WBCs is effective and that WBCs are
meeting the program's requirements.
Ineffective Communication from SBA Led to Confusion about WBC Program
Requirements and Performance Reviews:
The WBCs that we spoke with also raised issues related to SBA's
communication on program procedure and their performance. One study we
reviewed reported that 54 percent of 52 WBCs surveyed said that SBA
could improve its communication with them.[Footnote 16] Timely and
thorough communication of operational procedures is critical to
ensuring that the agency and the WBCs are able to perform their
responsibilities effectively. Our Standards for Internal Control in the
Federal Government state that for an entity to run and control its
operations, it must have relevant, reliable, and timely communications
relating to internal as well as external events. For external
communication, agency management should ensure that there are adequate
means of communicating with and obtaining information from external
stakeholders that may have a significant impact on the agency achieving
its goals.[Footnote 17]
OWBO conducts monthly conference calls with the WBCs and DOTRs, and SBA
officials said that the calls were intended to maintain contact with
the centers and to provide program updates and information on best
practices. OWBO program managers facilitate the conference calls each
month; and SBA officials also said that they send an agenda and
handouts to DOTRs and WBCs electronically, prior to making the calls,
and record the calls so that the information is available later. We
reviewed handouts from conference calls that OWBO conducted between
February and July 2007 and noted that program updates and best practice
presentations were included on some of the calls. However, when we
spoke with WBCs about the calls, some told us that the calls were not
meeting their communication needs. Three of the WBCs that we spoke with
said that best practice presentations that allowed them to share
information with other centers were helpful. Others said that the calls
were less effective because administrative items were typically covered
instead of new information. Although WBCs have an opportunity to ask
questions during the calls, the WBCs that we spoke with had mixed
opinions about whether monthly conference calls provided a good forum
for asking questions. One experienced WBC said that questions unrelated
to the call agenda sometimes caused the discussion to be sidetracked
and suggested that OWBO officials address such questions off-line. The
WBC director also said that the varying experiences of the WBCs
participating resulted in the calls being more effective for some
centers than for others and suggested that OWBO consider restructuring
the calls by WBC experience (years in the program) to provide a more
productive learning experience. SBA officials told us that in January
2007, as an opportunity to provide necessary instruction to newer
DOTRs, OWBO reinstated separate conference calls for DOTRs, although
they can still participate in the WBC conference calls.
OWBO also uses e-mail to communicate policy changes to the WBCs and
DOTRs and to make interim information requests of the WBCs, but some
WBCs told us that they had difficulty clarifying changes to
requirements and that SBA's communications were often insufficient.
Several WBCs said that SBA had not responded in a timely manner when
they submitted payment requests and other administrative paperwork and
that such delays resulted in financial burden and led to confusion
about whether they had followed appropriate procedure and met program
requirements. For example, one WBC director said that the center's
request for an advance payment was denied because she incorrectly
submitted the request to the DOTR during SBA's procedural changeover
and had not yet been notified of the revised procedure, which required
the request to go directly to OWBO. According to the WBC director, the
DOTR was out of the office during the week that she submitted the
request, and DPGM denied the request several weeks after receiving it
because it reached DPGM after the deadline. The WBC director said that
she received no notification of receipt from DPGM until the request was
denied.
While SBA removed the DOTRs from the payment request procedure to
eliminate potential bottlenecks, this action has not completely
resolved WBCs' concern about communications with SBA headquarters
offices. Another WBC director who identified communication issues with
SBA when we initially spoke with her, later told us that the recent
procedure revisions had eliminated some of the confusion caused by
multiple layers of approval for payment requests but noted that the WBC
still had difficulty with DPGM's denying requests without any
communication about items it may identify once the paperwork reached
that office. The Associate Administrator for OED highlighted the
revised payment request procedure as an example of recent efforts to
address inefficiencies, saying that the processing of payment requests
had also been centralized to one point of contact in OWBO. He added
that OWBO had initiated a prescreening process to identify missing
documentation prior to reviewing the payment request and said that
OWBO's new policy of notifying the WBC when a payment request had been
forwarded to DPGM would increase transparency. In agreement with the
OED official's statement, the WBC director said that OWBO appeared to
have a clearer understanding of DPGM's requirements in conducting its
initial review of payment requests and that OWBO had not denied any
recent requests. However, the WBC director said that DPGM had still
denied requests for minor items that the WBC became aware of during a
self-initiated follow-up with DPGM. For example, the WBC director said
that in one instance DPGM would not accept copies of forms for which
the WBC previously submitted originals that were either lost or
misplaced by OWBO. According to the WBC director, OWBO intervened to
resolve this particular issue.
It appears that limited communication within SBA has played a role in
some WBC communication issues, and the SBA OIG's preliminary report
found that until recently the agency lacked an integrated tracking
mechanism to identify when a payment request was received, where it was
in the review process, and whether a disbursement had been made within
the required time frame. One DOTR also told us that there were
opportunities for SBA headquarters to improve its communication with
DOTRs on policy and procedural changes to assist DOTRs in their role,
and a WBC director said that she would like to see improved
communication between SBA headquarters and its district offices, noting
that some changes to paperwork requirements and program policy had not
been communicated to the district offices.
In addition to communication issues related to payment requests and
other administrative procedures, several WBCs told us that SBA had
provided inconsistent communication on setting annual performance
goals. SBA has established procedures for OWBO to negotiate annual
performance goals with WBCs as they work toward accomplishing their 5-
year project goals. Prior to fiscal year 2008, SBA's requirement was
that WBCs establish a goal of increasing several performance measures
by 10 percent each year over the 5-year period of the award. One WBC
said that for fiscal year 2007, the district office had requested that
the WBC serve over 250 additional clients after OWBO and the WBC had
agreed to a 10 percent increase over the goal for fiscal year 2006. The
WBC director expressed concern that they had followed program
guidelines in setting the initial goal; had not received an official
explanation for the revised goal; and had received a smaller award than
for the previous year, although they would have to serve many more
clients. She said that when the WBC inquired about the change at the
district office, they were told that the new goal was an OWBO goal.
Another WBC said that the district office had communicated revised
goals for fiscal year 2006 but was unable to explain the basis for the
new goals. The director of this WBC said that the new goals were
subsequently retracted without any official communication from SBA. A
third WBC specifically noted that several years ago, SBA had issued a
midyear requirement that WBCs package a certain number of loans.
Although the WBC had been packaging loans, this requirement was not a
WBC program measure, and the WBC did not include loan packaging in its
annual goals. The WBC director said that the added requirement forced
WBCs to comply with a goal they had not been working toward previously,
and the director added that the requirement would have been especially
difficult for smaller centers that may have added staff and other
resources to package loans, particularly since this was not a permanent
program requirement. When we followed up with OWBO officials, they told
us that the district offices had sometimes communicated different goals
to the WBCs to assist them with meeting district office goals, but that
the district offices' goals were set by SBA's Office of Field
Operations, which is a separate office in SBA outside of OED and OWBO.
One district office staff member did tell us that the district office
would like the WBCs to be more involved in helping the district office
to meet its goals as part of a joint effort in meeting the needs of
their local communities. OWBO officials did not address a solution for
the miscommunication of goals, but in agreement with what some WBCs
told us, OWBO officials said that they recognized that it was
unrealistic for WBCs to continue to increase their goals each year
while receiving smaller awards. The officials said that OWBO is
revising its formula for WBCs to set annual goals, and removed the 10
percent increase requirement in its fiscal year 2007 program
announcement for centers that will be funded in 2008. They also said
that OWBO would begin to consider prior year funding amounts in setting
achievable goals.
Some WBCs also told us that they were not sure how well they were
performing because SBA did not provide them with feedback on semiannual
programmatic and financial examinations or the reports that they
submitted quarterly. One WBC told us that SBA did not provide details
on how programmatic and financial examination results were used to
place the center in a particular funding category, and another WBC said
that SBA should provide appropriate feedback to let the WBCs know what
they were doing well or could do better. The second WBC pointed out
that it could not tell whether anyone was actually reviewing the
reports that it submitted to SBA. SBA officials told us that they were
aware of the WBCs' concern regarding a lack of performance feedback and
would take steps to make the WBC program's performance-based funding
process more transparent. SBA's ineffective communication with the WBCs
and between its offices that oversee the WBC program has led to
confusion among WBCs, limiting their understanding of the program's
requirements and potentially reducing their ability to effectively
carry out these requirements.
WBCs Make Some Efforts to Coordinate with SBDCs and SCORE, but SBA
Provides Limited Guidance to Support These Efforts:
The WBCs that we spoke with focused on a different type of client than
the SBDCs and SCORE chapters in their areas, and several WBCs actively
coordinated with the other programs to avoid duplicating services.
Consistent with SBA requirements and statutory authority, WBCs tailor
services to meet the needs of socially and economically disadvantaged
women and tend to serve clients with businesses that have fewer
employees and lower revenues than clients of SBDCs and SCORE. Though
WBCs serve different types of clients, most WBCs told us that they
refer clients to and coordinate services with SBDCs and SCORE when
appropriate to leverage resources and avoid duplication. Also, some of
the coordination efforts were facilitated by the SBA district office,
but we found that SBA provided limited guidance to WBCs on how
coordination should occur. In addition, coordinating services can be
difficult because WBCs, SBDCs, and SCORE have similar performance
measures, which could lead to competition among the service providers
in some locations. We also found that on some occasions, SBA encouraged
WBCs to provide services that were similar to services already provided
by SBDCs in their district. These issues and the lack of sufficient
guidance could create barriers to coordination and increase the risk of
duplication in some locations.
The WBC, SBDC, and SCORE Programs Provide Training and Counseling to
Small Business Clients, but Have Different Target Groups:
Like SBDCs and SCORE chapters, WBCs provide both counseling and
training services to small business clients. Unlike SBDC and SCORE,
however, WBCs tended to target services to women, socially and
economically disadvantaged clients, and clients with smaller
businesses. Our review of the statutory authorities governing the WBC,
SBDC, and SCORE programs found that each of the programs is required to
provide training and counseling, but the WBC program's statutory
authority requires SBA to evaluate WBCs on, among other things, their
ability to target services to socially and economically disadvantaged
clients.[Footnote 18] Consistent with the WBC program's statutory
authority and SBA requirements, WBCs targeted services to socially and
economically disadvantaged clients. A study of WBCs conducted by the
Center for Women's Leadership at Babson College also confirmed that
WBCs responding to its survey predominantly served socially and
economically disadvantaged clients.[Footnote 19] According to the
Babson College study, 67 percent of WBC clients came from households
with incomes that were less than $50,000, and 55 percent of WBC clients
had a high school diploma or less education.
Three WBCs that we spoke with were able to provide support to socially
and economically disadvantaged clients through financial literacy,
savings, and credit repair programs. For example, a WBC in California
had a program that provided financial literacy and asset building
services for its economically disadvantaged small business clients.
Through this program, clients were able to attend financial literacy
courses while gradually increasing their savings through an individual
development account and savings club program. The individual
development account and savings club program allowed low-income clients
to receive matching funds to save toward the purchase of a home or to
start a small business.
Consistent with the program's statutory authority, we also found that
WBCs tended to focus their programs on female clients. A study
contracted by SBA on the impact of the WBC program reported that women
made up 77 percent of WBC clients.[Footnote 20] The Babson College
study also reported that the WBCs responding to its survey tailored
their programming to meet the needs of women clients.[Footnote 21]
Consistent with the findings of the SBA and Babson College studies,
several WBCs that we contacted provided services specific to the needs
of women clients. For example, a few WBCs had women's networking or
mentoring groups so that experienced women entrepreneurs could share
advice with those who were new women business owners.
WBCs also tended to offer services that helped clients start and expand
existing microenterprises or very small businesses. For example, a WBC
in Chicago established a program to help its clients start home-based
child care centers, and a WBC in Baltimore helped low-income clients
with existing informal home-based businesses expand and increase their
income in order to assist them with becoming economically self-
sufficient. SBA's impact study of WBCs also showed that they tended to
serve clients with businesses that had fewer employees and lower
revenues than clients of SBDCs and SCORE. According to the study, WBC
clients had businesses with an average of 2.5 employees and an average
revenue of $63,694. In contrast, SCORE worked with businesses with an
average of 3.2 employees and $112,182 in average revenue, and SBDC
worked with businesses with an average of 6.3 employees and $272,552 in
average revenue.[Footnote 22]
We found that some WBCs offered services for clients with limited
business experience. WBC directors interviewed for the Babson College
study also reported that WBC clients had distinct needs that often
reflected a lack of experience in the business world. Several WBCs that
we contacted provided intensive long-term training and counseling to
help clients through each phase of small business development from
start-up through expansion. A WBC in California provided a 3-year long
"virtual business incubator" program that targeted first generation
immigrant entrepreneurs, helping them to develop their businesses and
to set long-term asset-building goals. While in the virtual incubator
program, WBC clients, through coaching and training over a 3-year
period, produced a business plan, established a business accounting
system and legal structure, and developed a marketing plan to start and
establish their businesses. A WBC in Massachusetts also offered a 13-
week and 20-week multiphase training and counseling program for its
clients that was designed to help new small businesses through each
phase of the business development process.
Coordination among WBCs, SBDCs, and SCORE in Some Locations Was
Extensive, but SBA Provides Limited Guidance to Support These Efforts:
While SBA requires WBCs to coordinate with SBDCs and SCORE chapters,
SBA provides limited guidance or information on how these business
assistance programs should coordinate. Increasingly, the government
relies on new networks and partnerships to achieve critical results and
develop public policy, often including multiple federal agencies,
domestic and international non-or quasi-government organizations, for-
profit and nonprofit contractors, and state and local governments.
Notwithstanding the increased linkages in our system, each level of
government often makes decisions on these interrelated programs
independently, with little interaction or intergovernmental
dialogue.[Footnote 23] According to the Grant Accountability Project, a
working group chaired by the U.S. Comptroller General, coordination
between federally supported programs that provide similar services,
such as the WBC, SBDC, and SCORE programs, is important to avoid
service duplication and to efficiently leverage federal funds.[Footnote
24]
Through the WBC notice of award, SBA policy requires that WBCs work
collaboratively with SBDCs and SCORE chapters, with assistance from SBA
district offices, to coordinate efforts in order to expand services and
avoid duplication. When WBCs are located in communities with these
resource partners, the WBCs are to coordinate with them in offering
training and other forms of assistance to their clients. SBA
headquarters officials also confirmed that they expected district
offices to ensure that duplication between the programs did not occur.
Though SBA policy requires WBCs to coordinate, SBA does not provide
detailed guidance to WBCs on how coordination should occur in order to
efficiently leverage SBA funding. Through our review, we found that the
only guidance SBA provided to WBCs was in the notice of award, which
asks WBCs to coordinate with SBA resource partners and other WBCs,
where appropriate, under cosponsorship arrangements or memorandums of
understanding. However, neither the notice of award nor any other
document prescribes any specific practices or methods for these
efforts. When we asked SBA officials about the lack of guidance, they
said that they expect WBCs to initiate coordination on their own
without specific guidance from SBA. SBA officials also said that they
had not issued specific guidance because they did not want to be overly
prescriptive or dictate how coordination should occur, given that local
conditions varied and that some forms of coordination might be
effective in some locations but not in others.
Without specific SBA guidance, some WBCs used a variety of approaches
to initiate coordination with other business assistance providers. Most
WBCs said that they referred clients to SBDCs and SCORE chapters in
their areas when appropriate and coordinated services with these other
business assistance providers to leverage resources and avoid
duplication. Some WBCs provided services to both start-up and
experienced clients, but others referred more experienced or
established small businesses to SBDCs. Some WBCs tended to refer
clients seeking short-term counseling or specific industry expertise to
SCORE. As an organization primarily staffed by volunteer small business
counselors instead of full-time employees, SCORE services tended to be
short-term and focused. For example, a small business client seeking
restaurant industry expertise may be referred to a SCORE counselor that
formerly owned his own restaurant.
In several locations, WBCs were colocated or shared space with SBDCs
and SCORE chapters and were often able to benefit from reduced overhead
costs that came from shared facilities. Five colocated WBCs and SBDCs
we contacted shared administrative support and leveraged counseling
staff in order to better serve clients. For example, in California, a
WBC that was colocated with an SBDC often referred clients to SBDC
counselors if WBC counselors were not available in order to maximize
resources and provide better service.
Seven WBCs told us that the district office sometimes facilitated
coordination between WBC, SBDC, and SCORE. Two SBA district offices
that we contacted coordinated resource partner meetings at which
representatives from the WBC, SBDC, and SCORE programs and other small
business assistance providers met to discuss service coordination and
to organize small business events. A few SBA district offices were
involved in promoting WBC, SBDC, and SCORE activities but were not
often directly involved in facilitating communication among the
programs.
Some WBCs told us that coordination was sometimes independently
initiated by WBC, SBDC, and SCORE representatives without assistance
from the SBA district office. For example, under a memorandum of
understanding, WBC, SBDC, and SCORE representatives in South Carolina
organized informal groups with other area small business assistance
providers to plan events, coordinate services, or facilitate training.
In Wisconsin, a WBC coordinated with SBDC, SCORE, and other small
business assistance providers to develop a detailed triage system for
small business clients in their area. In order to better coordinate
services, the WBC and its resource partners developed a flow chart to
help service providers divide their resources and determine where to
refer clients. Under this system, clients with existing businesses were
referred to the SBDC, and clients not yet in business were generally
referred to the WBC. Figure 3 illustrates some of the approaches that
WBCs took to coordinate with SBDC and SCORE.
Figure 3: WBC Coordination Efforts:
This figure is a chart discussing WBC coordination efforts. Women's
Business Centers and SBDC and SCORE:
* colocate or share facilities and staff,
* refer clients,
* coorganize training seminars,
* cohost community events and conferences.
[See PDF for image]
Source: GAO.
[End of figure]
Though several WBCs provided examples of successful coordination
efforts, a few WBCs that we contacted were unable to provide sufficient
information to demonstrate that they were coordinating with SBDC and
SCORE in order to decrease duplication of services. In two instances,
WBCs that we spoke with had made efforts to decrease service
duplication without coordinating with SBDCs and SCORE chapters in their
area. For example, one WBC had limited contact with SBDC and SCORE
chapters and attempted to eliminate duplication in services by
reviewing some of the course and service information on SBDC and SCORE
chapter Web sites.
Also, WBCs raised concerns about how to effectively coordinate by
colocating with an SBDC or SCORE chapter. Several WBCs told us that
they had considered coordinating with SBDC and SCORE by colocating or
sharing space in order to reduce costs and leverage staff, but feared
that doing so would inhibit their ability to maintain their identity
and reach their target client group of low-income women. Until recent
policy changes, WBCs and SBDCs were both measured on the number of
clients that participate in small business training and counseling
services, and one WBC told us that colocation would cause WBCs to
compete for clients. SBA officials told us that the potential for
competition between WBCs and SBDCs should have been reduced since SBDCs
were no longer required to set a goal for the number of clients they
serve. Until recently, if a WBC and an SBDC sponsored a joint training
event, only one organization could count an individual client and the
total number of training hours. WBCs and SCORE still have similar
measures, and some measures could hinder collaborative efforts.
Some WBCs experienced challenges in their attempts to coordinate
services with SBDC and SCORE. Some WBCs told us that coordinating
services could be difficult. In some instances, SBA encouraged WBCs to
provide services similar to those that SBDCs were already providing to
small businesses. For example, in the WBC notice of award, SBA
emphasizes that WBCs provide ongoing assistance to existing or
established small businesses. However, several WBCs told us that they
considered SBDCs and other service providers to be better equipped to
serve existing and experienced small businesses. In another example,
SBA's WBC notice of award asks that each WBC make an effort to increase
its focus on providing procurement assistance to small businesses;
however this initiative could be interpreted as overlapping with the
existing goals of Procurement Technical Assistance Centers, a program
funded by the Department of Defense that provides procurement
assistance to small business owners through SBDCs and other
institutions. One WBC told us that the district office had encouraged
the center to develop a government procurement curriculum, although the
WBC was already referring clients to an SBDC in the area that provided
this service to small business clients.
As we have seen, some WBCs were effectively coordinating with SBDCs and
SCORE, but others faced challenges that SBA's limited guidance has not
addressed. The examples of successful and effective coordination that
were shared with us demonstrate that a variety of approaches exists,
and that some WBCs have overcome some of the challenges expressed by
others. This type of information would be useful guidance to all WBCs.
Without it, WBCs, SBDCs, and SCORE may be duplicating efforts and
missing opportunities to use federal funds more efficiently.
Conclusions:
The WBC program has undergone significant change since its inception in
1989. WBCs were initially envisioned as entities that would receive
federal funding for only 5 years. However, concerns about whether the
federal investment was sufficient to create sustainable WBCs led
Congress to create a pilot program to provide sustainability awards for
an additional 5 years. The creation of the sustainability awards, which
were meant to provide some additional support to WBCs, also created
some uncertainty about the amount of funding older WBCs would obtain
year to year and whether sustainability awards would continue in the
future. This year, Congress created a more permanent funding stream for
WBCs that continue to meet the program's requirements by establishing 3-
year renewable awards. This change should address the concerns raised
by existing WBCs. However, the program will remain competitive, and it
is unclear how the new awards will impact SBA's ability to fund new
centers in the future. SBA is planning to begin providing the new 3-
year renewable awards in 2008.
SBA's downsizing and the subsequent impact on staffing in district
offices, as well as the growth in the WBC program in terms of number of
WBCs participating, have had an impact on how SBA oversees WBCs. The
significant reliance on DOTRs in SBA's district offices is particularly
problematic because we found instances in which some DOTRs may not be
able to carry out those responsibilities effectively. Some DOTRs had
other district office responsibilities that could limit their ability
to oversee WBCs, and others lacked the necessary skills and expertise.
Because SBA relies on DOTRs, it is important that the agency ensure
that such staff have the right mix of responsibilities and adequate
guidance and training to carry out those responsibilities. Otherwise,
DOTRs may not succeed in ensuring that WBCs are meeting all program
requirements and that federal funds are not being misused or wasted.
Communication between SBA and WBCs could also be improved.
Communication is a key internal control that ensures SBA's policies and
procedures are understood. The fact that several WBCs said that they
did not obtain sufficient information on what it takes to be a
successful WBC, even though OWBO has monthly conference calls with
them, suggests the need to explore additional methods for providing
information that will help WBCs to be successful. Improved
communication would reduce the confusion expressed by many WBCs and
increase the likelihood that the centers meet program requirements and
perform well.
SBA can facilitate efficient and effective use of its resources by
encouraging coordination among the WBC, SBDC and SCORE programs when
coordination makes sense for the geographic areas they are serving.
Though we found that the WBC program distinguishes itself from other
business assistance programs by providing services to economically and
socially disadvantaged populations, all of SBA's business assistance
providers--WBCs, SBDCs, and SCORE--provide training and counseling
services to potential or existing entrepreneurs. As a result, the
opportunity for duplication exists. SBA is aware that duplication could
occur and has taken steps to encourage coordination but there is no
explicit guidance on how to successfully coordinate services. WBCs are
expected to demonstrate that they are coordinating with SBDCs and
SCORE, and several of the WBCs gave us examples of how they
coordinated, but the degree of coordination varied. Some WBCs had
concerns about how they should coordinate while also ensuring that they
meet their own program requirements. The instances of active
coordination among SBA's programs and other local business assistance
programs provide a range of methods other geographic areas could also
consider using. These examples demonstrated how coordination can
leverage resources and help programs minimize or avoid duplication, but
they are not necessarily familiar to all WBCs because SBA has not
provided guidance based on these promising practices and examples of
effective coordination.
Recommendations for Executive Action:
To ensure that oversight of the WBC program is efficient and effective
we recommend that the Administrator take the following two actions:
* evaluate and modify, as appropriate, the responsibilities assigned to
DOTRs to ensure that DOTRs can conduct appropriate and effective
monitoring of the centers, and:
* establish a communication strategy to ensure that WBCs have access to
up-to-date information on program requirements and help the centers
better understand how they are performing.
To improve coordination and facilitate the efficient use of federally
funded resources, we recommend that the Administrator direct the
Associate Administrator of the Office of Entrepreneurial Development
(OED) to take the following action:
* develop guidance or information for SBA's district offices and WBCs,
SBDCs, and SCORE that will facilitate successful coordination of
services. This guidance or information could be developed by
identifying promising practices currently in place in some geographic
areas or by developing case studies or examples of successful
coordination models. The guidance should also assist district offices,
WBCs, SBDCs and SCORE in providing sound advice on how to coordinate
services when doing so could conflict with meeting individual program
requirements or initiatives.
Agency Comments:
We provided SBA with a draft of this report for review and comment. SBA
provided no comments on the draft report or its recommendations.
We will send copies of this report to the chair of the Committee on
Small Business, House of Representatives, the Administrator of the
Small Business Administration, and other interested parties. We will
also make copies available to others upon request. In addition, the
report will be available at no charge on GAO's Web site at [hyperlink,
http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-8678. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last
page of this report. Staff acknowledgments are listed in appendix III.
Signed by:
William B. Shear:
Director, Financial Markets and Community Investment:
[End of section]
Appendix I: Scope and Methodology:
In this report, we address (1) the uncertainties associated with the
funding process for Women's Business Centers (WBC); (2) the Small
Business Administration's (SBA) oversight of the WBC program, including
policies and procedures for monitoring compliance with program
requirements and assessing program effectiveness; and (3) the services
that WBCs provide to small businesses and actions that SBA and WBCs
have taken to avoid duplicating the services offered by the Small
Business Development Center (SBDC) and SCORE (formerly Service Corps of
Retired Executives) programs.
To address all three objectives, we reviewed the legislative history of
the WBC program, our previous reports, SBA's policies and procedures
for administering the program, and studies of the program conducted by
SBA, SBA's Office of Inspector General, and external organizations. We
conducted site visits in 6 states and the District of Columbia and
interviewed officials from 10 WBCs, 7 SBDCs, and 6 SBA district
offices. We selected these locations to represent geographic diversity
and to enable us to rely on staff from our field offices. We also
conducted 17 telephone interviews with WBCs randomly selected from the
universe of 99 WBCs that received SBA awards in fiscal year 2007, using
criteria to ensure that we obtained a mix of newer and more established
WBCs that would allow us to compare a range of experiences with the
program. Table 3 lists the WBCs and SBDCs we contacted. We interviewed
officials from SBA's Office of Entrepreneurial Development (OED) and
Office of Women's Business Ownership (OWBO) who are responsible for
overseeing the program.
Table 3: Locations of Site Visits and Telephone Interviews with WBCs
and SBDCs:
WBC site visits: Berkeley, Calif;
WBC telephone interviews: Tucson, Ariz;
SBDC site visits: San Francisco, Calif;
SBDC telephone interview: Atlanta, Ga.
WBC site visits: San Francisco, Calif;
WBC telephone interviews: Los Angeles, Calif. (2);
SBDC site visits: Washington, D.C;
SBDC telephone interview: [Empty].
WBC site visits: Washington, D.C;
WBC telephone interviews: Stamford, Conn;
SBDC site visits: Chicago, Ill;
SBDC telephone interview: [Empty].
WBC site visits: Atlanta, Ga;
WBC telephone interviews: Wilmington, Del;
SBDC site visits: Chestnut Hill, Mass;
SBDC telephone interview: [Empty].
WBC site visits: Kennesaw, Ga;
WBC telephone interviews: Orlando, Fla;
SBDC site visits: College Park, Md;
SBDC telephone interview: [Empty].
WBC site visits: Chicago, Ill;
WBC telephone interviews: Des Moines, Iowa;
SBDC site visits: Springfield, Va;
SBDC telephone interview: [Empty].
WBC site visits: Rockford, Ill;
WBC telephone interviews: Lenexa, Kan;
SBDC site visits: [Empty];
SBDC telephone interview: [Empty].
WBC site visits: Baltimore, Md;
WBC telephone interviews: New Orleans, La; SBDC site visits: [Empty];
SBDC site visits: [Empty];
SBDC telephone interview: [Empty].
WBC site visits: Worcester, Mass;
WBC telephone interviews: Fayetteville, N.C;
SBDC site visits: [Empty];
SBDC telephone interview: [Empty].
WBC site visits: Springfield, Va;
WBC telephone interviews: Buffalo, N.Y;
SBDC site visits: [Empty];
SBDC telephone interview: [Empty].
WBC site visits: [Empty];
WBC telephone interviews: San Juan, P.R;
SBDC site visits: [Empty];
SBDC telephone interview: [Empty].
WBC site visits: [Empty];
WBC telephone interviews: Columbia, S.C;
SBDC site visits: [Empty];
SBDC telephone interview: [Empty].
WBC site visits: [Empty];
WBC telephone interviews: El Paso, Tex;
SBDC site visits: [Empty];
SBDC telephone interview: [Empty].
WBC site visits: [Empty];
WBC telephone interviews: Salt Lake City, Utah;
SBDC site visits: [Empty];
SBDC telephone interview: [Empty].
WBC site visits: [Empty];
WBC telephone interviews: Montpelier, Vt;
SBDC site visits: [Empty];
SBDC telephone interview: [Empty].
WBC site visits: [Empty];
WBC telephone interviews: Kenosha, Wis;
SBDC site visits: [Empty];
SBDC telephone interview: [Empty].
Source: GAO.
[End of table]
To address uncertainties associated with the funding process, we
interviewed officials in SBA's Division of Procurement and Grants
Management (DPGM) regarding the WBC award process and new legislation
changing the WBC program's funding structure. We interviewed officials
at the Office of Management and Budget (OMB) regarding specific
findings related to the WBC funding process in its Program Assessment
Rating Tool (PART). Additionally, as part of our interviews, we asked
the 27 WBCs to provide their perspectives on the WBC funding process.
To assess SBA's oversight of the program, we reviewed documentation
that SBA uses to oversee WBCs and the award applications and
programmatic and financial examination reports for 7 of the 10 WBCs
that we visited. We interviewed SBA district office staff on their role
in overseeing the WBCs and on the guidance that SBA provides to them.
We also interviewed officials in DPGM regarding DPGM's role in WBC
funding and oversight. We asked the 27 WBCs about their relationship
with SBA.
To identify the services WBCs provide and actions WBCs and SBA take to
avoid duplication with other SBA programs, we reviewed and compared the
statutory authority for the WBC, SBDC, and SCORE programs.
Additionally, we reviewed two reports from SBA's contracted study and
studies by three external entities on the impact of WBCs. We describe
each study and provide an assessment of each study's design in appendix
II. We asked the 27 WBCs, 7 SBDCs, and SCORE's national office about
the services they provide and coordination among the programs.
Additionally, we reviewed the Web sites of 24 of the WBCs and 6 of the
SBDCs that we contacted, and SCORE to identify the services that they
offer and determine whether the Web sites provided any information on
how the three programs coordinate in their geographic areas (local
markets).
We conducted our work in California, Georgia, Illinois, Maryland,
Massachusetts, Virginia, and Washington, D.C. between August 2006 and
November 2007 in accordance with generally accepted government auditing
standards.
[End of section]
Appendix II: Studies Evaluating the Impact of WBCs:
We reviewed four studies that have evaluated various aspects of the
impact of WBCs. One study was sponsored by SBA. SBA contracted with
Concentrance Consulting Group--a management consulting firm offering
services to government and private sector clients--to conduct a
longitudinal impact study of its business assistance programs,
including the WBC program. We reviewed the first two reports of the SBA
study and only reviewed the sections addressing the WBC program. The
three other studies focused on the impact of WBCs and were sponsored by
private organizations. The Association of Women's Business Centers
(AWBC)--a nonprofit organization representing WBCs--sponsored the study
conducted by the Center for Women's Leadership at Babson College. The
National Women's Business Council (NWBC)--a federal advisory council
created by Congress--sponsored a study conducted by Quality Research
Associates, a research firm. The fourth study was conducted by the
Center for Women's Business Research--a nonprofit research
organization--and was sponsored by NWBC, AT&T, and American Express. We
identified these three studies through Internet literature searches
during July and August 2006 as being industry-conducted studies using
the following search terms: "Women's Business Centers" AND "Study" OR
"Studies"; "WBC" AND "Study" OR "Studies." Each study was reviewed by
two staff members. Using a template, the first reviewer took notes on
author's affiliation, objectives, methodology, limitations, and other
information. The second reviewer then reviewed these notes after
reading the study. Where there was lack of agreement, the two reviewers
discussed their points of view and reached agreement.
Based on our assessment of the studies' design and methodology, we
determined that the studies provide useful information on how some WBCs
have impacted their clients, but these studies are limited because of
low survey response rates and other study limitations. It is important
to note that there are a number of considerations in attempting to
evaluate the impact of service delivery programs like the WBC program.
Voluntary surveys of private citizens tend to yield much lower response
rates than surveys of organizations or nonvoluntary surveys, like the
Census. Response rate is a key statistic toward understanding whether
study results are representative of the population that has been
sampled. As a consequence, any study of WBC clients may be limited in
describing the universe of clients due to low response rates. The type
of error associated with low response rates is called survey
nonresponse error. There are some procedures that help mitigate against
survey nonresponse error, and in our review of the study conducted for
SBA and the other studies, we have noted when the study used these
procedures. Also, when studies are based on small numbers, such as the
studies using WBCs as the unit of analysis, it can be difficult to
detect patterns in the data.
Overall, we believe that any inferences from these studies are largely
limited to the centers and clients actually providing data for the
studies, except perhaps in the first report for the SBA study, which
included procedures to increase the confidence that the results are
more representative of the population of clients served. In general, we
found that all four of the studies appear to have reasonable and well
thought through research designs. However, in some studies key
information was not reported that would have enabled us to more
completely evaluate them. Table 4 provides information on each of the
studies and our assessment of the studies' design.
Table 4: Assessment of Four Studies of WBCs:
Title: Impact Study of Entrepreneurial Development Resources (2004 and
2006);
Author/Sponsor: Concentrance Consulting Group for SBA;
Purpose and description of study: SBA designed a multiyear study to
assess the impact of its business assistance programs, one of which is
the WBC program. SBA hired Concentrance to administer the study,
analyze the findings, and write the reports. The 2004 report reflected
findings on the impact of the WBC program on clients served during
2003. The 2006 report presents findings for clients served during 2004
as well as findings of a follow-up survey of 2003 respondents. Among
other things, the study measures the clients' perceptions of usefulness
of information in starting a business, change management practices, and
business growth for firms that used SBA's business assistance programs;
Assessment of study design: The study used a stratified random sample
to select clients from an SBA database, which is one means to overcome
possible selection bias. The 2004 study had a 45.8 percent response
rate combined for its mail and telephone surveys from WBCs. A
nonresponse analysis found no difference between respondents and
nonrespondents on number of full-time equivalents or average sales
revenues. This analysis provides more confidence that the results of
this study are likely to be representative of a larger number of
clients than only those who responded and may be representative of the
WBC client population across most centers. The 2006 study had a lower
response rate of 23 percent for WBC clients and should be interpreted
with caution.
Title: The Impact and Influence of Women's Business Centers in the
United States (2005);
Author/Sponsor: Mary Godwyn, Nan Langowitz, and Norean Sharpe for the
Center for Women's Leadership at Babson College for the Association of
Women's Business Centers;
Purpose and description of study: The study surveyed WBCs in 2004 to
examine the social and economic impact of WBCs and their effectiveness
in assisting women entrepreneurs. The study reports on characteristics
of the WBCs, such as age, geographic location, organizational
structure, and funding. The study analyzed information WBCs collect on
their clients, including education and household income levels. The
study also identified the types of services and practices WBCs use to
assist clients and challenges WBCs face, such as funding and their
relationship with SBA;
Assessment of study design: Data collection methods included a survey
of 52 prequalified WBCs and focus groups of center directors attending
a national conference. The survey had a response rate of 52 percent. A
nonresponse bias analysis was not performed, and some of the analysis
of impact and effectiveness was also based on focus groups of center
directors attending the national conference, which may have a selection
bias. Therefore, the findings may not be representative of all center
directors. The report did not include the questions used in the survey
or the focus groups, which limited our ability to fully assess the
study.
Title: Analyzing the Economic Impact of the Women's Business Center
Program (2004);
Author/Sponsor: Quality Research Associates for the National Women's
Business Council;
Purpose and description of study: The study primarily uses data that
SBA collects from WBCs to analyze the economic impact of the WBC
program and to understand the factors contributing to positive
outcomes. The analyses included demographic data and output and outcome
measures based on data that WBCs collect from their clients, including
the number of clients served, gross receipts, profits, and new jobs
created. The analyses also looked at external factors that could affect
WBC clients, such as city/town size and poverty rate;
Assessment of study design: The primary data source was the 2001, 2002,
and 2003 data SBA collects from WBCs for its performance measures on
the WBC program. Additional data came from WBC Web sites and Census
data. The report did not reflect how the data from SBA was initially
obtained and data reliability was limited to the handling of missing
data. The lack of information on the reliability of the data that was
used limited our ability to fully assess the study.
Title: Launching Women-Owned Businesses: A Longitudinal study of
Women's Business Center Clients (2004);
Author/Sponsor: Center for Women's Business Research;
Purpose and description of study: The goals of the 3-year study were to
examine the progress of clients from four WBCs over time and to assess
the factors associated with the successful launch and growth of women-
owned businesses. Specifically, the report discussed findings on these
WBCs and on personal and economic situations;
Assessment of study design: The study focused on four centers and
applied a longitudinal mail survey of clients served by the four
centers. The survey was administered four times between 2001 and 2003.
Because the study focused on four centers, all of which were in major
cities, the results cannot be generalized to the population of women's
business centers. A response bias analysis showed that a higher
percentage of middle income clients and business owners responded to
follow-up surveys. The response rate on the fourth and final survey was
low (19 percent), and less than half of those respondents provided
information on all data points reflected in the report. The report did
not include the questions used in the survey, which limited our ability
to fully assess the study.
Source: GAO.
[End of table]
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
William B. Shear (202) 512-8678 or shearw@gao.gov:
Staff Acknowledgments:
The following individuals made key contributions to this report: Kay
Kuhlman, Assistant Director; Heather Atkins; Bernice Benta; Carolyn
Boyce; Michelle Bracy; Tania Calhoun; Emily Chalmers; and Rudy Chatlos.
[End of section]
Footnotes:
[1] The Women's Business Ownership Act of 1988, Pub. L. No. 100-533, §
201, 102 Stat. 2689, 2690 (1988) created the WBC program with
demonstration projects that would expire in 1991. Although the act was
passed in 1988, WBCs were initially funded in 1989.
[2] Under the Federal Grant and Cooperative Agreement Act of 1977, a
grant and cooperative agreement are closely related assistance
arrangements with essentially the same basic purpose: to encourage the
recipients of funding to carry out activities in furtherance of a
public goal. The difference is the degree of involvement between the
federal agency and the recipient in the performance of the funded
activity. When the involvement is expected to be "substantial", the act
requires the use of a cooperative agreement. GAO, Principles of Federal
Appropriations Law, Third Ed., Vol. II, GAO-06-382SP (Washington, D.C.:
February 2006).
[3] The Women's Business Development Act of 1991, Pub. L. No. 102-191,
§ 2, 105 Stat. 1589 (1991), made WBCs 3-year projects. In the Small
Business Reauthorization Act of 1997, Pub. L. No. 105-135, § 308, 111
Stat. 2592, 2611 (1997), the projects were extended to 5 years. The
Women's Business Centers Sustainability Act of 1999, Pub. L. No. 106-
165, § 4, 113 Stat. 1795, 1796 (1999), created 5-year sustainability
pilot projects awarded to WBCs who had completed the first 5-year
project.
[4] The U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and
Iraq Accountability Appropriations Act, 2007, Pub. L. No. 110-28, §
8305, 121 Stat. 112, 209 (2007), amends the Small Business Act to
repeal the sustainability pilot program and to permit WBCs to receive
SBA funding on a continual basis. WBCs currently in the program and
those that have successfully graduated will be eligible to apply for
continuous award funding through 3-year renewable awards of up to
$150,000 per year.
[5] GAO, 21st Century Challenges: Reexamining the Base of the Federal
Government, GAO-05-325SP (Washington, D.C.: February 2005).
[6] OMB, Program Assessment: Women's Business Centers, [hyperlink,
http://www.expectmore.gov] (accessed Feb. 6, 2007).
[7] When permissible under the terms of the Community Development Block
Grant (CDBG) program, CDBG funds may also be used to match a WBC award.
[8] The 63 lead centers include one in every state (Texas has four and
California six), the District of Columbia, Guam, Puerto Rico, American
Samoa, and the U.S. Virgin Islands.
[9] SBA's Division of Procurement and Grants Management was formerly
the Office of Procurement and Grants Management (OPGM).
[10] OMB, Program Assessment: Women's Business Centers, [hyperlink,
http://www.expectmore.gov] (accessed Feb. 6, 2007).
[11] Small Business Reauthorization Act of 1997, Pub. L. No. 105-135,
Section § 308(a), 111 Stat. 2592, 2611 (1997);
see 15 U.S.C. Section § 656(h).
[12] Information transfers include the use of library resources,
computers or software, viewing of business videos, fax services,
information mailings, telephone assistance, and electronic assistance.
[13] SBA headquarters still coordinates biannual financial audits for
SBDCs.
[14] SBA Office of Inspector General, Grants to the Texas Center for
Women's Business Enterprise, Austin, Texas, Audit Report No. 3-18,
(Washington, D.C.: March 2003).
[15] SBA and OMB have a goal of making WBC award payments within 30
days of the date that the WBC submits a payment request.
[16] Mary Godwyn, Nan Langowitz, and Norean Sharpe, The Impact and
Influence of Women's Business Centers in the United States, (Babson
Park, Mass.: Center for Women's Leadership at Babson College, April
2005).
[17] GAO, Standards for Internal Control in the Federal Government,
GAO/ AIMD-00-21.3.1 (Washington, D.C.: November 1999).
[18] 15 U.S.C. § 656(f)
[19] Godwyn, Langowitz, and Sharpe, The Impact and Influence of Women's
Business Centers.
[20] Small Business Administration, Office of Entrepreneurial
Development , Initial Impact Study of Entrepreneurial Development
Resources, prepared by Concentrance Consulting Group (Washington D.C. ,
November 2004).
[21] Godwyn, Langowitz, and Sharpe, The Impact and Influence of Women's
Business Centers.
[22] Small Business Administration, Initial Impact Study of
Entrepreneurial Development Resources.
[23] GAO, 21st Century Challenges: Reexamining the Base of the Federal
Government, GAO-05-325SP, (Washington, D.C.: February 2005).
[24] Guide to Opportunities for Improving Grant Accountability,"
Domestic Working Group, Grant Accountability Project, October 2005,
available at [hyperlink, http://www.epa.gov/oig/dwg/reports/].
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