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106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    106-365

======================================================================



 
          WOMEN'S BUSINESS CENTERS SUSTAINABILITY ACT OF 1999

                                _______


October 5, 1999.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Talent, from the Committee on Small Business, submitted the 
                               following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 1497]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Small Business, to whom was referred the 
bill (H.R. 1497) to amend the Small Business Act with respect 
to the women's business center program, having considered the 
same, report favorably thereon with an amendment and recommend 
that the bill as amended do pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Women's Business Centers 
Sustainability Act of 1999''.

SEC. 2. PRIVATE NONPROFIT ORGANIZATIONS.

  Section 29 of the Small Business Act (15 U.S.C. 656) is amended--
          (1) in subsection (a)--
                  (A) by redesignating paragraphs (2) and (3) as 
                paragraphs (3) and (4), respectively; and
                  (B) by inserting after paragraph (1) the following:
          ``(2) the term `private nonprofit organization' means an 
        entity described in section 501(c) of the Internal Revenue Code 
        of 1986 that is exempt from taxation under section 501(a) of 
        such Code;''; and
          (2) in subsection (b), by inserting ``nonprofit'' after 
        ``private''.

SEC. 3. INCREASED MANAGEMENT OVERSIGHT AND REVIEW OF WOMEN'S BUSINESS 
                    CENTERS.

  Section 29 of the Small Business Act (15 U.S.C. 656) is amended--
          (1) by striking subsection (h) and inserting the following:
  ``(h) Program Examination.--
          ``(1) In general.--The Administration shall--
                  ``(A) develop and implement procedures to annually 
                examine the programs and finances of each women's 
                business center established pursuant to this section, 
                pursuant to which each such center shall provide to the 
                Administration--
                          ``(i) an itemized cost breakdown of actual 
                        expenditures for costs incurred during the 
                        preceding year; and
                          ``(ii) documentation regarding the amount of 
                        matching assistance from non-Federal sources 
                        obtained and expended by the center during the 
                        preceding year in order to meet the 
                        requirements of subsection (c) and, with 
                        respect to any in-kind contributions described 
                        in subsection (c)(2) that were used to satisfy 
                        the requirements of subsection (c), 
                        verification of the existence and valuation of 
                        those contributions; and
                  ``(B) analyze the results of each such examination 
                and, based on that analysis, make a determination 
                regarding the viability of the programs and finances of 
                each women's business center.
          ``(2) Extension of contracts.--In determining whether to 
        extend or renew a contract with a women's business center, the 
        Administration--
                  ``(A) shall consider the results of the most recent 
                examination of the center under paragraph (1); and
                  ``(B) may withhold such extension or renewal, if the 
                Administration determines that--
                          ``(i) the center has failed to provide any 
                        information required to be provided under 
                        clause (i) or (ii) of paragraph (1)(A), or the 
                        information provided by the center is 
                        inadequate; or
                          ``(ii) the center has failed to provide any 
                        information required to be provided by the 
                        center for purposes of the report of the 
                        Administration under subsection (j), or the 
                        information provided by the center is 
                        inadequate.''; and
          (2) by striking subsection (j) and inserting the following:
  ``(j) Management Report.--
          ``(1) In general.--The Administration shall prepare and 
        submit to the Committees on Small Business of the House of 
        Representatives and the Senate a report on the effectiveness of 
        all projects conducted under this section.
          ``(2) Contents.--Each report submitted under paragraph (1) 
        shall include information concerning, with respect to each 
        women's business center established pursuant to this section--
                  ``(A) the number of individuals receiving assistance;
                  ``(B) the number of startup business concerns formed;
                  ``(C) the gross receipts of assisted concerns;
                  ``(D) the employment increases or decreases of 
                assisted concerns;
                  ``(E) to the maximum extent practicable, increases or 
                decreases in profits of assisted concerns;
                  ``(F) documentation detailing the most recent 
                analysis undertaken under subsection (h)(1)(B) and the 
                determinations made by the Administration with respect 
                to that analysis; and
                  ``(G) demographic data regarding the staff of the 
                center.''.

SEC. 4. WOMEN'S BUSINESS CENTER SUSTAINABILITY PILOT PROGRAM.

  (a) In General.--Section 29 of the Small Business Act (15 U.S.C. 656) 
is amended by adding at the end the following:
  ``(l) Sustainability Pilot Program.--
          ``(1) In general.--There is established a 4-year pilot 
        program under which the Administration is authorized to make 
        grants (referred to in this section as `sustainability grants') 
        on a competitive basis for an additional 5-year project under 
        this section to any private nonprofit organization (or a 
        division thereof)--
                  ``(A) that has received financial assistance under 
                this section pursuant to a grant, contract, or 
                cooperative agreement; and
                  ``(B) that--
                          ``(i) is in the final year of a 5-year 
                        project; or
                          ``(ii) to the extent that amounts are 
                        available for such purpose under subsection 
                        (k)(4)(B), has completed a project financed 
                        under this section (or any predecessor to this 
                        section) and continues to provide assistance to 
                        women entrepreneurs.
          ``(2) Conditions for participation.--In order to receive a 
        sustainability grant, an organization described in paragraph 
        (1) shall submit to the Administration an application, which 
        shall include--
                  ``(A) a certification that the applicant--
                          ``(i) is a private nonprofit organization;
                          ``(ii) employs a full-time executive director 
                        or program manager to manage the women's 
                        business center for which a grant is sought; 
                        and
                          ``(iii) as a condition of receiving a 
                        sustainability grant, agrees--
                                  ``(I) to an annual examination by the 
                                Administration of the center's programs 
                                and finances; and
                                  ``(II) to the maximum extent 
                                practicable, to remedy any problems 
                                identified pursuant to that 
                                examination;
                  ``(B) information demonstrating that the applicant 
                has the ability and resources to meet the needs of the 
                market to be served by the women's business center site 
                for which a sustainability grant is sought, including 
                the ability to raise financial resources;
                  ``(C) information relating to assistance provided by 
                the women's business center site for which a 
                sustainability grant is sought in the area in which the 
                site is located, including--
                          ``(i) the number of individuals assisted;
                          ``(ii) the number of hours of counseling, 
                        training, and workshops provided; and
                          ``(iii) the number of startup business 
                        concerns formed;
                  ``(D) information demonstrating the effective 
                experience of the applicant in--
                          ``(i) conducting financial, management, and 
                        marketing assistance programs, as described in 
                        paragraphs (1), (2), and (3) of subsection (b), 
                        designed to impart or upgrade the business 
                        skills of women business owners or potential 
                        owners;
                          ``(ii) providing training and services to a 
                        representative number of women who are both 
                        socially and economically disadvantaged;
                          ``(iii) using resource partners of the 
                        Administration and other entities, such as 
                        universities;
                          ``(iv) complying with the cooperative 
                        agreement of the applicant; and
                          ``(v) prudently managing finances and 
                        staffing, including the manner in which the 
                        performance of the applicant compared to the 
                        business plan of the applicant and the manner 
                        in which grants made under subsection (b) were 
                        used by the applicant; and
                  ``(E) a 5-year plan that demonstrates the ability of 
                the women's business center site for which a 
                sustainability grant is sought--
                          ``(i) to serve women business owners or 
                        potential owners in the future by improving 
                        fundraising and training activities; and
                          ``(ii) to provide training and services to a 
                        representative number of women who are both 
                        socially and economically disadvantaged.
          ``(3) Review of applications.--
                  ``(A) In general.--The Administration shall--
                          ``(i) review each application submitted under 
                        paragraph (2) based on the information provided 
                        under subparagraphs (D) and (E) of that 
                        paragraph, and the criteria set forth in 
                        subsection (f); and
                          ``(ii) approve or disapprove applications for 
                        sustainability grants simultaneously with 
                        applications for grants under subsection (b).
                  ``(B) Data collection.--Consistent with the annual 
                report to Congress under subsection (j), each women's 
                business center site that receives a sustainability 
                grant shall, to the maximum extent practicable, collect 
                the information relating to--
                          ``(i) the number of individuals assisted;
                          ``(ii) the number of hours of counseling and 
                        training provided and workshops conducted;
                          ``(iii) the number of startup business 
                        concerns formed;
                          ``(iv) any available gross receipts of 
                        assisted concerns; and
                          ``(v) the number of jobs created, maintained, 
                        or lost at assisted concerns.
                  ``(C) Record retention.--The Administration shall 
                maintain a copy of each application submitted under 
                this subsection for not less than 10 years.
          ``(4) Non-federal contribution.--
                  ``(A) In general.--Notwithstanding any other 
                provision of this section, as a condition of receiving 
                a sustainability grant, an organization described in 
                paragraph (1) shall agree to obtain, after its 
                application has been approved under paragraph (3) and 
                notice of award has been issued, cash and in-kind 
                contributions from non-Federal sources for each year of 
                additional program participation in an amount equal to 
                1 non-Federal dollar for each Federal dollar.
                  ``(B) In-kind contributions.--Not more than 50 
                percent of the non-Federal assistance obtained for 
                purposes of subparagraph (A) may be in the form of in-
                kind contributions that exist only as budget line 
                items, including such contributions of office equipment 
                and office space.
          ``(5) Timing of requests for proposals.--In carrying out this 
        subsection, the Administration shall issue requests for 
        proposals for women's business centers applying for the pilot 
        program under this subsection simultaneously with requests for 
        proposals for grants under subsection (b).''.
  (b) Authorization of Appropriations.--Section 29(k) of the Small 
Business Act (15 U.S.C. 656(k)) is amended--
          (1) by striking paragraph (1) and inserting the following:
          ``(1) In general.--There is authorized to be appropriated, to 
        remain available until the expiration of the pilot program 
        under subsection (l)--
                  ``(A) $12,000,000 for fiscal year 2000;
                  ``(B) $12,800,000 for fiscal year 2001;
                  ``(C) $13,700,000 for fiscal year 2002; and
                  ``(D) $14,500,000 for fiscal year 2003.'';
          (2) in paragraph (2)--
                  (A) by striking ``Amounts made'' and inserting the 
                following:
                  ``(A) In general.--Except as provided in subparagraph 
                (B), amounts made''; and
                  (B) by adding at the end the following:
                  ``(B) Exception.--Of the total amount made available 
                under this subsection for a fiscal year, the following 
                amounts shall be available for costs incurred in 
                connection with the selection of applicants for 
                assistance under this subsection and with monitoring 
                and oversight of the program authorized under this 
                subsection:
                          ``(i) For fiscal year 2000, 2 percent of such 
                        total amount.
                          ``(ii) For fiscal year 2001, 1.9 percent of 
                        such total amount.
                          ``(iii) For fiscal year 2002, 1.9 percent of 
                        such total amount.
                          ``(iv) For fiscal year 2003, 1.6 percent of 
                        such total amount.''; and
          (3) by adding at the end the following:
          ``(4) Reservation of funds for sustainability pilot 
        program.--
                  ``(A) In general.--Of the total amount made available 
                under this subsection for a fiscal year, the following 
                amounts shall be reserved for sustainability grants 
                under subsection (l):
                          ``(i) For fiscal year 2000, 17 percent of 
                        such total amount.
                          ``(ii) For fiscal year 2001, 18.8 percent of 
                        such total amount.
                          ``(iii) For fiscal year 2002, 30.2 percent of 
                        such total amount.
                          ``(iv) For fiscal year 2003, 30.2 percent of 
                        such total amount.
                  ``(B) Use of unawarded reserve funds.--
                          ``(i) Sustainability grants to other 
                        centers.--Of amounts reserved under 
                        subparagraph (A), the Administration shall use 
                        any funds that remain available after making 
                        grants in accordance with subsection (l) to 
                        make grants under such subsection to women's 
                        business center sites that have completed a 
                        project financed under this section (or any 
                        predecessor to this section) and that continue 
                        to provide assistance to women entrepreneurs.
                          ``(ii) Additional grants.--The Administration 
                        shall use any funds described in clause (i) 
                        that remain available after making grants under 
                        such clause to make grants to additional 
                        women's business center sites, or to increase 
                        the grants to existing women's business center 
                        sites, under subsection (b).''.
  (c) Guidelines.--Not later than 30 days after the date of enactment 
of this Act, the Administrator of the Small Business Administration 
shall issue guidelines to implement the amendments made by this 
section.

SEC. 5. EFFECTIVE DATE.

  This Act and the amendments made by this Act shall take effect on 
October 1, 1999.

                                Purpose

    The purpose of H.R. 1497 is to allow for currently funded 
Women's Business Centers and graduated Women's Business Centers 
to recompete for Federal funding. H.R. 1497 addresses the 
funding constraints that make it increasingly difficult for 
Women's Business Centers to sustain the level of services they 
provide and, in some instances, to keep their doors open after 
they graduate from the Women's Business Centers Program and no 
longer receive federal matching funds.
    This legislation establishes a pilot four-year competitive 
grant program that allows graduating and graduated centers that 
offer on-going programs and services to recompete for another 
five years of matching grants, known as sustainability grants. 
Graduating centers are considered centers that are in the final 
year of their five-year funding cycle. A graduated center is 
considered a center that no longer receives federal funds from 
the Women's Business Center Program, but is still actively 
providing business programs and services to its local market. 
The bill allows graduated centers to recompete for 
sustainability grants in any year in order to discourage self-
sufficient graduating centers from applying if they do not need 
to. For example, if a center has established adequate 
alternative funding by the time it is graduating, it does not 
need the sustainability grant. However, if three years later 
the local economic conditions negatively affect the center's 
ability to raise money, it can apply for a sustainability 
grant.

                          Need for Legislation

    The Small Business Administration's Women's Business Center 
Program provides five-year grants, matched by non-Federal 
dollars, to private-sector organizations to establish business-
training centers for women. Depending on the needs of the 
community being served, centers teach women the principles of 
finance, management and marketing, as well as specialized 
topics such as how to get a government contract or how to start 
a home-based business. The centers are located in rural, urban 
and suburban areas, and direct much of their training and 
counseling assistance toward socially and economically 
disadvantaged women.
    Congress started the Women's Business Center Program in 
1988 in response to hearings that revealed the Federal 
government was not meeting the needs of women entrepreneurs. 
They faced discrimination in access to credit and capital, were 
shut out of many government contracts and had little access to 
the kind of business assistance that they needed to compete in 
the marketplace.
    Through the Women's Business Center Program, our national 
policy has steadily improved the resources available to women: 
The program made its first four grants in 1989 and ten years 
later, as of June 18, 1999, there are 81 centers in 47 states, 
DC and Puerto Rico. In addition to increasing self-sufficiency 
among women, Women's Business Centers strengthen women's 
business ownership overall and encourage local job creation. 
Over the past decade, the number ofwomen-owned businesses 
operating in this country has grown by 103 percent to an estimated 9.1 
million women-owned firms, generating $3.6 trillion in sales and 
revenues and employing more than 27.5 million workers. In 1998, women-
owned businesses made up more than one-third of the 23 million small 
businesses in the United States.
    In spite of the impressive growth, according to the data 
from the 1998 Women's Economic Summit, women-owned businesses 
account for only 18 percent of all small-business gross 
receipts, and they are dramatically under-represented in the 
nation's two most lucrative markets: corporate buying and 
government contracting. Based on this data and hearing 
testimony, the Committee finds the need for the Women's 
Business Centers continues, and this is no time to diminish or 
dismantle the infrastructure we have invested in for the past 
decade.
    This legislation draws on testimony given before the 
Committee over the past year. According to testimony given by a 
member of the Association of Women's Business Centers at a 
hearing held February 11, 1999, the program is in danger of 
losing effective centers. Many centers need every penny to run 
their programs and it is increasingly difficult to raise the 
required matching funds. Losing the matching funds would 
compound the problem because they would have to raise twice as 
much money, the competition for foundation and private-sector 
dollars has become scarcer with each year that government 
funding has diminished, and they would not have any leverage to 
challenge those foundations and private corporations to give/
match.
    The hearing revealed that bank mergers further exacerbate 
the situation because they are a primary source of funding for 
many centers. According to the Association of Women's Business 
Centers, their executive directors have seen, whether in 
Oklahoma or Massachusetts, that merged institutions, whether 
banks or corporations, rarely give the combined sum of what the 
two single institutions gave.
    H.R. 1497 seeks to improve Congressional oversight of the 
Women's Business Center program and balance the need for 
developing new centers while sustaining currently funded and 
graduated sites. There are four main components to this 
balanced approach. First, the legislation increases oversight 
and review of women's business centers. SBA is directed to do 
an annual programmatic and financial examination of each center 
and then to analyze the results to determine whether the center 
is programmatically and financially viable. The Committee 
recognized a need for such an examination because a GAO study 
on the Women's Business Centers program released on September 
2, 1999, found ``limitations in SBA's records and databases'' 
for the years 1989 through 1998. Accordingly, if centers don't 
provide the information required, if the information is 
inadequate, or if the results are poor, the SBA can withhold 
grant extensions or grant renewals.
    Second, H.R. 1497 requires the SBA to issue the requests 
for proposals (RFP) for new centers and centers competing for 
sustainability grants at the same time in order to better 
manage the selection and award process. This provision is 
intended to ensure that new centers and sustained centers get 
equal consideration during the application review process and 
that funds areappropriately awarded. With regard to 
sustainability grants, the SBA shall make awards in two rounds, giving 
preference to graduating centers. The SBA will first award the best/
meritorious graduating centers. If there are any funds left from the 
appropriations reserved for sustainability grants, the SBA shall then 
award the best/meritorious graduating centers. The bill gives 
preference to graduating centers because of funding constraints. The 
appropriations reserved for sustainability grants each fiscal year of 
the pilot are primarily based on the number of centers that are 
graduating and leave little room for many graduated sites to recompete.
    Third, based on the conditions described in the bill, the 
Committee intends for the selection panel to judge merit on how 
well a center provided service to its market under its first 
award and how it plans to service its market in the next five 
years. The Committee wishes for the Small Business 
Administration to use the conditions for participation in the 
legislation as guidelines for establishing strict criteria 
applying to recompetition. During the development of the 
legislation, Members of both the Majority and Minority 
expressed concern that the Small Business Administration 
carefully develop the criteria regarding outreach and services 
to socially and economically disadvantaged women. One of the 
Committee's priorities is that the centers improve outreach to 
socially and economically disadvantaged women, and for this 
reason the Committee included language to allow the Small 
Business Administration to develop controlling criteria to 
either accept or refuse a proposal for recompetition.
    H.R. 1497 goes a step further by requiring the SBA as part 
of the final selection process to complete a site visit of each 
center competing for a sustainability grant. The Committee 
feels strongly that site visits are an important tool to help 
panel judges distinguish between the centers and to improve the 
oversight of the program. Recognizing that site visits are 
expensive, this bill makes available the equivalent of $275,000 
per year proportionate to appropriations to be used for site 
visits and other uses.
    In addition, the Committee recommends that the Small 
Business Administration re-evaluate its planning mechanism that 
determines the number of new centers it opens each year. Given 
the Administration's reluctance to manage a recompetition 
program, the Committee questions the Small Business 
Administration's ability to manage the additional 25 new 
centers it established in June 1999. The Committee urges the 
Administrator to develop the program in such a way that 
reflects the balance between new centers and recompeting 
centers established in H.R. 1497.
    Fourth, H.R. 1497 incrementally raises over four years the 
annual authorization levels from $12 million in FY2000 to $14.5 
million in fiscal year 2003. The Committee increased the 
authorization levels to ensure that there are adequate monies 
to fund 45 existing centers, an average of 8 recompeting 
centers, and an average of 10 new centers per year. This bill 
establishes very specific requirements for appropriations. 
First, of those amounts, the bill reserves a percentage of 
money each fiscal year for sustainability grants. While the 
bill does not specify a dollar amount for the grants, they are 
expected to be less than the grants for new centers and SBA is 
expected to manage the program accordingly. New centers and 
existing centers are awarded matching grants of up to $150,000 
per year. Recompeting centers are awarded matching grants of up 
to $125,000. The funds appropriated over the four fiscal years 
of the pilot are available until used so that if insufficient 
qualified applications are received, the program can carry over 
unawarded funds for use later in the pilot. Second, the bill 
makes available up to $275,000 per year for the selection panel 
costs, post-award conference costs, and monitoring and 
oversight costs.
    While federal funding should not be an entitlement, the 
Committee finds that graduating and graduated centers that 
provide on-going services should be able to recompete for a new 
cycle of matching grants so that we do not lose our investment 
in the most effective centers. The Women's Business Centers 
Sustainability Act of 1999 that the Committee favorably 
reported establishes a fair framework for competition and 
increases oversight to improve the overall program.

                            committee action

    The Committee on Small Business held a hearing on February 
11, 1999. As a result of the hearing, the Committee passed H.R. 
774, increasing the authorization for the Women's Business 
Center Program to 11 million dollars and changing the funding 
ratio in the 5th year of funding to 1:1.
    H.R. 1497 was introduced on April 20, 1999, in order to 
address the issue of recompetition. On September 30, 1999, the 
Committee on Small Business met for the purposes of considering 
and reporting H.R. 1497. Chairman Talent offered an amendment 
in the nature of a substitute which was introduced, considered 
as read, and opened for amendment. Congresswoman Stephanie 
Tubbs-Jones offered an amendment which was withdrawn. Chairman 
Talent moved to pass H.R. 1497 and report it to the House. At 
9:30 a.m., by voice vote, a quorum being present, the Committee 
passed the bill, H.R. 1497, as amended, and ordered it 
reported.
                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, October 4, 1999.
Hon. James M. Talent,
Chairman, Committee on Small Business,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1497, the Women's 
Business Centers Sustainability Act of 1999.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mark Hadley 
(for federal costs) and Shelley Finlayson (for the state and 
local impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

               Congressional Budget Office Cost Estimate


H.R. 1497--Women's Business Centers Sustainability Act of 1999

    Summary: Women's Business Center train and counsel women in 
the skills necessary to launch their own businesses. Current 
law authorizes appropriations of $11 million a year for Women's 
Business Centers. H.R. 1497 would increase the amounts 
authorized for fiscal years 2000 through 2003, but would repeal 
the authorization for subsequent years. The bill also would 
establish a pilot program to provide grants to such centers 
beyond their initial five-year projects. The bill would clarify 
that Women's Business Centers must be private nonprofit 
organizations. Finally, H.R. 1497 would direct the Small 
Business Administration (SBA) to determine whether each center 
is programmatically and financially viable, and would allow SBA 
to use a small portion of the authorized amounts for 
administrative expenses.
    Assuming appropriation of the authorized amounts, CBO 
estimates that H.R. 1497 would increase net outlays by $2 
million over the 2000-2004 period, relative to the currently 
authorized level. H.R. 1497 would not affect direct spending or 
receipts; therefore, pay-as-you-go procedures would not apply.
    H.R. 1497 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments. Any expenditures made by these governments to 
provide the nonfederal matching funds or in-kind contributions 
to Women's Business Centers in their jurisdictions would be 
incurred voluntarily.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1497 is shown in the following table. 
For purposes of this estimate, CBO assumes that historical 
spending rates for this program will continue and 
appropriations will be provided near the start of each fiscal 
year. The costs of this legislation fall within budget function 
370 (commerce and housing credit).

----------------------------------------------------------------------------------------------------------------
                                                                     By fiscal year, in million of dollars--
                                                               -------------------------------------------------
                                                                  2000      2001      2002      2003      2004
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION

             Spending for Women's Business Centers
Under Current Law:
    Authorization Level \1\...................................        11        11        11        11        11
    Estimated Outlays.........................................         9        10        11        11        11
Proposed Changes:
    Authorization Level.......................................         1         2         3         4       -11
    Estimated Outlays.........................................         0         1         2         3        -4
Under H.R. 1497:
    Authorization Level.......................................        12        13        14        15         0
    Estimated Outlays.........................................        10        12        13        14         7
----------------------------------------------------------------------------------------------------------------
\1\ The amounts shown reflect the amounts authorized to be appropriated under current law.

    Pay-as-you-go considerations: None.
    Intergovernmental and private-sector impact: H.R. 1497 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments. Any expenditures made by these governments 
to provide the non-federal matching funds or in-kind 
contributions to Women's Business Center in their jurisdictions 
would be incurred voluntarily.
    Estimate prepared by: Federal costs: Mark Hadley; impact on 
state, local, and tribal governments: Shelley Finlayson.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                      Committee Estimate of Costs

    Pursuant to the Congressional Budget Act of 1974, the 
Committee estimates that the amendments to Small Business Act 
contained in H.R. 1497, as amended, will increase 
appropriations no more than $15 million dollars over the next 
five fiscal years. Furthermore, pursuant to clause 3(d)(2)(A) 
of rule XIII of the Rules of the House of Representatives, the 
Committee estimates that implementation of H.R. 1497, as 
amended, will not significantly increase administrative costs. 
This concurs with the estimate of the Congressional Budget 
Office.

                           Oversight Findings

    In accordance with clause 4(c)(2) of rule X of the Rules of 
the House of Representatives, the Committee states that no 
oversight findings or recommendations have been made by the 
Committee on Government Reform with respect to the subject 
matter contained in H.R. 1497.
    In accordance with clause (2)(b)(1) of rule X of the Rules 
of the House of Representatives, the oversight findings and 
recommendations of the Committee on Small Business with respect 
to the subject matter contained in H.R. 1497 are incorporated 
into the descriptive portions of this report.

                 Statement of Constitutional Authority

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that authority 
for this legislation in Article I, Section 8, clause 18, of the 
Constitution of the United States.

                      Section-by-Section Analysis

    The bill amends Section 29 of the Small Business Act to 
create a 4-year pilot program that allows Women's Business 
Centers to recompete for another 5-year matching grant, known 
as a sustainability grant.

Section 1. Short title

    The Act is entitled the ``Women's Business Centers 
Sustainability Act of 1999.''

Section 2. Private nonprofit organizations

    This section amends the act to clarify that all Women's 
Business Centers must be private nonprofit organizations 
(501(c) organizations) instead of private organizations.

Section 3. Increased management oversight and review of Women's 
        Business Centers

    This section directs the SBA to do an annual programmatic 
and financial examination for each center and then to analyze 
the results to determine whether the center is programmatically 
and financially viable. The Committee recognized a need for 
such an examination because a GAO study on the Women's Business 
Centers program published on September 2nd found ``limitations 
in SBA's records and databases'' for the years 1989 through 
1998. Accordingly, if centers don't provide the information 
required, if the information is inadequate, or if the results 
are poor, the SBA can withhold grant extensions or grant 
renewals.

Section 4. Women's Business Centers sustainability pilot program

    Subsection (a)(1) establishes four-year competitive grant 
program. Each grant cycle is for five fiscal years. There will 
be two separate selection rounds for the sustainability grants 
in each year of the pilot. In the first round, centers in the 
final year of their five-year grant project can compete. If 
there are funds unawarded from the first round, there will be a 
second round for graduated centers to compete. A graduated 
center is considered a center that no longer receives federal 
funds from the Women's Business Center Program, but is still 
actively providing business programs and services to its local 
market.
    Subsection (a)(2) describes five conditions for 
participation. The conditions include requiring certification 
that the applicant is a private nonprofit organization; 
maintenance of records of its past performance; and submission 
of a plan that demonstrates a center's ability to records of 
its past performance; and submission of a plan that 
demonstrates a center's ability to better meet the needs of the 
market through fundraising and training in the next 5 years.
    Subsection (a)(3) sets forth the conditions for reviewing 
grant applications, reporting requirements for data collection, 
and a ten-year record retention of applications.
    Subsection (a)(4) establishes the matching requirement. 
Centers must raise cash or in-kind contributions from non-
Federal sources. Consistent with the last three years of the 
initial five-year grant, centers must raise the equivalent of 
one non-Federal dollar to each Federal dollar.
    Subsection (a)(5) requires the SBA to issue all requests 
for proposals (proposals to establish new centers as well as 
proposals seeking the sustainability pilot grants) at the same 
time. This provision is intended to ensure that new centers and 
sustained centers get equal consideration during the 
application review process and that funds are appropriately 
awarded.
    Subsection (b) authorizes appropriations for the term of 
the pilot.
    Subsection (b)(1) incrementally raises over four years the 
annual appropriations from $12 million in FY2000 to $14.5 
million in fiscal year 2003. The Committee increased the 
authorization levels to ensure that there are adequate monies 
to fund 45 existing centers, an average of 8 recompeting 
centers, and an average of 10 new centers per year. New centers 
and existing centers are awarded matching grants of up to 
$150,000 per year. Recompeting centers are awarded matching 
grants of up to $125,000. The funds appropriated over the next 
four fiscal years are available until used so that if 
insufficient qualified applications are received, the program 
can carry over unawarded funds for use later in the pilot.
    Subsection (b)(2) sets aside the equivalent of $275,000 per 
year for the Office of Women's Business Ownership to use for 
selection panel costs including site visits of all final 
contenders for sustainability grants, post-award conferences 
and oversight costs.
    Subsection (b)(3) reserves specific percentages each year 
to fund centers with sustainability pilot grants. The 
subsection also sets forth exceptions for the use of unawarded 
funds. First, if the funds for the first round of 
sustainability pilot grants are not fully awarded, the money 
can be used for grants to graduated centers. Then, if reserved 
funds remain after funding sustainability grants for qualified 
graduated centers, the money can be used for new centers or to 
expand programs to better meet the needs of a market. 
Conversely, if the funds intended for new centers and 
maintenance of existing centers are not fully awarded, the 
funds can be used for sustainability grants.
    Subsection (c) section establishes the guidelines. The SBA 
must issue guidelines to implement this Act within 30 days of 
enactment.

Section 5. Effective date

    This section establishes that this Act takes effect on 
October 1, 1999.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                  SECTION 29 OF THE SMALL BUSINESS ACT


SEC. 29. WOMEN'S BUSINESS CENTER PROGRAM.

  (a) Definitions.--In this section--
          (1)  * * *
          (2) the term ``private nonprofit organization'' means 
        an entity described in section 501(c) of the Internal 
        Revenue Code of 1986 that is exempt from taxation under 
        section 501(a) of such Code;
          [(2)] (3) the term ``small business concern owned and 
        controlled by women'', either startup or existing, 
        includes any small business concern--
                  (A)  * * *

           *       *       *       *       *       *       *

          [(3)] (4) the term ``women's business center site'' 
        means the location of--
                  (A)  * * *

           *       *       *       *       *       *       *

  (b) Authority.--The Administration may provide financial 
assistance to private nonprofit organizations to conduct 5-year 
projects for the benefit of small business concerns owned and 
controlled by women. The projects shall provide--
          (1)  * * *

           *       *       *       *       *       *       *

  [(h) Program Examination.--
          [(1) In general.--Not later than 180 days after the 
        date of enactment of the Small Business Reauthorization 
        Act of 1997, the Administrator shall develop and 
        implement an annual programmatic and financial 
        examination of each women's business center established 
        pursuant to this section.
          [(2) Extension of contracts.--In extending or 
        renewing a contract with a women's business center, the 
        Administrator shall consider the results of the 
        examination conducted under paragraph (1).]
  (h) Program Examination.--
          (1) In general.--The Administration shall--
                  (A) develop and implement procedures to 
                annually examine the programs and finances of 
                each women's business center established 
                pursuant to this section, pursuant to which 
                each such center shall provide to the 
                Administration--
                          (i) an itemized cost breakdown of 
                        actual expenditures for costs incurred 
                        during the preceding year; and
                          (ii) documentation regarding the 
                        amount of matching assistance from non-
                        Federal sources obtained and expended 
                        by the center during the preceding year 
                        in order to meet the requirements of 
                        subsection (c) and, with respect to any 
                        in-kind contributions described in 
                        subsection (c)(2) that were used to 
                        satisfy the requirements of subsection 
                        (c), verification of the existence and 
                        valuation of those contributions; and
                  (B) analyze the results of each such 
                examination and, based on that analysis, make a 
                determination regarding the viability of the 
                programs and finances of each women's business 
                center.
          (2) Extension of contracts.--In determining whether 
        to extend or renew a contract with a women's business 
        center, the Administration--
                  (A) shall consider the results of the most 
                recent examination of the center under 
                paragraph (1); and
                  (B) may withhold such extension or renewal, 
                if the Administration determines that--
                          (i) the center has failed to provide 
                        any information required to be provided 
                        under clause (i) or (ii) of paragraph 
                        (1)(A), or the information provided by 
                        the center is inadequate; or
                          (ii) the center has failed to provide 
                        any information required to be provided 
                        by the center for purposes of the 
                        report of the Administration under 
                        subsection (j), or the information 
                        provided by the center is inadequate.

           *       *       *       *       *       *       *

  [(j) Report.--The Administrator shall prepare and submit an 
annual report to the Committees on Small Business of the House 
of Representatives and the Senate on the effectiveness of all 
projects conducted under the authority of this section. Such 
report shall provide information concerning--
          [(1) the number of individuals receiving assistance;
          [(2) the number of startup business concerns formed;
          [(3) the gross receipts of assisted concerns;
          [(4) increases or decreases in profits of assisted 
        concerns; and
          [(5) the employment increases or decreases of 
        assisted concerns.]
  (j) Management Report.--
          (1) In general.--The Administration shall prepare and 
        submit to the Committees on Small Business of the House 
        of Representatives and the Senate a report on the 
        effectiveness of all projects conducted under this 
        section.
          (2) Contents.--Each report submitted under paragraph 
        (1) shall include information concerning, with respect 
        to each women's business center established pursuant to 
        this section--
                  (A) the number of individuals receiving 
                assistance;
                  (B) the number of startup business concerns 
                formed;
                  (C) the gross receipts of assisted concerns;
                  (D) the employment increases or decreases of 
                assisted concerns;
                  (E) to the maximum extent practicable, 
                increases or decreases in profits of assisted 
                concerns;
                  (F) documentation detailing the most recent 
                analysis undertaken under subsection (h)(1)(B) 
                and the determinations made by the 
                Administration with respect to that analysis; 
                and
                  (G) demographic data regarding the staff of 
                the center.
  (k) Authorization of Appropriations.--
          [(1) In general.--There is authorized to be 
        appropriated $11,000,000 for each fiscal year to carry 
        out the projects authorized under this section, of 
        which, for fiscal year 1998, not more than 5 percent 
        may be used for administrative expenses related to the 
        program under this section.]
          (1) In general.--There is authorized to be 
        appropriated, to remain available until the expiration 
        of the pilot program under subsection (l)--
                  (A) $12,000,000 for fiscal year 2000;
                  (B) $12,800,000 for fiscal year 2001;
                  (C) $13,700,000 for fiscal year 2002; and
                  (D) $14,500,000 for fiscal year 2003.
          (2) Use of amounts.--[Amounts made]
                  (A) In general.--Except as provided in 
                subparagraph (B), amounts made available under 
                this subsection for fiscal year 1999, and each 
                fiscal year thereafter, may only be used for 
                grant awards and may not be used for costs 
                incurred by the Administration in connection 
                with the management and administration of the 
                program under this section.
                  (B) Exception.--Of the total amount made 
                available under this subsection for a fiscal 
                year, the following amounts shall be available 
                for costs incurred in connection with the 
                selection of applicants for assistance under 
                this subsection and with monitoring and 
                oversight of the program authorized under this 
                subsection:
                          (i) For fiscal year 2000, 2 percent 
                        of such total amount.
                          (ii) For fiscal year 2001, 1.9 
                        percent of such total amount.
                          (iii) For fiscal year 2002, 1.9 
                        percent of such total amount.
                          (iv) For fiscal year 2003, 1.6 
                        percent of such total amount.

           *       *       *       *       *       *       *

          (4) Reservation of funds for sustainability pilot 
        program.--
                  (A) In general.--Of the total amount made 
                available under this subsection for a fiscal 
                year, the following amounts shall be reserved 
                for sustainability grants under subsection (l):
                          (i) For fiscal year 2000, 17 percent 
                        of such total amount.
                          (ii) For fiscal year 2001, 18.8 
                        percent of such total amount.
                          (iii) For fiscal year 2002, 30.2 
                        percent of such total amount.
                          (iv) For fiscal year 2003, 30.2 
                        percent of such total amount.
                  (B) Use of unawarded reserve funds.--
                          (i) Sustainability grants to other 
                        centers.--Of amounts reserved under 
                        subparagraph (A), the Administration 
                        shall use any funds that remain 
                        available after making grants in 
                        accordance with subsection (l) to make 
                        grants under such subsection to women's 
                        business center sites that have 
                        completed a project financed under this 
                        section (or any predecessor to this 
                        section) and that continue to provide 
                        assistance to women entrepreneurs.
                          (ii) Additional grants.--The 
                        Administration shall use any funds 
                        described in clause (i) that remain 
                        available after making grants under 
                        such clause to make grants to 
                        additional women's business center 
                        sites, or to increase the grants to 
                        existing women's business center sites, 
                        under subsection (b).
  (l) Sustainability Pilot Program.--
          (1) In general.--There is established a 4-year pilot 
        program under which the Administration is authorized to 
        make grants (referred to in this section as 
        ``sustainability grants'') on a competitive basis for 
        an additional 5-year project under this section to any 
        private nonprofit organization (or a division 
        thereof)--
                  (A) that has received financial assistance 
                under this section pursuant to a grant, 
                contract, or cooperative agreement; and
                  (B) that--
                          (i) is in the final year of a 5-year 
                        project; or
                          (ii) to the extent that amounts are 
                        available for such purpose under 
                        subsection (k)(4)(B), has completed a 
                        project financed under this section (or 
                        any predecessor to this section) and 
                        continues to provide assistance to 
                        women entrepreneurs.
          (2) Conditions for participation.--In order to 
        receive a sustainability grant, an organization 
        described in paragraph (1) shall submit to the 
        Administration an application, which shall include--
                  (A) a certification that the applicant--
                          (i) is a private nonprofit 
                        organization;
                          (ii) employs a full-time executive 
                        director or program manager to manage 
                        the women's business center for which a 
                        grant is sought; and
                          (iii) as a condition of receiving a 
                        sustainability grant, agrees--
                                  (I) to an annual examination 
                                by the Administration of the 
                                center's programs and finances; 
                                and
                                  (II) to the maximum extent 
                                practicable, to remedy any 
                                problems identified pursuant to 
                                that examination;
                  (B) information demonstrating that the 
                applicant has the ability and resources to meet 
                the needs of the market to be served by the 
                women's business center site for which a 
                sustainability grant is sought, including the 
                ability to raise financial resources;
                  (C) information relating to assistance 
                provided by the women's business center site 
                for which a sustainability grant is sought in 
                the area in which the site is located, 
                including--
                          (i) the number of individuals 
                        assisted;
                          (ii) the number of hours of 
                        counseling, training, and workshops 
                        provided; and
                          (iii) the number of startup business 
                        concerns formed;
                  (D) information demonstrating the effective 
                experience of the applicant in--
                          (i) conducting financial, management, 
                        and marketing assistance programs, as 
                        described in paragraphs (1), (2), and 
                        (3) of subsection (b), designed to 
                        impart or upgrade the business skills 
                        of women business owners or potential 
                        owners;
                          (ii) providing training and services 
                        to a representative number of women who 
                        are both socially and economically 
                        disadvantaged;
                          (iii) using resource partners of the 
                        Administration and other entities, such 
                        as universities;
                          (iv) complying with the cooperative 
                        agreement of the applicant; and
                          (v) prudently managing finances and 
                        staffing, including the manner in which 
                        the performance of the applicant 
                        compared to the business plan of the 
                        applicant and the manner in which 
                        grants made under subsection (b) were 
                        used by the applicant; and
                  (E) a 5-year plan that demonstrates the 
                ability of the women's business center site for 
                which a sustainability grant is sought--
                          (i) to serve women business owners or 
                        potential owners in the future by 
                        improving fundraising and training 
                        activities; and
                          (ii) to provide training and services 
                        to a representative number of women who 
                        are both socially and economically 
                        disadvantaged.
          (3) Review of applications.--
                  (A) In general.--The Administration shall--
                          (i) review each application submitted 
                        under paragraph (2) based on the 
                        information provided under 
                        subparagraphs (D) and (E) of that 
                        paragraph, and the criteria set forth 
                        in subsection (f); and
                          (ii) approve or disapprove 
                        applications for sustainability grants 
                        simultaneously with applications for 
                        grants under subsection (b).
                  (B) Data collection.--Consistent with the 
                annual report to Congress under subsection (j), 
                each women's business center site that receives 
                a sustainability grant shall, to the maximum 
                extent practicable, collect the information 
                relating to--
                          (i) the number of individuals 
                        assisted;
                          (ii) the number of hours of 
                        counseling and training provided and 
                        workshops conducted;
                          (iii) the number of startup business 
                        concerns formed;
                          (iv) any available gross receipts of 
                        assisted concerns; and
                          (v) the number of jobs created, 
                        maintained, or lost at assisted 
                        concerns.
                  (C) Record retention.--The Administration 
                shall maintain a copy of each application 
                submitted under this subsection for not less 
                than 10 years.
          (4) Non-federal contribution.--
                  (A) In general.--Notwithstanding any other 
                provision of this section, as a condition of 
                receiving a sustainability grant, an 
                organization described in paragraph (1) shall 
                agree to obtain, after its application has been 
                approved under paragraph (3) and notice of 
                award has been issued, cash and in-kind 
                contributions from non-Federal sources for each 
                year of additional program participation in an 
                amount equal to 1 non-Federal dollar for each 
                Federal dollar.
                  (B) In-kind contributions.--Not more than 50 
                percent of the non-Federal assistance obtained 
                for purposes of subparagraph (A) may be in the 
                form of in-kind contributions that exist only 
                as budget line items, including such 
                contributions of office equipment and office 
                space.
          (5) Timing of requests for proposals.--In carrying 
        out this subsection, the Administration shall issue 
        requests for proposals for women's business centers 
        applying for the pilot program under this subsection 
        simultaneously with requests for proposals for grants 
        under subsection (b).

                            ADDITIONAL VIEWS

    Committee Democrats strongly support expanding the 
opportunities to help women establish their own businesses and 
become self-sufficient. In 1988, Congress passed the Women's 
Business Demonstration Program, which directed the SBA to 
provide federal matching grants to private nonprofit 
organizations to establish Women's Business Centers (WBCs). 
Continuing with this commitment, the Committee marked up H.R. 
1497, ``The Women's Business Center Sustainability Act of 
1999.''
    The Women's Business Center program has gone through a 
myriad of changes since its establishment in 1989. The federal 
matching requirements have been adjusted and the funding cycle 
extended. To account for these changes the program's authorized 
level has also been increased several times. In February, the 
Committee passed H.R. 774, ``The Women's Business Center 
Amendments Act,'' which Committee Democrats strongly supported. 
This bill eased several of the funding problems the centers 
were experiencing by lowering the matching funds requirement 
and increasing the authorization level.
    It became clear during recent program oversight, however, 
that the centers need to vastly improve their services and 
outreach to economically and socially disadvantaged women. 
Statistics provided by the SBA's Office of Women's Business 
Ownership point out that only 9% of the clients served by the 
program were both socially and economically disadvantaged, 
while only 18% were economically disadvantaged. As we expand 
the program to allow existing centers to recompete for funding, 
several changes were made to begin dealing with this situation.
    The overall program is not reflective of the needs of low- 
and moderate-income women. Minority assessment of the program's 
clientele demographics point out that the centers' clientele 
median household income is $13,000 more than the average median 
household income of a low-income inner city district. Resolving 
this deficiency in the program is especially critical as we 
continue our efforts of advancing women from welfare to work, 
an area where the Women's Business Centers should be playing a 
larger role. To address this problem the legislation makes 
clear that as a criteria for recompetition the center must 
demonstrate its effectiveness inproviding training and services 
to women who are both socially and economically disadvantaged 
[Sec. 4(a)(2)(D)(ii)]. Also, in order to improve and provide continuity 
of services to this underserved sector, the center must provide a plan 
to aggressively tackle this issue during its next five-year grant 
[Sec. 4(a)(2)(E)(ii)].
    If the pilot program is to be successful, it needs to make 
sure these centers have a good track record serving low to 
moderate-income women. As the SBA prepares to develop 
guidelines for the pilot program's application process, it must 
use centers' new five-year plan to improve services and 
outreach to socially and economically disadvantaged women, as 
well as how well the centers serviced these groups during their 
first award, as controlling criteria when selecting recompeting 
centers [Sec. 4(a)(l)(3)(A)(i)]. This is a critical issue in 
the development of these centers. The Administration should pay 
close attention to ensure that this criteria is included as a 
primary factor when determining if a center is to receive 
renewed funding under the pilot program.
    An important way to effectively address the needs of 
socially and economically disadvantaged communities is to 
ensure that centers have an understanding and ties to those 
communities. A center that has no true understanding of the 
community it serves is more likely to fail in reaching out to 
socially and economically disadvantaged women. A review of the 
centers revealed that a low percentage of the centers are 
minority-run. Currently the SBA does not collect demographic 
information on the center's staff and management and the 
Committee found it extremely difficult to measure improvements 
in this area. For this reason the Committee included language 
in the bill indicating that the SBA include in their annual 
report to the Committee specific data on the demographics of 
the centers' management and staff [Sec. 3(1)(j)(2)(F)] so that 
future Committee oversight may review improvements in this 
area.
    H.R. 1497 will help the Administration focus the program on 
the issues it needs to address. The Committee Democrats will 
continue to revisit this pilot program to make sure that the 
provisions listed above are being implemented correctly and 
effectively. This is a program that the Democratic Members of 
the Committee feel strongly about and we want to see WBCs reach 
out aggressively to economically and socially disadvantaged 
women.

                                                Nydia M. Velazquez.