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                                                       Calendar No. 372
106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-214

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



 
          WOMEN'S BUSINESS CENTERS SUSTAINABILITY ACT OF 1999

                                _______
                                

                November 2, 1999.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 791]

    On September 29, 1999, the Committee on Small Business 
considered S. 791, the Women's Business Centers Sustainability 
Act of 1999. The Committee adopted by unanimous voice votes a 
substitute amendment offered by the Ranking Democrat, Senator 
John Kerry, and an amendment offered by Senator Spencer Abraham 
on Federal procurement opportunities for women-owned small 
businesses. As amended, S. 791 would authorize a four-year 
pilot program to allow Women's Business Centers to compete for 
new five-year matching grants and additional changes in the 
Women's Business Center program. Having considered S. 791, as 
amended, the Committee reports favorably thereon without 
further amendment and recommends that the bill do pass.

                            I. Introduction

    The Women's Business Centers program at the Small Business 
Administration (SBA) 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 individual communities being served, Centers teach women 
the principles of finance, management and marketing, as well as 
specialized topics such as how to obtain a Federal government 
contract or how to start a home-based business. Women Business 
Centers are located in rural, urban and suburban areas. Much of 
their training and counseling assistance is directed toward 
socially and economically disadvantaged women.
    Congress started the Women's Business Centers program in 
1988 following Congressional hearings that revealed the Federal 
government was not meeting the needs of women entrepreneurs. 
Testimony at that time revealed that women entrepreneurs faced 
extreme difficulty gaining access to bank loans and venture 
capital, had few opportunities to compete for Federal 
government contracts, and had insufficient access to the kind 
of business assistance they needed to compete in the 
marketplace.
    Through the Women's Business Program, specialized 
assistance has steadily improved the resources available to 
women. The program opened its first 12 centers in 1989. Ten 
years later, women receive assistance at 81 centers in 47 
states, the District of Columbia, Puerto Rico, and the Virgin 
Islands. 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 of women-owned businesses operating in 
this country has grown by 103 percent to an estimated 9.1 
million firms, generating $3.6 trillion in sales annually, 
while employing more than 27.5 million workers.\1\ In 1998, 
women-owned businesses made up more than one-third of the 23 
million small businesses in the United States.
---------------------------------------------------------------------------
    \1\ Research from the National Foundation for Women Business Owners 
(NFWBO)Women-Owned Businesses, Top 9 Million in 1999 (1999), Economic 
clout increases as employment, revenues grow.
---------------------------------------------------------------------------
    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 gross receipts from all small 
businesses. Further, they are dramatically under-represented in 
the nation's two most lucrative markets: corporate purchasing 
and government contracting. According to the National 
Foundation of Women Business Owners, in fiscal year 1998, only 
2.21 percent of the $181 billion in federal prime contracts 
went to women-owned businesses.\2\ As of 1999, women-owned 
businesses accounted for 38 percent of all firms.\3\ Based on 
this data and testimony from hearings, the Committee finds the 
need for the Women's Business Centers continues, and it is 
critical that we work to strengthen the infrastructure we have 
invested in for the past decade.
---------------------------------------------------------------------------
    \2\ National Women's Business Council, 1999 NWBC Best Practices 
Guide: Contracting with Women. Research conducted by the Office of 
Federal Procurement Policy.
    \3\ Research from the National Foundation for Women Business Owners 
(NFWBO)Women-Owned Businesses, Top 9 Million in 1999 (1999), Economic 
clout increases as employment, revenues grow.
---------------------------------------------------------------------------
    The ``Women's Business Centers Sustainability Act of 1999'' 
draws on testimony given before the Committee over the past 
year. According to statements from the Association of Women's 
Business Centers at a Committee hearing on March 16, 1999, and 
at a Committee Roundtable on May 20, 1999, the Women's Business 
Center program is in danger of losing effective Centers because 
it has become increasingly difficult to raise the required non-
Federal matching funds. For most centers, the competition for 
foundation and private-sector dollars as the result of mergers 
and down-sizing has become increasingly stiff. Testimony from 
the Association stressed that the loss of matching funds would 
compound the problem because the centers would have to raise 
twice as much money, and they would not have the leverage 
brought by Federal matching funds to attract foundations and 
private corporations to make donations.
    Ms. Agnes Noonan, Executive Director of WESST Corp., the 
Women's Business Center in Albuquerque, New Mexico, testified 
before the Committee on March 16, 1999. She commented on the 
possibility of charging higher fees to increase the Center's 
income in order to reduce its reliance on public dollars: 
``Though [such a] strategy may have made economic sense, it 
conflicted directly with our mission of serving low-income 
women * * *. If we were to target our services to women who 
could afford to pay market consulting and training rates, then 
we wouldclearly not be addressing the needs of low-income women 
in New Mexico.'' \4\
---------------------------------------------------------------------------
    \4\ Testimony of Agnes Noonan, Executive Director of the Women's 
Economic Self-Sufficiency Team (WESST Corp.) based in Albuquerque, New 
Mexico, presented to the Senate Small Business Committee for a hearing 
on the SBA's FY2000 Budget, Tuesday, March 16, 1999.
---------------------------------------------------------------------------
    Ms. Noonan also provided to the Committee important 
information about the realities of fund-raising: ``Nationally, 
only six percent of foundation money is earmarked for women, 
and only a tiny portion of that goes to women's economic 
development.'' \5\ Bank mergers further exacerbate the 
situation because they are a primary source of funding for many 
centers. According to testimony from the Association of Women's 
Business Centers, its members have seen that when institutions 
merge, whether they are banks or corporations, they rarely give 
the combined sum of what the two single institutions gave 
previously to Women's Business Centers.
---------------------------------------------------------------------------
    \5\ Testimony of Agnes Noonan, Executive Director of the Women's 
Economic Self-Sufficiency Team (WESST Corp.) based in Albuquerque, New 
Mexico, presented to the Senate Small Business Committee for a hearing 
on the SBA's FY2000 Budget, Tuesday, March 16, 1999.
---------------------------------------------------------------------------
    While Federal funding should not be automatic, the 
Committee finds graduating and graduated centers that provide 
on-going services should be able to compete for a new cycle of 
matching grants so that the Nation does not lose its investment 
in the most effective centers. The ``Women's Business Centers 
Sustainability Act of 1999,'' which was overwhelmingly approved 
by the Committee, would establish a fair framework for past and 
present Women's Business Centers to compete for limited Federal 
grant dollars, while increasing SBA oversight to improve the 
program.

                      II. Description of the Bill

    The ``Women's Business Centers Sustainability Act of 1999'' 
addresses the funding constraints that are making 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.
    To help these centers, this legislation would establish a 
four-year competitive grant pilot program that allows 
graduating and graduated centers that offer on-going programs 
and services to compete for another five years of matching 
grants, known as ``sustainability grants.'' ``Graduating 
centers'' are centers that are in the final year of their 
initial five-year funding cycle. A ``graduated center'' is a 
center that participated in the Women's Business Center program 
and no longer receives program funds but is still actively 
providing business programs and services to its local market.
    In order to help the SBA manage the selection and award 
process, the bill requires the SBA to issue the requests for 
proposals (RFP) for new centers and centers competing for 
sustainability grants at the same time. This provision is 
intended to ensure that new centers and centers applying for 
sustainability grants receive equal consideration during the 
application review process, and that funds are appropriately 
awarded.
    The bill also includes three provisions that seek to assist 
the SBA in its evaluation and selection of recompeting centers. 
The first provision directs the SBA to provide a preference to 
those Women's Business Centers that are in the final year of 
their initial five-year grant from SBA. The bill provides a 
priority to Centers in the last year of their initial five-year 
grant to offset potential Federal funding constraints. After 
the SBA has selected the most meritorious graduating centers, 
remaining funds reserved for sustainability grants should be 
targeted by the SBA to select the most meritorious graduated 
centers for new grant awards.
    In the second provision, the Committee intends for the 
selection panel, based on the participation conditions 
described in the bill, to judge how well a Center provided 
service to its market under its initial five-year grant and how 
it plans to serve its market during the next five years. As 
part of this review, the Committee urges the SBA to reach out 
to small business organizations that focus on women-owned 
businesses, such as the Association of Women's Business Centers 
and the National Association of Women Business Owners (NAWBO). 
From these and other like-minded organizations, SBA should seek 
their opinions and insight about the operation of the Women's 
Business Center program and the applicants that are competing 
for sustainability grants.
    The third provision of the bill requires the SBA, as part 
of the final selection process, to do 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 rank the centers and to improve oversight of the 
program. Recognizing that site visits are expensive, the bill 
limits site visits to only those centers being considered in 
the final selection process rather than all centers applying, 
and it authorizes not more than $275,000 per year can be used 
for site visits and other uses.

           sba needs to improve record keeping and oversight

    This ``Women's Business Center Sustainability Act of 1999'' 
also increases oversight and review of the Women's Business 
Centers. Following the introduction of S. 791, the General 
Accounting Office (GAO) undertook an examination of the Women's 
Business Center Program at the request of the Senate and House 
Committees on Small Business. This examination included a 
review of the program's records of the program maintained at 
SBA and a survey of all past and present Women's Business 
Centers. GAO found that more than two-thirds of the centers 
that currently receive grant funds or that received funds in 
the past continue to operate as Women's Business Centers. Most 
that are continuing to operate after Federal support ceasedhave 
continued to offer similar services to women business owners. This part 
of the GAO report is very encouraging.
    On the other hand, another part of the report from GAO is 
discouraging. GAO investigators experienced difficulty 
obtaining complete data about the program from the SBA because 
of limitations of SBA's records and databases for program years 
1989 through 1998. Information about Women's Business Centers 
prior to 1996 was incomplete or unavailable. During its review 
of information provided by SBA for 1996 and 1997, GAO had to 
perform follow-up and additional analysis because the program 
data was not complete. The failure of SBA to keep complete 
program and financial records on Centers that are receiving SBA 
grants funds is of concern to the Committee.
    The Committee is also concerned about the apparent failure 
of the Agency to undertake a thorough, ongoing analysis of the 
financial and program reports it already receives on the 
individual centers; therefore, Senator Kerry's substitute 
amendment, that was unanimously adopted by the Committee, 
included a provision that requires the SBA to send the Senate 
and House Committees on Small Business a yearly Management 
Report on the status of the program. This report would include 
an annual programmatic and financial examination of each 
Women's Business Center. Further, SBA is directed to make a 
determination annually of the programmatic and financial 
viability of each Women's Business Center. The Committee 
believes this new statutory requirement will lead to better SBA 
oversight and a stronger Women's Business Center Program.
    The Committee understands that SBA's current practice is to 
collect data on the number of women served who are socially and 
economically disadvantaged. The Committee encourages the Agency 
to continue collecting this data. To achieve this goal, it is 
important that SBA track separately the data from both the 
``intake form'' and ``follow-up survey'' that women 
entrepreneurs fill out when they visit women's business centers 
for help.

                          authorization levels

    This bill incrementally raises over four years the annual 
levels of authorized appropriations from $13 million in FY 1999 
to $17 million in FY 2003. The Committee believes the higher 
authorization levels are critical to ensure that Congress 
provides adequate funds to support 45 existing centers, an 
average of 12 recompeting centers, and an average of 12 new 
centers per year.
    The bill establishes very specific requirements for use of 
available appropriations. First, of those amounts, the bill 
reserves a percentage each fiscal year for sustainability 
grants. While the bill does not specify a dollar amount for 
each sustainability grant, it is expected to be generally less 
than the grants for new centers, and SBA is expected to manage 
the program accordingly. New centers and existing centers are 
currently awarded matching grants of up to $150,000 per year. 
Assuming an adequate appropriation, graduated and graduating 
Centers are expected to be awarded matching grants of up to 
$125,000. The Committee intends for the funds appropriated over 
the four fiscal years of the pilot program to be available 
until expended to permit funds to be carried over to the next 
year of the pilot if insufficient qualified applications are 
received in any year. Thus, the program can carry over 
unobligated funds for use later in the pilot. Second, the bill 
makes available up to $275,000 per year for the selection panel 
expenses, post-award conference costs, and monitoring and 
oversight costs.

          procurement opportunities for women-owned businesses

    Senator Abraham offered an amendment addressing Federal 
procurement opportunities for women-owned small businesses. The 
amendment, which was unanimously adopted by the Committee, 
expresses the sense of the Senate that the General Accounting 
Office (GAO) should conduct an audit on the federal procurement 
system for the preceding three years. This audit should report 
on all identifiable trends in Federal contracting that are 
related to women-owned small businesses. Further, GAO is urged 
to provide suggestions obtained from federal agencies as to how 
the Federal government can reach the Congressionally mandated 
five-percent procurement goal for women-owned small businesses.
    It is difficult for the Committee to understand how the 
women-owned small businesses segment of our economy can make up 
38 percent of all small businesses, while this segment receives 
only 2.2 percent of the $181 billion in Federal prime 
contracts. In 1994, Congress passed into law a goal for women-
owned small businesses to receive at least 5 percent of the 
total amount of Federal prime contract dollars. The Committee 
is perplexed by the failure of the Federal agencies to meet 
this goal and seeks to understand better the reasons for this 
discrepancy.

                          III. Committee Vote

    In compliance with rule XXVI(7)(b) of the Standing Rules of 
the Senate, the following votes were recorded on September 28, 
1999. A motion by Senator Bond to adopt an amendment by Senator 
Abraham concerning Federal procurement women-owned small 
business passed by unanimous voice vote. A motion by Senator 
Bond to adopt the substitute amendment by Senator Kerry passed 
by unanimous voice vote. A motion by Senator Kerry to adopt the 
``Women's Business Center Sustainability Act of 1999,'' as 
amended, was approved by a 17-1 recorded vote, with the 
following Senators voting in the affirmative: Bond, Kerry, 
Burns, Coverdell, Bennett, Snowe, Enzi, Fitzgerald, Crapo, 
Abraham, Levin, Harkin, Lieberman, Wellstone, Cleland, Landrieu 
and Edwards. Voting in the negative: Senator Voinovich.

                  IV. Evaluation of Regulatory Impact

    In compliance with rule XXVI(11)(b) of the Standing Rules 
of the Senate, it is the opinion of the Committee that no 
significant additional regulatory impact will be incurred in 
carrying out the provisions of this legislation. There will be 
no additional impact on the personal privacy of companies or 
individuals who utilize the services provided.

                       V. Changes in Existing Law

    In the opinion of the Committee, it is necessary to 
dispense with the requirement of rule XXVI (12) of the Standing 
Rules of the Senate in order to expedite the business of the 
Senate.

                           VI. Cost Estimate

    In compliance with rule XXVI(11)(a)(1) of the Standing 
Rules of the Senate, the Committee estimates the cost of the 
legislation will be equal to the amounts indicated by the 
Congressional Budget Office in the following letter.

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, October 5, 1999.
Hon. Christopher S. Bond,
Chairman, Committee on Small Business,
U.S. Senate, Washington, DC 20510
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 791, 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 state and local 
impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

S. 791--Women's Business Centers Sustainability Act of 1999

    Summary: Women's Business Centers 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. S. 791 would increase the amounts authorized 
for fiscal year 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, S. 791 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 S. 791 would increase net outlays by $9 million 
over the 2000-2004 period, relative to the currently authorized 
level. S. 791 would not affect direct spending or receipts; 
therefore, pay-as-you-go procedures would not apply.
    S. 791 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 S. 791 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 millions of dollars--
                                                                    --------------------------------------------
                                                                       2000     2001     2002     2003     2004
----------------------------------------------------------------------------------------------------------------
                                       SPENDING SUBJECT TO APPROPRIATIONS

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............................................        2        3        5        6      -11
    Estimated outlays..............................................        1        3        3        5       -3
Spending for Women's Business Centers under S. 791:
    Authorization level............................................       13       14       16       17        0
    Estimated outlays..............................................       10       13       14       16        8
----------------------------------------------------------------------------------------------------------------
\1\ The amount shown reflect the amounts authorized to be appropriated under current law.

    Pay-As-You-Go Considerations: None.
    Intergovernmental and private-sector impact: S. 791 
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 nonfederal matching funds or in-kind 
contributions to Women's Business Centers in their 
jurisdictions would be incurred voluntarily.
    Previous CBO estimate: On October 4, 1999, CBO transmitted 
a cost estimate for H.R. 1497, the Women's Centers 
Sustainability Act of 1999, as ordered reported by the House 
Committee on Small Business on September 30, 1999. Differences 
between the two estimates reflect differences between the two 
bills. CBO estimated that implementing H.R. 1497 would increase 
net outlays by $2 million over the 2000-2004 period, as 
compared to S. 791's estimated increase of $9 million over that 
period.
    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.

                    VII. Section-By-Section Analysis

    The bill amends Section 29 of the Small Business Act to 
create a four-year pilot program that allows Women's Business 
Centers to compete for another five-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 of each center and then to analyze 
the results to determine whether the center is programmatically 
and financially viable. SBA can withhold grant extensions or 
grant renewals if the centers do not provide information 
required, if the information is inadequate, or if the results 
of the examination are poor. SBA is directed to report annually 
to the Senate and House Committees on Small Business on the 
effectiveness of the program.

Section 4. Women's Business Centers sustainability pilot program

    Subsection (a)(1) establishes a four-year competitive grant 
pilot program. Each grant cycle is for five fiscal years. 
Eligible applicants would be any private nonprofit organization 
that had previously received a grant under this program.
    Subsection (a)(2) describes the conditions that need to be 
met for a private nonprofit organization to receive a 
sustainability grant.
    Subsection (a)(3) sets forth the conditions for reviewing 
grant applications, and the data collection requirements that 
must be met by the grant recipients. SBA is required to retain 
all applications submitted under this section for at least ten 
years.
    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 for each Federal dollar of assistance 
received under this section.
    Subsection (a)(5) requires the SBA to issue all requests 
for proposals (proposals to establish new centers and proposals 
to receive sustainability grants under the pilot program) at 
the same time. This provision is intended to ensure that new 
centers and sustained centers receive equal consideration 
during the application review process, and that funds are 
appropriately awarded.
    Subsection (b) sets forth the authorization for 
appropriations for the Women's Business Center Program for 
Fiscal Years 2000--2003.
    Subsection (b)(1) incrementally raises over four years the 
annual appropriations from $13 million in FY 1999 to $17 
million in FY 2003. The Committee intends for the funds 
appropriated to be available until spent or September 30, 2003, 
whichever is earlier.
    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 of funds 
appropriated each year to fund sustainability grants under the 
pilot program. The subsection also sets forth exceptions for 
the use of unobligated funds. Funds for sustainability grants 
that are not awarded to graduating centers shall be used for 
sustainability grants to graduated centers. Should funds under 
this subsection remain available after funding sustainability 
grants for qualified graduating and graduated centers, this 
amount may be used for new centers or to expand programs to 
meet the needs of a market.
    Subsection (c) directs the SBA to 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.