Hill Hearings Scrutinize SBA for Not Implementing Programs

Lawmakers this week lambasted the Small Business Administration for repeatedly failing to comply with laws designed to aid women-owned businesses.

House Small Business Committee Chairwomen Nydia Velazquez (D-N.Y.) grilled SBA Deputy Administrator Jovita Carranza, saying the agency is sending the message "we're not interested in doing business with women." Velazquez on Wednesday also chastised the agency for failing to implement legislation that was signed into law seven years ago to aid women in federal procurement issues.

The SBA had testified in July that the program would be implemented by Sept. 30, but this week said it could not meet that deadline.

Rep. Bruce Braley (D-Iowa) asked Carranza why SBA Administrator Steven Preston shouldn't be held "in contempt of committee" for failing to implement a plan that aids funding for the Women's Business Center program.

"There's no accountability," he said in front of a hearing room packed with an audience but sparsely attended by committee members. "Can you fathom UPS tasking an individual with [fixing a program] and accepting failure year after year after year?" Carranza was an executive with the shipping giant before joining the SBA.

Carranza noted that there's been progress with government contracting dollars going to small businesses. In her opening statement, she noted that there were $30.3 billion more in small business prime contracts in fiscal 2005 than in fiscal 2000. However, she added that "SBA recognizes the need for improving our government contracting programs" and is working to make contracting data more transparent and accurate.

Velazquez also expressed frustration with the agency's oversight of the federal HUBZone contracting program. The HUBZone covers areas across the United States that have high unemployment rates, low household income or both.

She said that according to a committee assessment, if Microsoft founder Bill Gates or billionaire investor Warren Buffett had a $1 million house in Park City, Utah, they would qualify for HUBZone under current rules.

Carranza said the agency recognizes the flaws of the program and would implement some recommendations made by the agency's inspector general.

Ronald Newlan, chairman of an association that focuses on expanding implementation of the HUBZone contracting plan, said the program "has been very poorly implemented by the federal agencies that buy America's goods and services." The HUBZone statute sets a goal for HUBZone contracting at 3 percent of total federal contracting dollars. However, in fiscal 2005 the government reached less than 2 percent although improved slightly in fiscal 2006 to 2.1 percent.

Sen. John Kerry (D-Mass.), who chairs the Senate panel overseeing small business issues, characterized his committee's Thursday hearing on women's business issues as a "classic oversight hearing."

"Our committee -- on both sides of the aisle -- has heard of red tape and lack of clear guidelines" for implementing these women's business programs, he said.

Congress created the Women's Procurement Program to help women gain a foothold in the federal procurement process, and "there's been $6 billion in lost contracts due to its lack of implementation," he said, later asking Anoop Prakash, the associate administrator in the SBA's Office of Entrepreneurial Development, "Do deadlines mean anything [to you]?"

William Shear, a director with the Government Accountability Office, testified on new findings from his group (pdf) regarding the Women's Business Center program. He said the SBA has suffered from agency downsizing and staff tasked with multiple responsibilities, and noted that the SBA has taken steps to adjust its oversight procedures.

Shear added that the programs could benefit if the SBA better used technology for automation.

Under pressure from Kerry, the SBA's Prakash agreed that the agency would implement new legislation that provides permanent funding to the women's centers within the next 120 days.

Kerry invited Prakash back to testify at the end of January, shortly after the 120-day mark is reached and commended him for sitting in the audience after his testimony to listen to comments of women entrepreneurs who testified on a second panel.

The entrepreneurs outlined frustrations with applications lost by the SBA, egregiously late payments and a lack of communication and coordination between the agency and the women's programs it oversees.

Sen. Kerry during the hearing said he expected the SBA's budget request to reflect its needs to repair some of the problems aired in the discussion.

By Sharon McLoone |  September 21, 2007; 12:18 PM ET Regulation Legislation
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