(Washington, DC)—Senate Committee on Small Business and Entrepreneurship Ranking Member Ben Cardin (D-Md.) today sent a letter to U.S. Small Business Administration (SBA) Acting Administrator Chris Pilkerton seeking answers after the Office of Inspector General (OIG) released an advisory memo last week detailing mismanagement at two Women’s Business Centers (WBC) in Alabama.
The report stated that the Brewton WBC has been closed since “the fourth quarter of FY2018.” It also stated that the Mobile WBC was “6 months behind on its rent payments” and other building tenants and the landlord “had not seen any WBC personnel at the location for approximately 6 months.”
The memo also revealed that the Alabama WBCs “materially violated federal statutes,” and noted that during the course of the investigation, OIG “witnessed and spoke to a potential client” who visited one of the WBCs, but “left without obtaining services.”
“With small business formation in the United States at a 40-year low, SBA must do all it can to ensure that entrepreneurs have access to the resources they need to open successful businesses and pursue their dreams,” Ranking Member Cardin wrote.
WBCs provide vital entrepreneurial development services to entrepreneurs, including many from underserved communities. The training provided by WBCs can be the difference between success and failure. Studies show that small businesses created by entrepreneurs who receive at least 3 hours of entrepreneurial development training have much higher survival rates than small businesses created by entrepreneurs who received less counseling or none at all.
The memo does not address what, if any, oversight SBA conducted on the WBCs, but did include a commitment from the agency to enact the recommendations in the memo, including referring the Alabama WBC and its staff to the Suspension and Debarment Official and holding the Alabama WBC in noncompliance with its cooperative agreements with the agency.
“I remain concerned that two WBC locations were closed for more than a year without any appropriate action from SBA. The services that WBCs provide are simply too important to fall through the cracks,” Ranking Member Cardin continued. “SBA’s failure to conduct oversight of the Alabama WBCs raises many questions about the agency’s oversight procedures, including SBA district offices’ ability to ensure that resource partners operating in their territory are delivering high-quality services to entrepreneurs.”
Cardin requested answers to the following questions from Acting Administrator Pilkerton:
- Please breakdown the number of employees in SBA’s Office of Entrepreneurial Development and the title and role of the employees. How many employees are there in each of the Office of Women’s Business Ownership, the Office of Small Business Development Centers, and the Office of Entrepreneurial Education
- Please state the different roles SBA’s Office of Entrepreneurial Development, Office of Women’s Business Ownership, SBA district offices, and the Office of Field Operations has to ensure WBCs’ financial and programmatic compliance with federal regulations and terms and conditions of cooperative agreements. How do these various offices within SBA coordinate on oversight of the WBC program?
- When did the recipient of the grant, the Women’s Business Center, Inc., receive its initial grant and for which location? When did the recipient receive its second grant and for which location?
- When did the two locations receive their final funding and/or reimbursement from SBA?
- For the two cooperative agreements, each for $131,250 in federal funding, how much of the funding was spent in compliance with the terms and conditions of the agreements? How much was spent incorrectly?
- When did the two WBC locations close their doors?
- What is SBA’s timeline and action steps from now until August 31, 2020, to complete OIG Recommendation 1: Take action in accordance with 2 CFR 200.338 Remedies for Noncompliance and the Notice of Award for suspension, termination, and debarment?
- Please provide a list of WBCs that are self-terminating or having difficulty complying with their cooperative agreement.
- What are the policies in place for SBA to issue a cure notice to a resource partner like a WBC for failing to comply with SBA’s cooperative agreement? What is the timeline for SBA to issue a cure notice? What are the triggering events?
- What is SBA doing to fix this situation? What reviews and oversight does SBA need in place to avoid a similar situation?