SBA urged to shut down, debar Alabama Women’s Biz Centers

      The Small Business Administration’s Inspector General has urged the agency to take “prompt corrective action” against two Women’s Business Centers in Alabama that were found to be closed for at least three months while continuing to receive taxpayer funds.

      The IG, in a management advisory report dated Sept. 19, recommended actions including termination, suspension and potential debarment.

      The two centers, located in Mobile and Brewton, were run by the Women’s Business Center Inc., renamed as the Women’s Business Alliance in 2014.

      The two centers received $262,500 from the SBA in fiscal 2018 to provide counseling and training primarily to women entrepreneurs. During the last quarter of that fiscal year, the centers reportedly were closed and not providing services, the auditors wrote. Fiscal 2019 funding was not examined.

      The critical report is the latest to raise concerns about whether SBA management is effectively overseeing its many programs. SBA and the Women’s Business Alliance declined to comment for this article.

OIG advisory report

      SBA auditors initially paid a surprise visit to the one of centers in June, noticing that it was closed during regular business hours. They observed a client seeking services who was unable to access any help. The center’s phone lines also were not working.

      After further investigation, IG Hannibal “Mike” Ware found that the operators had violated numerous statutes, regulations and terms of their funding agreements, including:

• The operators of the two centers refused to meet with, or provide paperwork to, SBA auditors;
• The two centers reportedly were closed and not operational since the fourth quarter of fiscal 2018, violating the requirement to have staff available and accessible locations. At one of the centers, the landlord reported the center was six months behind on rent;
• The centers did not comply with federal financial requirements and the terms and conditions of their cooperative agreements;
• The centers’ operator was “continuously late in processing its personnel payroll, had considerable obligations or liabilities that were not paid by their due dates, and did not provide the centers’ program directors access to financial information”;
• The operator failed to maintain an adequate financial management system and audited financial statements, as required; and
• Auditors also identified a potential conflict of interest at the Mobile location, where the program director reported she had been telling clients the center was closed and referring them to her personal firm for similar services. She said she had not been paid by the Mobile center since June 2018. She allegedly took referrals from the center and provided services to clients at her personal business location, according to the IG.

      While the program director stated that she was keeping separate records and offering counseling to the center clients for free, the auditors could not verify that information.

      The IG concluded that the operators were unable to effectively deliver the Women’s Business Center program requirements.

      In addition, the deficiencies “substantially increased the opportunity for fraud and mismanagement of taxpayer funds,” the IG wrote.

Capitol Hill response

      Responding to the advisory memo, Sen. Marco Rubio, R-FL, chair of the House Small Business Committee, commented that the “gross lack of oversight uncovered in the SBA OIG’s most recent management advisory is incredibly troubling.”

      Sen. Ben Cardin, D-MD, the senior Democrat on the committee, also expressed concern about the situation. He submitted 10 questions in a letter to the SBA, including asking on what dates the centers had closed, and how much federal money had been spent this fiscal year, among other questions.

      SBA officials told Set-Aside Alert that no comment would be issued at this time. However, Cardin said in his letter that the SBA told him it has referred the matters to the suspension and debarment unit and has taken action to find the WBCs non-compliant with the federal funding agreement.

Women’s Business Alliance

      Set-Aside Alert also contacted the Women’s Business Alliance on its Facebook page, which has more than 2,000 followers and is selling tickets for a Halloween event planned this month. The operators of that Facebook page said their attorney would contact Set-Aside Alert, but that has not happened as of press time

      The SBA funds 115 women’s business centers, which provided services to 124,000 clients in fiscal 2018.

      Clients of the centers had average revenue of $193,000 and, on average, 4.67 employees, according to a recent study by the Congressional Research Service.

More information:
IG report: https://www.sba.gov/node/1648714
Rubio statement: https://bit.ly/2mvxpbm
Cardin statement: https://bit.ly/2o572ZY

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