	Fragmented Programs Overlap, and Agencies’ Efforts to Collaborate Have Been Limited

Programs providing financial assistance to entrepreneurs are  fragmented—which occurs when more than one agency or program is  involved in the same broad area of national interest. Examples of programs in this  category include SBA’s 7(a) Loan Program and USDA’s Business and  Industry Loans. For example, Commerce’s Economic Adjustment  Assistance program can provide grants to intermediaries, such as  consortiums of local governments and nonprofits, which in turn provide  technical or financial assistance to entrepreneurs. In our 2012 report, we examined entrepreneurs’ experiences with the four  agencies’ technical assistance programs—which provide services such  as helping with development of business plans or a loan package to  obtain financing—and found that some struggle to navigate the  fragmented programs. For example, some entrepreneurs and various  technical assistance providers with whom we spoke—including agency  field offices, intermediaries, and other local service providers—told us that  the system can be confusing and that some entrepreneurs do not know  what services are available or where to go for assistance. In addition, programs’ Internet resources can also  be difficult to navigate. Given the fragmented nature of the federal programs that provide  financial assistance to entrepreneurs, enhanced collaboration between  agencies could help improve program efficiency. In  addition, GPRAMA’s crosscutting framework requires that agencies  collaborate in order to address issues, such as economic development,  that transcend more than one agency, and GPRAMA directs agencies to  describe how they are working with each other to achieve their program  goals. However, the  agencies have not implemented other good collaborative practices, such  as establishing compatible policies and procedures to better support rural  businesses. Agencies Lack Information to Track Program Activities and Have Not Evaluated Programs

While the four agencies collect at least some information on program  activities in either an electronic records system or through paper files,  most were unable to summarize the information in a way that could be  used to help administer the programs. Similarly, the agencies typically do  not track detailed information on the characteristics of entrepreneurs that  they serve, such as whether they are located in rural or economically  distressed areas or the entrepreneurs’ type of industry. According to  OMB, being able to track and measure specific program data can help  agencies diagnose problems, identify drivers of future performance,  evaluate risk, support collaboration, and inform follow-up actions. We also found that for fiscal year 2011, a number of programs that  support entrepreneurs failed to meet some or all of their performance  goals. GPRAMA requires agencies to develop annual performance plans  that include performance goals for an agency’s program activities and  accompanying performance measures. Further, from 2000 through 2012, the agencies had conducted program  evaluations of 13 of the 30 financial assistance programs that support  entrepreneurs we reviewed. Based on our review, we found that SBA has  conducted program evaluation studies on 5 of its 10 programs. Program evaluations that systematically study the benefits of programs  may help identify the extent to which overlapping and fragmented  programs are achieving their objectives. To address the issues identified in our August 2012 report and to help  improve the efficiency and effectiveness of federal efforts to support  entrepreneurs, we made the following recommendations:
The Director of the Office and Management and Budget; the  Secretaries of the Departments of Agriculture, Commerce, and  Housing and Urban Development; and the Administrator of the Small  Business Administration should work together to identify opportunities  to enhance collaboration among programs, both within and across  agencies. The Secretaries of the Departments of Agriculture, Commerce, and  Housing and Urban Development and the Administrator of the Small  Business Administration should consistently collect information that  would enable them to track the specific type of assistance programs  provide and the entrepreneurs they serve and use this information to  help administer their programs. The agencies, together with the administration, have taken some steps to  address our recommendations. One of the objectives  under this goal is to use programs and resources across the federal  government to improve and expand the reach of training, counseling, and  mentoring services to entrepreneurs and small business owners. GAO Contacts and Staff Acknowledgements

For further information on this testimony, please contact me at (202) 512- 8678 or shearw@gao.gov.
Why GAO Did This Study

Economic development programs that effectively provide assistance to entrepreneurs may help businesses develop and expand. In August 2012, GAO reported information on 52 programs at Commerce, HUD, SBA, and USDA that provided $2.0 billion in support to entrepreneurs in fiscal year 2011 ( GAO-12-819 ). Of these 52 programs, 30 programs distributed across the four agencies can provide financial assistance in the form of grants and loans. Inefficiencies in the administration of these programs could compromise the government's ability to effectively provide services and meet the shared goals of the programs.
This testimony discusses (1) the extent of overlap, fragmentation, and duplication among these programs and the extent to which programs collaborate and (2) the extent to which agencies collect information necessary to track program activities and whether these programs have met their performance goals and have been evaluated. This testimony is based on GAO's August 2012 report and provides information on the agencies' actions to address recommendations GAO made in that report.

What GAO Found

Federal programs GAO reviewed that offer financial support to entrepreneurs, such as grants and loans, are fragmented and overlap based on the type of support they are authorized to offer and the type of entrepreneur they are authorized to serve. The Departments of Commerce (Commerce), Housing and Urban Development (HUD), and Agriculture (USDA); the Small Business Administration (SBA); and the Office of Management and Budget (OMB) have taken steps to collaborate more in administering these programs in response to a recommendation in GAO's August 2012 report. For example, OMB has established a Cross-Agency Priority goal for entrepreneurship and small business and an associated interagency working group. However, the four agencies have not implemented a number of good collaborative practices GAO has identified, such as establishing compatible policies and procedures to better support rural businesses. The Government Performance and Results Act Modernization Act of 2010 (GPRAMA) crosscutting framework requires that agencies collaborate in order to address issues such as economic development that transcend more than one agency, and GPRAMA directs agencies to describe how they are working with each other to achieve their program goals. Some entrepreneurs struggle to navigate the fragmented programs that provide technical assistance in the form of training and counseling. This difficulty can in turn affect referrals to other programs, including financial assistance programs. For example, some entrepreneurs and technical assistance providers GAO spoke with said the system can be confusing and that some entrepreneurs do not know where to go for technical assistance. Collaboration could reduce some negative effects of overlap and fragmentation, but field staff GAO spoke with did not consistently collaborate to provide training and counseling services to entrepreneurs. Without enhanced collaboration and coordination, agencies may not be able to use limited federal resources in the most effective and efficient manner and entrepreneurs may struggle to navigate these fragmented programs.
While the four agencies collect at least some information on entrepreneurial assistance program activities, they do not track such information for many programs, a practice that is not consistent with government standards for internal controls. They typically do not track detailed information on the characteristics of entrepreneurs that they serve, such as whether they are located in rural or economically distressed areas or the entrepreneurs' type of industry. In addition, GAO found that from 2000 through 2012, the four agencies conducted program evaluations of 13 of the 30 financial assistance programs reviewed. GPRAMA requires agencies to set and measure annual performance goals and recognizes the value of program evaluations because they can help agencies assess programs' effectiveness and improve program performance. Without more robust program information, agencies may not be able to administer programs in the most effective and efficient manner, and scarce resources may be going toward programs that are less effective.

What GAO Recommends

In August 2012, GAO recommended that the four agencies and OMB explore opportunities to enhance collaboration among programs and that the four agencies track program information and conduct more program evaluations. The agencies neither agreed nor disagreed with the recommendations but did provide information on their plans to address them.