Today, I held a series of conference calls with MBDA staff and stakeholders to announce congressional approval of our proposal to realign our regional office structure. This change will enhance the efficient delivery of funds and services to our mission critical programs—particularly, the MBDA Business Center grassroots network that interacts directly with minority business owners on a daily basis.
Supporting the growth and global competitiveness of minority-owned businesses remains a priority for the Department of Commerce and the Obama Administration. The realignment of our office structure and streamlining of our operations builds upon the work we began in 2009 in response to President Obama’s call to improve services to minority-owned businesses and entrepreneurs by making government more efficient, effective and accountable to the American people.
By centralizing the agency’s grant management and monitoring functions in 2009, closing district offices in 2011, and redesigning the MBDA Business Center program last year, MBDA has been able to cut costs and deliver services more efficiently. With the funds made available from these greater efficiencies, we have expanded services into five new cities and now reach 36 percent more minority-owned firms.
The restructuring of our regional offices continues that progress.
With the closing of our five Regional Offices located in Atlanta, Chicago, Dallas, New York and San Francisco, there will be no reduction in force, nor any diminution in the services we provide. The 25 federal employees in the impacted offices are being offered equivalent positions at MBDA headquarters in Washington, D.C. Furthermore, each city served by those regional offices also hosts an MBDA Business Center that will continue to provide direct services to minority-owned businesses and entrepreneurs in the area. We expect to complete the closures in Atlanta, Chicago, Dallas and New York by September 2012 and by October 2012 in San Francisco.
We are taking these steps at a time when MBDA, as an advocacy agency for the nation’s 5.8 million minority-owned firms, is stronger than ever.
Last year, the Agency registered the best annual performance in its 43-year history. We helped minority-owned businesses gain access to nearly $4 billion in contracts and capital, supporting the creation of nearly 6,000 much-needed jobs. Over the past three years, our network of 39 MBDA Business Centers has been largely responsible for generating $11 billion in contracts and capital while helping to create and save nearly 20,000 jobs. I am confident that this new operational structure will unleash even greater benefits to our constituency.
The current challenge for MBDA–like so many organizations across the federal government–is to figure out how to maintain that strong momentum while becoming more efficient. So as we considered how best to meet the President’s mandate to improve services to minority-owned businesses and entrepreneurs in an increasingly difficult budget environment, we began by looking at the grassroots, where MBDA interacts on a daily basis with minority business owners.
Our front lines are our 39 MBDA Business Centers and related business development support services. Our plan is to strengthen connections at that level to enhance services and provide more for the taxpayer dollar.
The centers, operated by local entities, are funded in part by grants from MBDA. For some 15 years, the average grant had been less than $300,000. Last year, however, we launched a new round of competitions, and MBDA was able to increase the size of the grants and extend awards from three years to five years. As a result of earlier streamlining efforts, MBDA was also able to expand its presence to establish new centers in Denver, Cleveland, Boston, Minneapolis and Anchorage in fiscal year 2011.
But to put more resources into our business centers, we needed to find savings in other parts of our budget. Like many businesses in the private sector, we looked at our administrative costs and decided on a plan to consolidate our five regional administrative offices. This will allow us to cut funding for administration, while putting more resources into the MBDA Business Centers and business development programs that help minority-owned firms land contracts and financing awards.
The realignment of our regional office structure is a common sense solution and part of a larger strategy that began when I arrived at MBDA nearly three years ago. My goals have been to make the Agency more responsive to the changing marketplace and to enhance its ability to meet the demands of the rapidly growing minority business community.
Minority-owned firms account for $1 trillion in gross receipts and employ almost 6 million Americans. MBDA, the Department of Commerce, and the Obama Administration are dedicated to growing those numbers by strengthening our national presence and localized footprint.
Of course, we can’t overlook the all-important human dimension of this decision. While I understand that each impacted employee in the Regional offices will face a decision that will affect their families and careers, we want to retain their talents and skills and hope they will decide to take advantage of the attractive career opportunities available to them at MBDA headquarters. Over the next two weeks, MBDA senior managers, along with experts from the Department of Commerce’s Office of Human Resources, will visit each regional office to meet with individual employees and discuss their options.
These difficult, but necessary, decisions involved careful thought and consideration and we did not take these steps lightly. We are confident that they will help MBDA, the Commerce Department and the Obama Administration continue to execute on the joint commitment to grow the number and size of minority-owned firms by supporting mission critical programs that generate good jobs for all Americans.