CNMI Loses STEP Grant

March 26, 2012

It seems that the STEP (State Trade and Export Promotion) grant issued to the CNMI in September 2011 has been taken back by the U.S. Small Business Administration. The CNMI was awarded $1,022,781 and the CNMI Department of Commerce was charged with the grant's administration.

It was reported that some of the money has already been spent. Will this mean that the CNMI has to reimburse the federal government for spent funds?

It was revealed that the CNMI government hired Integrated Professional Solutions, LLC (Lynn  Knight) to write the grant application.

On March 26, 2012 the Saipan Department of Commerce announced that the STEP grant program was cancelled in a press release issued by the Office of the Governor.

In September 2011 when the Department of Commerce received notice of the grant's award Commerce Secretary Sixto Igiosmar was quoted in an Office of the Governor press release as stating:
“The CNMI agencies are grateful for the work that was done by IPS and are impressed with the results, especially given the tight time frame in which the application was due. Although IPS led the charge, it was truly a team effort, with folks from MVA, CDA, Commerce, the Saipan Chamber of Commerce, the CNMI Small Business Development Center, Mr. Phillip Long-Mendiola, and Mr. Casey Jeszenka; all pitching in to get the program developed and submitted,” said Igisomar.
The announcement of the grant also was praised in a press release from Delegate Gregorio Kilili Sablan He took credit for  adding the CNMI to the list of eligible applicants. He also noted that the CNMI was awarded the sixth highest grant amount in the country. His letter supporting the grant:

According to Sablan, Hopewell replied to his letter assuring him that the CNMI qualified to apply for the grant.

In September the announcement that the CNMI received over 1 million dollars in STEP monies as compared to Guam's $135, 097 and Hawaii's $487,519 raised the eyebrows of at least one person. Steven Craven of Kekapana International Services wrote:
Then came the first real shocker! The Commonwealth of the Northern Marianas Islands was awarded a grant for $1,022,781! If you don’t know the CNMI, it is a group of islands like Saipan and Tinian in the far western Pacific. I have traveled there often on business, and they are known mostly for attracting Japanese tourists to a few resorts and war memorials. Unfortunately, CNMI became known for its sweat-shop textile factories (now gone) and for locating poker machines in every available niche in every store or hotel. There have also been the occasional charges of official corruption. Other than that, the people are delightful and I have some good friends out there. The growth industry is the casinos on Tinian that are attracting well-heeled gamblers from China and Russia. Here’s the official description of the CNMI STEP Grant project:

"The project will focus on the achievement of four core goals: 1) Develop CNMI small business export acumen, 2) Provide venues for CNMI small business concerns to develop foreign trade networks and interact with foreign buyers, 3) Solidify CNMI lines of services to export markets, and 4) Develop and market a singular, “Made in the Marianas” brand for export commodities. The CNMI STEP program is intended to encourage eligible small firms to engage in foreign trade business meetings through participation in trade shows, exhibitions, and sales trips. This will allow CNMI small business to begin to implement strategic export business plans.
Just days ago, on March 23, 2012, a press release from the Office of the Governor announced a series of April  "Export 101" workshops for interested small businesses. It encouraged small businesses to attend the workshop. The press release said:
“This is an opportunity for existing small businesses to avail of this program in terms of expanding their locally made or produced products into the foreign markets. In addition, the program also offers an opportunity for a new entity who wishes to learn and understand the dynamics of exporting through the Foreign Trade Development Program,” said Perry Inos Jr., NMI STEP point of contact for Commerce.

The Foreign Trade Development Program is designed to provide CNMI small businesses the opportunity to engage in the foreign trade and export marketing. This includes providing the CNMI small business program participants with appropriate export organizational sessions and technical assistance to prepare and address the various dynamics of exporting to foreign markets.

“The FTDP program will provide the program participants with foreign trade and exporting elements through series of export organizational sessions, which will be conducted by export industry experts. Upon successful completion of the FTDP, participants will be required to develop an Export Business Plan. The participants will have their Export plan reviewed and guided by the CNMI STEP team and SBA resource partners,” added Inos.
The workshops have been cancelled no more activities can be charged to the cancelled grant.

The Chamber of Commerce, small businesses and the Marianas Visitor's Authority are disappointed with the loss of much needed funds.

It was reported that Delegate Sablan met with officials from the Small Business Administration yesterday in Washington, DC. He confirmed that the CNMI was not included as a state or territory in one section of the Small Business Jobs Act of 2010, thus making it ineligible for the grant.

In March 2011 Sablan introduced H.R. 1304, Small Business Jobs Act Technical Corrections Act of 2011 to have the CNMI included in the STEP grant program. It was referred to the House Committee on Small Business on March 31, 2011 and never moved from there.

The Saipan Tribune reported:
Sablan introduced HR 1304 even before he got written assurance from SBA that their definition of “state” includes the CNMI and that the Commonwealth therefore was eligible to apply.

In the same April 2011 letter from SBA, they invited and encouraged the Northern Marianas to compete for STEP grant funds.

But the STEP Program, under the Small Business Jobs Act of 2010, defines eligible State as “Several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the U.S Virgin Islands, American Samoa, and Guam.”

Sablan said he urged SBA officials at yesterday's meeting to find another way to use the grant funds to support tourism and other development in the CNMI.
It seems that the CNMI was clearly not included in the qualifying legislation and the SBA erred in stating that they could apply for the grant and then awarding the grant. It looks like someone caught the error.


The Saipan Blogger said...

That's too bad. It looks like the grant could have done some good.