[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
                 BARRIERS TO MINORITY ENTREPRENEURSHIP

=======================================================================

                                HEARING

                               before the

                      SUBCOMMITTEE ON EMPOWERMENT

                                 of the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, MARCH 23, 1999

                               __________

                            Serial No. 106-6

                               __________

         Printed for the use of the Committee on Small Business





                   U.S. GOVERNMENT PRINTING OFFICE
57-922 cc                  WASHINGTON : 1999





                      COMMITTEE ON SMALL BUSINESS

                  JAMES M. TALENT, Missouri, Chairman
LARRY COMBEST, Texas                 NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado                NORMAN SISISKY, Virginia
DONALD A. MANZULLO, Illinois         JUANITA MILLENDER-McDONALD, 
ROSCOE G. BARTLETT, Maryland             California
FRANK A. LoBIONDO, New Jersey        DANNY K. DAVIS, Illinois
SUE W. KELLY, New York               CAROLYN McCARTHY, New York
STEVEN J. CHABOT, Ohio               BILL PASCRELL, New Jersey
PHIL ENGLISH, Pennsylvania           RUBIN HINOJOSA, Texas
DAVID M. McINTOSH, Indiana           DONNA M. CHRISTIAN-CHRISTENSEN, 
RICK HILL, Montana                       Virgin Islands
JOSEPH R. PITTS, Pennsylvania        ROBERT A. BRADY, Pennsylvania
MICHAEL P. FORBES, New York          TOM UDALL, New Mexico
JOHN E. SWEENEY, New York            DENNIS MOORE, Kansas
PATRICK J. TOOMEY, Pennsylvania      STEPHANIE TUBBS JONES, Ohio
JIM DeMINT, South Carolina           CHARLES A. GONZALEZ, Texas
EDWARD PEASE, Indiana                DAVID D. PHELPS, Illinois
JOHN THUNE, South Dakota             GRACE F. NAPOLITANO, California
MARY BONO, California                BRIAN BAIRD, Washington
                                     JANICE SCHAKOWSKY, Illinois
                     Harry Katrichis, Chief Counsel
                  Michael Day, Minority Staff Director
                                 ------                                

                      Subcommittee on Empowerment

                JOSEPH R. PITTS, Pennsylvania, Chairman
PHIL ENGLISH, Pennsylvania           JUANITA MILLENDER-McDONALD, 
JIM DeMINT, South Carolina               California
FRANK A. LoBIONDO, New Jersey        DENNIS MOORE, Kansas
                                     STEPHANIE TUBBS JONES, Ohio
                                     TOM UDALL, New Mexico
               Dwayne Andrews, Professional Staff Member




                            C O N T E N T S


                              ----------                              
                                                                   Page
Hearing held on March 23, 1999...................................     1

                               WITNESSES

                             March 23, 1999

Stella Horton, Director of Entrepreneurship, EDTEC...............     4
Yvonne Simpson, Vice President, Small Business Services, 
  Greenville (SC) Chamber of Commerce............................     7
Shelia Brooks, President and CEO, SRB Productions, Inc...........     9
William Mellor, President and General Counsel, Institute for 
  Justice........................................................    11
Hector Ricketts, President and CEO, Queens Van Plan..............    13
Prepared statements:
    Stella Horton................................................    29
    Yvonne Simpson...............................................    37
    Shelia Brooks................................................    41
    William Mellor...............................................    46
Additional Materials:
    Letter to Chairman Joseph R. Pitts from Jeffrey S. Shoaf, 
      Executive Director, Congressional Relations, The Associated 
      General Contractors of America.............................    48


                 BARRIERS TO MINORITY ENTREPRENEURSHIP

                              ----------                              


                        TUESDAY, MARCH 23, 1999

                  House of Representatives,
                       Subcommittee on Empowerment,
                               Committee on Small Business,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:00 a.m., in 
room 2360, Rayburn House Office Building, Hon. Joseph Pitts 
[chairman of the Subcommittee] presiding.
    Chairman Pitts. Ladies and gentlemen, the time of 10 
o'clock having arrived, we will call this hearing to order.
    This is a hearing of the Empowerment Subcommittee of the 
Small Business Committee.
    Thank you for joining us, myself, the other members and the 
distinguished ranking member, Ms. Millender-McDonald, today to 
discuss the important issue of barriers to minority 
entrepreneurship.
    This hearing represents the first meeting of the 106th 
Congress of the Empowerment Subcommittee, and I look forward to 
hearing from a wide range of speakers from the grassroots level 
to the academia, who will focus this panel on the ills that 
plague so many of this Nation's low-income communities.
    Additionally, during this Congress, members of this 
Subcommittee will be able to hear from practitioners at the 
community level who are performing modern-day miracles by 
turning around neighborhoods that many in our society had 
written off as dead.
    During the 104th Congress, the Subcommittee on regulation 
and paperwork held a similar hearing that discussed the impact 
of Federal regulation on minority entrepreneurship. Because 
small businesses are owned by and employ a large percentage of 
minorities, Federal regulations and taxes are said to fall 
disproportionally on minorities as well.
    During the 1995 hearing, the witnesses emphasized the great 
importance of small business to the American economy and the 
many opportunities that small business provides for minorities, 
not only in ownership, but also in the many jobs that are 
created. The panel stressed that government programs, such as 
welfare and minority setasides, are solutions for the symptoms 
of poverty among minorities, but do not go to the root of the 
problem.
    There is a lack of economic opportunities provided to 
minorities because small businesses are stifled with high taxes 
and oppressive regulation. Dr. Stewart Butler, of the Heritage 
Foundation, testified before the Small Business Committee two 
years ago and said, ``It is the plethora of local taxes and red 
tape that frustrate owners and drive up the cost of opening and 
continuing a business for small financially-strapped firms. 
These local obstacles can be business killers.''
    That is why it is necessary to encourage local authorities 
to streamline zoning, building codes, and other regulations and 
permits that can be enormous obstacles to a small firm. 
Business development is key in order for a community to renew 
itself and it is an important component of any serious 
discussion regarding the revitalization of some of America's 
most economically-distressed areas.
    Minority groups represent 26.1 percent of the population, 
but own only 11.6 percent of the Nation's businesses. Although 
minority-owned businesses have grown explosively over the past 
10 years, minority entrepreneurs are significantly more likely 
to be denied bank credit, and when successful, receive smaller 
loans relative to comparable non-minority businesses. Many 
potential minority businesses never get off the ground, because 
they are unable to assemble the needed financial capital. This 
lack of access is especially troublesome in light of the fact 
that minority firms are more likely to employ minority workers 
and, thus, provide them with an entry point into the labor 
market.
    Today's panel consists of a fine cross-section of people 
who are working to cultivate minority entrepreneurs and help 
minority-owned business enterprises flourish. Dr. Stella 
Horton, the Director of Entrepreneurship Education for EDTEC, 
will discuss her company's movement to teach entrepreneurship 
education to minority youth. Yvonne Simpson, Vice President of 
the Greenville Chamber of Commerce, is here to discuss the 
chamber's efforts in increasing participation of minority-owned 
companies in the construction of major projects in South 
Carolina. Sheila Brooks, President and CEO of SRB Productions, 
Inc., will testify about her work in the media and 
communications consulting arena. William Mellor, the President 
and General Counsel of the Institute for Justice, will discuss 
his organization's battles to remove arbitrary barriers to 
enterprise. And, finally, Hector Ricketts, President of Queens 
Van Plan, will testify about his fight with the New York City 
Council to provide van service to low-income communities in New 
York.
    I look forward to the enlightening testimony of our panel, 
and I will now like to turn to the distinguished ranking 
member, Ms. Millender-McDonald, for any opening statement that 
she would like to make.
    Ms. Millender-McDonald. Thank you so much, Mr. Chairman, 
and good morning to all of you.
    I thank you, Mr. Chairman, for convening this very 
important hearing today, a hearing that will address the 
impediments and the barriers to small minority business owners.
    I am very pleased to be participating with you today, and 
this is my first meeting, I suppose, as a ranking member. So I 
certainly look forward to many meetings of this sort.
    However, Mr. Chairman, I must express my concern regarding 
the inadequate amount of time provided to the minority side to 
secure witnesses and the disproportionate ratio of witnesses 
for each side. In the future, I hope, Mr. Chairman, that we 
will be able to work together, especially coming out of Hershey 
this weekend and talk about some of these things in preparing 
for our Subcommittee hearings.
    I represent a part of the Los Angeles area that has thrived 
from numerous small business development opportunities, as well 
as other parts that are in dire need of some assistance. As you 
all know, the creation of successful small businesses in one 
neighborhood can completely transform a community and raise the 
living standards of many more individuals than just the 
business owners. It is of this critical importance that we 
recognize the vast positive ramifications for helping to launch 
new businesses in such communities.
    Between 1987 and 1992, the number of minority-owned 
businesses grew by 62 percent. During the same period, 
minority-owned businesses with paid employees accounted for 16 
percent of the total number of firms and 79 percent of gross 
receipts. Today, there are more than 2 million minority-owned 
businesses in the United States. These businesses have become a 
vital part of our growing economy. However, they continue to 
compete on a playing field that is not level.
    According to the U.S. Census Bureau, African-American-owned 
businesses grew from 424,000 in 1987 to 621,000 in 1992. But 
the average African-American-owned firm generated receipts of 
just under $52,000, considerably less than the $192,000 in 
sales generated by the average firm in the national economy. 
Hispanic-owned firms also grew significantly between 1987 and 
1992. And although their average sales are higher then that of 
the African-American counterparts, these sales are still well 
below the national average. In 1987, there were 422,373 
Hispanic-owned businesses, and in 1992, the number grew to 
771,706 businesses. Despite this growth, however, the average 
receipts for Hispanic-owned businesses was $94,000.
    In 1992, California had the largest number of firms, at 
541,414, and receipts of $61.8 million, of all the States, 
accounting for 28 percent of all minority-owned firms and 31 
percent of their receipts. In Los Angeles and Long Beach 
metropolitan areas, they had 230,025 firms and $27.9 million in 
receipts in 1992, making it the metropolitan area with the 
largest number of minority-ownedbusinesses.
    As our witnesses will discuss, two of the biggest factors 
impeding this growth in sales and delaying the expansion of 
minority-owned businesses include obtaining access to capital 
and abiding by complex regulations. I agree these can serve as 
insurmountable obstacles for many small business owners and not 
just minority-owned business firms alone. But I am deeply 
concerned about other issues, including gaining entry into the 
Federal procurement market. That is why I will be introducing 
legislation to empower minority businesses in obtaining Federal 
contracts.
    The real issue I want to address through this legislation, 
and throughout this Congress, is to find ways to find minority 
businesses spring from the edge of the business enterprise 
sphere into its core. The lack of real access to this core of 
boundless opportunities is what continues to tarnish and 
diminish the possibilities available to small businesses owners 
today.
    I look forward to hearing from our witnesses today, Mr. 
Chairman, about the struggles they have endured and the 
successes they have achieved, despite the barriers facing the 
minority-owned and minority-women-owned businesses. I am 
particularly interested in hearing your recommendations on how 
to evolve our current Federal programs into a more equitable 
system that helps all small business owners.
    I thank you Mr. Chairman.
    Chairman Pitts. The Chair thanks the gentlelady.
    Would any of the other members like to make opening 
statements?
    You want to wait until the next witness, the gentleman from 
New Mexico?
    If not, at this time we will call on our first witness, Dr. 
Stella Horton, Director of Youth Entrepreneurship, EDTEC. 
Welcome.

   STATEMENT OF STELLA HORTON, DIRECTOR OF ENTREPRENEURSHIP, 
                       EDTEC, CAMDEN, NJ

    Dr. Horton. Good morning, Mr. Pitts, and also to the other 
members of the Committee, and I thank you for providing us with 
the opportunity to speak before you this morning.
    As stated, I am Dr. Stella Horton and I am the Director of 
Entrepreneurship Education at EDTEC. We are a minority-owned 
firm, located in Camden, New Jersey, and we also have offices 
here in the District.
    We, and I want to be clear, I am presenting the testimony 
this morning for the owners, Mr. George Waters and Mr. Aaron 
Bocage, who are in fact the founders of EDTEC. And we are 
pioneers in the movement relative to entrepreneurship 
education, specifically as it relates to bringing 
entrepreneurship to minority youth.
    We consider this topic today probably one of the most 
important discussions that could be taking place in this 
Nation. There is no greater challenge than the challenge to 
remove the obstacles that are in fact preventing any American 
from participating in the free enterprise system. Since 1985, 
we are proud to say that we have fought to remove many of these 
barriers and obstacles because we see a lack of 
entrepreneurship education in the current American education 
system.
    And, Mr. Chairman, your opening words regarding 
entrepreneurship being a kind of modern-day miracle certainly 
is indicative of what EDTEC has been doing throughout the 
years, not only on a local level, but also on a national level. 
And we have received national recognition as a provider of 
innovative training as well as innovative education and 
economic development. So we feel we are quite qualified to 
discuss, as well as present testimony before you today, because 
we have traveled the country for the past 14 years teaching 
others how to develop entrepreneurial programs, specifically, 
for minority youth.
    At the very core of our philosophy is a belief that youth, 
if given the proper training and opportunities, those youth can 
in fact be contributors to the economic development in cities 
and towns across this country. We also believe that in order to 
help youth and others to fully participate in this free 
enterprise system, there needs to be an organized, systematic 
way for teaching entrepreneurship. Because we can talk about 
the number of businesses that currently exist, but no one is in 
fact teaching youth to become entrepreneurs where will they 
fit. We also know that the teaching of entrepreneurship must 
have basically three components. One, youth must be able to 
understand it; secondly, there must be a practical approach; 
and there has to be an inexpensive methodology of delivering 
entrepreneurship education.
    Years ago, our solution to this problem was to develop a 
youth-oriented curriculum to teach young people how to start 
and manage small businesses. And we call our curriculum the new 
youth entrepreneur. This curriculum was developed in 
partnership with the Ewing Marion Kauffman Foundation. We are 
very proud and honored to have been selected by the foundation 
from numerous organizations that had developed similar kinds of 
curriculum material. Dr. Marilyn Kourilsky, who is vice 
president at the Foundation, testified before your Committee, I 
think, last year. So the foundation, being one of the experts 
recognized in the field, again, choose the curriculum that was 
written by EDTEC to endorse.
    The goal of our new youth entrepreneurial curriculum is 
very basic, and we offer it in English as well as in Spanish. 
Primarily we want to provide youth the opportunity to learn 
about entrepreneurship through classroom as well as practical 
experiences. We also teach youth, through our curriculum, the 
very basic skills that are required to be entrepreneurs, and we 
help youth understand the relationship between entrepreneurship 
and core curriculum standards or academic subjects in the world 
of entrepreneurship.
    We feel that we must prepare minority youth for the world 
of entrepreneurship, and we believe that the greatest obstacle 
and barrier to the minority enterprise and business development 
is education. We support the idea that youth must be exposed to 
entrepreneurship at all levels, not only in the educational 
arena, but also in the community. For many minority youth, the 
opportunity does not exist because entrepreneurship is not 
discussed at their breakfast table, if they are fortunate 
enough to be sitting at a breakfast table. The free enterprise 
system is often viewed by them and seen in underground illicit 
drug trade and prostitution. We, though, expect them to be 
ready to understand and take advantage of government-sponsored 
business opportunity programs when they reach adulthood, when 
they in fact have not even been exposed to the concept.
    Ladies and gentlemen, learning about entrepreneurship for 
the first time as an adult is too late. Unfortunately, for many 
of these young people, the train has already left the station. 
If they had been exposed with a practical application 
component, several things would have happened. As I wrap-up, I 
will list them.
    First of all, they will have learned about setting goals. 
They will have been able to have had their creative energies 
tapped and they will have begun to think logically and 
sequentially. They will have been able to explore 
entrepreneurship as a free option. They would have learned the 
importance of academic preparation in the context of 
entrepreneurship, and they will have experienced a sense of 
empowerment.
    So, finally, I would like to offer this Committee a couple 
of recommendations. One, write and promote the legislation for 
mandatory entrepreneurship training. Secondly, encourage and 
support schools in your district to identify entrepreneurship 
curriculum materials. Three, work with local chambers of 
commerce and other business groups to develop outreach programs 
to minority youth in the community. And, finally, give young 
minority entrepreneurs the opportunity to get direct experience 
in a particular industry.
    In the interest of time, the natural forces of the American 
free enterprise system will take care of the rest. As educators 
and legislators, our job is to get as many youth as possible to 
experience the starting of a small enterprise.
    Thank you, Mr. Chairman.
    [Dr. Horton's statement may be found in the appendix.]
    Chairman Pitts. The Chair thanks the lady.
    We will proceed with all of the witnesses before going to 
questioning.
    I would like to explain, I am sorry I did not explain at 
the beginning, the series of lights that you will see before 
you are a time limit for the witnesses and themembers. The 
green light will go on for four minutes, and then the yellow light will 
indicate you have one minute left. Then when you see the red light, if 
you could begin to wrap up, and we will appreciate that to keep 
everybody on time.
     At this time, the Chair recognizes the gentleman from 
South Carolina, who would like to make a statement before the 
next witness.
    Mr. DeMint. Thank you, Mr. Chairman. And I particularly 
want to thank you for holding this hearing today. It is a 
crucial issue for everyone in business in our country. And I am 
very pleased that this is the first subject that we are 
considering on the Subcommittee.
    I would also like to thank all of the witnesses who have 
agreed to discuss the barriers to minority entrepreneurship 
with us today, and we appreciate and value your insight, your 
experience, everything you bring to us today.
    In particular, I want to thank Yvonne Simpson, who is Vice 
President of Small Business Services for the Greenville Chamber 
of Commerce in my home town, and with whom I have had the 
privilege of working, through the chamber, for many, many 
years, even back to when I started my own business, Yvonne. She 
has had tremendous impact in the small business community in 
our area and she is known around the State and the region for 
her expertise. She has especially worked very hard on minority 
business development in the upstate of South Carolina, and I 
know that her experience and insight will be invaluable to this 
hearing. I am grateful, Yvonne, for you agreeing to be here 
today.
    We all know, and we have talked about, that small business 
is the engine of our economy. In the past 25 years, two-thirds 
of the new jobs that have been created, have been created by 
small business. And I believe that this is largely attributable 
to the fact that the spirit of small business, the 
entrepreneurial spirit, is really the original spirit of 
America.
    As a small businessman myself, and a entrepreneur, I have 
experienced the joys and the trials of starting a new business. 
While I have been blessed with some success, I certainly 
empathize with some of the barriers that all of us experience 
when starting a new business, barriers which anyone faces who 
is starting a new business. These include long hours of 
paperwork, burdensome regulations, a confusing tax code, access 
to capital, and complying with various Federal, State, and 
local requirements.
    I remember my first experience opening a business was a 
late notice for a business license that I didn't know I had to 
get, and then a penalty for not filing my first quarterly 
Federal tax return, which I didn't know I had to do either. So 
it was a hard way to learn.
    I look forward to this hearing on the barriers, which face 
all of us, which I said, especially minorities, because we know 
that one of the best ways to improve anyone's situation is not 
only a job, but a business and a career. We need to know what 
works and what doesn't. And we need to know what is the 
appropriate role of the Federal Government in stimulating more 
small business startups by minorities.
    So I am particularly glad, again, for all of you to be 
here. I want to introduce Yvonne, as not only someone who has 
worked with the chamber, but at various points has actually 
been the interim president of the chamber when he needed her. 
Thank you, Yvonne, and I look forward to your comments.
    Chairman Pitts. The Chair thanks the gentleman, and the 
witness may now proceed.
    Welcome.

  STATEMENT OF YVONNE SIMPSON, VICE PRESIDENT, SMALL BUSINESS 
         SERVICES, GREENVILLE (SC) CHAMBER OF COMMERCE

    Ms. Simpson. Thank you, Mr. Chairman, and thank you, 
Congressman DeMint.
    Mr. Chairman and members of this Committee, good morning.
    I am certainly happy to be here, and I welcome the 
opportunity to be with you this morning to make remarks to this 
House Committee on Small Business and the Subcommittee on 
Empowerment. I do hope that my comments this morning will offer 
you greater insight into the issues and challenges facing 
minority businesses as they try to develop or expand their 
businesses.
    As a part of my testimony today, I could not begin unless 
you will allow me the opportunity to give a glimpse of 
Greenville County and the upstate region of South Carolina, a 
place, to quote our current chairman of the board, ``located at 
the foot of the Blue Ridge Mountains, the lovely scenic 
Piedmont region where the lakes are crystal clear, where the 
orange sun sits at the bosom of the Blue Ridge Mountains, and 
where the temperature is always 72 degrees!'' I am not quite 
sure about the last part--[laughter]--but I think that, Mr. 
Chairman, you and the members of the Committee can easily see 
why Congressman DeMint and I proudly call upstate South 
Carolina our home.
    The upstate is also the business belt of the entire area. 
We are situated along the interstate 85 corridor, between 
Charlotte, NC and Atlanta, GA. This area is well recognized as 
the premier leader in economic development and growth, as 
evidenced by an array of national and international firms, such 
as Michelin, BMW, and GE, that have chosen the upstate as their 
home, and is also evidenced by the distinction of enjoying a 
tremendous rate of growth of small businesses in this region.
    Now let me give you a snapshot of minority business 
development in our area. As you know, minority businesses play 
a pivotal role in the growth and vitality of any community. In 
the upstate, minority businesses provide jobs, they support 
countless worthwhile projects, and they add to the tax base. 
Furthermore, many minority business owners and managers serve 
as role models for today's youth and, of course, tomorrow's 
upstate leaders.
    Minority businesses recognize and understand that economic 
opportunity and the spirit of capitalism are the foundations 
upon which this country has been built, and they realize and 
understand that economic opportunity can, indeed, become a 
reality, provided they have the chance to compete openly and 
fairly in the marketplace. So please allow my remarks to give 
you a statistical view of minority business development, a view 
that will serve as a springboard for my observations and my 
recommendation.
    Some time ago, the U.S. Department of Commerce made 
available a survey of minority-owned business enterprises as a 
part of its overall economic census update. While the survey 
covered businesses owned by African-Americans, Hispanics, Asian 
and Pacific Islanders, and American Indians, we currently only 
have comparative data in our area for Black-owned businesses in 
the upstate. We do know, however, that over the past several 
years the upstate has experienced the tremendous growth in 
Hispanic and Asian residents and a corresponding rapid rise in 
the number of businesses. In fact, several weeks ago, our 
chamber of commerce recently initiated a new program for 
Hispanic-owned businesses, as a result of the growth that we 
have seen. Therefore, we see nothing short of the continuation 
of the rising trend in business growth among all ethnic groups.
    According to the Census Bureau report, in the five-year 
period in upstate South Carolina, the number of Black-owned 
businesses increased by almost 98 percent--by almost 98 
percent. In fact, the growth rate in the upstate more than 
doubled the statewide and the national rates. In the same 
report, however, the sales and receipts of Black-owned 
businesses increased by only 30 percent. And perhaps the 
statistic of most concern to us is this: Average growth 
receipts of Black-owned firms totaled $38,000. That is well 
below the national average; that is well below the average of 
all small businesses. Please understand this--that $38,000, out 
of this, minority businesses must also pay rent, utilities, 
taxes. and other expenses.
    So I submit to you, Mr. Chairman, what we are talking 
about, instead of the working poor, we are talking about the 
business poor. Furthermore, Mr. Chairman, I believe that these 
statistics are a microcosm of the state of minority businesses 
in this country. I also contend that of all the areas of the 
country with a potential and a willingness to really tackle 
this issue, it is, indeed, the upstate region of South Carolina 
and we are doing that.
    Let me briefly outline my thoughts regarding this whole 
issue of empowerment. With all due respect to you, Mr. Chairman 
and members of this body, the public sector--the government--is 
neither the sole player nor the major entity that can bring 
about economic parity for minority-owned businesses. Please 
also understand, however, that as long as there are average 
receipts of $38,000 per company, small business programs, such 
as SBA 8(a) programs and others, continue to be necessary.
    However, this government, this Committee cannot approach 
this issue alone. Your mission can best be filled by providing 
the leadership and incentives at the national level to make 
things happen at the local level. Incentives must be provided 
so that the business leadership, nationally and locally, 
continually challenges ``status quo'' purchasing notions and 
explores new ways to work with new minority vendors. I suggest 
that this Committee explore the offering of tax credit to 
companies that purchase from minority vendors. This single 
incentive will at least provide Federal contractors the added 
emphasis to give concerted attention to its purchasing 
decisions and to how these decisions can positively or 
adversely affect local minority-owned businesses. We should no 
longer be satisfied with conducting business as usual.
    Let me cite an example. In Greenville County, in the 
upstate region of South Carolina, three major construction 
projects were built primarily with private funds. They are our 
Regional Center for the Performing Arts, the BMW manufacturing 
facility, and our regional sports entertainment complex. In 
each of these projects, local business leaders made a concerted 
effort and made the commitment to ensure that the field was 
leveled to allow participation by minority-owned firms. 
Furthermore, in some instances, language was placed in the bid 
specifications to provide incentives to bidders to use minority 
contractors. Innovative approaches were used, from the creation 
of a minority participation task force to locate viable 
subcontractors and vendors, to providing support for the 
purchasing for materials and supplies, to the development of 
strategic alliances between majority-owned firms and minority 
companies.
    Are we proud of these successes? Yes. Are there other 
opportunities for using this approach? Yes. However, the 
leveraging of dollars to achieve this $25 million that went to 
minority-owned businesses is a good start. A lot needs to be 
done.
    Mr. Chairman, members of this Committee, I call upon you to 
provide the leadership at the national level to ensure a more 
level playing field at the local level. Through tax incentives, 
these Federal contracts can, indeed, make a difference on the 
bottom line of many minority businesses.
    Again, thank you for this opportunity and thank you for 
your concern and interest in this matter.
    [Ms. Simpson's statement may be found in the appendix.]
    Chairman Pitts. The Chair thanks the lady coming all the 
way from South Carolina to present her experience, her 
expertise, and we will proceed with the witnesses before the 
questioning, but I am sure there will be some questions of the 
witness.
     At this time I would like to call on Sheila Brooks, 
President, CEO of SRB Production, Inc., Washington, DC for her 
testimony.
     Welcome, Ms. Brooks.

STATEMENT OF SHEILA BROOKS, PRESIDENT AND CEO, SRB PRODUCTIONS, 
                      INC., WASHINGTON, DC

    Ms. Brooks. Thank you, Mr. Chairman.
    Good morning, Mr. Chairman, members of the House of 
Representatives Committee on Small Business, Subcommittee on 
Empowerment, Ranking Minority Member Congresswoman Millender-
McDonald, and those others that are here.
    I am Sheila Brooks, President and CEO of SRB Productions. 
We are nearly a 9-year-old, full service television and video 
production firm and post-production facility in downtown 
Washington, D.C. We produce VNRs, PSAs, video teleconferences, 
and programming for the television networks. We produce those 
videos and programs for Federal Government agencies, as well as 
national non-profits and Fortune 500 companies.
    You should also know that I am a staunch advocate of women-
owned businesses. As a national board member of the National 
Association of Women Business Owners, NAWBO, and the immediate 
past president of the NAWBO Capital Area Chapter, it is an 
important part of my work to tirelessly champion minority and 
women entrepreneurs on how they can procure more business 
opportunities, particularly contracting opportunities in the 
Federal Government, and how to lobby small business issues.
    The purpose of my testimony today to is address some 
specific obstacles facing minority entrepreneurs, particularly 
women business owners of color, and offer you some 
recommendations.
    As you know, women business enterprises are a very 
important and vital segment of the small business community. 
What we know is that, according to the National Foundation for 
Women Business Owners, there are nearly 8 million women-owned 
businesses in the United States and they generate $3.1 trillion 
in sales. Now that is an increase from the $2.3 trillion that 
was just released a year ago. What we do know is that women-
owned businesses employ one out of every four company workers, 
a total of 18.5 million employees.
    And while all of this is good news, women still face 
intolerable obstacles, including access to capital, credit 
worthiness, and increased procurement opportunities both in the 
Federal sector and corporate America. For too long, women-owned 
businesses have not received their fair share of Federal 
contracts.
    Most women entrepreneurs of color still have trouble 
maintaining business profitability, managing cashflow, 
maintaining growth, and keeping qualified employees. And the 
single area where women of color are still significantly 
different from Caucasian women is access to capital. Women 
business owners of color are more likely to face greater 
barriers in accessing capital. Specifically, minority women 
entrepreneurs are less likely to have bank credit. Black and 
Native American women business owners are more likely to have 
been turned down for a loan when first starting their 
businesses.
    Now what can you do? Let me recommend the following: Speed 
up the award process for Federal contracts on bids between 
$25,000 and $100,000 and include at least one woman-owned firm 
and one minority-owned firm in the bidding process. And most 
importantly, implement the ``Master Plan.'' And I have a copy 
of that here and I will leave copies. Let me explain.
    Last week, Aida Alvarez, Administrator of the U.S. Small 
Business Administration, commended a new comprehensive plan 
aimed at accelerating the growth of women-owned businesses. The 
Master Plan, as it is called, was formally presented to the 
President and the United States Congress last week. It was 
developed by a diverse group of business, government, and 
academic leaders from across the country, a result of the 1998 
Women's Economic Summit, where more than 550 leaders from 
women's business communities across the country collaborated on 
four key initiatives: financing business growth, marketing 
opportunities, training, leadership and advocacy.
    Four important actions can make a difference now, according 
to the Master Plan. Launch a national women's loan fund, one, 
to lend to women's businesses and fund training programs that 
tie together learning and lending; two, compile a guide of the 
practices and government agencies that have worked to increase 
women's market share; three, form a network of women State 
legislators who are, or have been, women business owners to 
amplify their voice in economic policymaking, and four, conduct 
research to find out what States are doing to invest in women's 
business growth.
    Building an alliance with leaders in the women's business 
community, particularly among women of color, will help build a 
healthy economy and stronger communities for all Americans and 
for our children to come. Doing business with women, doing 
business with women of color, is the right thing to do. Let's 
not just pay continued lip service to outstanding reports like 
the Master Plan; let's be part of putting that plan into 
action.
    Thank you.
    [Ms. Brooks' statement may be found in the appendix.]
    Chairman Pitts. The Chair thanks the lady for her excellent 
testimony.
    We will now turn to Mr. Chip Mellor, President and General 
Counsel, Institute for Justice, Washington, DC. Welcome, Chip. 
You may proceed.

  STATEMENT OF WILLIAM MELLOR, PRESIDENT AND GENERAL COUNSEL, 
             INSTITUTE FOR JUSTICE, WASHINGTON, DC

    Mr. Mellor. Thank you, Mr. Chairman, and members of the 
Subcommittee.
    I am William Mellor, President and General Counsel for the 
Institute for Justice. The Institute for Justice is a 
nonprofit, public interest law firm that represents entry-level 
entrepreneurs across the Nation in lawsuits that seek to remove 
arbitrary barriers to honest enterprise. In the course of my 
work, I have seen firsthand the energies and enormous potential 
for entrepreneurship in the innercities of America. I commend 
and thank this Subcommittee for the opportunity to be here 
today and for the effort you are making in showcasing and 
addressing this vital issue.
    The fight for economic liberty is being waged across 
America in cities large and small. Occupations like taxi 
driving, cosmetology, childcare, commuter vans, hauling, and 
home-based business provide the context. But at its heart, this 
struggle is about real people trying to lead productive lives 
and follow in the tradition of upward mobility pioneered by 
previous generations. They embody the spirit of America and 
serve as a beacon to our future. They deserve nothing less than 
our full support and ask for nothing more than a chance to 
succeed on their own. And make no mistake about it, when given 
that chance, they will succeed.
    However, every day, hundreds of thousands of Americans 
engage in the most massive expression of civil disobedience 
this country has ever seen. They face arrest, fines, and even 
imprisonment as a result of their actions. You won't find them 
on picket lines. You won't find them being hauled away in paddy 
wagons after raucous demonstrations. Instead, you will find 
that, through countless activities and with tireless energy, 
they all seek the same goal. And that is to earn an honest 
living for themselves and their families. But, tragically, they 
do so under laws and regulations of this Nation that make them 
outlaws.
    These hardworking men and women can be treated as pariahs 
under the law of this land because of the total evisceration of 
constitutional and legal protection for economic liberty. 
Smothering economic liberty are countless laws andregulations, 
often in the forms of licenses and permits that arbitrarily foreclose 
and unreasonably condition entry into markets ideally suited to people 
of modest means. At least 10 percent of all occupations in this country 
require some form of license or permit from the government. Most of 
these laws and regulations are created at the State and local level. 
And far too often they have little, if any, relation to legitimate 
public health and safety concerns.
    Under the laws interpreted by the Supreme Court today, 
there is a presumption in favor of government when it comes to 
economic regulation. This Congress should take the lead in 
restoring what our Founding Fathers envisioned in the 
Constitution, and that is the presumption in favor of liberty. 
The burden must be placed squarely on government to demonstrate 
a close and reasonable fit between any legitimate public health 
and safety goal and the regulatory means that government 
employs to achieve that goal. The ends cannot justify the 
means.
    In the aftermath of welfare reform, job creation is an 
overriding national priority. In innercities across America, a 
wellspring of entrepreneurship exists, waiting to be tapped. 
Once released from the shackles of senseless laws, indigenous 
community-based enterprise and employment will play a vital 
role in rejuvenating blighted neighborhoods. And individuals 
will be empowered with greater control of their own destinies 
as free and responsible members of society.
    Thank you.
    [Mr. Mellor's statement may be found in the appendix.]
    Chairman Pitts. The Chair thanks the gentleman.
    And to conclude the panel of witnesses, Mr. Hector 
Ricketts, President, Queens Van Plan, Queens, NY.
    Welcome.

  STATEMENT OF HECTOR RICKETTS, PRESIDENT AND CEO, QUEENS VAN 
                        PLAN, QUEENS, NY

    Mr. Ricketts. Thank you, Mr. Chairman, and good morning to 
the members of the panel.
    My name is Hector Ricketts. I am the President and CEO of 
Queens Van Plan, Inc., which is a commuter van service 
authorized by the State of New York and the New York City Taxi 
and Limousine Commission. I also represent a group of companies 
under the auspices of the Interbar Alliance for Community 
Transportation, which is an advocacy group speaking on behalf 
of men and women who on a daily basis attempt to earn an honest 
living. We do so under the cloud, while the barriers we face 
are similar to those described by the previous speakers. Our 
main concern is the barrier imposed by government--in this 
instance, the barrier imposed by the New York City Council.
    For you to understand the daily problems of this industry, 
which operates 360 authorized, fully-insured commuter vans in 
New York City, by men and women who are licensed to do this 
job, I must take you through the licensing process. Should I 
decide to expand my business, and I attempted to do that in 
1996, I must go through a six-month review process. At the end 
of six months, if there is no response from the government 
agencies, my application is deemed denied.
    I must submit an application, with support statements of 
prospective customers. The Taxi and Limousine Commission must 
then review my background to make sure that I have no criminal 
records, that I am able to provide the service that I have 
described, that there are residents who demand my service, that 
my vans will be fully insured and inspected on a regular basis. 
The New York City Department of Transportation must then do a 
needs study to make sure that my service will not have a 
negative impact on mass transit, which, by the way, is heavily 
subsidized, both public and private bus services. After these 
reviews are done, if the recommendations are favorable, a group 
within the city council, the transportation committee, then 
makes a final decision on whether or not I should be granted a 
permit.
    In my last attempt to apply for a new service, I was 
approved by the Taxi and Limousine Commission and by the 
Department of Transportation, regulatory bodies, but before my 
application got before the city council, the city council 
imposed a one-year moratoria. This, in fact, killed my 
application.
    I have again applied, and hopefully, in a few weeks my 
application will again go before this body. I have no great 
expectation that their positions have changed. My only crime is 
that I provide a cost-effective, safe, reliable service. And 
because of that success, I am deemed an outlaw. My service is 
not subsidized; I receive no Federal grant, neither do the 300 
other men and women who work within this industry.
    My recommendation to you today is to set the pace in 
eliminating government-imposed barriers to folks who simply 
want to earn an honest living in this country. I think 
regulations should be based on safety issues and not on the 
fact that one seeks to compete and compete successfully.
    I thank you for this opportunity.
    Chairman Pitts. The Chair thanks the gentleman.
    The Committee will now proceed to questions from the 
members. We will go in the order of attendance.
    I would like to begin with a question for Dr. Horton.
    Dr. Horton. Yes.
    Chairman Pitts. Can you give the Subcommittee some examples 
of success stories that the new youth entrepreneur curriculum 
has produced?
    Dr. Horton. Yes, I certainly will be glad to.
    I have had the fortunate experience providing specific 
entrepreneurial training to youth who reside in public housing 
across the country. We were a part of a national demonstration 
model which in Philadelphia, with the Philadelphia Housing 
Authority, and in Los Angeles, provided training to 100 youth 
using our curriculum, in which we actually taught these youth 
the mechanics of establishing their own businesses. Out of 
that, there were youth who, after becoming skilled and 
proficient, secured small loans and developed their own 
businesses. This was specifically geared to youth who had 
dropped out of high school, who were primarily between the ages 
of 16 to 24.
    At the other end of the spectrum, I have had the 
opportunity to work with youth in Connecticut who were fifth-
graders; many of the youth came from monolinguistic homes and 
families in which Spanish was the predominate language. We 
provided training to the youth and their parents in 
entrepreneurial education. Again, using the entrepreneurial 
curriculum, those youth who were in fifth grade were able to 
become skilled, proficient. And it also assisted them in 
improving their math and reading scores on State tests. And 
those youth became small entrepreneurs within an educational 
environ.
    We have also worked at the community-based level with 
churches, with local nonprofit organizations, in training staff 
to become proficient in delivering entrepreneurial skills. In 
the Camden City Public School System, we worked with the 
alternative high school in Camden City, as well as with the 
middle school, in training those youth to become young 
entrepreneurs.
    One final point I want to make that I did not include in my 
testimony was that, in addition to publishing the new youth 
entrepreneurs curriculum, you also have a copy of our most 
recent publication which is ``Making Money the Old-Fashioned 
Way,'' a story of Black entrepreneurship in America. And we use 
both this book as well as our developed curriculum material in 
delivering entrepreneurial skills.
    Chairman Pitts. Thank you, Dr. Horton.
    Do you have a system of tracking the small businesses that 
the entrepreneurs start? If you do that, how long do you track 
them?
    Dr. Horton. We do in the city of Camden track those youth 
who take our entrepreneurial training.
    The point that I do want to drive home, however, is this: 
that our ultimate goal is not to measure the number of youth 
who end up becoming entrepreneurs. We look at what we do and 
measure from a kind of inverted cylinder, in which we want to 
provide as many youth as necessary the opportunity to become 
skilled, proficient, because we don't know how many youth may 
ultimately become entrepreneurs. So, over the long run, we want 
to make sure that the skills are imparted. Because it may take 
an individual to become 30 years old to draw back on the 
skills.
    But, yes, we do have tracking information specifically as 
relates to those youth in the city of Camden.
    Chairman Pitts. Thank you.
    I would like now to go to Mr. Ricketts and ask, would you 
please describe the demand for your services in New York?
    Mr. Ricketts. Okay. The service we provide is within the 
outer boroughs of New York City, in low-to moderate-income 
communities. Historically, these communities have been 
underserved by mass transit. Today, mass transit has introduced 
a one-fare zone, which means that the average rider travels 
upon a bus by paying one fare and then would transfer to the 
subway system without paying an additional fare. In spite of 
that, because of the inefficient service within our community, 
thousands of people on a daily basis demand to ride commuter 
vans--because they are reliable, they are safe, they are 
efficient, and in many instances, they provide door-to-door 
service, which is very valuable in a community that is often 
plagued with violence.
    Chairman Pitts. How much of an impact will there be on your 
business if the New York City Council does not reauthorize your 
license?
    Mr. Ricketts. This essentially will eliminate my business. 
My business began in 1983 with the new law in effect. By the 
city council, my business is only authorized for six years. 
Prior to this new law, there was not a limit on my authority. 
At the end of six years, I will have to now prove need and 
necessity. The mass transit has now attempted to flood the 
streets with buses and to provide a one-fare zone, in an 
attempt to derail my existence.
    Chairman Pitts. Thank you.
    The Chair would like to yield to the other members for some 
questions here. The gentlelady from California.
    Ms. Millender-McDonald. Thank you so much, Mr. Chairman.
    I have certainly appreciated the presentations by all of 
the persons here this morning. Certainly, they have been 
insightful, a lot of them repetitive to what we have heard 
numerous times on the impediments to small businesses, and yet, 
we are still at this juncture talking about it and we are not 
moving beyond that point.
    Let me begin with Mr. Ricketts. I was quite moved by your 
presentation, and certainly coming out of local government as 
one of the vice mayors in the city 90,000 strong in California, 
I am concerned about this business that you are trying to 
continue, or did it begin with funding from the local level in 
1983?
    Mr. Ricketts. There has never been any funding for this 
business.
    Ms. Millender-McDonald. I thought I heard that. I just 
wanted to make sure that was correct.
    So what did you do to finance this business of yours, 
before you attempted to get funding from the city?
    Mr. Ricketts. Well, I have never attempted to get funding 
from the city. My problem is with regulations at the city level 
that deem me as an outlaw. This business started as any mom-
and-pop business would. Because of the demand from local 
residents, it grew, to the point we are citywide. This concept 
of transportation provides service for some 60,000 people.
    Ms. Millender-McDonald. And so, it is my view then, as I 
hear this, that perhaps you were doing so good that they wanted 
to perhaps impede your progress, by imposing types of 
regulations. That would certainly do that. Am I correct on 
that?
    Mr. Ricketts. That is totally correct.
    Ms. Millender-McDonald. And so, therefore, the six-months 
review that you sought----
    Mr. Ricketts. Expand.
    Ms. Millender-McDonald [continuing]. For them, through this 
process, and you are telling me that there is no response as to 
whether they approved or disapproved. Are you suggesting this 
to me?
    Mr. Ricketts. Under the local law, 115, if there is no 
response from the licensing agency, my application is deemed 
denied.
    Ms. Millender-McDonald. I mean that is just a common 
courtesy that they should give you to tell you whether they 
have approved this six-month review or not.
    Then you make the second attempt, and again they have put a 
one-year moratorium?
    Mr. Ricketts. The one-year moratorium ended in October of 
1998.
    Ms. Millender-McDonald. But as you began to again attempt 
to follow up on this inability to hear from them----
    Mr. Ricketts. I am now waiting.
    Ms. Millender-McDonald [continuing]. They imposed this 
moratorium?
    Mr. Ricketts. No. The moratorium ended in 1998 of October.
    Ms. Millender-McDonald. Okay, fine.
    Mr. Ricketts. I then submitted a reapplication and I am now 
waiting.
    Ms. Millender-McDonald. Okay, fine. All right. Well, I sure 
hope that they do not impose another moratorium. I know what 
that means, coming out of local government. It means that they 
are trying to stagnate and absolutely circumvent your getting 
whatever it is you are trying to get. I would like to have you, 
Mr. Ricketts, talk to me about this litigation, this particular 
issue and situation, that you are now asserting that the laws 
in question unconstitutionally restrict your ability to earn a 
decent living and deny residents access to adequate 
transportation. This is litigation. Are you amenable to talk 
about this, or is this litigation that you can not speak about? 
And perhaps, Mr. Mellor, can you comment on this as well?
    Mr. Ricketts. I am represented by the Institute of Justice; 
the President is Mr. Mellor. He is here. I think it is a 
question he could best answer.
    Ms. Millender-McDonald. Okay, Mr. Mellor.
    Mr. Mellor. I would be delighted to answer that, 
Representative Millender-McDonald. This is the lawsuit that we 
filed on behalf of Hector Ricketts and a number of other 
commuter van operators, as well as the Interborough Alliance 
for Community Transportation. And it is designed to protect 
their right to economic liberty, and the service that they 
provide to the 60,000 people a day that Hector described.
    The claims are as follows: One, that the city council acted 
without legal authority under the laws of New York State when 
it passed a moratorium freezing all applications. Two, that the 
city council does not have the authority that it has given 
itself to exercise arbitrary and unilateral veto over every 
single application for a new commuter van. Three, that the 
privileges or immunities clause of the U.S. Constitution 
protects the rights to economic liberty and that has been 
usurped by the laws affecting commuter vans in this instance. 
The lawsuit is currently pending before the Supreme Court of 
New York State, which happens to be the trial court.
    Ms. Millender-McDonald. What kind of court?
    Mr. Mellor. It is called the Supreme Court, but it is 
actually the trial court level in New York State. The case has 
been fully briefed and argued and is awaiting decision.
    Ms. Millender-McDonald. Question to you Mr. Mellor: Do you 
think Congress should overturn State and local laws pertaining 
to health and safety? And what is the proper line of 
demarcation between Federal, State, and local laws in this 
area? Thirdly, can Congress constitutionally require State and 
local governments to demonstrate a close and reasonable fit 
between any legitimate public health or safety goal and the 
regulatory means government employs in this process?
    Mr. Mellor. I do not think it is the role, constitutionally 
or appropriately, of Congress to overrule legitimate exercise 
of public health and safety legislation at the local level. 
However, under the 14th Amendment, and specifically section 5 
of the 14th Amendment, which gives Congress authority to 
enforce the provisions of that amendment, to the extent this 
Congress recognizes economic liberty as a civil right, as I 
hope it will, it does have the authority to require that those 
civil rights be protected at the local level, and that 
arbitrary laws not be used to deny the exercise of that civil 
right. In fact, we have one example right now, if I may just 
digress for a moment to illustrate.
    In southern California, in Federal Court there in southern 
California, we represent a number of African hair-braiders, 
including Joanne Cornwell, who is the chair of the Africana 
Studies Department at San Diego State University. We have been 
joined in this effort by the Urban League.
    Ms. Millender-McDonald. I am familiar with that one in San 
Diego.
    Mr. Mellor. Yes. In this instance, the laws of California 
imposed upon potential braiders, require that they attend 
cosmetology school for 1,600 hours of training, which is almost 
entirely irrelevant to the art of African hair-braiding. And 
our argument there is, again, the ends have to justify the 
means. This is really a barrier to entry, totally unrelated to 
the occupation that is being pursued, and that kind of law 
simply must not stand in the face of constitutionality.
    Ms. Millender-McDonald. Interesting.
    Mr. Chairman, I would like to think that these lights that 
are going on and off will not pertain to this member, in that I 
do have questions that I need to raise that are very important 
and very pertinent to our trying to deliberate and get down to 
the really core of the issues here.
    I would like to say to Mr. Ricketts, that you should seek 
CBDG grants at the local level. Because those are really for 
and have been used during the time I was on city council, 
serving in my capacity for types of transportation, or, at 
least, I think proposition A grants, or whatever grants that 
are deemed important through gas taxes. Those should be the 
taxes that you should go after in terms of getting grants and 
funding for your business. And good luck to you.
    All I can say to Sheila Brooks, you know I tell you, these 
glasses I have to look at for reading, but I can't see a thing 
if I am looking out over.
    Sheila Brooks, all I can say to you is just kudos. You gave 
an outstanding presentation. I have worked with you numerous 
times.
    Mr. Chairman, you might know that Sue Kelly and I convened 
the first hearing of women-owned businesses to get down to the 
crux of the impediments of women-owned businesses. Because we 
do recognize that if we are going to move women and men from 
welfare to work, this will be the conduit by which it happens. 
It will be those 8 million women-owned businesses that we 
provide in this country, but we also must make sure that they 
have access to capital as well as the procurement contracts by 
the Federal Government. I do have a bill that I am introducing 
that will speak to that as well.
    So, Ms. Brooks, all I can say to you is thank you, continue 
to work with us as we move the agenda for small businesses.
    Ms. Brooks. Thank you, Congresswoman.
    Ms. Millender-McDonald. Ms. Simpson, I appreciate your 
coming, and certainly you had me thinking that maybe I should 
move to South Carolina, given the climate that your talking 
about. [Laughter.]
    It certainly has the ambiance that you spoke of.
    I am in agreement with you that we can talk about all of 
the businesses that we create, develop, but when you have 
receipts of $38,000, even the national level of $52,000, you 
are not going to succeed nor are you going to survive, for 
heaven's sake. Because of the necessity of having some access 
to capital that will certainly provide you the type of 
livelihood that you should have and also the creation of jobs 
that should be done. I appreciate your saying that to develop 
jobs would provide the jobs, add to the tax base, and serve as 
role models to our children, albeit African-Americans, Latinos, 
Asians, poor whites, or whatever we are talking about. We are 
just talking about improving the quality of life for people in 
small communities.
    I wanted to ask you a question here. When you had this 
minority participation task force, did it provide the type of 
incentives, the types of programs, the types of interaction 
with the private sector that you deemed important enough to 
drive small businesses to levels of success?
    Ms. Simpson. It did, in the sense that it provided, or it 
showed that, the leadership of the community was concerned 
about the problem.
    Ms. Millender-McDonald. Leadership being that of elected 
officials and/or?
    Ms. Simpson. Business leadership.
    Ms. Millender-McDonald. Okay, fine.
    Ms. Simpson. The business leadership saw this as an 
important issue at that time. Because these were high-profile 
large projects, there was a real concern that at the end of the 
day that everyone would feel postive about what had happened 
with these projects. And the leadership decided that they would 
work closely with the public bodies, and in the case of the BMW 
project, with the State, to ensure that all efforts were being 
made to identify and use minority contractors.
    Again, I have to go back to say that it had to be the 
leadership. In many cases, the tone is set by the business 
leadership and the governmental leadership of any community. So 
the tone had to be set. And once the tone was set, many of the 
purchasing agents, many of the people who worked for these 
businesses, knew that this was a priority and they got on about 
the business of making sure that we found minority contractors 
to work on these projects.
    Ms. Millender-McDonald. Let us see, you are saying the tone 
is set by that of local or State-elected officials.
    Ms. Simpson. And the business leaders.
    Ms. Millender-McDonald. And so, that had to be tweaked 
some?
    Ms. Simpson. Yes.
    Ms. Millender-McDonald. According to the complaints about 
regulations, that usually means either two things: that the 
party complaining does not agree with the legislature's 
determination in this area of the regulatory process, or that 
the agency has gone further than the legislature intended for 
it to go in regulating a given activity. Do you have an opinion 
on how frequently it is for the former, or often the latter, in 
terms of the regulatory system?
    Ms. Simpson. It has been my view, especially with regard to 
one particular example, and I will cite that, in some cases, 
the regulatory agency may go a little bit too far. Let me give 
you an example.
    The Small Business Administration has a program for loans 
for small businesses. In the past few years, the SBA amount 
that is required from the lender has gone up tremendously, from 
the point where, for a $700,000 project, the SBA fee may be as 
much as $30,000. What normally happens, then, is that is passed 
on to the borrower. And you are finding many lenders now who 
are saying that this is a constraint to their being able to 
provide funding through SBA to the borrowers. So, it was well-
intended; the fee, I am sure, had to be used to cover 
administrative costs. But when you gradually increase the fee, 
what happens is that it adversely affects the small or minority 
business owner.
    Ms. Millender-McDonald. Of course it does.
    Do you think that the agencies generally are better or 
worse off then the Federal agency, local and State?
    Ms. Simpson I think in many cases the agencies--when you 
say, ``agency,'' you are talking about the businesses?
    Ms. Millender-McDonald. Yes.
    Ms. Simpson. In many cases, unless there is a monitoring of 
the situation, sometimes the business can be worse off. 
Oftentimes, when a business receives a loan, they need all of 
the dollars; they don't need $30,000 to go towards SBA fees. So 
in many cases, they are worse off.
    Ms. Millender-McDonald. Thank you so much.
    And the last person is Dr. Stella Norton.
    Dr. Horton. Horton.
    Ms. Millender-McDonald. Dr. Horton. Well, they have 
``Norton here,'' and I know I am looking at my glasses right. 
Dr. Horton, you stated that you have gone to public housing. 
Certainly, that is my area in the Los Angeles part of my--in 
fact, some of the other parts of my district. But Watts is one 
of the areas that I represent.
    First of all, have you been there, and have the 100 youth 
whom you have given this type of technical and skillful 
training been a part of Los Angeles youth?
    Dr. Horton. Yes. The youth that we provided the 
entrepreneurial training to were the youth who lived in Los 
Angeles. Now the housing authority's staff were responsible for 
identifying the youth who were the participants in the 
program.So, Congresswoman, I cannot tell you exactly.
    Ms. Millender-McDonald. I agree with you that you need an 
organized, systematic way to teach entrepreneurship, but when 
we teach this, and especially to our youth and they become 
skilled, what means do you have and what track record can you 
tell me that parlays from their skillful and learning ability 
to businesses that will employee them, whereby that will then 
be utilized and improved upon?
    Dr. Horton. Right. Let me begin by saying, in addition to 
providing the entrepreneurial skills, EDTEC also provides a 
revolving loan fund. Because in order for youth to become an 
entrepreneur, there must also be some capital available for 
that youth to draw upon. Not to give, but to provide as a 
revolving load fund so that that youth, once he or she becomes 
successful, can begin to put back into that loan fund, and the 
free enterprise system in America works not only with the 
adults, but also with the youth. And we do have youth that we 
can demonstrate have been part of this lending system, have 
actually borrowed, have started their businesses, and have in 
fact paid back. And I would cite----
    Ms. Millender-McDonald. Let me just interrupt for just a 
second, please, ma'am. Is this the ages between 16 and 24, we 
are talking about?
    Dr. Horton. That is right.
    And we have data that we can demonstrate youth as young as 
14.
    What we did in the mid-and late 1980's, we used youth who 
were in fact through what was then CETA, became JTPA. Rather 
than put those youth to work and endorse the concept of 
cleaning up the city street, we actually identified each summer 
between 40 and 60 youth in Camden, NJ, that we would provide 
classroom training in entrepreneurship education. Those youth, 
14, and we asked specifically, we went to the middle school, 
and we asked for youth between the ages of 14 and 15, because 
these were the youth that were the hardest to place with JTPA. 
We provide those youth with a summer curriculum. We went to the 
universities and to the community colleges; they allowed us to 
use their classrooms and space. Then we took those youth, 
aligned them with mentors. Then we provided again a revolving 
loan fund for those youth, because those youth who have gone 
through the JPTA training also received a stipend. They then 
became partners in an entrepreneurial venture, and we had youth 
vendors on the city streets of Camden. And sometimes it took an 
older vendor to agree to allow the youth to work with him or 
her in order to address the licensing and permit requirements. 
And those youth were able to develop businesses, such as 
purchasing school supplies.
    And I do know a private school, in particular, that I am 
associated with, purchased their school supplies from a youth 
that had been trained at EDTEC during the summer months. We 
also had youth who would set up Italian ice water/pretzel 
businesses. Those youth have continued. I have an example of 
the youth by the name of David, who moved from the age of 14, 
when he came by to see us, I guess, six or seven months ago, 
and David is now 29 years old. David moved from selling water 
icee and pretzels to getting a hotdog cart to now in Atlantic 
City he has his own fleet on the boardwalk transporting youth.
    Ms. Millender-McDonald. That is excellent.
    I have just one more question, Mr. Chairman, and I 
certainly do appreciate your indulgence.
    This is my first time as a ranking member. I see that we 
are going to work well with this chairman, who is very 
sensitive. But I just want to raise one more question.
    You know, summer youth program is really faltering and when 
we see this, we are busy trying to, here in Congress, make sure 
that we have money for summer school programs--or summer youth 
program, I should say.
    What has been your experience with regard to Federal 
efforts to encourage more entrepreneurial training and exposure 
among our young people? And what has been your means of Federal 
assistance, given your web page talks a lot about your being 
involved in HUD?
    Dr. Horton. Well, I am so glad to report that we have been 
able to gain support for what is the Future Entrepreneurs Act. 
And we feel that this legislation----
    Ms. Millender-McDonald. Is this something that is going 
through the pike now?
    Dr. Horton. Well, yes, it is. And this piece of legislation 
is sponsored by Representative Dennis J. Kucinich of Ohio. 
There are several co-sponsors of this legislation, and they 
are, of course, bipartisan supporters there. And what this bill 
will do is establish a national program to provide Federal 
resources to schools and local agencies, to teach 
entrepreneurship skills to the junior high and high school 
students. And it is, hopefully, going to be operated by the 
Department of Education and funded at a cost of $60 million per 
year. And we do have a summary of that bill attached to our 
testimony.
    So in response to the question, madam, what I would suggest 
is a challenge for this Subcommittee may actually be for you to 
sponsor similar legislation. Because it is through these kinds 
of efforts that our youth will then become truly skilled in 
those entrepreneurial skills that are necessary. And that is 
part of our request to you.
    Ms. Millender-McDonald. Thank you, Mr. Chairman.
    Chairman Pitts. The Chair thanks the lady for her excellent 
line of questioning.
    At this time, I recognize the gentleman from South 
Carolina, Mr. DeMint.
    Mr. DeMint. Thank you, Mr. Chairman.
    I will ask the witnesses to work with me a minute, to maybe 
solve what I think is one of the key problems in trying to come 
up with some ideas that we could move forward. There have been 
mentions, Ms. Simpson, of ideas like tax credits for private 
businesses that use minority contractors. We have talked about 
perhaps set percentages or some way to encourage the Federal 
Government to use minority contractors. And I think this is 
something that is important that we try to figure out how to 
make it work.
    As you know, a lot of the debate on this is going be, 
should we set aside some kind of quota? Or should we give tax 
credits just based on race or gender? And the same at the 
Federal level, should we give contracts just based on race or 
gender? I am particularly sensitive to that myself, and as you 
know, people in business are generally very resourceful or they 
would not be in business.
    And when I first started my business and tried to get some 
State and Federal contracts myself, I found that a lot of my 
male friends, who had businesses that I was competing with, 
just simply put their businesses in their wives' name to get 
contracts. And it worked very well. I never got any myself. My 
wife didn't want to have anything to do with it.
    But, what I would like to consider with you is, are there 
different criteria that would accomplish the same thing? As we 
have talked about minority businesses, I think it is clear, 
particularly minority start-up businesses, can be defined as 
small in size, small sales numbers, as well as the length in 
business being a short period of time.
    Ms. Brooks, I would assume that your business is far enough 
along that it may not need to have some special requirement in 
order to get contracts, while it may be different for someone 
who has just been in business a year or two. But my question 
is, could we establish criteria for some of these ideas that 
were based on the size of the company and the start-up status--
meaning being in business five years or less, $100,000 sales or 
less? That would help, in addition to women-owned businesses, 
minority-owned businesses, would also help other, perhaps 
others that don't have those specific criteria, start too.
    And if we could do that, I think these type of ideas could 
move through quickly and I think would accomplish a lot of what 
we are talking about for women and minority-owned businesses, 
but might also help some other businesses in need that might 
not fit those requirements. And I just wanted to hear some 
comments about different criteria that might be more acceptable 
to a broader range of folks.
    And Ms. Simpson, you may want to comment, and I would 
certainly like to hear from Ms. Brooks, too.
    Ms. Simpson. I think we can start with the premise that the 
main goal here is to level the playing field; to make sure 
that, when all is said and done, we can say that everything has 
happened in an equitable manner. As long as you have a 
situation in which all small businesses have an annual income 
of $100,000 and you look at minority businesses at $52,000, I 
think we can say that the playing field is not level yet. And 
because of that, unless we can come up with a better way--and I 
agree with you, there may be some other option to use; I am not 
aware of one. Because the numbers speak for themselves. If we 
look at the idea of disadvantaged businesses and define that, 
that might be another approach.
    But until we can look at both sectors, the total small 
business sector and the minority business sector, and see a 
coming together of that average annual income, we are going to 
have to have special projects and special efforts in order to 
make that happen, to level the playing field. I guess what I am 
saying right now is that the playing field is not level yet, 
and until we can come up with a better measurement, it has to 
be minority-business-driven or disadvantaged-business-driven.
    Mr. DeMint. And how would you define disadvantaged? I mean, 
I know I felt disadvantaged when I started, but you may not 
have considered me that way. [Laughter.]
    Ms. Simpson. There are varying ways to define 
disadvantaged. It might very well be the average annual income 
of a company. It might very well be the fact that it is a 
minority business. It might very well be a company that has 
been in existence less than two to three years. Right now I am 
not prepared to say what a definition should be. But I do think 
that those options need to be taken into consideration and, 
yes, race does have a part in it.
    Mr. DeMint. I agree.
    Ms. Brooks.
    Ms. Brooks. Thank you. Thank you, Ms. Simpson. I think you 
really put in perspective some of the criteria that needs to 
happen.
    But I must go back to the award process for Federal 
contracts. And I think that is where this all begins. When we 
are talking about procuring contracts for minority- and women-
owned businesses--and I think that the criteria has to be begin 
there--when there is a bidding process on contracts at a 
certain level, and I mentioned in my testimony the $25,000 to 
$100,000 level, that there has to be some kind of requirement 
or criteria whereby at least a minority-owned business person 
and a woman-owned business person is a part of that process.
    When that does not happen, what happens is that contracts 
are awarded to those companies that have been doing business 
with those Federal Government agencies for years. Contracts are 
awarded to those companies whereby you have friends and 
colleagues within those Federal Government agencies who ensure 
that you, as a business person, get your fair share of the 
contracts. And that leaves out minority- and women-owned 
businesses. I have seen it happen, because it has happened to 
me.
    Mr. DeMint. Would we get part of that if we had a 
requirement for certain number of businesses that have been in 
business for less than five or three years? Certainly, that 
would get part of that problem, wouldn't it, of just picking 
your old friends?
    Ms. Simpson. I think we would then be operating under the 
understanding or the feeling that, if you have been in business 
more than five years, you are no longer disadvantaged. That is 
not the case--that is not the case. In many cases, you have 
struggling businesses that have been in business 5, 10, 15 
years. So, I don't know if we can use that as an option.
    I do agree that in many cases, if you look at the companies 
that have received contracts, there are normally the same 
companies over and over again. It is very difficult to get 
through this whole maze called Federal contracting. That is 
done--even if you do it at the local level, you find some of 
the same companies again and again and again. So, I am not 
quite sure that we can put a time limit on the history of the 
company as a ``disadvantaged'' definition. It goes beyond that.
    I am not so sure in many cases it can be legislated other 
than through regulations to those who make the decision. You 
can develop a law, but it really boils down to how people 
interpret the laws and whether or not there is that sensitivity 
there and their commitment to open the playing field or level 
the playing field. So it goes just beyond the laws themselves. 
And that is why I continue to say, you have got to make some 
changes nationally, but also locally.
    Mr. DeMint. I agree with you to make some changes, 
something that would move us in the right direction. And I 
think the problem we have is I don't think we are going to sell 
quotas to the Congress for Federal contracts; I may be wrong.
    Ms. Millender-McDonald. It is unconstitutional, anyway, so 
you can't do that.
    Mr. DeMint. So, what can we legislate or what should we 
legislate? I know a part of it you mentioned, Ms. Simpson, is 
certainly the local business voluntary efforts to make this 
thing work.
    And what we are looking for here today is, is there a role 
for the Federal Government and are there some things we can do 
that are not discriminatory, that are not unconstitutional, 
that could improve the situation?
    Ms. Simpson. The major recommendation I would have along 
those lines, again, goes back to providing incentives to do the 
right thing. And I think that is as simply as I can state it. 
We need to provide those incentives to those Federal 
contractors to stop doing business as usual and to look beyond 
the traditional ways of purchasing and to be creative and to 
offer advantages to them to do that.
    Mr. DeMint. Okay. Great. Thank you.
    Ms. Brooks. And I might add that those people that Ms. 
Simpson is talkingabout are your contractors, are your 
contracting officers, not your small and disadvantaged business 
utilization representatives, not your obstacles, not any of the other 
intermediaries that are within the Federal Government agencies. But it 
is those contracting officers who are awarding the contracts.
    Mr. DeMint. Agreed. Thank you.
    Thank you. That is all, Mr. Chairman.
    Chairman Pitts. The Chair thanks the gentleman.
    I don't know if you are familiar with the American 
Community Renewal Act, but that is legislation that has been 
put in primarily by J. C. Watts and James Talent. I think that 
it provides capital gains tax relief. It increased its 
expensing wage credits, brownfields relief, and tax and 
regulatory relief to economically-distressed communities that 
are defined in this act. You might want to explore that to see 
if that would be helpful to you.
    The Chair now recognizes the gentleman from Kansas, Mr. 
Moore.
    Mr. Moore. I don't have any questions, Mr. Chair.
    Chairman Pitts. All right. Thank you.
    Ms. Simpson, aside from tax credits that you advocated in 
your--oh, I am sorry.
    Ms. Tubbs-Jones. I am Stephanie Tubbs-Jones. I would like 
to be heard, please.
    Chairman Pitts. The Chair recognizes the lady.
    Ms. Tubbs-Jones. I don't believe we have ever met, sir. So 
that is a dilemma we have here. Let me introduce myself. 
[Laughter.]
    Thank you, Mr. Chair.
    And, ladies and gentlemen, I apologize, I am going to be 
briefer than I would have liked to have been because I have 
another commitment. That is what coming to Congress seems to 
bring to you. And as a new Member of Congress, I am struggling 
to try to do all the things they want you to do within the same 
hour.
    But I will, first of all, say thank you very much for your 
testimony this morning. I am a new Member from Cleveland, OH. I 
am the successor to Congressman Louis Stokes, who is very much 
an advocate for minority businesses. For the record, I want to 
be heard in saying that I struggle, having been EEO officer for 
the Northeast Ohio Regional Sewer District back in the 1970's, 
having been both a judge and prosecutor prior to coming to 
Congress, with the concept that some of us can't get to, that 
there is a continual need to deal with past abuses of 
discrimination in the economic business development area in our 
country. We all recognize that we have a Supreme Court who has 
made a decision that minority setaside programs have some 
problems, but the reality is that, as a Nation, we still 
struggle to provide equal access and opportunity for economic 
development in our country.
    I believe, before I ask you a few questions, that what it 
is going to take is a President, a Vice President, and a 
Congress, be they Democrat or Republican, that will open their 
eyes to discrimination in our country; that will set the 
standard and say morally it is appropriate for African-
Americans and Latinos and other economically-disadvantaged 
people to have an opportunity to have a piece of pie that we 
all enjoy, and that we must provide incentives to do so.
    I also want to say, Ms. Brooks, you are the young woman who 
just received an award from SBA this year in the last month or 
so for the work you have done in your business. I want to just 
put that in our record and congratulate you again.
    Ms. Brooks. Thank you, Congresswoman.
    Ms. Tubbs-Jones. Let me start with Dr. Horton. With the 
program you have for educating young people. How is EDTEC 
funded?
    Dr. Horton. EDTEC is, first of all, a for-profit minority 
enterprise, and at this time, if I may yield, the partners are 
here, if I could ask them to please articulate----
    Chairman Pitts. Would you please identify yourselves as you 
speak, please?
    Mr. Waters. My name is George Waters.
    Mr. Bocage. Aaron Bocage.
    Mr. Waters. We do all of our work through contracts with 
cities and local government, State government and Federal 
Government. We have several contracts with HUD where we do 
economic development entrepreneurship training. We have also 
done some training in Cleveland and Lakeview, and a very 
successful youth entrepreneurship program.
    Ms. Tubbs-Jones. Lakeview Terrace. At CMHA. Okay.
    Mr. Waters. We worked there for years. We have a long track 
record working there with the local HUD office, Rita Robinson 
and others.
    Basically, since 1985, Aaron and I have been on this 
mission to push for universal entrepreneurship education.
    Ms. Tubbs-Jones. What would open additional doors for you 
to be able to do increase your mission or meet your mission?
    Mr. Waters. I think for years we have struggled trying to 
convince different groups the importance of this. I think it is 
now time to start institutionalizing some of these concepts so 
that all kids can be exposed. That is why we are looking at 
working with legislators around making sure that, within 
schools and outside of schools, all young people have an 
opportunity to be exposed. Because, in our 15 or 16 years, we 
have not been able to predict who is going to be successful, 
but we think the best solution to that is to expose as many and 
train as many as possible.
    And we thank you for the opportunity just to be here today 
to speak, because 15 years ago we could not get anyone to 
listen to us.
    Ms. Tubbs-Jones. Understood.
    Ms. Taylor. If I may, my name is Pam Taylor, and I am in 
the Washington office of EDTEC. We, just last May, opened a 
Washington office because of this great need to get the 
legislation moving. And I wanted to tell the Committee that the 
Future Entrepreneurs Act of America was introduced in the 105th 
Congress. It had not been reintroduced, and we could use your 
help.
    Ms. Tubbs-Jones. The chairman and I have already begun to 
talk about it.
    Ms. Taylor. Thank you very much. I just wanted to say that 
and get it on record.
    Ms. Tubbs-Jones. For the record, I want to make one 
additional commentary. The other thing that just scares me to 
death is the fact that our Congress and our Nation has failed 
to recognize the reason women businesses have been so 
successful is because of affirmative action programs and 
setaside programs. And all they did is to look at the advantage 
it has given to women businesses to see what advantage it would 
give to minority businesses. And instead of being afraid of 
they are missing out on, it is being happy about the success 
that others in the community are enjoying, as a result of these 
various programs.
    I want to go back real quickly to Ms. Brooks. We were 
discussing the other day in a CBC meeting some issues with 
regard to access for businesses such as yours, and two 
opportunities in the Federal sector in communications and 
advertising, transportation, et cetera.
    Can you, for a moment, just suggest some of the blocks that 
have been put in your way in terms as minority business in 
communications?
    Ms. Brooks. In the communications area specifically, I 
think one of the problems has been the regulations, the size 
standards. For example, in the video production area, the size 
standard is $21.5 million, which is extremely high for a small 
business, particularly in television and video production. The 
largest production company in this area in the last year, which 
is in Washington, DC, happens to be one of the fastest-growing 
areas like New York and California, only had revenues of a 
little more than $10 million. It is very tough to compete with 
the size standards in the FAR so high.
    One of the other things, particularly in the communications 
area, is that we face marketing, advertising, video production, 
the competition from the big boys, as you speak. The large 
publication relations and advertising companies whose mission 
is to have long-term media campaigns, and a part of that, a 
small part of that includes the job that we do. So we are cut 
out of those contracts. Because your Young and Rubicam, your 
larger advertising and public relations firms out of New York, 
Chicago, California, can certainly ably compete for those 
larger multimedia campaigns which close out some of us smaller 
companies. And with the bundling of contracts, it does not help 
at all.
    And I just want to say for the record, for the gentleman 
particularly who left, yes, I have been in business nine years 
in June. Yes, I am an 8(a) company. Yes, I am a minority-owned 
and woman-owned firm. But in four years in the 8(a) program, I 
have had one small $70,000 contract. I have worked the Federal 
Government from the competitive end. More than 70 percent of my 
business is Federal contracts. And I won those contracts 
successfully competitively, not just from the setasides. And I 
want to make mentioned of that because I think it is important. 
Because what it says is that if minority- and women-owned 
businesses were given an opportunity, we could excel even more. 
In the last six months, that has more than quadrupled, but it 
has taken a lot of hard work.
    Ms. Tubbs-Jones. Mr. Chairman, my last question: Mr. 
Ricketts, I don't know if you saw the young boy that was seated 
here with his dad that came in with me. He is a businessman out 
of Cleveland, Ohio, and he wrote me this note, and I wanted to 
read it in the record to you.
    He said, ``Congresswoman Jones, this kind of thing is not 
just a New York City issue. Cleveland artificially and severely 
restricts the number of taxis in the city. The licensing 
requires a limited number of cabs replacing old ones, et 
cetera. How many entrepreneurs, many of whom would be minority, 
are kept from being one-person cab companies? What if a 
restaurant owner or lawyer needed a special permission just to 
open up? Safety permitting is fine, but these laws shelter the 
existing cab companies and public transportation from 
competition, and thereby, stifles minority entrepreneurship.''
    I figured that you would share those words. But not that it 
makes it any better for you in New York City, that it is 
happening in Cleveland, but just for the record that someone 
was here. And I didn't put his name in the record because he 
didn't give me permission to do so--only because of that.
    What I want to close with is to encourage you to stay 
vigilant. You know, one of the dilemmas that we face in our 
struggle is that people forget the struggle is constant, and 
that we have to continue to be vigilant in our efforts to 
assure that minority businesses have an opportunity to be 
successful in this country.
    As I said, I am new to Congress, and I am so pleased to 
have an opportunity to serve on Small Business as well as 
Banking. And it is my goal to attempt to assist minority in my 
service in Banking and Small Business.
    I have no further questions, Mr. Chairman. I thank you for 
this opportunity, and it is not that I don't think you are 
important, but I have got one more place to go. So I am going 
to excuse myself.
    Mr. Chairman, thank you so very much for this opportunity.
    Chairman Pitts. The Chair thanks the lady.
    Are there any other questions from the members?
    [No response.]
    If not, the committee thanks the panel of witnesses for the 
excellent testimony we received this morning. We thank you for 
the recommendations.
    The Chair will hold the record open for five legislative 
days for any additional information that you may submit. You 
have given us a lot of information and we will take your 
recommendations under advisement.
    The Chair yields to the ranking member.
    Ms. Millender-Mcdonald. Just to say thank you again for 
such an important hearing and such outstanding witnesses. And 
thank you for your sensitivity for our long-winded questions.
    Chairman Pitts. That is perfectly all right.
    One closing comment.
    Ms. Mellor. Just a quick comment. I apologize for the 
little flurry of activity here; I was handed a note by the 
staff earlier. A call from our office came in saying that we 
just won the lawsuit up in New York City on behalf of the 
commuter van operators.
    [Applause.]
    Chairman Pitts. Congratulations. Good way to end the 
hearing.
    Thank you very much. This hearing stands adjourned.

    [Whereupon, at 11:45 a.m., the Subcommittee was adjourned.]




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