[House Hearing, 107 Congress]
[From the U.S. Government Printing Office]



 
      NATIONAL SMALL BUSINESS WEEK: SMALL BUSINESS SUCCESS STORIES
=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION
                               __________

                      WASHINGTON, DC, MAY 8, 2002
                               __________

                           Serial No. 107-56
                               __________

         Printed for the use of the Committee on Small Business








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                      COMMITTEE ON SMALL BUSINESS

                  DONALD MANZULLO, Illinois, Chairman
LARRY COMBEST, Texas                 NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado                JUANITA MILLENDER-McDONALD, 
ROSCOE G. BARTLETT, Maryland             California
FRANK A. LoBIONDO, New Jersey        DANNY K. DAVIS, Illinois
SUE W. KELLY, New York               BILL PASCRELL, Jr., New Jersey
STEVE CHABOT, Ohio                   DONNA M. CHRISTENSEN, Virgin 
PATRICK J. TOOMEY, Pennsylvania          Islands
JIM DeMINT, South Carolina           ROBERT A. BRADY, Pennsylvania
JOHN R. THUNE, South Dakota          TOM UDALL, New Mexico
MICHAEL PENCE, Indiana               STEPHANIE TUBBS JONES, Ohio
MIKE FERGUSON, New Jersey            CHARLES A. GONZALEZ, Texas
DARRELL E. ISSA, California          DAVID D. PHELPS, Illinois
SAM GRAVES, Missouri                 GRACE F. NAPOLITANO, California
EDWARD L. SCHROCK, Virginia          BRIAN BAIRD, Washington
FELIX J. GRUCCI, Jr., New York       MARK UDALL, Colorado
TODD W. AKIN, Missouri               JAMES R. LANGEVIN, Rhode Island
SHELLEY MOORE CAPITO, West Virginia  MIKE ROSS, Arkansas
BILL SHUSTER, Pennsylvania           BRAD CARSON, Oklahoma
                                     ANIBAL ACEVEDO-VILA, Puerto Rico
                      Doug Thomas, Staff Director
                  Phil Eskeland, Deputy Staff Director
                  Michael Day, Minority Staff Director









                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 8, 2002......................................     1

                               Witnesses

Carroll, Richard, Digital System Resources, Inc., Falls Church, 
  VA.............................................................     8
Berg, Gene, Austin/Westran, Byron, IL............................    10
Espat, Roberto, Roses Southwest Papers, Inc., Albuquerque, NM....    12
Bartoletta, John, High Street Financial Group, Tampa, FL.........    12
Francis, John, Northern Virginia Roofing, Inc., Falls Church, VA.    14
Kuntz, Donald, Fine Print of Grand Forks, Grand Forks, ND........    15
Shore, Billy, Community Wealth Ventures, Washington, DC..........    17
Siccardi, Frank, Coenco, Inc. Fayetteville, AR...................    18
Guadarrama, Belinda, GC Micro Corporation, Novato, CA............    19
Burkhartsmeier, Brenda, Mountain Mudd & Mountain Manufacturing, 
  Billings, MT...................................................    21

                                Appendix

Opening statements:
    Manzullo, Hon. Donald........................................    28
    McDonald, Hon. Juanita Millender.............................    32
    Christensen, Hon. Donna M....................................    36
    Ross, Hon. Mike..............................................    39
Prepared statements:
    Carroll, Richard.............................................    40
    Berg, Gene...................................................    46
    Espat, Roberto...............................................    47
    Bartoletta, John.............................................    49
    Kuntz, Donald................................................    70
    Shore, Billy.................................................    74
    Siccardi, Frank..............................................    91
    Guadarrama, Belinda..........................................    92
    Burkhartsmeier, Brenda.......................................    94
Additional Information:
    Submission by John Bollinger, Deputy Executive Director, 
      Paralyzed Veterans of America..............................    98




      NATIONAL SMALL BUSINESS WEEK: SMALL BUSINESS SUCCESS STORIES

                              ----------                              


                         WEDNESDAY, MAY 8, 2002

                          House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 2:40 p.m. in room 
2360, Rayburn House Office Building, Hon. Donald Manzullo 
presiding.
    Present: Representatives Velazquez, Millender-McDonald, 
Ross, and Thune.
    Chairman Manzullo. Good afternoon. This afternoon the Small 
Business Committee conducts a hearing in conjunction with 
National Small Business Week to recognize several small 
businesses that embody the spirit of entrepreneurship. 
Specifically, the Committee will receive testimony from several 
small businesses who have grown their businesses with the 
assistance of the Small Business Administration. Additionally, 
this hearing will enable the participants to promote their 
successes in the industry in which they have engaged.
    Each year for the past 39 years, the President of the 
United States has issued a proclamation calling for the 
celebration of Small Business Week. This year, National Small 
Business Week, which is sponsored by the Small Business 
Administration [SBA], is being held from May 5 through 11, 
2002.
    Historically, small businesses have been the catalyst for 
economic growth. From 1990 to 1995, one of our nation's most 
impressive economic growth cycles, small businesses created 
three-fourths of the new jobs. Overall, small business accounts 
for 99.7 percent of the nation's employers, employing 53 
percent of the private work force, contributing 47 percent of 
all sales in the country, and is responsible for 50 percent of 
the private gross domestic product.
    Small businesses also play an integral role in helping to 
solve some of the nation's most complex problems. For example, 
with the onslaught of the War on Terrorism, a number of small 
businesses have provided valuable technical assistance to the 
Department of Defense. Additionally, because small businesses 
are the heart of specific communities, they are also attuned to 
the challenges facing their community. Consequently, they often 
serve as the leaders to fight problems such as hunger and 
homelessness.
    Unfortunately, burdensome regulations, a complex tax code, 
and an inaccessible health care system are stifling small 
businesses. Small business owners face a tax and regulatory 
scheme that overburdens and demoralizes them. Government is 
meant to be the servant of the people, yet the existing federal 
tax and regulatory state unfairly acts as judge, jury, and 
master of honest, hard-working Americans.
    Fortunately, with the assistance of the Small Business 
Administration, our guests have managed to become successful in 
spite of the road blocks placed in their way. However, if small 
business is to continue as the nation's economic catalyst, it 
is imperative that fewer regulations, simpler, lower taxes, and 
a free market approach to health care are all implemented to 
ensure a competitive environment for all small businesses.
    While Washington has contributed to these problems in the 
past, I am proud to say that, along with President Bush, 
Congress has worked to repeal the 100 billion ergonomics rule 
and pass the President's Economic Growth and Tax Relief 
Reconciliation Act. It is my hope that in the very near future 
Congress can act to make health care an affordable benefit for 
all small businesses.
    I look forward to the testimony of the witnesses today and 
want to thank the witnesses who are testifying, especially my 
constituent, Mr. Gene Berg, who through some creative thinking 
was able to save over 200 jobs in Byron, Illinois. 
Additionally, I want to recognize and thank SBA Administrator 
Hector Baretto for his cooperation over the last year. Mr. 
Baretto will join us today to discuss the role his agency has 
played in helping to create and sustain successful small 
businesses.
    [Chairman Manzullo's statement may be found in appendix.]
    Ms. Velazquez. Thank you, Mr. Chairman
    We take time this week to recognize the huge contribution 
that small business makes to this country. It is absolutely 
incredible the work small businesses do for America. They 
anchor our neighborhoods and communities. They create three-
fourths of all new jobs and employ half our workers. While 
corporate America sheds jobs and shifts production overseas, 
small businesses are busy hauling us out of recession.
    Today it is truly an honor to have the opportunity to hear 
from some of the leaders in the small business community.
    Kimberly Francis and her husband, John, own Northern 
Virginia Roofing in Falls Church, Virginia. When the Pentagon 
was attacked and burned on September 11, they worked with other 
roofers across the country to volunteer their services to 
rebuild more than over an acre of destroyed slate roofing over 
the Pentagon. Hard at work ever since, they aim to finish the 
job along with the rest of the headquarters by September 11, 
2002.
    Belinda Guadarrama is president and CEO of GC Micro 
Corporation in Novato, California. She started her company more 
than 15 years ago with just two employees. When she tried to 
get a small, $5,000 loan, the bank turned her down for lack of 
collateral. A prime contractor told her, ``No company wants to 
work with a little Mexican company in Novato''. But three years 
later, she secured an SBA loan of $300,000 and expanded into a 
business park. Today, she employs 28 workers, with sales of $34 
million as one of the leading suppliers of computer hardware 
and software to the defense and aerospace industries. 
Congratulations, Belinda.
    Ms. Guadarrama. Thank you.
    Ms. Velazquez. While these small businesses do so much for 
our nation, we should be doing more for them. And while this 
Committee has continued to work tirelessly to help small 
business, the needs still greatly outweigh the gains. On issues 
like tax fairness and regulatory equity most of the change has 
helped corporate America rather than small businesses. Many of 
these issues remained unresolved.
    It was heartening about a month ago to hear the President 
outline his agenda for small businesses. I am glad to hear him 
return to the issue that he raised during the campaign. It is 
my hope that there is action to follow up on these promises.
    Small businesses built this country. From the industrial 
revolution to the information age, American enterprise has 
shaped our economy and way of life. Since this is Small 
Business Week, it is appropriate that during this hearing we 
can learn what small businesses have done for our country and 
our communities. Small enterprise is not uniquely American, but 
Americans have harnessed small enterprise like no other nation. 
Alexis deTocqueville remarked two centuries ago that ``boldness 
of enterprise is the foremost cause of America's rapid 
progress, itsstrength and its greatness.''
    The history of this country and the mission of this 
Committee has been the dogged pursuit of equal opportunity for 
all with the dream of a better life through commerce. That is 
why, Mr. Chairman, I am disappointed in the House leadership 
when they decided to pull two of our bills from the floor this 
week that would have strengthened small businesses. But today 
is less about politics than it is about reminding ourselves why 
we work for small businesses. In addition to the 
entrepreneurial drive, small companies most often embody 
another unique American characteristic: our patriotic 
obligation to give something back to the country that rewards 
talent and hard work with prosperity.
    We honor this spirit today. Small businesses are constantly 
giving back, just as Kimberly and John Francis envisioned 
during our country's darkest hour and just as Belinda 
Guadarrama in contributing to our nation's defense.
    We thank you again for all that you have given us. Welcome. 
Thank you, Mr. Chairman.
    Chairman Manzullo. Thank you. We are going to have some 
visiting members to the Small Business Committee introduce 
their constituents. Representative Lynn Woolsey, would you be 
kind enough to introduce us to your constituent and witness?
    Ms. Woolsey. Thank you very much, Mr. Chairman, and thank 
you, members of the Committee, for letting me come by here 
today to introduce one of my favorite constituents, actually. 
Your ranking member has mentioned Belinda Guadarrama, but I 
want to say a little bit more about her because I know her 
better.
    Belinda, as you have learned, is the president and CEO of 
GC Micro Corporation, which is based in Novato, California, 
which is the very center of my district across the Golden Gate 
Bridge from San Francisco. Belinda was the winner of this 
year's California Small Businessperson of the Year. She is a 
second-generation American and the daughter of a disabled 
American veteran. Belinda earned a degree in economics from 
Trinity University in San Antonio, Texas, and completed 
graduate work at the University of Texas.
    In 1986, investing her entire life savings, Belinda began 
selling software to government contractors and created GC 
Micro, a company with revenues of over $34 million last year. 
Beginning GC Micro was not easy due to both racial and gender 
discrimination. However, Belinda overcame the perception that 
minority women did not belong in the technology field or could 
be effective marketing to defense contractors. Now she is a 
strong and respected voice for minority businesses in America 
and has served as a small business policy adviser to the White 
House over the past three presidential administrations.
    I am proud to represent Belinda Guadarrama, and I know you 
will enjoy her comments today. Welcome, Belinda.
    Ms. Guadarrama. Thank you very much.
    Chairman Manzullo. Thank you very much. Congresswoman 
Woolsey, you can stick around as long as you want. If you would 
like to join our Committee, let us know. We always have need of 
your talent. Thank you so much.
    Representative Reberg from Montana would like to introduce 
a witness and a constituent.
    Mr. Reberg. Thank you, Mr. Chairman. I do feel like I am 
part of the Small Business Committee. Let me begin by thanking 
you for traveling all the way to the State of Montana and 
having a Small Business Committee hearing on the snowmobile 
issue. It was very important to my constituency, and we 
appreciate that.
    Appropriately enough, I have a constituent sitting on the 
far right of the panel. Her name is Brenda Burkhartsmeier, and 
her husband, Dennis, is somewhere in the audience. I like his 
name. It is easy to remember Dennis. They are a tremendous 
reflection of a small business in the State of Montana. We are 
a state of small business. We have not a lot of large business, 
and within Montana there are two things that are important, 
knowledge and capital, and the Burkhartsmeiers came up with a 
concept called Mountain Mud. It is a kiosk that sells coffee. 
As you can imagine, carts are not particularly popular in the 
winter in Montana selling coffee, but a drive-up kiosk is. It 
turned out to be a tremendous asset to the state. They now do 
business in many states, as you will hear in their testimony.
    They are the Small Business of the Year recipients within 
the State of Montana, and we are pretty proud of them. 
Unfortunately, they stole one of my good friends, moved him out 
of state, who was also my insurance agent. They are a growing 
entity in scooping up and creating jobs, and not only are they 
working with the Small Business Administration on the capital 
necessary to expand their business, but they are doing 
something that is very important for all of us to remember: 
They are sharing their knowledge with other small business 
people that are interested in getting into something similar, 
and you do not run into that when there is the proprietary 
interest in business. But they are willing to share their 
expertise, mentoring other small businesses, and my hat goes 
off to them, and I thank you for allowing them an opportunity 
to highlight their business before your Committee today. Thank 
you, Mr. Chairman.
    Chairman Manzullo. Thank you, Congressman Reberg. And we 
have Congressman Tom Udall, a member of our Committee, who is 
going to be introducing his witness, and not a constituent, but 
New Mexico is big enough for Tom Udall, and Mr. Espat.
    Mr. Udall. Thank you, Chairman Manzullo and Ranking Member 
Velazquez for allowing me the opportunity to offer a brief 
statement to welcome Roberto Espat to Washington, D.C. and to 
this hearing today. Roberto is the president and CEO of Roses 
Southwest Papers, Inc., located in Albuquerque, New Mexico. I 
am sure that he will go into detail about his successful 
business, so I will leave that to his testimony. Let me just 
say that he has received many honors during his illustrious 
career, including being named one of the Hispanic Business 
magazine's top 500 owned businesses in the year 2000, New 
Mexico Ethics in Business Award in 2001, just to name a few. 
And most recently, Roberto was named New Mexico's Small 
Businessperson of the Year and will be honored at a luncheon in 
Albuquerque on May 13th. So congratulations, Roberto, on that 
award.
    Mr. Espat is truly an inspiration to entrepreneurs all over 
the country but especially to individuals in New Mexico. Many 
parts of New Mexico struggle to develop economically, with high 
rates of unemployment, high rates of people lacking health 
insurance, and high rates of poverty. In that context, what he 
has achieved is all the more admirable. Not only do you employ 
more than 200 people, but you also provide these employees with 
a health plan, with long-term disability, tuition reimbursement 
for work-related training, and a 401K plan.
    I commend you, Roberto, for your success as a small 
business owner and for providing quality employment 
opportunities for an impoverished state such as ours. And 
again, let me thank you, Mr. Chairman, and Ranking Member 
Velazquez for this opportunity. Thank you.
    Chairman Manzullo. Roberto, did you come in? Where is he?
    Mr. Udall. I think he is arriving momentarily.
    Chairman Manzullo. All right. We will squeeze everybody at 
the table for one more.
    Then Representative Ross from Arkansas, who is a member of 
our Committee, was going to introduce Representative Boozman, 
also from Arkansas, who is going to introduce your constituent, 
but Mike is not here so please.
    Mr. Boozman. Thank you, Mr. Chairman, and I thank the 
members of your Committee forallowing me the distinct pleasure 
of introducing Dr. Frank J. Siccardi and his wife, Linda.
    Frank Siccardi, a resident of Fayetteville, Arkansas, 
earned his doctor of veterinary medicine degree from the 
University of Georgia in 1959 and served as a avian research 
scientist until 1983. Perceiving a need for improved air 
quality in poultry processing plants to enhance both 
environmental quality and cost efficiency, Dr. Siccardi 
developed the Coenco positive air system in 1983 and formed 
Coenco, Inc., to manufacture and sell his new product.
    Dr. Siccardi restructured his company in 1994 and expanded 
his focus to include warehouses, manufacturing facilities, and 
other large, open-space buildings. Since its 1994 
diversification, Coenco's growth has been remarkable. 
Employment has grown from four to 15, and annual sales have 
risen from $300,000 to over one and a half million.
    Dr. Siccardi has been a regular Small Business 
Administration customer for many years. He began working with 
the Arkansas SBA Development Center in 1995 and obtained SBA-
guaranteed loans in 1995 and 1997 to enhance cash flow and fund 
Coenco's rapid growth. Dr. Siccardi's recent work is defining 
precise ways and means of significantly reducing energy needs 
in large buildings.
    Mr. Chairman, Dr. Siccardi is a great example of the 
American entrepreneurial spirit that is the backbone of our 
nation. It is my pleasure to introduce you to a fellow 
Arkansan, Frank Siccardi. Thank you.
    Chairman Manzullo. Thank you, Congressman. Before we start, 
I have got a resolution here that I drew up honoring the 
employees of the U.S. Small Business Administration for 
tireless efforts in aiding, counseling, and assisting small 
businesses in preservation of the free-enterprise system and 
helping the growth of personal initiative through the creation 
and growth of small businesses and particularly the assistance 
given on September 11th. With your indulgence, it will take me 
about a couple of minutes to read it.
    ``Whereas, on September 11, 2001, terrorists hijacked and 
destroyed four civilian aircraft, crashing two of the planes 
into the towers of the World Trade Center in New York City and 
a third plane into the Pentagon in Northern Virginia, and 
resulting in the crash of a fourth plane in Somerset County, 
Pennsylvania, and whereas these attacks destroyed both towers 
of the World Trade Center as well as adjacent buildings and 
seriously damaged the Pentagon, and whereas thousands of 
innocent people were killed or injured, and businesses both 
large and small were destroyed, closed, or suspended for 
national security purposes by mandate of the federal 
government, many business owners were both directly and 
indirectly adversely affected by the terrorists' attack and 
were finding it increasingly more difficult or impossible to 
make loan payments, find access to new capital, and pay 
employees and vendors, and whereas the employees of the U.S. 
SBA have been working above and beyond the call of duty, in 
some instances going without proper sleep and spending time 
away from their families and loved ones, and have been called 
upon to put in extra time to assist and serve the needs of 
those directly and indirectly affected by the events of 
September 11, 2001, and, therefore, be it resolved by the 
chairman of the Committee on Small Business, United States 
House of Representatives, that the chairman commends the 
employees of the U.S. SBA for their tireless dedication in 
helping those businesses and homeowners directly and indirectly 
affected by the horrific terrorist attacks and helping to 
restore economic well being to thousands of homemakers and 
small businesses throughout this nation. Those who worked in 
cooperation with the U.S. SBA to assist victims of the 
terrorist attacks of September 11, 2001, particularly 
Administrator Hector Baretto, who had to deal with the events 
of September 11th only a short period of time after he was 
confirmed by the Senate; John Whitmore, who held the agency 
together during the transition between administrations; Herb 
Mitchell, who went well beyond the call of duty in helping 
small businesses virtually around the clock in the aftermath of 
the terrorist attacks; and Gary Jackson, who resolved complex 
size standards, particularly with respect to travel agencies, 
to all of you are sincere thanks and gratitude.''
    Administrator Baretto, do you want to come up, and John 
Whitmore and Herb Mitchell and Gary Jackson? Folks, give these 
people a big round of applause for the tremendous work that 
they have done.
    [Applause.]
    Chairman Manzullo. John, do you want to come up? Please. 
Mr. Baretto is going to be sitting up here at the table, 
Hector. John, do you want to come on up? Let me give this to 
you also.
    [Applause.]
    Chairman Manzullo. Okay. Well, this is unusual. We have the 
administrator of the SBA sitting up here with us and for a very 
special purpose because, as far as we are concerned, Hector has 
always been one of us. He is a man of the people. He earned his 
oats, as we say in the Midwest, when on September 11th 
tirelessly he walked the streets of New York City with Ms. 
Velazquez and helping people personally to come through that 
tragedy. And Administrator Baretto, we are going to give you 
the opportunity to make a statement, whatever you would like to 
share with us, and then we can turn to the witnesses, and thank 
you for being here.
    Mr. Baretto. Thank you very much, Mr. Chairman, and Ranking 
Member Velazquez. Thank you so much for inviting me to be here. 
It truly is an honor, and today is really a day that we can 
celebrate so much, so many of the achievements that are 
represented today, and I am so anxious to hear the testimony 
from these great men and women small business owners. I have 
read some of their bios. I know how incredible they are, and 
they really are representative of what we know is the best of 
the best of our small business owners. We have so many of them 
in town today.
    I also want to acknowledge the other members that are here. 
I have had an opportunity to work with them, Congresswoman 
Tubbs-Jones and Congressman Chabot, and many of the others that 
sit on this dais often. I have had an opportunity to go to 
their districts. One of the first places I went to, as the 
chairman said, was to Rockford, Illinois, and then soon after 
that I went to Congresswoman Velazquez's district. And I have 
learned so much by being there in their districts and working 
with them and really being on the ground where the rubber meets 
the road, as they often tell us. And so it is a privilege to be 
here.
    Just for the record, I want to unequivocally state that I 
have no designs on any of the chairs that are up here on this 
dais. I know the very important responsibility that the members 
of this Committee have, and I feel honored to be the SBA 
administrator. I do not consider it a job; I consider it a 
higher purpose. I like to tell people that I was busy minding 
my own business literally when the call came to serve, and it 
is such an honor to serve this country and this administration 
and to work with leaders like the ones that are represented on 
this Committee, Chairman Manzullo and Ranking Member Velazquez.
    You know, National Small Business Week gives the SBA the 
opportunity to honor small business men and women who build the 
products and make the sales and create the jobs that fuel our 
economy, and I am so privileged to be here with all of these 
winners that are representing all of the states of the union. 
In fact, with the indulgence of the Committee, I would also 
like to acknowledge the regional administrators who so ably 
represent the SBA in all of the regions in the country. They 
are so proud that so many of their constituents are being 
acknowledged, and Iwould like to ask them also to stand, all 
the regional administrators of the SBA that are here today. Thank you 
so much.
    [Applause.]
    Mr. Baretto. Our winners represent a wide range of products 
and services, including a mix as diverse as American society 
and culture itself, from shipbuilding to outdoor furniture 
manufacturing to day spa and boutique services to Web design, 
advertising, wireless communication, restaurant owners, 
sandwich makers, general contractors, and everything in 
between. Twenty-three percent of our winning businesses are 
minority-owned businesses. Three percent are African-American, 
14 percent are Hispanic-Americans, six percent are Asian-
Americans, 21 percent are veterans, and women own 28 percent of 
the winning businesses, 10 percent more than last year. And I 
think that that is important because I think everybody in this 
room knows that the fastest growing segments of small business 
are women-owned and minority-owned small businesses who do such 
a great job. And the general businesses that are represented 
here today are really also leading the way in creating many of 
the opportunities that we see.
    Again, I want to thank the chairman and the ranking member 
and this Committee for all of their counsel and all of their 
support. It truly is a privilege to work with them, and I look 
forward to working with them in partnership to do all of the 
great things that we need to do for all of the small business 
owners of America. Thank you very much, Mr. Chairman. I am 
honored to be here with you today.
    Chairman Manzullo. Thank you, Administrator. We are honored 
to have you here. Thank you so much.
    We have a clock here. Try to keep your testimony to three 
minutes or so. I know it is a difficult thing to do. Do you 
want to be in charge of the clock? These things happen, you 
know. Some small businessman will be put to work fixing the 
clock, so do not worry about that.
    We are going to start here with Richard Carroll, the 
founder and CEO of Digital System Resources. Mr. Carroll, if 
you could keep your testimony to three to four minutes, we 
would appreciate it very much, and you are going to have to 
talk directly into that mike.

 STATEMENT OF RICHARD CARROLL, DIGITAL SYSTEM RESOURCES, INC., 
                       FAIRFAX, VIRGINIA

    Mr. Carroll. Well, thank you very much, Chairman Manzullo 
and Ranking Minority Member Velazquez. Members of the 
Subcommittee, I want to thank you for the opportunity to 
testify before the Committee today.
    My name is Richard Carroll. I am the founder and CEO of 
Digital System Resources. DSR was founded in 1982 with two 
employees. The company became incorporated as Digital System 
Resources, Inc., in 1985, when we had eight employees. We won 
our first contract, which was an SBIR contract, part of the 
Small Business Innovative Research Program, at which time we 
had 24 people working for the company. Today, we employ 480 
scientists and engineers, and our annual sales are in excess of 
$100 million a year.
    D.S.R. has offices in Fairfax, Virginia; Crystal City, 
Virginia; Virginia Beach, Orlando, San Diego, Anaheim, and 
Kauai, Hawaii. Our success is directly attributable to the 
Small Business Innovative Research Program. Since our first 
SBIR contract award in 1988, we have been awarded over 80 
separate Phase I, II, and III SBIR contracts.
    The SBIR program opened the door for DSR to prove to 
initially the Navy that a small business with just 40 people 
could design, develop, test, and provide a data processing 
system for a major military system. In competition with large 
companies, such as Lockheed Martin and Raytheon, now the first 
and fourth largest defense contractors in the world, our 
company has been very successful in providing a small business 
alternative.
    Our product was called a multipurpose processor, which is a 
computer that does data processing for the sonars on board our 
nation's submarines. The MPP, as it is known, replaced legacy 
sonar systems, or is to replace them, in our entire nuclear 
submarine fleet. And we believe it could have only been done by 
a small business, what we did. It has had nearly $300 million 
of follow-on work to provide these systems for the submarine 
fleet.
    More important than providing a small business can do the 
job, DSR proved that using a small business to provide a 
competitive alternative in this case to what was longstanding, 
incumbent, large businesses got innovation moving. The system 
we provided is much more capable, faster, and cheaper than the 
traditional process that was used. We adapted commercial, off-
the-shelf hardware with open system software that allowed the 
software and the hardware to be developed independently, 
something that we find in our commercial world often but not in 
our military world.
    Chairman Manzullo. How are you doing on time, Richard? You 
have got three minutes.
    Mr. Carroll. Okay. I will finish up here.
    Chairman Manzullo. All right. Thank you.
    Mr. Carroll. The SBIR program--I just wanted to mention a 
couple of things about that. The SBIR program was recently 
reauthorized, and I think that the Committee made a home run in 
reauthorizing the SBIR program. The final step that is needed 
is that the directive that the SBA has to issue on the SBIR 
program is not issued, and I understand it is very, very close, 
and we really feel like that needs to be issued. Thank you.
    [Mr. Carroll's statement may be found in appendix.]
    Chairman Manzullo. Thank you very much. Our next witness is 
my constituent, Gene Berg. He hails from Byron, Illinois, and 
Gene, at the ripe, old age of 39, decided that he needed to buy 
a business, and after 19 trips to China, thank God, he got 
involved in keeping that business in Byron, Illinois, which is 
the nearest biggest town to my unincorporated town of Egan, 
Illinois, population 39. So I look forward to your testimony, 
Gene.

    STATEMENT OF GENE BERG, AUSTIN/WESTRAN, BYRON, ILLINOIS

    Mr. Berg. Thank you. As Don said, my name is Gene Berg, and 
I thank you for the opportunity to sit before you and tell my 
story, the story of what might not have happened without the 
assistance of the Small Business Administration.
    I am the president and owner of a small business named 
Austin-Westran, located in Byron, Illinois. We are a 
manufacturer of products that include trailer landing gear, 
commercial vehicle components, and a line of corn-burning 
stoves for residential heating. We employ 200 proud, UAW team 
members in our 200,000 square-foot, modern manufacturing 
facility.
    My story begins early last year, when the company I was 
working for as chief operating officer found itself in a 
position that required it to divest of this division, called 
Austin-Westran. Several suitors stepped forward, with the most 
likely acquirer being a competitor headquartered in Germany. Of 
note is that the selling of this plant to any of these suitors 
would result in its closure, 200 jobs lost and/or dislocated, 
some possibly moving outside the United States--a picture we 
have all seen much too often.
    Shortly after the decision to divest, I decided to attempt 
to buy Austin-Westran. As Don said, I was 39. It was time to 
get moving. After six months of financial wrangling, I came up 
short of financing, and the deal feel through. About that time, 
Mr. Manzullo's office called me and asked if there was anything 
they could do to assist me. They called me. Coming from a 
family of staunch conservatives, I was doubtful that the 
government could assist me with much of anything, at least that 
is what I had been taught, but I had no choice. The Byron plant 
would be gone and my dream of owning a manufacturing company 
ended, and the 200 jobs, most importantly, would not be there.
    Mr. Manzullo's office put me in touch with a local 
development corporation, assisted in numerous other ways, and 
we began the process of qualifying for a $1.3 million SBA 504 
loan. I would never have guessed that working with the 
government could have been so fruitful and efficient, but in 
very short order we were approved. With the SBA financing 
secured, we closed the deal February 2nd of this year, 200 jobs 
in our community saved, our community left intact.
    We are proud of what we have been able to accomplish in our 
short life as Austin-Westran. We have been awarded contracts to 
manufacture corn-burning stoves for heating homes. In addition, 
we have secured a $1 million contract to produce trailer 
landing gear for Mexican trailer companies and have begun a 
program to set up an operation to serve the China market.
    No, this is not a case of outsourcing to low-wage countries 
like we hear so much about. This is Austin-Westran, located in 
Byron, Illinois, making products for Mexico and shipment to 
China. These contracts have resulted in 17 new jobs, of which 
53 percent of the team members are of minority descent.
    Quickly, since Mr. SBA Administrator is here, since I owe 
you money, you will be interested in knowing we are doing well 
and able to pay our loan. Okay?
    [Applause.]
    Mr. Berg. You made me nervous when you showed up.
    In conclusion, I would just add that this Committee does 
important work. As it was so well stated by the Committee 
members, small business is critical to the growth and vitality 
of this country. The Small Business Administration helped save 
Byron, Illinois, and gave me the opportunity to pursue my 
dream. It is your committee that leads this country in support 
of small business. For that, I would like to thank you.
    [Mr. Berg's statement may be found in appendix.]
    Chairman Manzullo. Thank you very much.
    [Applause.]
    Chairman Manzullo. Congressman Mike Ross is going to give a 
second introduction to Mr. Siccardi. You did not realize that, 
did you? Okay. Mike?
    Mr. Ross. Thank you, Mr. Chairman. In the spirit of Small 
Business Week and as a fellow Arkansan, I want to welcome Frank 
Siccardi for being here and thank him for sharing his success 
story with us. I want to thank my friend and colleague, John 
Boozman for coming to give his introduction as well.
    Let me just say that as a small business owner myself with 
12 employees back home in Prescott, Arkansas, I know what it is 
like to meet a payroll every Friday, and I understand the 
difficulties and challenges that someone who is trying to 
establish and grow a business faces. I have been there, and I 
appreciate the effort that you and the other witnesses today 
have put into making your business successful.
    Frank Siccardi had a vision to create a cleaner, safer, and 
more energy-efficient environment for poultry processing. 
Arkansas is home to an awful a lot of chicken and poultry 
processing plants. He has taken this vision and not only 
created the air-quality system to do it, but he has worked, 
even when not many people took him seriously, to turn it into a 
successful business that now benefits the poultry industry as 
well as many other types of large warehouses and manufacturing 
facilities.
    As members of Congress, we have to work to make sure that 
our government provides resources and opportunities to help 
small businesses have the chance to succeed. We need to be 
there for them, not against them. Small businesses truly are 
the engine of our nation's economy, and they create an awful a 
lot of economic opportunities for people from all walks of 
life. I want to commend you, as well as all of the guests here, 
for your success, and I want to personally congratulate Frank 
Siccardi for being Arkansas's Small Businessperson of the Year. 
Thank you for being here. Thanks to all of you for being here. 
We look forward to hearing your testimony today.
    Chairman Manzullo. Thank you, Congressman Ross. Our next 
witness is Roberto Espat. Roberto, do you want to pull that 
mike up closer to you there? Can you see the colors? When it 
gets to yellow, you have got one minute to go. Is it green now?
    Mr. Espat. It is green now.
    Chairman Manzullo. Okay.

 STATEMENT OF ROBERTO E. ESPAT, ROSES SOUTHWEST PAPERS, INC., 
                    ALBUQUERQUE, NEW MEXICO

    Mr. Espat. Thank you, Mr. Chairman. Thank you, SBA, for all 
you do for small business. I happen to be one of those that did 
not do any business through SBA. We were at one time a 
certified 8(a), but unfortunately it was very difficult for us 
to get any GSA contracts because it was difficult to penetrate 
GSA--no fault of the SBA. And thank you for this honor. We are 
proud to be here and proud to be part of SBA.
    I am frequently asked, because I come from the little 
country of Belize, am frequently asked, how did you get here? I 
say I canoed up the Rio Grande.
    Anyway, on a more serious note, we started the business. 
After a couple of rejections from a couple of banks, we were 
fortunate to find one bank that started to carry us, and we 
started back in 1986 doing recycled paper to produce paper 
products: toilet tissue, paper napkins, et cetera. We started 
with one machine, one line, a toilet tissue line back in 1985. 
The first year we had less than 12 employees, a 20,000 square-
foot building, one line, and less than half a million dollars' 
sales.
    Today, I am proud to say that we have 250,000 square feet. 
By the end of this year we will have 17 production lines, 
employ 200 people, and our sales this year should reach 
somewhere around $55 million. None of this would be possible 
today if it was not for our people, our staff, our employees. 
We have tried to do everything we can for them. Since the 
second year of business we have had a profit-sharing program, 
and we give them all of the benefits that are available, 
including a 401K, health plans, et cetera.
    We would like to suggest that the government can help SBA 
by helping deregulation. There is so much paper work, so many 
things that are happening that really frustrate small business 
and sometimes make it impossible for small business to exist. 
Thank you for the time you have given me.
    [Applause.]
    [Mr. Espat's statement may be found in appendix.]
    Chairman Manzullo. Okay. Our next witness is John 
Bartoletta with High Street Financial Group out of Tampa, 
Florida. John, I look forward to your testimony.

  STATEMENT OF JOHN BARTOLETTA, HIGH STREET FINANCIAL GROUP, 
                         TAMPA, FLORIDA

    Mr. Bartoletta. Mr. Chairman, distinguished Committee 
members, I am honored and delighted to have this opportunity to 
directly address those who have jurisdiction over the Small 
Business Administration and the ability to advise Congress on 
the issues that concern small businesses. I hope my testimony 
regarding the High Street Financial success story will serve as 
inspiration and encouragement to help other small businesses 
achieve success.
    High Street Financial is an independent, registered, 
investment-advisory firm headquartered in Tampa, Florida. High 
Street is registered with the United States Securities and 
Exchange Commission. We offer customized investment-management 
services to institutions, professional associations, and high-
net-worth individuals and have earned a reputation as one of 
the best quantitative money managers on Wall Street.
    We feel that we are redefining traditional institutional 
investment management by offering one of the most sophisticated 
investment-management systems ever made available to investors. 
This proprietary investment system is known as Dynamic Style 
Rotation.
    High Street's mission is to form a partnership with our 
clients and provide them with the most complete investment-
management program available in the industry. At High Street we 
understand investing and the responsibility that goes along 
with prudent management. That is why all of our institutional 
investment experience, breadth of capabilities, and resources 
are focused on giving the client the best possible personalized 
attention, professional stature, ultimate privacy, and timely 
implementation of their specific investment needs, goals, and 
objectives.
    We believe it is significant that clients understand and 
share in our firm's long-term vision. Consistent bottom line 
investment success is only achieved through comprehensive 
planning, a multidisciplined investment strategy, and a client 
commitment to the overall process and patience. We continually 
strive to uphold the highest standards of performance, 
practice, and procedure in the industry.
    The cornerstone of the program is our documented fiduciary 
prudence, exceptional client service, responsive back office 
support, and superior institutional investment management 
utilizing Dynamic Style Rotation. Our mission can be 
quantified, and we call it I-cubed-E: image, infrastructure, 
implementation, and execution. In all aspects of the client 
relationship we strive to meet and exceed the client's 
expectations. High Street takes as much burden off the client 
as possible. The necessary paper work is filled out for the 
client, transfer of the assets is tracked and expedited by 
continuous contact with the transferring firm while the client 
is informed every step of the way. Communication is made to the 
client when we receive the paper work, when the custodian of 
the assets receives the paper work, and when the assets are 
finally transferred. It is this commitment to execution that 
has earned High Street the fastest-growing firm in the nation 
above $200 million with the least amount of internal errors 
among all asset-management firms that custody their assets with 
Fidelity.
    Chairman Manzullo. How are you doing on time, John?
    Mr. Bartoletta. I have got 14 over.
    Chairman Manzullo. All right.
    Mr. Bartoletta. Everyone at High Street takes great pride 
in providing our services that help to secure the financial 
well being of numerous small businesses not much different than 
our own. The bulk of our asset base is comprised of pension 
plans, profit-sharing plans of small businesses, physicians, 
dentists, and chiropractors nationwide.
    America's small business community provides the 
entrepreneurial engine for America's future economic growth. 
The leaders of America's small businesses are people whose 
motto is, ``the difficult we do immediately; the impossible 
takes a little longer.''
    Mr. Chairman, I would like to close by saying again how 
honored I am to be invited to speak at this hearing. My entire 
staff at High Street is also honored and humbled, and I would 
like to congratulate you on the excellent job you are doing in 
instilling and nurturing the entrepreneurial spirit for small 
business. The entrepreneurial spirit embodied by small business 
has played a critical role in the development of the United 
States as the leading world economic power, and we commend your 
efforts to deliver that message to the American public. Thank 
you.
    [Mr. Bartoletta's statement may be found in appendix.]
    Chairman Manzullo. John, thank you very much. Another 
example of a little guy that got involved in big finance and 
made it successful. Thank you for your testimony.
    Mr. Bartoletta. Thank you.
    Chairman Manzullo. I wonder if we should show the video at 
this time. We can do that. All right. John Francis is with the 
Northern Virginia Roofing Association out of Falls Church, and 
in lieu of his testimony you have got a video for us. Is that 
right?
    Mr. Francis. That is correct.
    Chairman Manzullo. All right. How long is the video? Is it 
four minutes?
    Mr. Francis. Or so. Could I make just a brief opening 
statement?
    Chairman Manzullo. You bet.
    Mr. Francis. Thank you. Chairman Manzullo----
    Chairman Manzullo. Make it brief if you have got a video. 
Okay?

  STATEMENT OF JOHN FRANCIS, NORTHERN VIRGINIA ROOFING, INC., 
                     FALLS CHURCH, VIRGINIA

    Mr. Francis. It will be very brief. My name is John 
Francis, and this is my wife, Kimberly. We own and operate 
Northern Virginia Roofing, a small business, and appreciate the 
opportunity to testify on behalf of the National Roofing 
Contractors Association, or the NRCA. Kimberly and I are here 
today for reasons other than the great work done by the Small 
Business Administration. We are here to discuss the NRCA's 
small business volunteer effort to reroof the Pentagon and have 
brought a short videotape for you to view. We would be happy to 
answer any questions. Thank you.
    Chairman Manzullo. Okay. If you want to turn that video so 
that the folks here can see it. I think we have time for the 
video. Why don't you turn it more towards the audience? We can 
move over there to catch it ourselves, just a little bit there.
    [The video was played.]
    [Applause.]
    Chairman Manzullo. This Committee will be in recess while 
we go and vote, but just continue watching the video.
    [Mr. Francis' statement may be found in appendix.]
    [Whereupon, at 3:30 p.m., a brief recess was taken.]
    Chairman Manzullo. Congressman Pomeroy, do you want to come 
on up? Congressman Earl Pomeroy is from North Dakota, and we 
advised him that one of his constituents was coming, and so we 
asked him to come and introduce his constituent, Mr. Kuntz. 
Earl?
    Mr. Pomeroy. Thank you for your accommodation. I want to 
briefly tell you about these folks because like all of the 
representatives of small business, America's engine, testifying 
today, there is really quite an extraordinary story behind 
North Dakota's winners of the Small Business of the Year Award.
    Five years ago, Grand Forks, North Dakota went under the 
water of the Red River. Incalculable damage all across the town 
and a family-owned print shop contemplating expansion found 
themselves stopped dead in their tracks as the facility got 
inundated, the town got decimated, and they were out of 
business for a period of better than six months. They estimate 
they took it on the chin to the tune of $800,000 to $1,000,000 
in terms of lost opportunity--a hell of a hit for a family-
owned business. But with the small business assistance disaster 
support, they were able to get the capital they needed to build 
back, and build back they did.
    Now, Mr. and Mrs. Kuntz, along with their son, Kevin, who 
is part of the business, and their other son, who while at the 
university is also part of the business, have built back to 
more than double where they were before the flood. This shows, 
I think, an extraordinary story of personal resilience, 
business acumen, entrepreneurial spirit, but there is even 
another chapter to the story I just found out about.
    As they looked at the total shutdown of their business for 
the foreseeable future, as they slogged through the muck of 
what remained of their business, they knew that they had 
employees that were suddenly without a pay check, suddenly 
totally without support, and they made a decision, Mr. and Mrs. 
Kuntz, that they were going to keep health insurance in place 
for their work force even while they worked to get a business 
up and running again. And so they did. They paid the premiums, 
and they kept health insurance absolutely in force for their 
work force until they could get the shop up and running. And 
each of those employees, not surprising, is still with that 
business today. It is an outfit that we are really proud of, 
people that I am proud to know, and I just wanted you to know 
that about them. Mr. Chairman, I appreciate you having them 
testify today.
    Chairman Manzullo. Thank you, Congressman, for taking the 
time. You can stick around here as long as you like. Let us do 
this. Let us skip to Mr. Kuntz, and then we will come back to 
Mr. Shore while your congressman is here. I look forward to 
your testimony.
    Mr. Pomeroy. Thank you, Mr. Chairman.
    Mr. Kuntz. Thank you, Chairman Manzullo, and thank you----
    Chairman Manzullo. You want to slide the mike up closer.

  STATEMENT OF DONALD KUNTZ, FINE PRINT OF GRAND FORKS, GRAND 
                      FORKS, NORTH DAKOTA

    Mr. Kuntz. Thank you, Chairman Manzullo, and thank you, 
Representative Pomeroy. Your greeting was outstanding. Thank 
you.
    Fine Print of Grand Forks is a full-service commercial 
print shop. We specialize in high-quality, four-color printing. 
We produce printed products, such as posters, calendars, books, 
promotional materials, brochures, along with other common 
things such as business cards and envelopes. Today, we employ 
23 full-time employees at our locations in both Grand Forks, 
North Dakota, and Thief River Falls, Minnesota.
    We had to overcome countless challenges over the years to 
make Fine Print a success. Our first challenge began back in 
October of 1984, when we took over a failing business form 
shop. The previous owner had left bad credit, worn-out 
machinery, and unqualified employees. With hard work and 
determination, we made Fine Print a successful printing 
company, specializing in high-end, four-color-process printing.
    Our greatest challenge began on Friday, April 18, 1997, 
when the dikes gave way to downtown Grand Forks, allowing the 
ice-cold flood waters of the Red River to engulf the city. My 
son and I had to wade through the flood waters to salvage the 
company's financial records before they fell victim to the 
flood. The business was a complete loss, while our home 
sustained extensive damage and was unlivable until major 
repairs could be completed. At that point, we joined the 50,000 
other residents of Grand Forks as flood refugees.
    During the flood, we visited our bank to make arrangements 
for the company's payroll. They told us not to bother. They 
said we are in over our heads, and we will never succeed. 
Because of a business loan secured by a second mortgage on our 
house, they told us the bank was going to take our home. We 
were so shocked at what we had heard from our bank that we 
decided to tell our story to our congressional delegation. That 
afternoon their staffs made some phone calls, put us in touch 
with the SBA, and by that evening our loan was verbally 
confirmed. We received approximately $971,000 in disaster 
assistance loans. This allowed us to pay our bills, make 
payroll, and open our doors to a new building six months later.
    Since that time, we have doubled our sales and added 
several new full-time positions. We have a digital prepress 
system on the cutting edge of technology, followed up by up-to-
date production equipment, including a brand-new, four-color 
press.
    Our employees are highly skilled and well motivated. 
Countless overtime hours have been worked by my family and 
staff to make Fine Print a success. At this point, we have 
drawn up plans to add onto the building and purchase a larger, 
faster press. The addition will result in further growth for 
the company.
    We were also very fortunate to have our loans managed by 
the people in the North Dakota SBA office. Since our disaster 
assistance loans were not managed by the centralized service 
center in Fresno, they were not sold as part of the SBA asset 
sales. Because our loans are still being managed by the SBA, we 
are able to finance the upcoming additions to our building and 
continue to grow. Other Grand Forks businesses are not so 
fortunate as we were, as their loans have been sold to a third 
party and their recovery hampered by this arrangement. These 
third-party financial institutions will not subordinate to 
other lenders like the SBA does, further restricting growth for 
these companies.
    The SBA has proven to be a beneficial partner in disaster 
recovery. On behalf of all of the businesses in Grand Forks, 
North Dakota, I would like to extend a thanks to the SBA for 
all of their assistance after the devastating flood. Without 
your help, a small business like ours would not exist today. 
Thank you very much.
    [Applause.]
    [Mr. Kuntz's statement may be found in appendix.]
    Chairman Manzullo. Our next witness will be Billy Shore. He 
is chairman of Community Wealth Ventures. When I became 
chairman of the Small Business Committee, we sort of expanded 
the jurisdictional scope of the definition of a small business 
to include municipalities, faith-based organizations, not-for-
profits, churches, and the reason we did that is that all of 
these organizations have the same problems as small businesses 
except they do not pay taxes. AndBilly Shore brings a very 
interesting twist on what he is doing with the charities, and we look 
forward to your testimony, Mr. Shore.

     STATEMENT OF BILLY SHORE, COMMUNITY WEALTH VENTURES, 
                        WASHINGTON, D.C.

    Mr. Shore. Thank you, Mr. Chairman. Thank you for those 
introductory remarks and for this opportunity to share 
information about one of the fastest growing but least 
recognized areas of small business, the increasingly successful 
entrepreneurship of America's nonprofit sector. I am also 
honored to have the audience of Mr. Barreto here today. Thank 
you for being here.
    It may surprise you to learn that I am speaking of the 
nonprofit sector, the chairman's comments notwithstanding, but 
this is the sector that is capitalizing on business 
opportunities to create a new kind of wealth. We call it 
community wealth, nonprofit organizations that are generating 
profit to help them reduce or eliminate their dependence on 
government and foundation funding. It is perhaps the best 
untapped market for new revenues, jobs, economic growth--
everything that the SBA seeks to develop.
    The responsibilities of nonprofit organizations have 
increased dramatically as growth in government funding and 
social services has slowed. Nonprofits have come to realize, as 
government has in recent years, that redistributing wealth by 
itself cannot solve our social and economic problems. Only 
creating new wealth can do that. In growing numbers, nonprofit 
organizations, such as rehabilitation centers, homeless 
shelters, youth groups, and community development corporations, 
are addressing the challenge by creating community wealth 
enterprises. They are starting small businesses, such as auto 
repair shops, catering businesses, printing and packaging 
operations, and Web site development firms.
    In addition to competing in the for-profit marketplace, 
these mission-driven businesses often provide job training. One 
of these, for example, is Seattle-based Pioneer Human Services, 
which helps more than 5,000 ex-convicts, homeless, and drug-
addicted individuals find jobs and rebuild their lives. They 
have a large business, which is a precision light-metal 
fabricator, that has become the principal supplier to Boeing 
Aircraft for their sheet-metal cargo bay liners.
    Each year more than 700,000 501(c)(3) and 501(c)(4) 
organizations deliver critical services to communities across 
the United States, but they do not have the resources to get to 
scale or to be sustainable.
    In 1984, we started Share Our Strength, an antihunger 
organization, and as a grant maker we did not want to 
redistribute wealth; we wanted to create new wealth. So we 
worked with corporate partners like American Express, Evian, 
Calphalon, Tyson Foods and others not in philanthropic 
relationships but in marketing partnerships that create new 
wealth. And then we created Community Wealth Ventures four 
years ago to help nonprofits improve their bottom line through 
the design and implementation of business ventures.
    Organizations that run a business also start to impart 
business thinking in their organization, and this impacts a 
nonprofit organization's accountability and program delivery.
    We are proposing that Congress authorize the SBA to create 
a pilot demonstration program to provide technical assistance 
and consulting to nonprofit organizations that receive federal 
funding and to help them establish for-profit ventures. This is 
not for every organization, and for organizations that choose 
to do it must compete fairly. But we believe that this 
entrepreneurship is for more nonprofit organizations than are 
currently doing it.
    This Committee has a proud legacy, Mr. Chairman, as you 
know, of helping organizations innovate and helping 
organizations break through to new areas. We believe the 
nonprofit sector is ripe for this now and able to create the 
kind of community wealth that we have described. Thank you very 
much for bringing and introducing this idea into the Congress.
    [Mr. Shore's statement may be found in appendix.]
    Chairman Manzullo. Thank you, Mr. Shore. You have got the 
right man here, who is looking at all of you and listening to 
these great ideas. Mr. Siccardi, you have had two introductions 
by two members of Congress.
    Mr. Siccardi. It is going to be hard to follow those 
gentlemen.
    Chairman Manzullo. There it is, one a Republican and one a 
Democrat. You want to pull the mike close to you there. Okay. I 
look forward to your testimony.

  STATEMENT OF FRANK J. SICCARDI, COENCO, INC., FAYETTEVILLE, 
                            ARKANSAS

    Mr. Siccardi. Mr. Chairman, Ranking Member, and other 
members of the Committee, I am happy to be here to discuss with 
you today my work for the past 30 or 40 years.
    My name is Frank Siccardi. I am the president of a company 
called Coenco. That stands for Coordinated Environmental 
Control. Forty years of university, government, private 
independent research in many areas all can be generalized as 
looking for the cause, not the effect. I am not interested in 
the Band-Aid, and what that generally means is original 
thought. So one is not going along with the crowd. That means 
change, and most people do not like change or the people that 
propose change. It ain't easy, in plain language.
    I believe you will all agree that energy use and 
conservation and the related pollution problems are of a major 
concern to our society today in many, many ways. The work I am 
reporting on today potentially has a really significant impact 
on the total energy use of our country and the pollution 
problem. Basically, big buildings are energy hogs. We have a 
basketball arena at the university, and it only uses $30,000 
worth of gas and electric a month, which turns out to be 350 to 
$400,000 a year. That is a lot of energy for a building that is 
only used about 10 times a year.
    About eight years ago, my interest shifted to large 
buildings from the poultry industry. Basically, I am a 
veterinarian by training, but after a lot of good schooling and 
exposure overseas with USAID and other programs, I have had the 
opportunity to be able to look at things as basically a problem 
solver. About eight years ago, my interest shifted to large 
buildings: warehouses, factories, food plants, gymnasiums, 
coliseums, and so forth.
    Getting to the point, I have developed a totally new and 
different approach to big buildings. In its simplest sense, it 
is a unique air mover that shoots a bullet of air, and the net 
result is a series of these units allows us to create in a big 
building a uniform temperature and humidity, and now the big 
thing is the building and its contents becomes a thermal bank.
    For instance, there is a little company in Arkansas I work 
with, and they have a number of good-sized warehouses, 1.2 
million square feet, to be precise. We have a number of these 
under my control, and what we have found recently, and I might 
say that right now our knowledge and growth just continues to 
expand. To make a long story short, a 1.2 million-square-foot 
building, if it is under 80 and above 25 degrees, the energy 
use for that building to maintain 70 degrees is exactly $13.52 
a day at six-cent electricity.
    I see my time is up, but that is a measure of what we are 
talking about, and I have here a number of examples that I 
could go into that are just unbelievable what the opportunity 
is because we create a uniform temperature and humidity on a 
pulsing basis, very preciselycontrolled, and now the building 
and its contents does not want to go anywhere. Thank you.
    [Applause.]
    [Mr. Siccardi's statement may be found in appendix.]
    Chairman Manzullo. I see Gene Berg over here definitely 
wants to talk to you. His corn burner heats a 2,000 square-foot 
house on a bushel of corn a day, so that is quite efficient.
    Our next witness is Belinda Guadarrama from GC Micro 
Corporation, and if you could pull the mike up closer to you, I 
look forward to your testimony.

   STATEMENT OF BELINDA GUADARRAMA, GC MICRO CORP., NOVATO, 
                           CALIFORNIA

    Ms. Guadarrama. Thank you. It is an honor to speak before 
the House of Representatives Committee on Small Business today. 
My name is Belinda Guadarrama, and my company is GC Micro. We 
have been providing personal computer hardware and software to 
the federal government and Fortune 1,000 customers across the 
nation since 1986.
    As a small business, GC Micro faced a number of challenges 
that are common to most small businesses. The lack of capital 
was a serious problem until I was able to obtain an SBA-
guaranteed loan. As a woman and a minority, it has been 
difficult breaking into the established network. However, the 
federal contracting goals that have been established for small 
businesses have provided numerous opportunities for us.
    G.C. Micro is a proud participant of the SBA 8(a) program, 
and we will be graduating in August. I would like to thank the 
Small Business Administration for the opportunity to 
participate in Small Business Week. I am honored to be the 
Businessperson of the Year for California and delighted to be 
chosen as the second runner up for the national award. And, of 
course, it was also very exciting to meet President Bush and 
his dogs on Monday.
    However, I am concerned that some of Congress' original 
intentions under the Small Business Act are eroding over the 
years. There are three areas of concern that I would like to 
highlight. As an example, it is my understanding that the 
Lockheed Joint Strike Fighter contract has been awarded with no 
apparent small or minority business goals. Ten years ago, the 
House investigated the Lockheed F-22 fighter contract when it 
was discovered that the contract had been awarded with a one 
one-hundredth of 1 percent minority business goal and a sixteen 
one-hundredths small business goal. As a result of the 
investigation, the Air Force and Lockheed allocated an 
additional $500 million for small business.
    I would pose the question, how can a DoD contract be 
awarded without small and minority business goals being set in 
the contract? Unfortunately, there is also no strong mechanism 
to enforce small business goals. Federal law requires any 
contractor failing to make a good-faith effort to achieve their 
small business goals to pay liquidated damages back to the 
government. However, no contractor has ever been penalized with 
liquidated damages for failing to reach these easily achievable 
small business goals.
    And additional concern I have is the comprehensive test 
program for reporting subcontracting goals. This program was 
established to increase small business subcontracting by 
eliminating the requirement to report small business 
contracting performance on individual contracts. Eliminating 
individual contract reporting is similar to trying to improve 
the scholastic performance of students by eliminating report 
cards. I believe this allows contractors to circumvent 
accurately reporting their small business subcontracting 
performance. I believe that an inquiry into this program would 
show that in reality it has dramatically reduced business 
opportunities for both small and small, disadvantaged 
businesses.
    In closing, I believe Small Business Week is a celebration 
that demonstrates to major government contractors and federal 
agencies that when you embrace the nation's small business 
programs, you are expanding our country's economy and 
stimulating the economic engine that generates a major portion 
of the tax dollars that fund the government contracts.
    Chairman, Administrator, members, I thank you very much for 
the support and hard work that you do on behalf of small 
businesses.
    [Applause.]
    [Ms. Guadarrama's statement may be found in appendix.]
    Chairman Manzullo. Thank you.
    [Applause.]
    Chairman Manzullo. Our next witness comes from the State of 
Montana, where we had a very interesting time out there in West 
Yellowstone National Park, Brenda Burkhartsmeier. I look 
forward to your testimony, Brenda.

 STATEMENT OF BRENDA BURKHARTSMEIER, MOUNTAIN MUDD & MOUNTAIN 
                MANUFACTURING, BILLINGS, MONTANA

    Ms. Burkhartsmeier. Thank you very much. Small Business 
Week is a great celebration for all of us here, and small 
businesses come in all shapes and sizes, and our size is 
certainly one of the smaller ones. We started out in an eight-
by-eight, drive-through, coffee kiosk in Billings, Montana, of 
all places.
    After attending the luncheon we had previous to this 
meeting, I am very proud and honored that we have someone such 
as yourself, Chairman Manzullo, with such a great fighting 
experience, and thank you very much for your dedication in 
fighting for us and the rest of the Committee.
    Like many small business owners, we had a vision back in 
1994, my sister-in-law and I, of starting a little coffee 
company. And probably the most frequent question I have been 
asked since I have been to Washington is not about the business 
but how did you come up with a name like Mountain Mudd. Well, I 
have to tell you that it was between Two Dumb Blondes Espresso 
or Mountain Mudd, so I am sure glad we chose the latter.
    As we pursued our idea, we wanted to do something 
different, and if you have been to West Yellowstone, you know 
that we can have a lot of snow. If you listened to the news 
this morning, we had over eight inches of snow just yesterday, 
and, well, we probably get two nice days out of the year, so we 
knew we could not do a sidewalk cafe like Starbucks. So we did 
a drive-through coffee kiosk with an enclosed environment, and 
it has really been the secret to our success.
    My husband and I, Dennis, built that first coffee kiosk in 
our friend's garage. It took us over four months to build it, 
and we had no idea what we were doing. But now our little 
company produces one building every other day, and we have a 
20,000 square-foot manufacturing plant. We have sold our coffee 
kiosks to 150 other individual people just like myself and my 
husband, and we impact over 400 hard-working individuals.
    The ideas, though, come with rules and regulations, and you 
touched on that in your speech. Not only federal government red 
tape and rules and regulations can hinder small businesses like 
ourselves from growing and prospering. When we go into a city 
or a community, we must deal with misconceptions and people not 
knowing exactly what our business is. It is a small, portable, 
little business on wheels. So we have to go through many local 
agencies, zoning issues, signpermits, planned urban development 
permits. I could go on and on and on.
    So I would urge you to definitely look into the red tape in 
small business because a small business can grow from a really 
small little dream into a big company, and thank you.
    [Applause.]
    [Ms. Burkhartsmeier's statement may be found in appendix.]
    Chairman Manzullo. Thank you. I am sorry. I am so tired.
    Ms. Millender-McDonald. That is all right, Mr. Chairman. 
Take a coffee break.
    Chairman Manzullo. I need that very much. Please go ahead.
    Ms. Millender-McDonald. Thank you, Mr. Chairman. Thank you 
so much for bringing these outstanding small business folks to 
us today. Given the National Small Business Week, we are so 
grateful to all of you and the work that you have done, and 
especially having the administrator sit on the dais with us, I 
tell you, this is really good news and hot stuff. To have him 
here, representing California and all others, and you, young 
woman, is it----
    Ms. Guadarrama. Guadarrama.
    Ms. Millender-McDonald [continuing]. Guadarrama, 
congratulations to you for California's best in small business.
    But I say to you, Mr. Chairman, that this is just a 
reflection of what can be done once you get a team of folks and 
people like these outstanding folks with your team behind you 
and your respective businesses working together and trying to 
be as efficient as you can. This as a ranking member on this 
Committee, and I applaud you and the young woman in the orange 
dress out there, your spirit is what has been the driving 
force. The energy that you brought in your presentation 
certainly is indicative of why you are successful. And so I 
have nothing else to say. What can you say to success but thank 
you?
    Thank you, Mr. Chairman. I turn it back to you with my 
statement for the record.
    [Ms. Millender-McDonald's statement may be found in 
appendix.]
    Chairman Manzullo. Thank you. Your statement will be 
included in the record. Congressman Thune?
    Mr. Thune. Thank you, Mr. Chairman. I cannot add anything 
to that except to say thank you and congratulations to all of 
you. You are what the entrepreneurial spirit is all about, and 
I had the opportunity earlier--I just came from a meeting in my 
office with our Small Business of the Year award winner in the 
State of South Dakota. In South Dakota, I think every business 
is by definition small with a couple of exceptions, but they 
are really the job-creating engine, and we want to do 
everything we can to make sure that you have at your disposal 
the freedoms, the lack of regulatory and tax barriers in order 
to succeed, and if there are things that we can do with the 
programs that SBA administers, fine tune those to make those 
more workable to add to your success, we certainly want to be 
available to do that, and just appreciate the great job that 
you are doing out there creating jobs in this economy. Thank 
you very much for being here. It is wonderful to hear these 
powerful testimonies and success stories. It is kind of 
inspiring, actually. We might have to go try something else for 
a living, huh, guys?
    Ms. Millender-McDonald. Of course, you will.
    Chairman Manzullo. I have got just a couple of questions. I 
cannot ask a question of everybody, but I am fascinated by the 
power conversion to which you referred Mr. Siccardi. Would you 
explain this again?
    Mr. Siccardi. Basically, in a big building you have got a 
monstrous heater or air conditioner that makes cold air or hot 
air, and it comes in just like a mushroom, and then it goes 
out, and the air is not really distributed. In our building 
what we have been able to do is distribute the air effectively. 
For 30 seconds, 60 seconds our air movers are on, and then they 
sit there, and this monstrous building is 70 degrees, and it 
does not want to go anywhere. So consequently, the building and 
all its contents becomes a stable, uniform mass.
    I will give you another example. We work at a company in 
Arkansas that does canning of vegetables. Here is a 100,000 
square-foot warehouse full of canned goods, and we circulate 
the air, and in the wintertime these canned goods, 70 degrees, 
ceiling to floor. Right next door is another warehouse, 100,000 
feet, full of canned goods, and heaters are in the ceiling like 
in a regular building. A hundred and five on the ceiling. The 
temperature is 47 on the floor. That heat as it is going 
through the roof is taking all the heat of the building out. 
And the difference is when we do it our way, the building and 
all its stuff becomes the same temperature, and it does not go 
anywhere, and it just needs pulsing, very efficient pulsing. It 
is that simple.
    Another point.
    Chairman Manzullo. Go ahead.
    Mr. Siccardi. Oftentimes, in a large building the 
thermostat is over there against the wall. It has no 
relationship with the air of the building. In my presentation 
there is a very good demonstration of how when the system is 
on, we can go from 55 to 70 degrees just like that using 
100,000 BTUs, for instance. Without the circulation it takes, 
like, three hours and 800,000 BTUs for that thermostat to get 
satisfied. And the net result is in the regular building the 
temperature is going up and down. We are plus or minus one 
degree constantly. It is so simple it is ridiculous. The unique 
thing is, as a friend of mine with a large, major control 
company said, it is unbelievable, but what you did is about 
what is up there, which we do not pay attention to in regular--
--
    Chairman Manzullo. So you take and you jet--what is the 
word?--jet streams of air----
    Mr. Siccardi. Boulevair.
    Chairman Manzullo [continuing]. Boulevair, and that breaks 
up the mass.
    Mr. Siccardi. And it goes to the wall and gets all the air 
in the building moving.
    Chairman Manzullo. So what normally would cost how much for 
a regular gas bill for a building, how much would you save by 
using that method?
    Mr. Siccardi. Depending on the geography and the 
circumstances, it can be as much as, depending on what is 
really going on, it could be 50, 75 or more percent. Hopefully, 
you will read my report.
    Chairman Manzullo. I will. The complete statements of the 
witnesses and members of Congress will be made part of the 
record. Gene, would you tell us how you came across that corn 
burner? I think you were looking at an ad in Forbes Junior, or 
what was it?
    Mr. Berg [continuing]. Fortune magazine had an 
advertisement about a small company in Hutchinson, Minnesota.
    Chairman Manzullo. It was an article, not an advertisement.
    Mr. Berg. Article. I am sorry.
    Chairman Manzullo. Go ahead.
    Mr. Berg [continuing]. In Hutchinson, Minnesota, that had 
developed a very efficient way to burn corn and other fuels, 
but corn being the primary fuel, as an alternative to wood 
burning, wood being not a very efficient fuel and also a dirty 
fuel. In fact, there are cities in areas in this country that 
are beginning to outlaw wood burning because of the pollution 
factor.
    So he developed this corn-burning technology. Literally, a 
bushel of corn goes into the hopper, and as Don mentioned 
earlier, that will heat a 2,000 square-foot home easily for a 
day, and so abushel of corn is, I do not know, a couple of 
bucks, Don knows----
    Chairman Manzullo. It is a dollar eighty-one.
    Mr. Berg. So it literally is that simple. There is a 
thermostat so it pulses the corn in there a few kernels at a 
time and keeps a very, very hot fire. I think corn burns at 
1,100 degrees, wood at three or 400 degrees, and so it gives 
you a feeling for being a much better fuel, and it is clean. It 
does not smell. You have seen it, Don.
    Chairman Manzullo. I have seen it. I asked you to bring the 
machine here.
    Mr. Berg. Security would not let me.
    Chairman Manzullo. Security would not let you bring it in. 
But this was a frustrated inventor. There was an article 
written by him in Fortune magazine, and then you read about 
him.
    Mr. Berg. Yeah. I did not fully answer your question. I 
read about him in Fortune magazine. He said he could have sold 
50,000 of these in the winter of 2000 had he been able to build 
them. But he had a relatively small shop, more of an inventor 
than he was a manufacturer, and that is the kind of work that 
we do and do well. So we went and met him, introduced 
ourselves, and said that we would like to make those stoves for 
you, and so he awarded us the contract late last year, and we 
have been making those stoves since right around Christmas 
time.
    Chairman Manzullo. Now what is unique about this corn 
burner is the fact that it is 100 percent corn.
    Mr. Berg. Correct.
    Chairman Manzullo. You do not have to integrate any other 
fuels in it.
    Mr. Berg. Correct.
    Chairman Manzullo. And then what is it about this burner 
that has very little residue, no odor, and very little smoke?
    Mr. Berg. He will not tell me.
    Chairman Manzullo. It is efficiency----
    Mr. Berg. It is efficiency. It is the way he moves the air. 
It is also the fact that in the burning pot, the burning 
chamber, he stirs the corn as it burns, which does not allow a 
buildup of the residue that you would get from burning corn if 
it were just idle or sitting in the chamber. So it is a 
combination of its design, the way he brings the air in, and 
the fact that he stirs the corn with a computer algorithm that 
allows him to not have the buildup and do such a great job of 
heating.
    Chairman Manzullo. Does this corn have to be totally dry 
before it goes into the hopper?
    Mr. Berg. You can go to, you know, 13, 14 percent moisture. 
Standard corn. You do not have to have any special drying. One 
of our employees, the team members, bought one at a substantial 
discount that you can have, Don. He bought one of these, and he 
literally brings his pickup truck to the farmer down the 
street, dumps it into his pickup truck. He takes it home and 
puts them into 55-gallon drums that we give him.
    Chairman Manzullo. So this corn is dried in the field, or 
does the farmer have to dry it in the elevator?
    Mr. Berg. Yes.
    Chairman Manzullo. It has to be in the elevator.
    Mr. Berg. Correct.
    Chairman Manzullo. Okay. I just want to let you know that 
there is a company out there that is working on a genetically 
modified, a GMO corn product that will dry in the field. I have 
not told you about that yet.
    Mr. Berg. No. I am interested in knowing about that.
    Chairman Manzullo. I told them about that machine that you 
are working with. And the goal there is if it is possible to 
dry the corn in the field, then you can go directly from the 
field to the hopper----
    Mr. Berg. Right.
    Chairman Manzullo [continuing]. Which would revolutionize 
heating in this country by making it a totally renewable energy 
without having to use gas in order to dry the kernel before it 
goes in. Plus what I noticed when I was there in Byron is that 
corn is not totally dry.
    Mr. Berg. No.
    Chairman Manzullo. It still had a lot of moisture content 
in it. So very good. Congresswoman Velazquez.
    Ms. Velazquez. Thank you, Mr. Chairman, and I want to thank 
all of you again for being here. I am sorry I was not able to 
stay, but I had two more meetings back in my office.
    I think it is appropriate that during this week we 
celebrate small business to talk about the role that the Small 
Business Administration plays in helping small businesses. 
Brenda, I saw that in your testimony you said that your initial 
startup financing came from a cashing of a life insurance 
policy and a 401K. At the time, were you aware of the SBA 
financing products?
    Ms. Burkhartsmeier. We certainly were aware that the 
products were out there, but like a lot of entrepreneurial type 
of people we were so excited about the idea and the end result 
that we did not take the time to do a very good business plan, 
or we did not take the time to do a well-executed strategy of 
how we were going to do the business. When we went into our 
local economic development company, we were a bit put off by 
the approach. When we went in, we were told, well, you have got 
to have a business plan. You have got to have this. You have 
got to have that. We really thought naively that, gee, we were 
nice and cute, and we thought we would go in and waltz in and 
get the money.
    Well, it does not happen in business. So really we did know 
about it. The information is out there, and it really takes 
other people, other business people trying to help other 
business people to know where the information is. I think the 
Web had certainly helped because now people, without getting 
embarrassed going into that local economic development person 
and being told what you need and kind of intimidated, they can 
preliminarily look at that site and qualify themselves before 
they go in. But still, we could not have gotten the loan 
because there was no business like ours, and so we had to 
establish the track record, and now our businesses that we sell 
to, the 150 other people, do have a track record to follow. We 
would not have gotten the loan--well, we maybe would have, but 
there certainly was not anyone in our industry at that time.
    Ms. Velazquez. So how do you think an SBA loan would have 
benefited you when you started your business?
    Ms. Burkhartsmeier. Well, we certainly would have not had 
to have sold our car. We certainly would not have had to maybe 
ruin your credit going along the way because you are robbing 
Peter to pay Paul. All small business people do that when they 
are starting out. We would have had the capital, and maybe we 
would have had some more mentoring and some tutoring along the 
way to teach us. But as small business people, we do need to 
make mistakes, and we certainly made lots of them, and now we 
teach other people how not to make those same mistakes.
    Ms. Velazquez. Can any of the other members of the panel 
who have used any of the SBA products talk to us about how you 
benefited or how your business would have done much better if 
you had the opportunity to use any of those products like 
loans? Yes?
    Ms. Guadarrama. When I originally started GC Micro, the 
startup capital that I had to work with was from the sale of my 
house back in Texas. That was $20,000, and I went throughthat 
very quickly. I would not have been able to grow the company if a 
number of years later I had not been able to receive a bank loan that 
was SBA guaranteed, and that was a $300,000 loan, and that made all the 
difference in the world to us. Once we had that first loan in place and 
were able to pay it off, then at that point the other banks became 
interested in working with us, and it just made a tremendous 
difference.
    The other part of the SBA that we have worked with is with 
the 8(a) program, and while we probably only do maybe 15 to 20 
percent of our business under the 8(a) program, the first large 
contract that we received was through the 8(a) program. In 
trying to put that contract together, we also went to the 
Minority Business Development Agency to actually help us put 
together the contract language because we had not worked with 
it before. So working both with the MBDA and through the 8(a) 
program, we were able to put our first really large contract in 
place, then had the experience to start looking at other 
contracts. So it made a big difference in my company.
    Ms. Velazquez. Thank you, Belinda. Any other person who 
would like to comment? Thank you, Mr. Chairman.
    Chairman Manzullo. Could you yield for a second?
    Ms. Velazquez. Sure.
    Chairman Manzullo. Didn't one of the witnesses have an SBIR 
loan? The SBIR program; did anybody participate in that? You 
did, didn't you, Frank?
    Mr. Siccardi. No. I need to in the worst way from this 
point on.
    Chairman Manzullo. First, I want to thank you all for 
coming today. Administrator Baretto, thank you for 
participating. I wanted you up here to sort of get a different 
perspective. I wanted you to look at the people that have come 
here especially to thank you for the great work that the Small 
Business Administration has done. You know, Mr. Baretto was 
sworn in--was it August?
    Mr. Baretto. It was July 25th.
    Chairman Manzullo. And then within what, five weeks, five 
six weeks, September 11th came along and really turned this 
town upside down. But to all of you people here, you represent 
such a great cross-section of America. You are from everywhere. 
We have got Montana and Illinois and California. But what is 
important is the fact that these programs exist in the SBA only 
to the extent that people know about them, and that is the 
biggest problem that we have.
    We still struggle with 9/11 in New York with the small 
businesses up there because the SBA only has unfortunately very 
limited authority with the distribution of the help, and we are 
going to be having a hearing in New York City on why the big 
companies are getting all the money, and the small businesses 
are being hurt in a dramatic way. We would like to give the SBA 
more authority over how to use that money because they are the 
experts at it. They know what a disaster is, nothing like 9/11. 
So, again, I want to thank you all for coming out here.
    Mr. Baretto, did you want to have a closing comment?
    Mr. Baretto. I just want to thank you, Mr. Chairman, and 
Ranking Member Velazquez. I have appreciated the working 
relationship we have had. I very much look forward to continue 
working with you. You told me early on that this committee is a 
bipartisan committee, and there are only business solutions, 
not partisan solutions, and you have proven that, and it has 
been a pleasure to work with you.
    I also want to recognize a couple of the other individuals 
that do great work for us. A lot of the questions were on 
regulations. The chief counsel of advocacy of the SBA is here, 
Tom Sullivan, and also Michael Barrera, the national ombudsman. 
Any of you who are having any issues with regulations, I invite 
you to get to know them. And thank you so much again for all 
your leadership and everything that you do to make American 
small business strong. We appreciate it very, very much. Can we 
give the congressmen and the ranking member a round of 
applause?
    [Applause.]
    Chairman Manzullo. This hearing is adjourned.
    [Whereupon, at 4:30 p.m., the committee was adjourned.]
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