[Senate Hearing 107-615]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-615
 
   SMALL BUSINESS DEVELOPMENT IN NATIVE AMERICAN COMMUNITIES: IS THE 
                                FEDERAL
                  GOVERNMENT MEETING ITS OBLIGATIONS?
=======================================================================

                             JOINT HEARING

                               BEFORE THE

            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                                AND THE

                      COMMITTEE ON INDIAN AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 30, 2002

                               __________

    Printed for the Committee on Small Business and Entrepreneurship


 Available via the World Wide Web: http://www.access.gpo.gov/congress/ 
                                 senate




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            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                      ONE HUNDRED SEVENTH CONGRESS

                              ----------                              
                 JOHN F. KERRY, Massachusetts, Chairman
CARL LEVIN, Michigan                 CHRISTOPHER S. BOND, Missouri
TOM HARKIN, Iowa                     CONRAD BURNS, Montana
JOSEPH I. LIEBERMAN, Connecticut     ROBERT F. BENNETT, Utah
PAUL D. WELLSTONE, Minnesota         OLYMPIA J. SNOWE, Maine
MAX CLELAND, Georgia                 MICHAEL ENZI, Wyoming
MARY LANDRIEU, Louisiana             PETER G. FITZGERALD, Illinois
JOHN EDWARDS, North Carolina         MIKE CRAPO, Idaho
MARIA CANTWELL, Washington           GEORGE ALLEN, Virginia
JEAN CARNAHAN, Missouri              JOHN ENSIGN, Nevada
    Patricia R. Forbes, Democratic Staff Director and Chief Counsel
               Emilia DiSanto, Republican Staff Director
               Paul H. Cooksey, Republican Chief Counsel





                      COMMITTEE ON INDIAN AFFAIRS


                      ONE HUNDRED SEVENTH CONGRESS

                              ----------                              
                   DANIEL K. INOUYE, Hawaii, Chairman
            BEN NIGHTHORSE CAMPBELL, Colorado, Vice Chairman
KENT CONRAD, North Dakota            FRANK H. MURKOWSKI, Alaska
HARRY REID, Nevada                   JOHN McCAIN, Arizona
DANIEL K. AKAKA, Hawaii              PETE V. DOMENICI, New Mexico
PAUL WELLSTONE, Minnesota            CRAIG THOMAS, Wyoming
BYRON L. DORGAN, North Dakota        ORRIN G. HATCH, Utah
TIM JOHNSON, South Dakota            JAMES INHOFE, Oklahoma
MARIA CANTWELL, Washington
        Patricia M. Zell, Majority Staff Director/Chief Counsel
         Paul Moorehead, Minority Staff Director/Chief Counsel












                            C O N T E N T S

                              ----------                              

                           Opening Statements

                                                                   Page

Wellstone, The Honorable Paul D., a United States Senator from 
  Minnesota......................................................     7
Inouye, The Honorable Daniel K., Chairman, Committee on Indian 
  Affairs, and a United States Senator from Hawaii...............     1
Cantwell, The Honorable Maria, a United States Senator from 
  Washington.....................................................    48
Bond, The Honorable Christopher S., Ranking Member, Committee on 
  Small Business and Entrepreneurship, and a United States 
  Senator from Missouri..........................................    12
Campbell, The Honorable Ben Nighthorse, a United States Senator 
  from Colorado..................................................    11
Enzi, The Honorable Michael B., a United States Senator from 
  Wyoming........................................................    13
Crapo, The Honorable Mike, a United States Senator from Idaho....    19
Thomas, The Honorable Craig, a United States Senator from Wyoming    19
Johnson, The Honorable Tim, a United States Senator from South 
  Dakota.........................................................    22

                           Witness Testimony

Johnson, The Honorable Tim, a United States Senator from South 
  Dakota.........................................................    22
Udall, The Honorable Tom, a Member of Congress from New Mexico...     3
Street, Kaaren Johnson, associate deputy administrator for 
  Entrepreneurial Development, U.S. Small Business Administration    32
Danforth, The Honorable Gerald, chairman, Oneida Tribe of Indians 
  of Wisconsin, Oneida, WI.......................................    49
Homer, Pete, president & chief executive officer, National Indian 
  Business Association, Washington, D.C..........................    56
Dorr, Derek, chief operating officcer, Deco, Inc., Onimia, 
  Minnesota......................................................    61
Drapeaux, Monica, executive director, The Lakota Fund, Kyle, SD..    66
Hampson, Tom, executive director, ONABEN: A Native American 
  Business Network, Tigard, OR...................................    79

         Alphabetical Listing and Additional Material Submitted

Bagne, Conrad
    Comments for the record......................................   208
Bond, The Honorable Christopher S.
    Opening statement............................................    12
Campbell, The Honorable Ben Nighthorse
    Opening statement............................................    11
    Prepared statement...........................................     2
Cantwell, The Honorable Maria
    Opening statement............................................    48
    Prepared statement...........................................   204
Committee on Small Business and Entrepreneurship
    S. 2335, Native American Small Business Development bill 
      summary and text...........................................   150
     H.R. 2538, Native American Small Business Development bill 
      text.......................................................   187
Crapo, The Honorable Mike
    Opening statement............................................    19
Danforth, The Honorable Gerald
    Testimony....................................................    49
    Prepared testimony...........................................    51
    Post hearing questions.......................................   126
Dorr, Derek
    Testimony....................................................    61
    Prepared testimony...........................................    64
    Post-hearing questions.......................................   138
Drapeaux, Monica
    Testimony....................................................    66
    Prepared testimony...........................................    68
Enzi, The Honorable Michael B.
    Opening statement............................................    13
    Prepared statement...........................................    15
Hampson, Tom
    Testimony....................................................    79
    Prepared testimony...........................................    82
    Post-hearing questions.......................................   128
Homer, Pete
    Testimony....................................................    56
    Prepared testimony...........................................    58
    Post-hearing questions.......................................   135
Inouye, The Honorable Daniel K.
    Opening statement............................................     1
Johnson, The Honorable Tim
    Testimony....................................................    22
    Prepared statement...........................................    25
Street, Kaaren Johnson
    Testimony....................................................    32
    Prepared testimony...........................................    35
    Post-hearing questions.......................................   113
Thomas, The Honorable Craig
    Opening statement............................................    19
    Prepared statement...........................................    20
Udall, The Honorable Tom
    Testimony....................................................     3
    Prepared testimony...........................................     5
Wellstone, The Honorable Paul D.
    Opening statement............................................     7
    Prepared statement...........................................     9

                        Comments for the Record

Bagne, Conrad, chief operating officer, Arctic Slope Regional 
  Corporation, Barrow, AK........................................   208
Burns, The Honorable Conrad R., a United Sates Senator from 
  Montana........................................................   201
Cooper, David, president and chief executive officer, Hana 
  Engineering, Inc., Honolulu, HI................................   210
Dorr, Tom, director, Western Washington University, Small 
  Business Development Center, Bellingham, WA....................   100
Hughes, Claire, president, native Hawaiian Chamber of Commerce, 
  Honolulu, HI...................................................   212
Jarrett, Ron, president, Jarrett Technology Solutions, Inc., 
  Kailua, HI.....................................................   213
Keppler, H.K. Bruce, attorney at law, Honolulu, HI...............   214
Keppeler, Jack, president, John P. Keppeler II, Inc. Agribusiness 
  Consultant, Honolulu, HI.......................................   215
Minthonr, Antone, chairman, Board of Trustees, Confederated 
  Tribes of Umatilla Indian Reservation, Pendleton, OR, testimony 
  before the House Subcommittee on Appropriations................   216
Mleynek, Darryl, state director, Hawaii Small Business 
  Development Center Network, Hilo, HI...........................   219
Nicolai, Matthew, president and chief executive officer, Calista 
  Corporation, Anchorage, AK.....................................   221
Park, Kaulana, program manager, Native Hawaiian Revolving Loan 
  Fund, Officer of Hawaiian Affairs, Honolulu, HI................   223
Robbins, Kenneth, president, Native Center for American Indian 
  Enterprise Development, Mesa, AZ...............................    93
Rose, Charles, president, Association of Hawaiian Civic Clubs, 
  Honolulu, HI...................................................   225
Shinn, Dorothy, executive director, Ahtna Heritage Foundation, 
  Glenallen, AR..................................................   227
Vasconcellos, Vaughn, president and manager, Akimeka LLC, 
  Honolulu, HI...................................................   228






   SMALL BUSINESS DEVELOPMENT IN NATIVE AMERICAN COMMUNITIES: IS THE 
              FEDERAL GOVERNMENT MEETING ITS OBLIGATIONS?

                              ----------                              


                        TUESDAY, APRIL 30, 2002

                              United States Senate,
Committee on Small Business and Entrepreneurship, with the 
                               Committee on Indian Affairs,
                                                   Washington, D.C.
    The committees met jointly, pursuant to notice, at 9:35 
a.m., in room SR-428A, Russell Senate Office Building, the 
Honorable Daniel K. Inouye, Chairman of the Committee on Indian 
Affairs and the Honorable Paul Wellstone of the Committee on 
Small Business and Entrepreneurship presiding.
    Present: Senators Wellstone, Cantwell, Inouye, Johnson, 
Bond, Enzi, Crapo, Campbell, and Thomas.

OPENING STATEMENT OF THE HONORABLE DANIEL K. INOUYE, CHAIRMAN, 
SENATE COMMITTEE ON INDIAN AFFAIRS, AND A UNITED STATES SENATOR 
                          FROM HAWAII

    Chairman Inouye. The Committee on Indian Affairs and the 
Committee on Small Business and Entrepreneurship meet today to 
receive testimony on the challenges confronting the formation, 
development, and growth of small businesses in Indian country.
    The committees will also receive testimony on S. 2335, a 
bill 
introduced by Senators Johnson, Kerry, Cantwell, Wellstone, 
Daschle, Baucus, Bingaman, Stabenow, and Clinton. I am also 
pleased to serve as a cosponsor of this measure. S. 2335 
provides statutory authority for the establishment of the 
Office of Native American Affairs within the Small Business 
Administration and further provides for the establishment of 
the Native American Small Business Development Program.
    On behalf of both committees, I must advise the witnesses 
for today's hearing that we do have several committees meeting 
at the same time today, and so to enable Members who have to 
chair other hearings to do so, there may be several Senators 
chairing this hearing and we have to complete this hearing by 
11 a.m.
    Now, may I call upon Congressman Udall for this important 
hearing.
    Mr. Udall.
    Congressman Udall. Thank you very much, Mr. Chairman and 
Vice Chairman Campbell.
    Chairman Inouye. Before we proceed, may I ask if the Vice 
Chairman has anything he wishes to say?
    Senator Campbell. If we have just a really short timeframe, 
Mr. Chairman, I will put my statement in the record and maybe 
make a little statement when I ask some questions.
    [The prepared statement of Senator Campbell follows:]
      
    [GRAPHIC] [TIFF OMITTED] 81288.001
    
    Chairman Inouye. Senator Bond.
    Senator Bond. Mr. Chairman, like you, I have many other 
things to do. I would be happy to hear the Congressman's 
testimony. I do want to say some things, because the Small 
Business Committee has been very active in this issue. I am not 
going to be as kind as my colleague from Colorado. I am going 
to say my statement when you get around to it.
    Chairman Inouye. That is great.
    Senator Enzi.
    Senator Enzi. Mr. Chairman, I would wait until after Mr. 
Udall's testimony, as well, but I do have a statement that I 
would like to make.
    Chairman Inouye. Mr. Udall.

             STATEMENT OF THE HONORABLE TOM UDALL, 
          A REPRESENTATIVE IN CONGRESS FROM NEW MEXICO

    Congressman Udall. Thank you, Mr. Chairman and Vice 
Chairman Campbell, Senator Bond, and Senator Enzi. Thank you 
for convening this hearing on this important topic. I 
appreciate the opportunity to be here.
    One of our biggest challenges as a Nation is bringing 
economic development to Indian country. Despite the work that 
has gone into improving economic and small business development 
in Indian country, there is still a great deal that needs to be 
done to improve the economic standing of Native Americans 
throughout the United States.
    The current economic situation on Native American lands is 
very grave, but does hold promise for the future. The average 
unemployment rate on these lands is almost 10 times the 
national average, while at the same time, Native Americans are 
creating small businesses at an unprecedented rate. Native 
American- and Native Alaskan-owned small businesses grew by 84 
percent from 1992 to 1997, and their gross receipts grew by 179 
percent in the same period. Clearly, these figures point to a 
desire and an ability to start small businesses.
    For over 200 years, the Federal Government and the first 
Americans have been engaged in a trust relationship which has 
resulted in a great deal of work on economic development 
issues. However, the work has yet to usher in a new era of 
economic development in Indian country.
    That is why I am so pleased today with the legislation 
before these committees. Senator Kerry and Senator Johnson have 
expanded upon my earlier introduced and House-passed Native 
American Small Business Development Act. This legislation moves 
forward with three programs which will provide excellent 
assistance to Native American entrepreneurs.
    In addition, I applaud the Senators for including language 
to create a statutory Office of Native American Affairs under 
the U.S. Small Business Administration. This office would be 
headed by an assistant administrator who must be knowledgeable 
about Native cultures and have experience providing culturally 
tailored small business development assistance to Native 
Americans.
    Those of us in the House and those of us in the Senate who 
represent tribes, we know firsthand the need to spur economic 
development in Indian country. I represent parts of the Navajo 
Nation, numerous Indian pueblos, and the Hickory Apache Nation, 
and I can tell you firsthand that something dramatic needs to 
be done to alleviate the high levels of unemployment that 
exist.
    The Federal Government can play an integral role in 
spurring further small business development while at the same 
time assisting the recently established businesses to gain a 
stronger foothold in the market. We have an excellent 
opportunity to help bring increased economic prosperity to 
these areas that have not been as fortunate in reaping the 
rewards of the recent U.S. economic expansion.
    I look forward to working with you further and with my 
colleagues in the House to ensure that this legislation is 
passed as expeditiously as possible. I believe passing the 
Native American Small Business Development Act will provide the 
necessary tools and assistance to establish and build on their 
businesses and, in turn, their communities.
    The House and Senate Small Business Committees have worked 
endlessly to ensure that programs exist to assist veterans, 
women, and minority business owners, but entrepreneurs like the 
ones I have mentioned rarely face the barriers of living in an 
area with little to no infrastructure, including lack of water, 
electricity, and facilities, which many Native Americans face. 
Our discussion today is the first big step, I believe, to 
tearing down those barriers and building up economic 
development for Native Americans.
    Let me, in closing, just thank the staff of our committees 
and our personal staff for working very closely together and 
thank you for the opportunity, again, to testify. I am happy to 
answer any questions.
    Chairman Inouye. Thank you very much, Congressman
    [The prepared statement of Congressman Udall follows:]
    [GRAPHIC] [TIFF OMITTED] 81288.002
    
    [GRAPHIC] [TIFF OMITTED] 81288.003
    
    Chairman Inouye. Now, may I call upon Senator Wellstone, 
who is joining me this morning to chair this important hearing 
on behalf of the Committee on Small Business and 
Entrepreneurship.

OPENING STATEMENT OF THE HONORABLE PAUL D. WELLSTONE, A UNITED 
                 STATES SENATOR FROM MINNESOTA

    Senator Wellstone. Thank you, Mr. Chairman. I wonder, I do 
not want to precede other colleagues if opening statements have 
been made. I gather we are also waiting for Senator Johnson, is 
that correct?
    Let me ask, I do have an opening statement. Let me ask the 
Congressman, are you OK on time or do you want to--I would be 
willing to defer to questions to him and then make an opening 
statement.
    Chairman Inouye. Go ahead.
    Senator Wellstone. All right. Then I will go forward with 
an opening statement. I want to thank my colleagues, both on 
Small Business and the Committee on Indian Affairs, for the 
joint hearing. It is real important. I want to thank you, 
Congressman Udall, for your excellent work and also your sole 
personal commitment. I want to thank Senator Johnson, as well, 
and I am proud to be a cosponsor of this legislation.
    I want to point out that during the 1990's, when we saw 
this economic expansion in the country, we saw double-digit 
unemployment rates in Indian Country, in excess of 20 to 30 
percent. In the State of Minnesota, that was the case, even 
though the State's overall unemployment rate was 3 percent or 
less.
    So we are going to have a lot of success stories today, but 
I think this legislation is critically important and I think we 
ought to really be pushing entrepreneurship so that you can 
have more home-grown economies. We are going to hear from Derek 
Dorr, who will be here, and he is here with his father, Robert 
Dorr, and they are going to talk about their experiences with 
SBA and what sounds like a great success story, both on the 
8(a) and on the HUBZone Program.
    The Native American Small Business Development Act, which 
you have introduced, again, I think is critically important in 
getting more Federal resources out to reservations and in 
meeting our trust obligations to the tribes.
    We are also going to hear from SBA on their work in Indian 
Country and I want to get some explanation, I say to my 
colleagues, especially on the Small Business Committee, and I 
hope a reversal of the SBA's decision to cutoff all funding for 
the Tribal Business Information Center, or the TBIC Program. I 
do not really quite understand this.
    The Minnesota TBIC, which has been run by the Minnesota 
Chippewa Tribe, has done great work at the cost to the Federal 
Government of $33,000 a year. That is it. Their TBIC is 
basically used like a business library, where prospective small 
business people in Indian Country use computers, access the 
Internet, do research, and it is critically important, and I 
cannot for the life of me understand the Small Business 
Administration's decision here.
    According to the director of the Minnesota Chippewa Tribe 
Native American Business Development Center, the loss of 
funding for the TBIC means that they will literally have to 
lock the doors because they cannot afford to staff it. It just 
does not make any sense whatsoever.
    I have got a full statement that I want to be included in 
the record, so I will just conclude this way. I hate to say it, 
but to colleagues on both Committees, the pattern I have seen 
with SBA, and I have been on this Committee since the very 
beginning and try never to even miss a committee hearing, but 
the pattern I have seen is nickel-and-diming small businesses. 
I do not understand it. To propose cutting $4.5 billion in 
loans, I mean, the cuts and the 50 percent reduction in 7(a) 
and 504 are very short-sighted. Small businesses will tell you 
that. The lenders will tell you that. All of them will say it.
    The proposed cutting and then flat funding for the 
Microloan Technical Assistance Program, which has been 
extremely important, I do not understand, as well. Now we are 
wiping out the SBA program that targets or helps Native 
Americans to save $200,000 or less, which is 0.0003 percent of 
the SBA's annual budget. From a cost/benefit point of view, it 
is irrational.
    So I am here to thank my colleagues for their legislation. 
I am here to also sharply question SBA about what in the world 
they are doing right now. I thank the Chair.
    Chairman Inouye. Thank you.
    [The prepared statement of Senator Wellstone follows:]
    [GRAPHIC] [TIFF OMITTED] 81288.004
    
    [GRAPHIC] [TIFF OMITTED] 81288.005
    
    Chairman Inouye. Senator Campbell.

 OPENING STATEMENT OF THE HONORABLE BEN NIGHTHORSE CAMPBELL, A 
              UNITED STATES SENATOR FROM COLORADO

    Senator Campbell. Mr. Chairman, since Senator Johnson is 
not here yet to speak on behalf of this bill, let me make maybe 
just a short opening statement.
    I appreciate you and Senator Wellstone convening this 
hearing. I was on the Small Business Committee for 6 years on 
the House side and have been active in this Committee ever 
since I have been in the Senate. But I do have some questions 
about the bill, and that is why I am not an original cosponsor 
of it.
    I understand the importance of creating jobs on Indian 
reservations. Small business is the backbone of most economies 
in America. Seventy percent of employment, or more, comes from 
small business. But one of the problems I have always had when 
we talk about creating new Federal programs for Indian 
reservations is I think there is confusion when we use the word 
``economic development.''
    I know many times in the past, in talking to people on 
reservation, the feeling among some is that what we need to do 
is get a grant from the Federal Government and that creates 
jobs and, therefore, somehow, that equals economic development. 
It is a kind of a flow from the Federal Government that creates 
the jobs, when, in fact, we all know that is not the basis for 
job creation in America. It is done by efforts to create a 
product or a service and sell that and that makes a profit and 
that, in fact, is what makes the free enterprise system work.
    With reservation system now, an awful lot of small 
businesses are related to what we call home industries. In 
fact, Senator Udall represents the Navajo Tribe. The Navajos as 
well as many other tribes in the Southwest, they say that the 
home industry dealing with pottery, basketry, rugs, things of 
that nature, are almost $1 billion a year, a huge industry.
    I would have some questions of this, although I support 
anything that would create more jobs on the reservations. But 
first of all, I am not sure what this bill would do that is not 
already being done, and as Senator Wellstone mentioned, we are 
already in the President's budget cutting some programs that I 
think are extremely important. To create another agency when we 
are not funding the ones that are already in place to the point 
where we should, I am not sure if that is productive or not. I 
also would be interested in knowing what the cost will be in 
implementing this new effort and what models we have looked at 
of those successful small businesses on reservations that we 
might help.
    But I notice that Senator Johnson is here, so I will 
curtail the rest of my comments and ask some questions when I 
have the time.
    Chairman Inouye. Senator Bond.

OPENING STATEMENT OF THE HONORABLE CHRISTOPHER S. BOND, RANKING 
MEMBER ON THE COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP, 
           AND A UNITED STATES SENATOR FROM MISSOURI

    Senator Bond. Thank you very much, Mr. Chairman. I welcome 
the opportunity to be here with you and Ranking Member 
Campbell, as well as my colleagues on the Small Business 
Committee, to talk about solving some of the real problems and 
developing common sense solutions.
    The question before us today is how to improve small 
business services in Indian Country, how to make sure that the 
free enterprise system, through small businesses, provides the 
jobs, the opportunity, the hope that really is lacking in too 
many Native American areas in the country today. We should be 
able to strengthen SBA's delivery of technical assistance to 
help entrepreneurs startup and develop small firms on various 
reservations. We have some thoughtful additions to existing 
programs. I look forward to reviewing them and to hearing from 
the SBA's Kaaren Johnson Street on the Bush Administration 
plans in this area.
    No question about it, the needs are enormous. Far too 
often, Indian reservations have been a metaphor for economic 
despair and neglect. As has already been noted, unemployment 
levels are at a scandalous level that should shock our 
consciences.
    We know that small business can be a vital part of changing 
that picture. Getting technical support to the reservation on a 
continuous basis rather than on one-shot, occasional training 
seminars should help translate entrepreneurs from their 
abstract business plans and visions into real jobs and 
opportunity.
    A number of years ago, we developed, or I developed the 
HUBZone Program to get Federal contracts out of the Washington 
Beltway into the hands of small businesses in areas with high 
unemployment and high poverty, and one of the specific targets 
was the Native American reservations. One of our witnesses 
today, Pete Homer of the National Indian Business Association, 
was a very good friend and advisor to us in that. Thank you 
again, Pete, for your help there.
    We wrote in that original HUBZone Act that Federal Indian 
reservations would automatically be considered HUBZones. Small 
businesses could agree to locate there and hire from those 
HUBZones, and could get special competitive advantages in 
winning Federal contracts. There is a set-aside, but then there 
are also specific price preferences that go with it to make 
sure that we make the Federal Government as a purchaser--a 
market for small businesses locating in these impoverished, 
high unemployment areas.
    We ran into technical issues that got in the way of this 
vision, so we developed the HUBZones in Native America Act of 
2000 to fix those problems. Again, Pete Homer was there for 
that. Ben Nighthorse Campbell was then chairman of the Indian 
Affairs Committee, and as chairman, we enjoyed working with 
you, and Senators Stevens and Murkowski worked constructively 
with us on the Alaska Native provisions. The effort was totally 
bipartisan. My now-chairman John Kerry, who was ranking member 
at the time, was part of the initiative. Senator Kerry and I 
have changed roles, but the bipartisan approach and the concern 
and commitment to this live on. Keeping focused on the issues 
instead of the politics is key.
    As with the original HUBZone Act of 1997 and the HUBZones 
in Native America Act of 2000, we can develop solutions that 
work. We look forward to reading the comments of witnesses and 
also hearing the Administration's views. Once we have all the 
cards face up on the table, I think we can see what the needs 
are, what our options are, and move from there.
    Again, I apologize for not being able to stay for the 
entire hearing, but we look forward to a thorough briefing on 
what is going on this morning and we appreciate very much you 
calling this hearing. Thank you.
    Chairman Inouye. Thank you.
    Senator Enzi.

       OPENING STATEMENT OF THE HONORABLE MICHAEL ENZI, 
              A UNITED STATES SENATOR FROM WYOMING

    Senator Enzi. Thank you, Mr. Chairman and Ranking Members 
for holding this hearing. I am pleased to have this information 
regarding the importance of successful Native American small 
business and economic development nationwide. I appreciate the 
unique challenges facing the Native American community in 
creating and sustaining Indian small business and economic 
development opportunities. Therefore, I support and encourage 
discussing common Native American small business development 
barriers and approaches to overcoming these barriers.
    Small business development on the Wind River Indian 
Reservation in Wyoming has and will continue to create a 
network of Native Americans that are excited and knowledgeable 
about entrepreneurship. Northern Arapaho and Eastern Shoshone 
small business entrepreneurs have planted the seeds of economic 
diversity in communities that really need it.
    I know the SBA is dedicated to ensuring that all Native 
Americans who seek to create, develop, and expand small 
businesses have full access to the necessary business 
development and expansion tools available. I was pleased to see 
the creation of the Native American Small Business Outreach at 
$1 million in the President's fiscal year 2003 budget request. 
This outreach will greatly assist the new small businesses 
being created by the Northern Arapaho and Eastern Shoshone on 
the Wind River Indian reservation in Wyoming to sustain 
economic growth in my State.
    Now, I have a person on my Wyoming staff who is a former 
State legislator. He lives on the Wind River Indian reservation 
and is a tribal member. I have worked with him for years and I 
appreciate the perspective that he gives me. His message: first 
fund the current program so that it can reach full 
effectiveness.
    I got to participate in the change for the Native American 
HUBZone effort and I noted that Senator Wellstone mentioned the 
Tribal Information Systems. We do not have that in Wyoming yet. 
Those are current programs. I think there is a shortage of 
concentration and completion, not a shortage of programs.
    I look forward to hearing from Ms. Street concerning SBA's 
Native American Small Business Outreach initiatives, with an 
open dialog between all interested parties. I know we will be 
encouraged to focus more resources on increasing small business 
and economic development assistance to Native Americans.
    In closing, the Senate Committee on Small Business and 
Entrepreneurship is committed to ensuring that the Small 
Business Administration stays on task in an efficient and 
effective manner when assisting small businesses nationwide, 
including Native American small businesses.
    Again, I want to thank Senator Johnson, Congressman Udall, 
Ms. Street, and the other witnesses for being here today. I 
look forward to the information that you will share with us and 
discussing the Native American small business issues. Thank 
you, Mr. Chairman.
    [The prepared statement of Senator Enzi follows:
    [GRAPHIC] [TIFF OMITTED] 81288.006
    
    [GRAPHIC] [TIFF OMITTED] 81288.007
    
    [GRAPHIC] [TIFF OMITTED] 81288.008
    
    [GRAPHIC] [TIFF OMITTED] 81288.009
    
    Chairman Inouye. I thank you, sir.
    Senator Crapo.

  OPENING STATEMENT OF THE HONORABLE MICHAEL CRAPO, A UNITED 
             STATES SENATOR FROM THE STATE OF IDAHO

    Senator Crapo. Thank you, Mr. Chairman. I appreciate the 
fact that we are having this hearing today because there is a 
tremendous amount of interest in Native American economic 
development issues in Idaho.
    I come to this hearing with a sincere interest in finding 
out what it is that the Native American community believes we 
should do to address these issues. As is obvious from some of 
the comments that have already been made, issues have been 
raised as to whether we should begin moving into new programs 
or whether we should be focusing on strengthening and 
increasing support for and the effectiveness of existing 
programs, or whether a mix of the two needs to be achieved. I 
am open to considering all of these options. What I want to 
find are effective solutions.
    I have also worked very closely with the HUBZone Program 
for the Native American tribes as well as other aspects of the 
HUBZone Program. We have seen some significant effects of that 
in Idaho. My opinion is that we need to find out what works, 
find out what needs to have additional support and 
strengthening, and then move ahead in these two committees to 
make sure that we support them the way that we should here in 
Washington, and frankly, that is what I am here to learn about 
today. Thank you very much.
    Chairman Inouye. Thank you.
    Senator Thomas.

       OPENING STATEMENT OF THE HONORABLE CRAIG THOMAS, 
              A UNITED STATES SENATOR FROM WYOMING

    Senator Thomas. Thank you, Mr. Chairman. I will submit a 
statement. I just know that we have worked on the Indian 
Affairs Committee, trying to find ways for a better economy for 
the tribes. I was on our tribe's reservation just a couple of 
weeks ago, met with the business council.
    I, too, am concerned about how we do this. No one would 
argue with the fact that we want to improve small business and 
the economic opportunities on the reservation, certainly, but I 
think we have to take a look at how we can best do that. Some 
measure of success at what has been there and what needs to be 
changed to make it more successful, and some accountability in 
terms of moving toward our objectives is important.
    So I am happy to be here and look forward to hearing from 
the witnesses.
    Chairman Inouye. Thank you very much, and your full 
statement is made part of the record.
    Senator Thomas. Thank you.
    [The prepared statement of Senator Thomas follows:]
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    Chairman Inouye. May I now call upon Senator Johnson, the 
author of the measure.

STATEMENT OF THE HONORABLE TIM JOHNSON, A UNITED STATES SENATOR 
                       FROM SOUTH DAKOTA

    Senator Johnson. Thank you, Mr. Chairman. I want to thank 
Senator Wellstone and Senator Inouye for chairing today's 
hearing and for their support of S. 2235, the Native American 
Small Business Development Act.
    I was pleased to introduce this important legislation last 
week, along with Senator Kerry, and I appreciate the 
opportunity to discuss its objectives as well as the serious 
economic problems facing Native American communities and 
families. I would like to thank Congressman Udall for his 
leadership in the U.S. House to bring these issues to the 
forefront and for his cooperation on this historic legislation.
    I also want to express my appreciation to Monica Drapeaux, 
executive director of the Lakota Fund, for her participation in 
today's hearing. Monica will testify later this morning and 
brings with her years of experience, both as a business owner 
herself and in operating programs to promote Native American 
entrepreneurship.
    Native American communities continue to struggle with the 
social, economic, and cultural repercussions derived from 
persistent and pervasive poverty and unemployment. A recent 
report released by the Census Bureau entitled, ``Poverty in the 
United States: 2000,'' indicates that the 3-year average 
poverty rate for American Indians and Alaska Natives from 1998 
to 2000 was 25.9 percent, higher than for any other race 
groups.
    While most Americans can look forward to continued 
prosperity during 2002, the approximately 2.7 million Native 
American people living in the United States will not. It is 
essential that Native American concerns are provided adequate 
consideration.
    The Native American Small Business Development Act is an 
effort to enhance the availability of technical assistance to 
support entrepreneurship in Indian Country. The communities 
served by this initiative represent some of the most 
traditionally isolated, disadvantaged, and underserved 
populations in our country.
    In my home State of South Dakota, and I am sure it is very 
similar in your respective States, members of this panel, 
employment opportunities chiefly, to the extent they exist, are 
through the tribe, through tribally-owned enterprises, and 
through Federal employment. There is virtually no private 
sector that is in existence in very many of our tribal 
communities across my State and across the country.
    Consider the following statistics. According to the 
Department of Commerce, unemployment rates on Indian lands in 
the continental U.S. range up to 80 percent compared to 5.6 
percent in the United States as a whole. Census data also show 
that the poverty rate for Native Americans during the 1990's 
was 26 percent, compared to the national average of 12 percent. 
Overall, Native American household income is only three-fourths 
of the national average.
    The disparity is particularly evident in my home State of 
South Dakota, where Native Americans represent over 8 percent 
of the State's population, and while the overall State economy 
is relatively strong, with a low 3.1 percent unemployment rate, 
Native American populations continue to suffer. Our counties 
with Indian reservations are ranked by the Census Bureau as 
among the most impoverished anywhere in the United States.
    This month, the Wall Street Journal ran an article that 
focuses in part on the toll of poverty for the Oglala Sioux 
living on the Pine Ridge Indian Reservation. The article noted 
that nearly half the tribe's population is destitute. The 
unemployment rate is about 75 percent. There is no bank, no 
motel, no movie theater. Restaurants open and close down before 
anyone even notices.
    We cannot eliminate poverty until we combat unemployment, 
and we cannot address unemployment without promoting 
sustainable business practices to create jobs. Without adequate 
assistance for entrepreneurs, economic limitations facing 
Native American communities will persist and this panel and the 
rest of the committees in this Congress will continue to 
struggle to finance programs designed to address the symptoms 
of lack of unemployment. Health care, education, family 
dysfunction, crime, and child abuse will continue to persist so 
long as we fail to address the underlying problem of economic 
opportunity.
    Due to the unique and persistent challenges to business 
development in these areas, the proposed legislation 
establishes a statutory Office of Native American Affairs at 
the SBA. The office will serve as an advocate in the SBA for 
the interests of Native Americans. In addition to administering 
the Native American Development Program, the assistant 
administrator will consult with tribal colleges, tribal 
governments, Alaska Native corporations, and Native Hawaiian 
organizations to enhance the development and implementation of 
culturally specific approaches to support the growth and 
prosperity of Native American small business.
    Among the achievements included in the bill is the 
establishment of the Native American Development Program to 
provide necessary business development assistance. This program 
will work to establish and maintain Native American business 
centers to provide business planning marketing services, and 
management assistance to support entrepreneurship. These 
services are vital to establish and support small business.
    The Federal Government currently invests to provide 
business services in communities throughout our nation. It is 
past time for these services to be integrated into our efforts 
to promote self-sufficiency and economic development in Indian 
Country.
    In addition, we recognize that in order to remain 
competitive, businesses and entrepreneurs must be innovative 
and flexible to change. This legislation reflects the needs of 
businesses, tribes, and regional interests to pursue unique 
approaches that will complement local needs and improve the 
overall quality of services. Two pilot programs are integrated 
in this approach to promote new and creative solutions to 
assist American Indians to awaken economic opportunities in 
their communities.
    We have got to strive to eliminate the impediments that 
restrain Native American entrepreneurs. By providing business 
planning services and technical assistance to potential and 
existing small businesses, we can unlock the capacity for 
individuals and families to pursue their dreams of business 
ownership.
    The problems that face Native American communities are 
complex. This legislation is not a panacea which will, by 
itself, remedy all the economic hardships faced by tribal 
communities. It is, however, an integral component to foster 
opportunities for individuals, families, and entire communities 
to achieve success in their pursuit of economic growth.
    To complement the initiatives brought forth in this 
legislation, we have also got to work to improve access to 
investment capital to support economic and community 
development for Native Americans. As the Chairman of the Senate 
Banking Financial Institutions Subcommittee, I am conducting 
hearings to identify opportunities and techniques that may 
foster greater access to capital markets for tribal and Native 
American entities.
    The lack of access to investment capital in Native American 
communities significantly contributes to the inability to 
invest in businesses, services, and economic development, but 
providing investment capital alone, without the supportive 
services necessary to fully and successfully utilize those 
funds, may be inadequate and, ultimately, unsuccessful. The 
business planning and technical assistance included in the 
Native American Small Business Development Act is essential to 
provide the infrastructure and support necessary to maximize 
the impact and success of local ventures and investments. 
Together, these initiatives will help to turn an important 
corner as we endeavor to enhance the livelihood of the first 
Americans.
    I greatly appreciate the consideration and cooperation of 
the committee chairmen and the Committee Members to examine 
these issues and to work to tackle the difficult and persistent 
economic challenges that face Native American communities. So 
long as private sector efforts struggle in Indian Country, the 
need to address the symptoms of that lack of economic activity 
will continue to overwhelm us, there is no question about that, 
and in the end, we have got to find ways to foster greater 
Indian entrepreneurship and private sector development in 
Indian Country. Otherwise, I am afraid there will never be 
enough money in our budget to address the problems that are 
consequent of that lack of that private sector involvement.
    Thank you, Mr. Chairman. Thank you, Members of the 
Committees.
    Chairman Inouye. Thank you, Senator Johnson.
    [The prepared statement of Senator Johnson follows:]
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    Chairman Inouye. Senator Wellstone, any questions?
    Senator Wellstone. Mr. Chairman, I know we have other 
panels, so I will not ask questions. I just will, in 20 
seconds, say to both Congressman Udall and Senator Johnson that 
I think that one really critical distinction is you are not 
really talking about the government being the engine of 
economic growth. You are talking about really some technical 
assistance which goes to the how to start a business. It is not 
the government businesses. It is the sort of missing piece of 
the technical assistance to enable people to themselves have 
the access to the capital to start the business. Is that not 
really the kind of basic premise of this? We do that a lot in 
SBA programs, but this is with the specific focus in Indian 
Country.
    Senator Johnson. I think you are exactly right, Senator 
Wellstone. In many Indian communities, there is not a tradition 
of private entrepreneurship. There is not a lot of familiarity. 
There is not a lot of knowledge about business plans and 
capital formation and the like that the SBA has provided so 
ably across the country as a whole. We need a special energized 
focus, I think, to assist Indian entrepreneurs to have the know 
how and the business planning that, in fact, can lead to these 
efforts being successful.
    Congressman Udall. If I can just add to that, Senator 
Wellstone, if there is anything that I think we have failed in 
is not bringing those skills and programs right near or on the 
reservation, and I believe what this piece of legislation does 
is locate those kinds of operations on or near the reservation 
because of the long distances and the problems in terms of 
entrepreneurs leaving the reservation and going off-reservation 
to get access to those kinds of advice and technical 
assistance.
    Senator Wellstone. Thank you.
    Chairman Inouye. Senator Campbell.
    Senator Campbell. Just maybe a couple of quick questions, 
Mr. Chairman. I certainly support any initiative that is going 
to create more jobs on reservations.
    The figures I have from SBA and BIA both say that Native 
American and Native Alaskan-owned small businesses grew by 84 
percent between 1992 and 1997, when the overall growth of non-
native businesses grew by 40 percent in the same timeframe. So 
there is no question in my mind that that, plus the 179 percent 
increase of gross receipts during that same amount of time, 
tells me something is happening on the reservations that is 
good. It is not all totally depressed and not all totally bad. 
I live on a reservation and I see small business growing and I 
know it is growing all over.
    I guess the real question for me is we have had some 
experience in the past with ``638'' programs and programs that 
have not been tailored to the tribes' needs at the Federal 
level, and what we have done with the IHS and the BIA is we 
have created self-governance and we have given the money 
directly to the tribes so that they administer their own 
programs, and I am wondering if it would not be more 
appropriate if they had or could contract to get the expertise 
to be able to do what this bill does without creating new 
bureaucracy, if it would not be better to try and fund the 
tribes directly.
    Senator Johnson. I would only observe, Senator Campbell, 
who I know has as great an interest in the economic welfare of 
Native peoples as anyone, that the Office of Native American 
Affairs at the SBA already exists. This legislation makes it 
statutory and further requires the head of the office to have 
experience providing culturally tailored business development 
assistance to Native Americans. So we are formalizing an effort 
at the SBA that has been undertaken, but we want to put 
statutory language behind it and we want to expand what they 
are attempting to do.
    The cost of the total bill is relatively modest, $7 million 
a year, $5 million for the statutory Office of Native American 
Business Center Grants that would have greater outreach than we 
have now, plus $1 million for development grant pilot projects 
for nonprofits, as well as the Small Business Development 
Council Centers.
    So I do not think we are trying to duplicate anything or 
create new bureaucracies, but we are trying to refocus a small 
effort that has already been in place to try to, in the end, by 
creating a stronger private sector in Indian Country, reduce 
the reliance on government bureaucracies as a whole. As more 
Native Americans become self-sufficient through the private 
sector, in the end, it will lead to less dependence and less 
bureaucracy.
    Senator Campbell. That would be my hope, too, that it would 
lead to less, because we have got too much now, from my 
perspective. It would seem to me it might be simpler to fund 
the Tribal Business Information Centers that were established 
in 1992 rather than start another program that might duplicate 
efforts, but that is just my general observation. Go ahead, 
Congressman.
    Congressman Udall. Senator Campbell, I think the thrust of 
your question is why are we not getting things closer to Native 
Americans and to the----
    Senator Campbell. That is right.
    Congressman Udall [continuing]. To the reservations.
    Senator Campbell. In this program, so much of it is eaten 
up by salaries in Washington, D.C. That has always been one of 
the problems with Indian programs.
    Congressman Udall. Two of these programs in here are pilot 
programs that are grant programs and they specifically target. 
One is the Native American Development Grant Pilot Program. The 
other is the American Indian Tribal Assistance Center Grant 
Program, and both of these target the reservation. The eligible 
participants in the grant, it is open to any Small Business 
Development Center or nonprofit that has a board of directors 
with a majority consisting of tribal government members.
    So I think the attempt here with the grant is to get as 
close as possible to the reservation, open up those 
opportunities for any individuals or nonprofits that are 
operating on the reservation to provide the kind of services we 
are talking about. So I think that this bill does that.
    Senator Campbell. Maybe one last comment, then. We have 
done a number of things through the Indian Affairs Committee 
where we have created pilot programs, and I think they are 
good, because usually when we do it, we have some kind of a 
measuring device. We create a pilot program and come back 2 
years later or 3 years later and see how the thing worked, and 
if it did not work, there is no use expanding the thing, and if 
it did work, then we try and expand it with another bill.
    What would you think of, if this bill moves forward, of 
establishing some kind of a provision where we do have a way of 
measuring the pilot's performance after a given period of time?
    Congressman Udall. It makes sense to me and there is also 
in here a sunset on this in 4 years. So at the end of 4 years, 
you can come back and take a look at it.
    Senator Campbell. Thank you. Thank you, Mr. Chairman.
    Chairman Inouye. Thank you.
    Senator Thomas.
    Senator Thomas. I will hold my questions until the Small 
Business Administration comes.
    Chairman Inouye. May I thank Senator Johnson and 
Congressman Udall. You have been very helpful.
    Congressman Udall. Thank you.
    Senator Johnson. Thank you very much.
    Chairman Inouye. Our next witness is the Associate Deputy 
Administrator for Entrepreneurial Development of the U.S. Small 
Business Administration, Ms. Kaaren Johnson Street.
    Ms. Street, welcome to the committee. Please proceed.

     STATEMENT OF KAAREN JOHNSON STREET, ASSOCIATE DEPUTY 
   ADMINISTRATOR FOR ENTREPRENEURIAL DEVELOPMENT, U.S. SMALL 
           BUSINESS ADMINISTRATION, WASHINGTON, D.C.

    Ms. Street. Thank you. Good morning, Chairman Inouye, 
Senator Wellstone, Senator Campbell, and Senator Thomas, and 
Distinguished Members who will join us, hopefully later, of 
both committees. Thank you for convening this joint hearing to 
discuss the extremely important issue of Native American 
economic development.
    Administrator Barreto apologizes for being unable to 
attend. He is attending the National Center for American Indian 
Enterprise Development's annual Economic Development Conference 
as their honored guest and featured speaker. In light of this, 
the Administrator asked that, as Associate Deputy Administrator 
for the Office of Entrepreneurial Development, I speak on 
behalf of the U.S. Small Business Administration.
    I am honored and delighted to have this opportunity. I 
would also like to request that the committee include my full 
written testimony in the record.
    Chairman Inouye. Without objection, so ordered.
    Ms. Street. The SBA is dedicated to ensuring that all 
Native Americans who seek to create, develop, and expand small 
businesses have full access to the necessary business 
development tools available through all of our agency programs.
    As you know, the President's fiscal year 2003 budget for 
the SBA contains a $1 million request for our expanded Native 
American Economic Development Outreach Program. This program is 
designed to recognize cultural needs and aid in small business 
job creation. Furthermore, it is intended to complement the 
existing economic development activity of Native American 
tribes and tribal organizations seeking to improve the economic 
conditions of their communities by adding a critical small 
business component.
    The 2003 initiative is an expansion of the current SBA 
Native American Outreach Program. The current SBA Technical 
Assistance Program activity, Tribal Business Information 
Centers, or TBICs, operates in only six States. It is an 
objective of the expanded program to increase the geographic 
diversity of SBA assistance. It will expand our scope 
nationally, thereby enabling us to have a greater impact on 
more Native American businesses.
    Those eligible to participate in the program include Native 
American tribes and tribal organizations who presently have a 
multi-faced economic development program and can present a 
well-
defined plan for increasing small business development in 
Native American communities. The current TBICs will be 
encouraged to participate in this program.
    Today, I am also pleased to say that the SBA is in the 
final stages of selecting our National Director for Native 
American Outreach. The National Director will direct and 
coordinate an agency-wide program designed to promote, expand, 
and enhance small business opportunities and services for all 
Native Americans. We expect to fill this position as soon as 
possible.
    The SBA currently provides technical assistance for the 
startup and growth of all small businesses. We recognize that 
successful businesses require three key ingredients. They are 
access to capital, access to business opportunities, and access 
to information, training, and technical assistance. These are 
currently provided through SBA programs which are available to 
everyone.
    In fiscal year 2001, the Women's Business Centers counseled 
2,200 Native American women-owned businesses. There were 634 
Native Americans in our 8(a) program. Eight hundred and 
seventy-five Native Americans are certified in our SBD 
programs. Four hundred and twenty-eight Native American 
businesses are located in HUBZones. Five thousand and four-
hundred Native Americans are registered on PRONet, and SCORE 
served over 5,700 Native Americans, and our SBDCs counseled 
over 7,500 Native Americans.
    I am also pleased to inform you that the 2002 
Entrepreneurial Success Award winner is a Native American, 
Adrian Lugo, President of Lugo Construction. Lugo Construction 
was an 8(a) company. He applied for minority status under the 
8(a) program in 1984 and graduated in 1992. During Lugo's 8 
years in the program, the company increased its sales to more 
than $15 million in 1993, a year after their graduation from 
the program. Today, Lugo is a $50 million construction company 
and a nationally recognized Washington State contractor. Mr. 
Lugo attributes the company's success to the knowledge and 
reputation earned through SBA's 8(a) program.
    Through the SBA counseling and training programs, we have 
served over 1.4 million aspiring and existing small business 
owners. Nevertheless, we need to constantly strive to reach all 
segments of the 25 million American small businesses. Part of 
this effort is our objective to increase SBA services to Native 
American communities. This initiative will complement our 
existing programs and aid our outreach to this traditionally 
underserved population so that we may help to create other 
success stories similar to Lugo Construction.
    Again, thank you, Chairman Inouye and Distinguished Members 
of both committees for providing me the opportunity to share 
the SBA's vision for Native American economic development. The 
appointment of a national director for Native American 
Outreach, in conjunction with the 2003 Native American Economic 
Development Outreach Program, are the essential steps, we 
believe, for providing the appropriate tools to promote self-
sufficiency and job creation in Native American business 
communities.
    I look forward to working with each of you to achieve this 
goal, and at this time, I am prepared to answer any of your 
questions.
    Chairman Inouye. Thank you very much, Ms. Street.
    [The prepared statement of Ms. Street follows:]
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    Chairman Inouye. In your statement, you said that your 
agency has done its best to set up programs to provide access 
to capital, one. Now, there are over 550 tribes and most of the 
members of those tribes live on reservations and these 
reservations are generally many, many miles away from urban 
centers, and these reservations very, very seldom have banks. 
Furthermore, I am certain you know that reservation lands are 
held in trust by the government of the United States and, 
therefore, not subject to alienation if one wants to use land 
as collateral. So does your program provide any access to 
capital for Native Americans?
    Ms. Street. Presently, our access to capital includes our 
microloan program, which Native Americans have participated in, 
that as well as our 7(a) program for loans out of our 7(a) 
program. So they are participating in our capital access 
programs.
    Chairman Inouye. Where do you go to apply?
    Ms. Street. Those would be to banks, and these are Native 
Americans, not necessarily tribal organizations, but Native 
American businesses. So I doubt if they are tribal 
organizations.
    Chairman Inouye. You spoke of establishing training 
programs. Where are they established, in urban areas or out in 
reservation areas?
    Ms. Street. These would be on tribal organizations through 
our expanded economic development outreach program.
    Chairman Inouye. You have training programs on these 
reservations?
    Ms. Street. No, we do not have them now, but they will be--
currently, we propose that in the President's 2003 budget.
    Chairman Inouye. Where are they located?
    Ms. Street. They will be located--we are going to be 
outreaching with our director of Native American Affairs to 
solicit input from Native American tribal organizations.
    Chairman Inouye. So up until now, if a Native American 
wanted to get some training, he had to go to an urban area?
    Ms. Street. No. Up to this point, they have been able to at 
least get access through Tribal Business Information activity, 
which is a resource center, or they would have to go into the 
urban area, you are correct.
    Chairman Inouye. Where are the resource centers?
    Ms. Street. The resources centers are located on 16 
different tribal organizations, on tribal land, at tribal 
colleges, the current----
    Chairman Inouye. Now, if you have difficulty accessing 
these training programs, then you have limits in terms of 
talented people, is that not true?
    Ms. Street. I am not sure I understand the question.
    Chairman Inouye. People with skills.
    Ms. Street. Skills to provide the training?
    Chairman Inouye. To do a job, whether it is carpentry or 
computer work.
    Ms. Street. That is why the training workshops would be 
important.
    Chairman Inouye. Now, where are the markets of the United 
States?
    Ms. Street. When you say markets----
    Chairman Inouye. Where people buy things?
    Ms. Street. I would say all over.
    Chairman Inouye. In the urban areas, are they not?
    Ms. Street. Well, rural markets exist, as well, and we do 
provide services to the rural communities, as well. Of course, 
there is a centralization. I think you are alluding to the 
centralization of our malls and our central commercial 
districts are, to a large extent, in urban areas, but more and 
more, it has expanded into rural and suburban areas. So 
opportunities are going to where people live.
    Chairman Inouye. I ask these strange questions because, as 
you are well aware, we entered into treaties with many tribes, 
actually, 800 treaties, and of those 800 treaties, 430 are in 
some filing cabinet in the United States Senate. Of the 370, 
the United States has violated provisions in every one of them. 
The most common violation was not to put the Indians where they 
were promised to be put, and as a matter of policy, we put 
Indians as far away from us population centers as possible. 
Very seldom do you find a reservation right next to a city. 
They are out in the remote rural areas of the country. You have 
to travel miles and miles to get out there, and that is not 
where the markets are.
    My question is, what are we doing to help these people that 
we, as Americans, by policy, sent out to the remote rural 
areas?
    Ms. Street. Well, we hope with the expanded Native American 
Economic Development Program that we would encourage the 
applicants who would apply for funding would have a multi-
faceted economic development program that would deal with 
issues such as geography, in terms of taking advantage of urban 
opportunities when they are located in these remote areas. I 
think that is a global economic development process. We want to 
bring the small business component to that.
    There are lots of issues, as the previous testimonies have 
revealed, but we can only focus on the small business element 
of that and we are hoping, and that is one of the reasons we 
have a requirement in this program that it be part of a global 
economic development program, that it is not just a stand-
alone, similar to what we currently have, stand-alone little 
small activity, but it be part of an entire economic 
development process.
    Chairman Inouye. I know that the Small Business 
Administration is trying its best, and I commend you for it, 
but in order to benefit from your programs, these Indians are 
put in a quandary. They have to leave their reservations to get 
into training programs in the metropolitan areas. At the same 
time, they want to remain on the reservations to maintain their 
culture and their traditional ways and stay with their people.
    So there is a problem here, and in many ways, we are the 
ones who brought it about. I think if we can come up with 
programs that will provide greater access to capital, which 
most tribes do not have, greater access to training programs in 
their areas, then I think we are getting somewhere. The authors 
of this measure felt that maybe this may be the first step. Do 
you think it is a good first step?
    Ms. Street. I think the program that we have in place, that 
we are proposing in terms of our Native American Outreach 
Program in the President's 2003 budget, would bring those 
training and technical assistance programs to the tribal 
organizations on tribal land, and I think that critical 
training component, technical assistance and information 
assistance, would help complement any economic development 
program to bridge that geographical difference and other 
economic issues, like digital divide is another issue that 
affects minorities and Native American communities, in 
particular, and use of computers or access to computers and 
that kind of thing.
    So our program would be based, an element or a great 
portion of it would be based on tribal lands to provide that 
assistance, and hopefully be leveraged with State and local 
dollars and any other private sector commitments to further 
expand what we are engaged in to help foster a strong economic 
development process for Native Americans. So it is a start. It 
is not going to solve all of the issues, but at least I think 
it is a really great effort in terms of expanding upon the 
small activity that we currently have and moving forward to a 
more broader, comprehensive program.
    Chairman Inouye. Ms. Street, my final question, what is the 
total budget of the Small Business Administration, your agency?
    Ms. Street. Approximately about $700 million.
    Chairman Inouye. Seven hundred million?
    Ms. Street. Yes.
    Chairman Inouye. Your agency has recommended to the 
President that we set aside $1 million for Indian programs?
    Ms. Street. Yes, for this particular program.
    Chairman Inouye. So out of a $700 million budget, $1 
million has been set aside for Native Americans?
    Ms. Street. Yes, specifically for this program----
    Chairman Inouye. Thank you very much.
    Ms. Street [continuing]. However, we do have a--I guess 
what I want to say pretty much is that this $1 million is for 
this specific program. It does not preclude Native Americans 
from participating in any of our other programs. In fact, they 
indeed are, and, in fact, we are going to encourage and beef 
that up so that we can enhance their engagement in those 
programs, because just as you said, Chairman Inouye, that 
isolating the program as well as a geographic location limits 
the whole economic development posture. So eventually, there 
comes a point where Native Americans would be able to 
participate in all of SBA's programs and advance into that, as 
they are currently doing in our other programs. So the $1 
million coupled with the rest of our budget is inclusive for 
Native Americans as well as all other small businesses.
    Chairman Inouye. Thank you.
    Ms. Street. You are welcome.
    Chairman Inouye. Senator Wellstone.
    Senator Wellstone. Mr. Chairman, first of all, before I 
forget, I want to say to the Dorrs that I am very proud that 
you are here, and I may have to go to another committee before 
I get to hear people from Indian Country in Minnesota testify 
because it deals with the NIH budget and I have a commitment to 
be there dealing with some research in certain diseases.
    Ms. Street, first of all, thank you, because my question is 
going to be not hostile, but it is going to be tough. You know, 
the Chairman said, out of this overall budget, $1 million, then 
you said but there are other programs, but you are cutting. I 
mean, the people in Indian Country, they do not have access to 
the traditional education or capital. But we have the 7(a) and 
the--you are cutting that program. You are flat-lining the 
microloan, which is so important. You are flat-lining technical 
assistance. The job training, the workforce investment, the 
Administration has a proposed cut of, I do not know, 15 to 20 
percent.
    So to go to Senator Campbell's point, the irony of it is 
that the very programs that are really out there in the country 
helping people in Indian Country, you are actually cutting, and 
I want to come back to one of them, because I cannot for the 
life of me figure this out.
    According to the director of the Minnesota Chippewa Tribe 
Native American Business Development Center, you are 
eliminating the TBIC, and he says, ``Well, we are going to have 
to basically lock the doors.'' That is it. So we have got the 
computers, the access to the Internet, it is like a business 
library, Senator Campbell, out there in Indian Country. You are 
cutting it. Now, you have got the computers and other equipment 
and they go to waste.
    Now, the Native American Business Development Center uses, 
out in Minnesota, uses the TBIC to counsel and provide 
resources to 300 prospective Native American entrepreneurs. 
They helped about 100 of them secure capital for their 
business. That was $6 million, 60 to 70 percent of which was 
raised through private lenders. The technical assistance that 
the tribe made available through the TBIC, which you are 
eliminating, was critical to those small businesses that these 
men and women were able to start.
    With the help of a $160,000 grant from the Minority 
Business Development Program at the Department of Commerce and 
your $33,000 TBIC grant from SBA, they helped 100 entrepreneurs 
raise $6 million. That is a real return on investment. So the 
loss of the TBIC is a tremendous blow, and the irony to me is 
that the $200,000 that you save through TBIC's elimination gets 
you almost nothing here in Washington, but the money goes 
pretty far, Senator Campbell, out in Indian Country.
    So you are sucking $200,000 of Indian Country. You have 
dealt a significant blow to entrepreneurship among Native 
Americans. You have hardly changed the fiscal position of SBA 
here at all. Why? Why are you cutting this program?
    Ms. Street. First of all, it is not a program, it is an 
activity. It is an activity----
    Senator Wellstone. Well, that is better. I like activity 
better. Why are you cutting the activity action?
    Ms. Street. OK. We looked at it from the point of view that 
due to our very, very, very tight budget constraints this year, 
the nominal success of the program--the TBICs have been 
counseling or providing counseling to approximately 200 
participants annually. As you know, the budget--we have not had 
a line item funded for this measure since 1995. We have been 
funding it--SBA has been funding it out of our salary and 
expense line item, and every year, we have to decide or look 
and try to find ways that we can fund this program.
    Coupled with its nominal success and not part of a 
comprehensive economic development program and none of the 
other aspects of technical assistance or training, workshops, 
in terms of technical assistance, it was not as effective as we 
would like to see it be and it prompted us to reevaluate that 
program----
    Senator Wellstone. Well, listen----
    Ms. Street [continuing]. Design a program----
    Senator Wellstone. Let me interrupt you, Ms. Street. First 
of all, as far as the savings, this is a savings of 0.0003 
percent of SBA's annual budget. It is $200,000 or less. If you 
think the program is not working as well as it should, reform 
it. Do not eliminate it in the middle of the year. You just 
heard Senator Inouye's rather dramatic illustration of how 
little commitment we are making to Indian Country. If you want 
it to do better, then come here with some proposals about how 
to reform it and make it do better. Do not eliminate it in the 
middle of the year.
    This is unacceptable. As a member of the Small Business 
Committee and also the Committee on Indian Affairs, and I am 
not posturing, I swear to you, this is just unacceptable. I do 
not think you make the case at all.
    Ms. Street. Senator----
    Senator Wellstone. You say it is not effective. I gave you 
a report from the State of Minnesota. Do you have any quarrel 
with what the Minnesota Chippewa Tribe has reported to me about 
exactly how much money they have had, what they have been able 
to do with it, and how much capital they have leveraged? Do you 
have any basis for disagreeing?
    Ms. Street. No, I have no basis----
    Senator Wellstone. Well, you should not be eliminating this 
program, then.
    Ms. Street. In all due respect, Senator Wellstone, we did 
not cut their funding off in midstream. March 31 was the end of 
the program year for this particular activity. So we did not 
just--every year at March, in March is when we review and look 
for, search for, and try to find moneys out of our salary and 
expense budget because there has been no line-item budget.
    It is time, we believe, that a line-item appropriation be 
submitted and approved by Congress for Native American 
education and training and technical assistance, and this is an 
opportunity that we are delighted and excited about, this $1 
million 2003 budget appropriation. It is a great start. It is a 
beginning. We believe it was nickel-and-diming it every year, 
because every year, we never knew what amount of funding we 
would be able to dedicate to it.
    Senator Wellstone. Well, I will finish. This is why we need 
to do the Johnson bill. We need to have more than a line item. 
We need to have some statutory authority so we know exactly 
what you are doing and we give you a mandate about what you do 
in Indian Country. I do not want to leave it up to you in terms 
of your own discretion.
    Chairman Inouye. Senator Campbell.
    Senator Campbell. Thank you, Mr. Chairman.
    I certainly want to associate myself with the comments of 
Senator Wellstone and Senator Inouye. I do not mean to put you 
on the spot, Ms. Street, but they are both absolutely right. I 
do not know how we do a better job when they are facing the 
fact that we are cutting the programs that are needed.
    Senator Inouye is very right in one respect when he talks 
about the difficulty of getting to markets. Those tribes who 
are in the 72 metropolitan areas generally have done pretty 
well through casinos or whatever. Then there are some that are 
blessed with the abundance of natural resources and they are 
doing pretty well, too. But the ones that he is speaking about 
and the ones that I am really concerned about are the ones that 
have neither. They are a long way from markets and they are a 
long way from being able to develop their own resources, too.
    We tried to get an amendment, into the energy bill to 
provide some opportunities for them to develop their own energy 
and met with so much resistance, we dropped it before 
introducing it in the Senate last week.
    But to give you an example of how far they are from the 
markets, I mentioned home industry from particularly, say, like 
the Navajos that Congressman Udall mentioned. The mark-up of a 
home craft product, such as a rug or a piece of jewelry or 
something for Indian people who are actually making them out on 
the reservation is six times. That means they get for making 
the thing and providing their own tools, their own materials, 
their own everything, about one-sixth of what sells in a store 
downtown.
    Everybody else is in the deal. The craftsman gets a small 
part, the jobber gets some, the wholesaler gets some, the 
retailer gets some. Everybody adds something on, but when you 
see a price in a store of something that was manufactured on a 
reservation with a hand product, the person that did that got 
about one-sixth of what that sales tag says because they are so 
far from the market.
    You mentioned that there are ``Distance Learning'' programs 
available through the colleges, and I think that is terrific. I 
am active with the Indian colleges. But I guess that also just 
reinforces my view about this bill, that in my view, we are not 
doing a good job with the programs we have got. I am not sure 
that more laws will make better programs. It seems to me we 
ought to focus on doing a better job than we are doing now.
    Believe me, it is not a savings at all if you think by 
putting less money into programs to help people help 
themselves, somehow that is a savings. If you do not put money 
into them helping themselves, you are going to end up with more 
and more dependency and pay a heck of a lot more in terms of 
social programs, dependency programs, truancy, drug abuse, all 
that other stuff that is all related to the lack of jobs on 
reservations. If we cannot create more jobs, we are going to 
end up just paying more and more to those ``after-the-fact'' 
programs than we do.
    Let me just ask you a couple of simple questions that ought 
to be very easy to answer, and one is something we have not 
gotten to yet, and that is does the Administration support this 
bill or not?
    Ms. Street. We have not had an opportunity to actually 
review it in depth. We are more focusing on what we have 
proposed in our 2003 budget, which is $1 million, which is an 
increase over--so we are putting money into our 2003 budget for 
this effort.
    Senator Campbell. In 2000, we enacted the Native American 
Business Development Trade Promotion and Tourism Act. It was 
one that I sponsored. Senator Inouye worked very hard on that, 
too. It set up a coordinator for all economic programs at the 
Federal level, to try to coordinate them so we do not kind of 
have a shotgun approach to those programs. The office is 
supposed to be in the Commerce Department. Do you work with 
that office or other agencies to try to coordinate economic 
resources for tribes?
    Ms. Street. Yes, and when we begin, we hire our Director of 
the Office of Native American Affairs, that person would be 
clearly working very closely with their counterparts in other 
Federal agencies.
    Senator Campbell. The loans to Native Americans, can you 
tell us how many small business loans you make to Native 
Americans?
    Ms. Street. Sure. Let me see if I have that.
    Senator Campbell. Just in the last year would be fine. I 
would like you to tell me that number and tell me how you 
define Native American.
    Ms. Street. I am trying to just check and see.
    Senator Campbell. I mention that, and Senator Thomas is 
kind of smiling at this over here because I know he has faced 
the same thing. I will tell you what, 25 years ago, nobody 
wanted to be Indian, it seems like. But now that there seems to 
be some money in it, you would be surprised how many people 
suddenly remember they have a cousin that was Indian.
    One of the problems that I continually have with some of 
the grants that go to Indian people is that we have found that 
some are very enterprising people who are not American Indian, 
who have found that if they develop a partnership with an 
Indian, with an enrolled American Indian, they can get in one 
some of the grants, when, in fact, it may help the Indian 
person a little bit, but it helps the non-Indian a hell of a 
lot more.
    How do you define when you give a grant to a Native 
American, No. 1, and how many did you give last year?
    Ms. Street. Well, we had--our 7(a) loans, we had 537 
loans----
    Senator Campbell. Five-thirty-seven?
    Ms. Street [continuing]. Five-thirty-seven were given last 
year, for a total of $90 million.
    Senator Campbell. Ninety million dollars? OK. And the 
second part, how did you define who was to get----
    Ms. Street. We have been following the Bureau of Indian 
Affairs, the definition of Native American, and that would 
include Native Americans, Alaskan Natives, and Hawaiian 
Natives, but we have been following those guidelines.
    Senator Campbell. Did most of those grants go to Native 
Americans that live on reservations or do they also go downtown 
to urban Indians?
    Ms. Street. Well, we have not broken them down in terms of 
reservation or outside, off the reservation. I could get that 
information for you at a later time.
    Senator Campbell. If you could provide that to the 
committee, I would appreciate it.
    [The information of Ms. Street is located on page 121.]
    Senator Campbell. Certainly, they both the need the help.
    Ms. Street. Yes.
    Senator Campbell. But because of the proximity to markets, 
as Senator Inouye mentioned, the ones who live on reservations, 
in my view, have it a lot tougher in trying to produce 
something for sale.
    Ms. Street. Our program is specifically for on 
reservations.
    Senator Campbell. It is designed----
    Ms. Street. Yes.
    Senator Campbell [continuing]. Primarily for on-
reservation?
    Ms. Street. Yes.
    Senator Campbell. Mr. Chairman, thanks. I will go ahead and 
yield the floor.
    Chairman Inouye. Senator Thomas.
    Senator Thomas. Thank you, Mr. Chairman. Thank you, Ms. 
Street, for being here.
    I was going to ask, what is the total expenditure, then, 
relating to tribes? That would be your loans, your programs. I 
guess you have already gone through that.
    Ms. Street. No, I do not specifically know what the total 
aggregate, if we added up all of our programs, because Native 
Americans are participating in different degrees in all of our 
programs.
    Senator Thomas. I guess that is kind of the point. I am 
sure there is some uniqueness, clearly, with the tribes, but on 
the other hand, they are eligible to participate in the things 
that everyone else is eligible to participate in.
    Ms. Street. Absolutely, and we outreach to them to do that 
and they are doing that. In my testimony, I cited certain 
statistics in terms of the numbers that are participating, and 
those numbers are growing in our general program.
    Senator Thomas. Home loans are sometimes more difficult 
because of the lack of ownership of the land to be able to have 
something to base the loan on.
    Ms. Street. Collateral rules.
    Senator Thomas. Collateral, so it is difficult. In Wyoming, 
the TBIC Program has worked through the State Small Business 
Development Centers----
    Ms. Street. Yes.
    Senator Thomas [continuing]. And worked on the reservation 
that way. I wonder, can we continue to do that, do you think, 
in the future, under the program that you talked about?
    Ms. Street. Even if we had no funding, the Small Business 
Development Centers as part of their mandate and our funding to 
them is to provide services to Native Americans and they are 
doing that, at the tune of 8,000 per year that they are 
actually providing services to. The program that we have in our 
2003 budget is a complement, an addition to all the other 
services that are available to Native Americans.
    In SCORE, our Small Business Development Centers, our 
Women's Business Centers, we have Native American women-owned 
businesses who are benefiting from our services in our Women's 
Business Centers, as well. Any of our programs are accessible 
to all Native Americans and we have evidence that they are 
participating in them.
    Senator Thomas. So the program that you are seeking to 
initiate here would be one that recognizes the uniqueness, 
then----
    Ms. Street. The culturally sensitive on tribal lands, with 
Native American tribes and tribal organizations----
    Senator Thomas. Well, I have to say----
    Ms. Street [continuing]. Who have the most difficulty, as 
has been mentioned here.
    Senator Thomas. I do appreciate the fact that you are 
looking at the effectiveness of these programs. I think too 
often we just think if we can put some more money in it, it is 
going to be successful. I do not agree with that. I think there 
has to be an evaluation, an appraisal, and some accountability 
for success.
    You mentioned the number of tribal members you had dealt 
with in terms of training and involvement. Do you know how many 
of those, then, have actually been able to create some sort of 
business? Do you have any success rates----
    Ms. Street. We are beginning to compile that information. 
We do not have that data available to us. The current program 
is an activity where individuals can come in and use our 
computers, use the equipment there, take CD-ROMs, get manuals, 
reference materials. It is a kind of self-learning environment. 
It is certainly not sufficient, and that is why we evaluated 
that program and decided that we needed a much more 
comprehensive, dedicated source of funding, and a more 
comprehensive program that would focus on Indian reservations, 
businesses on reservations, who are having the most difficult 
time because of the geography and the long distances to it. The 
others, the more urban Native American businesses, are 
participating in greater proportions in our regular programs.
    Senator Thomas. I am sure that is true, and that is because 
you have a market. Particularly on the gambling, you have to be 
where there are some people to do the gambling, obviously. But 
that is not the case in Wyoming. We do not have urban areas, 
and so the people who are close to that are also in small rural 
areas. So there, the Native American activities there are going 
to have to be oriented toward rural communities because that is 
where they are, and I suspect it will be that way.
    Then your Department has not a position on this proposed 
legislation?
    Ms. Street. No, we do not.
    Senator Thomas. Do you think what you are planning to do 
would be similar? Would it do the kinds of things generally 
that----
    Ms. Street. We believe greater outreach for our other 
programs, the Native Americans to participate in our general 
overall programs, plus the budget allocation for our 2003 
budget, is more than sufficient as a beginning, and we will 
reevaluate it next year and see where we go from there.
    Senator Thomas. Thank you.
    Chairman Inouye. Thank you.
    Senator Campbell.
    Senator Campbell. Maybe I should have already asked this, 
Ms. Street, but I was just reading your testimony. The SBA 
delivers access to capital and opportunities for a microloan 
program, HUBZone contracting program, business development 
program, 504 loan programs, counseling, training, technical 
assistance programs, includes Small Business Development 
Centers, SCORE, Women's Business Centers, et cetera, et cetera, 
and I guess I would just get a little clearer picture of it 
based on what Senator Thomas just asked. Does this bill, S. 
2335, duplicate what you are already doing?
    Ms. Street. We think it does.
    Senator Campbell. Thank you, Mr. Chairman.
    Chairman Inouye. Senator Cantwell.
    Senator Cantwell. Thank you, Mr. Chairman, and thank you 
for conducting this hearing. As a Member of both the Indian 
Affairs Committee and the Small Business Committee, I am glad 
to see that we are having a discussion on this important 
intersection.
    Mr. Chairman, I heard a slight rumor that we are trying to 
adjourn shortly? No? We have time?
    Chairman Inouye. Oh, yes.
    Senator Cantwell. I obviously have some comments and 
questions for the next panel and want to offer my encouragement 
for what I think is important legislation.
    I guess the question is, so you are officially not 
supportive of this concept of an office----
    Ms. Street. We already have an Office of Native American 
Affairs. It is staffed. We are in the midst right now of making 
the decision for a national director to lead that office. So we 
already have that in place already.
    Senator Cantwell. So you believe you have all the staff 
that you need, as well, to service in this capacity and 
outreach?
    Ms. Street. Sure. For this year, we think we do, yes.
    Senator Cantwell. And the level of expertise?
    Ms. Street. The level of expertise would be--the National 
Director for Native American Affairs would have to have 
experience, and we have been talking to and interviewing, as a 
result of referrals from Native American organizations. They 
would have to have that experience in programming and small 
business development for Native American affairs. We believe we 
have the quality. We have had some very good candidates to come 
forward and we are close to a decision.
    Senator Cantwell. So when would you expect to have that 
position filled?
    Ms. Street. Hopefully any day.
    Senator Cantwell. Any----
    Ms. Street. Any day now. We are still going through that 
process. We have not completed the process yet.
    Senator Cantwell. I am sorry, I did not quite hear. So any 
day is what you said?
    Ms. Street. Yes.
    Senator Cantwell. OK. What could the committee expect, 
then, in the filling of that position? I mean, if 30 days went 
by, that would be beyond what your expectation is? I mean, does 
any day mean in the next 30 days or does it mean----
    Ms. Street. I would say--it is hard to answer because there 
is a whole process that goes along with bringing someone on 
board and it could take anywhere--I would say 60 would be, to 
give myself as much--give ourselves as much room, I would say 
60 would be----
    Senator Cantwell. Thank you. Thank you, Mr. Chairman.
    Chairman Inouye. Thank you very much.
    May I ask one parochial question. What assistance does SBA 
provide for small business development to Alaskan Natives and 
Native Hawaiians?
    Ms. Street. I do not have any breakdown of that 
information. I could get that information for you. We just have 
it all categorized under Native American and Native Americans, 
but I will try to get----
    Chairman Inouye. You do provide assistance for small 
business development to Alaskan Natives?
    Ms. Street. And Hawaiian Natives, yes.
    Chairman Inouye. I thank you very much, Ms. Street.
    Ms. Street. You are welcome.
    Chairman Inouye. Now, may I call upon the third panel, 
consisting of the chairman of the Oneida Tribe of Indians of 
Wisconsin, the Honorable Gerald Danforth; the president and CEO 
of the National Indian Business Association, of Washington, 
D.C., Mr. Pete Homer; the chief operational officer of DECO, 
Incorporated, of Minnesota, Mr. Derek Dorr; the executive 
director of the Lakota Fund of South Dakota, Ms. Monica 
Drapeaux, and the executive director of ONABEN: A Native 
American Business Network of Oregon, Mr. Tom Hampson.
    May I first call upon Chairman Danforth.

STATEMENT OF GERALD DANFORTH, CHAIRMAN, ONEIDA TRIBE OF INDIANS 
                OF WISCONSIN, ONEIDA, WISCONSIN

    Mr. Danforth. Mr. Chairman, Members of the joint committee, 
good morning and thank you for the opportunity. I was really 
excited when I first saw this bill last Thursday, and without 
hesitation was anxious to come here to our Capital to provide 
testimony from the Oneida Tribe of Indians of Wisconsin.
    I would like to first commend Senators Johnson and Kerry 
for this visionary proposal. It was very clear in reading 
through this bill that the Native American voices have been 
heard, specifically regarding the issues and concerns 
associated with small business in Native American communities, 
because as I read through this, I could see the answers to 
many, many of our concerns. It is a good bill. It is a good 
bill.
    The Native American Small Business Program recognizes that 
many Native American communities still function in Third World 
reality. Even though in Wisconsin we have a casino, we look at 
the revenue that that casino generates. In a course of days, 
that revenue instantly leaves the reservation. Small businesses 
and business expansions, we recognize, are fundamental to the 
development of our community, to the diversification of our 
economic base, and to the achievement of individual fulfillment 
and objectives of various career paths.
    A sound, diversified, and integrated economy is the 
direction that we need to go in Native American communities. 
The Johnson-Kerry bill moves us in that direction.
    In Oneida, we have tried a number of times to establish and 
generate, initiate small business programs, and I am sad to say 
that, with rare exception, most of those initiatives have 
failed. Some of the common problems of those failures have been 
lack of understanding of growth and management of those 
businesses, inability to effectively market and establish a 
marketing plan, inability to access financial resources, 
inability to access technical assistance at critical times. 
This bill answers those questions.
    The bill requires long-term planning. When I saw 5 years, 
that was very key in my mind. Often, our programs of small 
businesses have gotten off the ground only to fly short 
distances and are crashing and dying out. The entrepreneurs 
turn to somebody and generally end up coming back to the 
government, the tribal government, to say, we are fading out, 
and we do not have and did not have the mechanisms and the 
processes in place to support those needs during those critical 
times.
    The bill answers many of those questions. The bill provides 
for long-term periods of critical monitoring and follow-up 
action with experts in the business arena for persons of 
entrepreneurs to turn to. It provides for getting through the 
barricades for additional financial assistance when the time is 
needed.
    Generally, in the reporting section, the examination and 
reporting section of the bill, and I really have not had time 
to cover that and examine it and I would like more time, it 
just seemed like the reporting and examination was a bit 
cumbersome. But compared to other grant programs, perhaps it is 
not. I guess I would like more time to be able to evaluate that 
section and to provide additional comments in the future. I 
think within 10 days, I could provide that information for you.
    In summary, this bill can work. It will diversify an 
economic base. It will permit individuals to achieve their 
potential. It will bring success to Indian communities and 
Native American communities, and it will bring success to the 
surrounding communities in small business development.
    Thank you again very much for this opportunity. I would be 
happy to try to answer your questions.
    Chairman Inouye. Thank you very much, Mr. Danforth. We will 
listen to the whole panel before we ask questions.
    [The prepared statement of Mr. Danforth follows:]
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    Chairman Inouye. Mr. Homer.

  STATEMENT OF PETE HOMER, JR., PRESIDENT AND CHIEF EXECUTIVE 
OFFICER, NATIONAL INDIAN BUSINESS ASSOCIATION, WASHINGTON, D.C.

    Mr. Homer. Thank you, Mr. Chairman and Members of the 
Senate Committee on Small Business and also the Senate 
Committee on Indian Affairs. On behalf of the National Indian 
Business Association, I would like to thank you all for the 
opportunity to testify today on this very important 
legislation, the Native American Small Business Development 
Act.
    My name is Pete Homer. I am Mojave, an enrolled member of 
the Colorado River Indian Tribes. I serve as the tribal 
consultant on the hydroelectric project. I am also the 
President and CEO of the National Indian Business Association, 
an organization that was established in 1992 to promote Native 
American business development through education, communication, 
and advocacy. We represent approximately 24,000 Native 
American-owned businesses nationwide. Our mission is to 
stimulate business development, job creation, and economic 
activity within Native American communities.
    I have over 36 years of experience working in business, 
employment, and community development, and in 1992, I served as 
the Small Business Administration's first director of the 
Office of Native American Affairs. I structured, implemented, 
and coordinated all SBA programs for Native American 
communities, and today is an exciting day for me, because 
hopefully, I am assisting in making these programs statutory.
    As you are aware, the socio-economic statistics pertaining 
to Native Americans remains grim. Even today, many Native 
American businesses are still without adequate training and 
technology to compete and do business with the private sector 
and Federal Government. Yet in spite of this, there are some 
bright spots on the horizon for Native American business 
development. The explosive growth and the demand for 
information technology and business 
e-commerce continues. Overseas businesses often fill the void 
in the United States-based information technology businesses, 
while potential resources of Native American businesses on and 
off Indian reservations are overlooked.
    Among the problems cited by Native American businesses is 
that there are few training and technical assistance centers, 
mentor or incentive programs that focus specifically on 
assisting the development of Native American businesses. It is 
this void that drives NIBA in its support of the Native 
American Small Business Development Act.
    The establishment of Small Business Development Centers in 
Indian Country would serve as the central focal point for 
training, technical assistance, education, e-commerce 
development programs, and technical assistance service with the 
goal of expanding the number of Native American businesses and 
creating Native American jobs.
    The National Indian Business Association is presenting 
testimony to seek your support on the passage of the Senate 
Native American Small Business Development Act. We urge both 
committees, the Senate Committee on Small Business and 
Entrepreneurship and the Senate Committee on Indian Affairs, to 
work together and come to a consensus, because Native American 
businesses will benefit as a result of this legislation. I also 
thank the committees for recognizing and focusing on 
legislation that will create self-
sufficiency, jobs, and economic development in Indian Country 
through training and technical assistance.
    This legislation establishes two innovative culturally 
tailored business pilot programs for Native reservations and 
community businesses, the Native American Development Grant 
Pilot Program and the American Indian Tribal Assistance Center 
Grant Program. These programs may bridge the gap of the digital 
divide in information technology for Native American 
communities. NIBA supports the two innovative pilot programs.
    NIBA is highly optimistic that this legislation can serve 
to advance Native American economic development through 
preference contracting by providing assistance to Native 
American businesses that will allow for the development of more 
tribal 8(a) companies and HUBZone certified companies.
    Sustainable small business development in Indian Country 
remains as the engine for new job creation and economic growth. 
Given the current fragile State of the economy, this is no time 
for further weakening much needed small business resources.
    Chairman Kerry and Senator Bond were the ones, and we thank 
them and other Members of the Committee. It was through their 
leadership and bipartisan support that created the HUBZone 
program, a very important program in Indian Country. Chairman 
Inouye and Senator Johnson and Senator Kerry, we thank you for 
the Native American Small Business Development Act and we ask 
for that same bipartisanship support in passing this important 
piece of legislation.
    Thank you for allowing me to present testimony today and I 
will be around for answering questions.
    Chairman Inouye. Thank you very much, Mr. Homer.
    [The prepared statement of Mr. Homer follows:]
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    Chairman Inouye. I now call upon Mr. Dorr.

 STATEMENT OF DEREK DORR, CHIEF OPERATING OFFICER, DECO, INC., 
                       ONIMIA, MINNESOTA

    Mr. Dorr. Hello. My name is Derek Dorr and I am the chief 
operating officer and executive vice president of DECO. I am 
joined with my father, Robert Door, Chief Executive Officer of 
DECO.
    First, I would like to thank Senator Wellstone from our 
State of Minnesota for allowing us the opportunity to present 
our experience and understanding of the Federal marketplace 
pertaining to small business development, particularly from our 
position as a Native American-owned and operated company 
located on the Mille Lacs Band of Ojibwe Reservation, a band 
within the Minnesota Chippewa Tribe. We would also like to 
thank Senators Kerry and Inouye for allowing us this 
opportunity.
    DECO was established in 1986. We had limited growth until 
1992. At that time, tribal gaming began to flourish and the 
procurement system increased the opportunities made available 
to Native American-owned companies, such as ours. From 1992 to 
1998, DECO slowly grew, with revenues increasing approximately 
five to 10 percent per year.
    It was not until 1998 when we started to explore the 
markets, programs, and assistance available within the Federal 
Government that we truly began to enhance our potential as a 
Native American-owned company. Specifically, in 1999, DECO was 
certified in the SBA 8(a) program and was the first company in 
the State of Minnesota to become HUBZone certified. Also, DECO 
is currently certified under the SBA Mentor/Protege Program, 
and for the past year or so has been mentored by a large 
company that is a leader within the security industry.
    Frankly, the introduction of these programs and 
specifically Randy Czaia at the SBA Minnesota District Office 
has provided an overwhelming benefit to our continued growth 
and success. Further, the Small Business Development Centers, 
funded partially by the SBA and located throughout Minnesota, 
helped this goal, as well. From 1998 through 2002, DECO's 
revenues have and will increase between 50 to 100 percent each 
year while maintaining a healthy and stable net income. At the 
same time, the Federal market is only 25 percent of our yearly 
revenues, while tribal governments remain our largest client.
    I am proud to tell you that DECO was awarded the 2001 
Minority 8(a) Firm of the Year for the SBA Region 5 and was a 
runner-up nationally. Overall, these achievements were made 
possible by the SBA 8(a) and small business programs. For DECO, 
participation in these programs has been extremely positive and 
overwhelmingly successful.
    Currently, DECO is licensed to perform services from 
security guards to security systems to electrical systems and 
maintains contracts with a variety of clients, including the 
Federal Government, for all of these services. We now provide 
security guard services to the GSA, Federal Protective Services 
in Regions 5 and 7, the U.S. Department of Commerce Bureau of 
Census, and the U.S. EPA, while providing electrical 
contracting services for the U.S. Department of Defense Air 
Force Reserve 934th Airlift Wing, the Department of Defense 
Grand Forks Air Force Base, and the Department of Veterans' 
Affairs Minneapolis Medical Center. Although we maintain 
corporate offices on the Mille Lacs Band of Ojibwe Reservation 
in Minnesota, we also have six field offices located in other 
parts of Minnesota, Texas, Illinois, Indiana, Michigan, and 
Ohio.
    As we strive for continued success, we also remain focused 
on key issues on the reservation. Since 1998, DECO has solely 
funded a Native American apprenticeship program, where band 
members are given the opportunity to work on the reservation 
projects and gain experience and training in electrical trade. 
Accordingly, as these individuals' experience grows, they are 
further supplemented with required educational materials and 
instructors to become a licensed tradesman. The final stages of 
this program are either completed with the cooperation of the 
National Electrical Contractors Association and/or via the 
appropriate Minnesota State licensing agency.
    Since 1998, we have provided training to over 40 band 
members within the State of Minnesota. As a matter of fact, we 
feel by coupling work ethic, i.e., timeliness, attentiveness, 
and quality assurance with the instant rewards of a paycheck, 
that our project has transformed from a sole economic 
opportunity to a long-lasting community effort. Of course, 
without any financial or administrative assistance for this 
program, DECO must also maintain our competitiveness within the 
market, which is often an obstacle.
    Upon the completion of the construction of our corporate 
offices on the reservation, our clear desire was and is to 
build a solid economy separate from gaming. Even though our 
office remains the only building within our industrial park, we 
feel confident that our success may eventually redefine some of 
the negative stereotypes within our community. With the 
assistance of the Mille Lacs Band of Ojibwe Chief Executive 
Melanie Benjamin, we continue to strive to lead by example.
    However, our success depends largely on Federal procurement 
procedures and policies for small 8(a) and HUBZone companies. 
Particularly, through our years of growth, we have experienced 
specific obstacles within the Federal marketplace and within 
the Federal programs we work with which advocate for small 
businesses. For example, we have direct experience with the SBA 
throughout the country and have found that procurement center 
representatives or safeguards overlooking the Federal 
procurement process are overwhelmingly understaffed. 
Specifically, contracts that have been in the SBA 8(a) or small 
business programs for many years have been procured outside 
this arena because there are so few people watching these 
various areas within Federal purchasing.
    Furthermore, the HUBZone Program has extreme potential 
within the Federal marketplace. However, with so few people 
administering this program, full advocacy is rarely achieved. 
Although our HUBZone status is clearly beneficial when coupled 
with our SBA 8(a) certification, we rarely, if ever, receive 
inquiries regarding our HUBZone certification.
    Within the few years we have been 8(a) certified, we have 
noticed a dramatic reduction in SBA personnel. In all, we feel 
the strength and vitality of the SBA within the Federal 
procurement arena is essential to the ultimate success of 
Native American small business and Native American communities.
    From our experience, the most clear and direct impact that 
the Federal Government has to revitalize and maintain 
businesses within the Native American community is the SBA 8(a) 
program. Overall, we perceive that Federal agencies throughout 
the country respect this program and are striving to maintain 
its goals. However, there is a severe issue rising to corrode 
this program. This issue is the GSA Federal Supply Schedule. 
Under the FAR regulations, the 8(a) and small business programs 
are not applicable when agencies procure under FSS.
    We have had firsthand experience with contracts we 
originally procured under the 8(a) program that were reprocured 
under the FSS Program without consideration of 8(a) and given 
to large businesses. As a matter of fact, we have heard from a 
variety of Federal clients that FSS procurement will soon 
become the leading procurement method within the Federal 
Government. If this holds true, it will likely nullify the 
benefits of the 8(a) and small business programs.
    Generally, we are not against the concept of the FSS 
Program. However, the FSS Program should be modified to include 
small business programs and, thus, require that 8(a) and small 
business contracts remain within the program. We believe this 
will help to level the playing field.
    In conclusion, throughout the past few years, we have 
clearly benefited from the SBA and its programs. The SBA and 
its continued strength and influence is a key to the success 
with the Native American communities in the Federal contracting 
area. Thank you very much.
    Chairman Inouye. Thank you very much, Mr. Dorr.
    [The prepared statement of Mr. Dorr follows:]
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    Chairman Inouye. Now, may I recognize Ms. Drapeaux.

 STATEMENT OF MONICA DRAPEAUX, EXECUTIVE DIRECTOR, THE LAKOTA 
                    FUND, KYLE, SOUTH DAKOTA

    Ms. Drapeaux. Good morning, Senators. I would like to say 
good morning to Senator Inouye and Senator Campbell, and I 
would also like to thank Congressman Udall and Senator 
Wellstone and, of course, Senator Johnson. Also, I would like 
to thank you for holding these hearings that are so important 
to us in Indian Country. I would also like to thank Congressman 
Udall for introducing this bill.
    My name is Monica Drapeaux and I am the executive director 
of The Lakota Fund on the Pine Ridge Reservation in South 
Dakota. I have come here today to support the proposed Native 
American Small Business Development Act. The Lakota Fund's 
mission is to promote economic growth and sustainability on the 
Pine Ridge Reservation in a culturally sensitive manner. I 
would like to give you an overview of The Lakota Fund and what 
we do.
    We began in 1986 as a microlender, giving small loans from 
$1,000 up to $25,000. We have increased our lending limit 
dramatically in the year 2000, from $25,000 up to $200,000. 
Also in the year 2000, we were the second reservation in the 
United States to be certified by the U.S. Treasury Department 
as a CDFI.
    We own and operate Spirit Horse Gallery, which provides a 
marketing arm for our local artists. Lakota Fund owns and 
operates a 30-unit tax credit housing project in Wanblee, South 
Dakota. This was the first low-income tax credit project on a 
reservation in South Dakota.
    We have recently launched the first IDA program on any 
reservation in South Dakota. This is a pilot project that will 
provide 30 tribal members with a matched savings program that 
can be used for home ownership, education, business, or 
business development.
    We provide training and technical assistance to our 
borrowers, which is a key to successful entrepreneurial 
development. Our training is culturally relevant and 
appropriate. We develop our own training materials and we 
provide all of these services through our TBIC.
    We utilize the TBIC in conjunction with our lending. We 
provide small business training, computer technology workshops, 
bookkeeping, marketing, credit counseling, and business taxes 
to tribal members. The Lakota Fund firmly believes that the 
TBIC has a direct impact on the entrepreneurial development on 
the Pine Ridge Reservation. Each month, an average of 25 people 
utilizes the centers and its resources. The TBIC center is 
generating new businesses and jobs on a monthly basis, a 
remarkable fact for the context of the reservation economy.
    We believe that our economy will be built one business at a 
time, from the inside out. Pine Ridge has no access to capital, 
which means there are no banks or credit unions on the 
reservation, so if we are not making loans, no one is making 
loans. Nothing will change and people's lives will stay the 
same.
    However, in 2001, we loaned over three-quarters of a 
million dollars to tribal members. Those loans created 66 jobs. 
Thirty-four percent of those loans were given to existing 
businesses and 66 percent were startup businesses. Over the 
past 16 years, Lakota Fund has helped build the economy with 
businesses such as buffalo ranches, hair salon, tire repair 
shop, bakery, tipi retail, bed and breakfast, a trading post, 
and a trucking operation, to name a few.
    People in our community travel 100 miles one way to get 
services that we do not have on the reservation. Now, people do 
not have to travel to Rapid City to get their tire fixed. They 
can get it done locally. In another community, we have a local 
convenience store where people can buy a gallon of milk instead 
of driving 60 miles one way. We now have an opportunity to 
provide services to tourists at a local bed and breakfast. As a 
result of these businesses, it has created income and revenue 
which did not exist before.
    We now have the Pine Ridge Area Chamber of Commerce that 
provides a voice and support for our local businesses. The need 
for the Chamber is a vital component and a sign that an economy 
is being built. We are proud that we are a part of assisting 
them financially and getting them started.
    I would like to comment on the proposed legislation. You 
are recommending that eligible organizations are described as 
any nonprofit organization that has tribal government members 
or their designees comprise the majority of its board of 
directors. We are concerned that the requirement of the 
organizations be directed by tribal government. While The 
Lakota Fund is tribally chartered, we are a private nonprofit 
501(c)(3). While we coordinate efforts with tribal government, 
maintaining our independence is also important. Rather than 
tribal government members comprising a majority of the board of 
directors, to ensure local governance and input, The Lakota 
Fund would recommend the requirement that tribal members 
comprise the majority of the board.
    We concur that Native American Business Centers be 
reservation-based, culturally appropriate, where priority will 
be given based on the proximity of the center population being 
served. In our case, our TBIC is located in the center of the 
Pine Ridge Reservation in Kyle, South Dakota. The Lakota Fund 
agrees that adequate staffing and capacity is necessary in 
providing effective services.
    In closing, the needs of our reservation and most 
reservations are great. At The Lakota Fund, we are proud of our 
accomplishments and working to meet the needs of the people we 
serve. This piece of legislation is critical to us. It is a 
cornerstone to grow our economy and provide future 
sustainability. Thank you for the opportunity to share our 
experience.
    Chairman Inouye. Thank you very much, Ms. Drapeaux.
    [The prepared statement of Ms. Drapeaux follows:]
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    Chairman Inouye. Now, may I call on Mr. Hampson.

STATEMENT OF TOM HAMPSON, EXECUTIVE DIRECTOR, ONABEN: A NATIVE 
           AMERICAN BUSINESS NETWORK, TIGARD, OREGON

    Mr. Hampson. Good morning. Thank you very much. I want to 
express my appreciation to Senator Cantwell for giving me the 
opportunity to speak to you today. It is a real honor to talk 
to all of you. Also, to Senators Wellstone and Inouye for 
holding these hearings, and, of course, to Senator Johnson and 
to House and Senate cosponsors who broke ground, I think, in 
this particular piece of legislation. Because of the 
differences between the Senate and the House bills, this 
particular legislation addresses issues in the small business 
development community that have not been directly addressed 
before.
    You have my written testimony before you, and with that, 
the appendices as well as the commentary that I made, I would 
like to request that that be made a part of the record and 
particularly emphasize a few points with respect to the query 
that you have posed to us today, which is what is the Federal 
obligation relative to small business development.
    Now, ONABEN is a Native American business network, and like 
The Lakota Fund, we are a 501(c)(3). We do have tribal member 
or tribal representatives on our board. We are also founded by 
federally recognized tribes in Oregon. Each one of these tribes 
offer services to Native Americans through their own owned and 
managed Small Business Development Center Network, and we 
provide the services in terms of content, classes, counseling.
    It is a program that depends upon collaboration between a 
501(c)(3) and a Native American tribe, and when they are 
available, Small Business Development Centers. We did not 
always used to collaborate with Small Business Development 
Centers. Within the last 2 years, we have felt it is absolutely 
essential to find every resource within the community to make 
sure that the Native American people within our service area, 
both on the reservation, near the reservation, and within urban 
areas, are served. So at this point, this bill represents truly 
a innovative way of bringing all of these things together.
    Now, Native American entrepreneurs, as you have heard, face 
a lot of barriers, and you have heard some tremendous good news 
stories from the panel themselves. Some of those barriers that 
Native American entrepreneurs face are common to all small 
business owners. Some are unique to their circumstances, and I 
will not dwell on them except to say that when a Native 
American person tries to start a business on the reservation or 
near the reservation, they confront considerable obstacles, not 
only because of the marketing issues that Senator Inouye has 
referred to, but also because of some of the political issues 
that they face with respect to their relationship to their own 
tribal government.
    But the interesting and paradoxical thing about that is 
that these folks look to their tribal governments for help. 
They look to their Small Business Development Centers, if the 
tribes have one. They, like so many other entrepreneurs, see 
their tribal governments as both helpers and hindrants, but 
when they do get services from the tribal governments, those 
services are very, very welcome, although albeit they are never 
considered enough.
    Now, tribes are seeking on their behalf to balance the 
needs and concerns that they have before them in the complex 
world that they manage. They have to balance both economic 
concerns, cultural concerns, and there is ever present a 
natural tension between individual free enterprise as expressed 
through the Native American families that you have heard today 
and tribal enterprises, which have been probably responsible 
for the renaissance in Indian Country today.
    That natural tension is emblematic of Indian Country in 
general. Indian Country represents the best examples of local 
governments being entrepreneurial. Indian Country also 
represents some of the worst examples of mixing politics and 
business to the detriment of both the tribe and to the 
business.
    Therefore, it is not a matter of whether the government 
should or should not be involved in supporting free enterprise. 
It is really a function of what the strategy is and what the 
level of involvement should be. Ultimately, from our point of 
view, as a tribally-founded organization that serves individual 
entrepreneurs and is dedicated to creating a private sector, we 
believe that tribes and entrepreneurs and the local small 
business owners and their local community neighbors all really 
share fundamentally the same goals and objectives, which are to 
have strong and healthy communities based upon enterprises that 
are both privately founded as well as public in their 
orientation, and to have a strong small business community 
there to support them. That is a classic economic rural 
development model. That is also the model that underpins the 
Small Business Development Program as founded by the SBA.
    As a former tribal business manager, as a former tribal 
economic development person, and also as a former Small 
Business Development Center manager in a neighboring community, 
I know that those lines are not easily crossed, but when SBDCs 
do cross them, the results are considerable.
    You have within your testimony testimony from Tom Dorr, who 
runs the Small Business Development Center out of Western 
Washington University. By Tom's own admission, even though he 
wants desperately to be involved with the eight tribes within 
his service area, he would not have been able to do it had not 
the SBA provided a grant in the form of a small business LINC 
Program to support his outreach efforts.
    Small Business Development Centers in Oregon and in 
Washington, in Idaho and Northern California, the areas that we 
serve, would like to serve Indian Country. They simply do not 
have the resources. If they are provided with that incentive, 
they will work with tribes to do so. We are currently working 
with Jill Thomas-Jorgenson from the Small Business Development 
Center at Lapwai, who is now doing outreach with the Nez Perce 
tribe.
    The fact of the matter is that relative to Small Business 
Development Centers, it is a working model, but tribes deserve 
parity in taking advantage of the things that are provided by 
funding of Small Business Development Centers by SBA. Our 
experience tells us primarily that the local presence of a 
Small Business Development Center, just as you have heard in 
the experience of The Lakota Fund, is absolutely essential to 
providing continuity of service to Native American 
entrepreneurs. As someone on the panel said, it cannot be just 
an occasional class, an occasional seminar, and then walk out 
of town.
    ONABEN's experience in Washington is not dissimilar to that 
experience. We provide intensive 6-week classes, but those 
classes are only provided when we have the resources to serve 
the Washington tribes. Colville, Yakama, Makah, and Chehalis 
have all taken advantage of our programs, but when our funding 
is diminished because SBA is not able to fund us in that 
particular year, then we cannot provide those services.
    Government's role is fundamentally--I think the most 
important role that government can play is to provide incentive 
capital. It does not need to be large amounts of money, but it 
needs to be significant, it needs to be continuous over time. I 
think $1 million is a little shy to meet the needs of the 
tribes that we have, and particularly when you add Alaskan 
Natives and Native Hawaiian organizations.
    But the other thing that the Federal Government needs to do 
through legislation like the Small Business Development Act is 
to encourage collaboration to maximize the use of these 
resources. ONABEN's SBDCs, tribal colleges, organizations like 
The Lakota Fund, we must be asked and we must work together to 
make it all work.
    The Small Business Development Act does all of these 
things. It is a well-crafted piece of legislation where people 
have listened to the practitioners and integrated the best 
practices into this legislation. On behalf of our board, our 
member tribes, we stand ready to help assist to make it work. I 
thank you very much for the opportunity to talk to you this 
morning.
    Chairman Inouye. Thank you very much.
    [The prepared statement of Mr. Hampson follows:]
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    Chairman Inouye. Before proceeding with questions, I would 
like to announce that all of your prepared statements are made 
part of the record. The record will be kept open for 2 weeks, 
until the close of business Tuesday, May 14. So if you have any 
addendums, corrections, or amendments to make, please feel free 
to submit them.
    I would like to insert in the record at this time a 
statement from Kenneth E. Robbins, president of the National 
Center for American Indian Enterprise Development.
    [The prepared statement of Mr. Robbins follows:]
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    Chairman Inouye. I would also like to include a statement 
provided by Tom Dorr, director of the Western Washington 
University Small Business Development Center.
    [The prepared statement of Mr. Dorr follows:]
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    Chairman Inouye. May I call upon Senator Campbell.
    Senator Campbell. I thank the panel for testifying. Just 
going through my own notes and jotting some things down from my 
own memory in the years I have been involved in different 
Indian affairs programs, it seems to me that, I do not know, I 
do not have it in front of me, but probably half the agencies 
in the Federal Government have some kind of programs designed 
to try to help Native Americans. Certainly the Department of 
Labor does, Interior does, the Department of Defense has a 
small section, SBA, HHS. They almost all have some programs 
that people can make themselves available to.
    It seems to me that the weaknesses of all of them are 
either we dropped the ball here in Congress and did not fund 
them to the level they should be funded--we hear that quite 
often, and Senator Wellstone spoke very well to that when he 
was here, and it looks like we are not doing that this year in 
the President's budget again. The second weakness seems to be 
the delivery system, and the third is that tribes or individual 
Indian people are not aware of the programs they can avail 
themselves to, and we hear that a lot, too. We put things in 
place and then we hear 2 years later that the networking did 
not go through the agencies to the tribes so they know that 
they could do or avail themselves to different things.
    The BIA has a loan guarantee program. We did a hearing last 
week on S. 2017, the Indian Financing Act Amendments of 2002. 
They have a program that guarantees 90 percent of a bank loan 
to start Native American-owned businesses. The SBA, as I read 
from their testimony a while ago, has many of the things that 
seem to be covered in this bill--loan programs, HUBZone 
contracting programs, business development programs, small 
business centers, counseling, I mean, all kinds of things.
    So I guess I have to come back to my original question, and 
that is we have seen so many things we have put in place in the 
law that just simply do not get implemented. My question is, do 
we need more laws that people are not going to implement anyway 
or should we be doing a better job of what we are already 
doing? I do not know for sure, but it just seems to me, if we 
put this in place and we get it signed into law, that we are 
just doing more of the same things that can be covered if we 
would do a better job of funding it here in Congress or if it 
was better implemented by the agencies themselves.
    So I guess that is the question. Maybe, Pete, since you 
were with the SBA yourself, could you answer that for me? Is 
this really going to be an improvement----
    Mr. Homer. Yes, I can.
    Senator Campbell [continuing]. Or should we, can we do it 
with existing things that are already in place?
    Mr. Homer. I think we can improve SBA programs with this 
legislation because we have National Indian Business 
Associations around the country that do a good job monitoring 
and coordinating with the Small Business Administration, we 
work with SBA staff on a weekly basis. Also, the National 
Indian Business Association submitted four resumes of 
individuals from Indian Country that are very competent 
individuals and have the capacity to administer the office at 
SBA. SBA asked NIBA to submit Native attorney resumes that have 
Indian law capability, we did this for the SBA. Hopefully, SBA 
will hire a Native attorney in that capacity.
    Senator Campbell. Have they given you a timeframe or any 
indication of when that is going to be done?
    Mr. Homer. On the SBA directorship, NIBA submitted four 
Native resumes, two dropped out because they got tired of 
waiting and took other jobs. SBA hiring is a slow system, and I 
understand the system SBA goes through--it's one that is out of 
SBA hands. Actually, it is in the Justice Department system, 
actually, that's the hold-up.
    What we are looking to develop, is to create State Small 
Business Development Centers for Native Americans, bring them 
into the mix of other SBA programs that are existing in non-
Indian communities. NIBA, in 1996 negotiated with the SBA Small 
Business Development Centers to create funding for Native 
American colleges as Small Business Development Centers, 
because around the country, SBA funded over 108 different 
business development centers in every State, but they did not 
fund one Native American Business Development Center.
    The SBA women's programs, and veterans' programs, were the 
models Congress used in 1998, to create the office of Native 
American Affairs. It took SBA 4 years to hire a national 
director, and I was the first Native American hired in 1992 to 
follow through with what Congress recommended.
    Today NIBA wants to coordinate our effort with all State 
Small Business Development Centers, not only the Indian 
centers. We must organize and fund the Indian center's programs 
first. NIBA asked SBA to create funding for 31 Native American 
colleges, along with all the colleges, junior colleges and 
vocational education associations that SBA funded in all the 
States. NIBA wanted to include 31 Indian colleges. Because the 
program might have been so political, SBA was not going to 
carve off $7 million for funding 31 Indian colleges. Also, SBA 
stated that Native colleges did not fit the criteria and SBA 
was not legally responsible to fund the 31 Native colleges as 
they were not specifically written in the SBA Small Business 
Act, so SBA did not fund them.
    So we are here today asking for support in funding Native 
American Business Development Center programs. The monitoring 
will be from the Indian tribal governments and business 
associations around the country. Since we are the only National 
Indian Business Association, in Washington, D.C., we do a lot 
of coordinating with SBA and the Department of Commerce, BIA 
and IHS on buy-Indian contracting. We attend all their 
hearings.
    Senator Campbell. Pete, did I understand originally when 
this bill was introduced on the House side you were not 
particularly supportive of it?
    Mr. Homer. Yes, originally I had two problems with the 
House bill and I debated Representative Udall on Native 
American--calling radio shows from the University of New Mexico 
in Albuquerque. Congressman Udall asked me: ``Pete, do you have 
a problem with SBDCs?'' I said, ``No, they do a great job in 
Tucson and Phoenix, Las Cruces and Albuquerque, but they do not 
outreach to the Native American communities.''
    The two problems I had were the Office of Native American 
Affairs (ONAA) in SBA was structured to coordinate all Indian 
programs and the Udall bill stated that the SBA Small Business 
Development Center Program would administer this Native 
American program. The other problem was the State Small 
Business Development Center programs would provide the training 
to Indian reservations.
    When you look at the estimated 200 SBDCs around the country 
and there is only one Indian hired working on that T&TA program 
in Bellingham, Washington, you say, ``No, State SBDC's will not 
be able to provide services to Indian Country.'' There are some 
existing programs in our colleges. There are some existing 
TBICs that will be involved in this Senate bill funding. NIBA 
will continue to support TBICs. Senator Wellstone from 
Minnesota mentioned other TBICs from some of the other States, 
including Oregon. NIBA will enhance the TBIC efforts making 
them marketable so they can coordinate with all SBDCs funded by 
SBA.
    Senator Campbell. Does this Senate bill address those 
concerns?
    Mr. Homer. Yes, it does. It fixes the problem NIBA had with 
the House bill.
    Senator Campbell. I have a few more questions but I think I 
might submit them in writing, Mr. Chairman. I thank you.
    Senator Inouye. Thank you. I just want to have a little 
profile of a tribe here. I realize that the Oneidas are not 
typical, but how many members do you have on your reservation?
    Mr. Danforth. We have approximately 15,000 members total, 
of which 6,000 reside in and around the immediate reservation, 
adjacent to Green Bay, Wisconsin.
    Senator Inouye. Of that number, how many individuals are 
involved in small businesses?
    Mr. Danforth. There are probably in the neighborhood of 20, 
approximately.
    Senator Inouye. Twenty out of fifteen thousand.
    Mr. Danforth. Now out of that 20, if I can just comment, 
there are about half a dozen successful. The remainder are 
either marginal or unsuccessful. There are approximately 80, 
currently, potential entrepreneurs that are waiting for a 
program that is in its beginning State of being initiated as we 
speak.
    Senator Inouye. What sort of help can you give the 80?
    Mr. Danforth. We have a couple of initiatives we are just 
beginning. One is a small business loan program where we have 
injected $4 million.
    Senator Inouye. This is a tribal initiative?
    Mr. Danforth. A tribal program. That $4 million would be 
injected into that program this year and $1 million per year 
after that. We have another program that is more like a 
revolving loan program where we have lobbied the state--we pay 
approximately $5 million a year to the State for gaming. Those 
monies are supposed to come back to the reservation and 
surrounding communities. We have about $500,000 of that money 
came back for small business loans.
    Senator Inouye. Of those that succeeded, what sort of 
businesses were they in?
    Mr. Danforth. To name a few, one is a sub shop franchise, a 
food service business, insurance. Now there are several 
instances where a tribal member has joined with an insurance 
company and operating as an insurance business, Native 
insurance business. Another is a casino furniture manufacturer 
or delivery service.
    Some of the businesses that have failed: dry cleaning and 
laundry service, a couple of restaurants, grocery store, about 
five construction companies, a larger tribally-sponsored 
program referred to as Bortech, a machine shop, a couple of 
body shops, car wash, landscaping business. Those are some--
some of those I mentioned, the body shop, landscaping, car 
wash, are potentially moving toward becoming successful but 
over the years have not been to date.
    Senator Inouye. How close is the nearest major urban area?
    Mr. Danforth. Green Bay, Wisconsin borders our reservation 
on the east side so it is a--I forget the actual population 
there but it is industrial, paper mill areas. We know that the 
revenues from the casino in that area have expanded the 
existing businesses and have initiated many additional small 
businesses. A small handful of those have been Oneida 
businesses or other Native American businesses.
    Senator Inouye. How many members have benefited from your 
loan program?
    Mr. Danforth. Under these? None right now. It is just in 
its initiation stages, both of those programs. We have 
attempted programs in the past. Those failed businesses I 
mentioned were some of those who have benefited from those. 
Other things that have caused problems with our own 
administered programs, tribal politics enters into these 
things. It should not be, but it does. I see this bill helping 
overcome that problem, where we have a technical assist that 
lays out adopted criteria that a person must go through, an 
entrepreneur must go through to establish its loan and business 
plan to be adopted.
    Senator Inouye. Thank you. Mr. Homer, you have mentioned 
eight principles in your prepared statement. Do you think that 
your eight principles can be achieved by this bill? The eight 
objectives you have?
    Mr. Homer. Yes, I do.
    Senator Inouye. So you support this measure?
    Mr. Homer. Yes, I do. I have worked with these principles 
in the past. In the Small Business Administration I worked with 
these same principles. My efforts were to create within the SBA 
these kinds of program principles to outreach to Indian 
country, and NIBA coordinated with every SBA district office. 
On a volunteer basis, the SBA district offices in every State 
designated one employee from each as the Native American 
coordinator to coordinate all Native American activity with the 
Office of Native American Affairs.
    The ONAA program was cosmetic when we initially started 
out. SBA did not have the resources to actually operate a 
National program in the Office of Native American Affairs. I 
was the only fulltime staff that you had there. So we had to 
outreach for support from the district offices. We got approval 
from the SBA Administrator, and we operated and coordinated all 
over Indian country. The 13 Western Indian States had very good 
SBA coordinators. They started working to making T&TA inroads 
to Indian country.
    Today we need to establish the SBA Office of Native 
American Affairs with statutory legislation, to provide Native 
Training and Technical Assistance with some funding behind it. 
Senator Campbell, it will not work if we don't have the $7 
million funding behind it. This funding for 5 years will start 
training and technical assistance, so Native American Programs 
can coordinate with State SDBC programs. It only makes sense 
that we coordinate with all SBA programs in this way. Tribes 
around the country have been coordinating all programs making 
them comprehensive programs.
    I lived in the day when we successfully assisted the 
Choctaw, Mississippi through comprehensive funding from many 
Federal agencies and from all agency components. Laguna 
Industries was not any different from Choctaw. A&S Industries 
is not any different either--all were successful. This is how 
they were successfully created through these types of funding. 
The private sector did their share in the development of Indian 
Country business.
    Today, these concepts in development are what we have to 
look at for future developments. We need T&TA to start working 
with these concepts again. Manufacturing is a big initiative 
right now in Indian country; light, small manufacturing. Native 
businesses need training and technical assistance. NIBA is 
going back to square one in providing assistance with: business 
development, business plans, feasibility, and financial 
management plans. These services will also be provided by the 
SBA Native Small Business Development Centers.
    Senator Inouye. Thank you. Mr. Dorr, before I proceed, 
congratulations on your recent award.
    Mr. Dorr. Thank you.
    Senator Inouye. You have been certified under the SBA's 
mentor-protege program. What sort of benefits do Indians get 
from that program?
    Mr. Dorr. Specifically in our industry of security guard 
services, a variety of our mentor offers a variety of 
administrative, technical assistance, resourcing, employment 
options, legal advice. So a variety of spectrum of our business 
experience.
    Senator Inouye. These mentors are Native Americans?
    Mr. Dorr. No, they are not. This specific one is located 
very close to our office, our corporate office by the 
reservation and is a very large business. So this specifically 
is not.
    Senator Inouye. So you believe that this program works?
    Mr. Dorr. Very much so.
    Senator Inouye. I presume from what you are stating there 
is a shortage of mentors.
    Mr. Dorr. I think there are quite a few mentors available. 
I just think that maybe the marketing or the SBA's letting them 
know, or what have you, I guess is not really available.
    Senator Inouye. How many contracts do you believe your 
company has lost because its 8(a) status is not considered 
under the Federal supply schedule?
    Mr. Dorr. In the last 30 days we have lost four.
    Senator Inouye. If you were considered you would have had 
those?
    Mr. Dorr. We would be more considered. I cannot assume that 
we would be awarded those. But instead of considering small 
businesses, they excluded the small business programs and it is 
the largest companies in the world competing against contracts 
that are historically 8(a) for a number of years.
    Senator Inouye. Ms. Drapeaux, you have indicated that in 
your training and business development services that you try to 
make them culturally relevant.
    Ms. Drapeaux. Yes.
    Senator Inouye. What do you do to accomplish that?
    Ms. Drapeaux. We actually developed our own training 
curriculum and now we are using the--like buffalo economy. Part 
of our training we go back to the very beginning of time and 
why Native people should be businesspeople and why we probably 
always have been businesspeople as we have always bartered, and 
how we have survived as a people.
    So what that has really done, I think, has helped 
individuals really consider themselves to be eligible to be 
businesspeople. Where we live a lot of people are like, you 
know, we do not know if we should be in business. Is that 
really us? Is that something we should be doing as people? So 
part of our education process is simply getting people to think 
that it is OK to be in business and it is something that we 
should strive for and look to, and it is not just for white 
people, or it is not just a certain of person that should be in 
business; that it is really OK for us to be in business.
    Where we live is pretty isolated so we really do start at 
the very beginning of where our people come from, and we build 
in our own belief systems and tie them to our business 
training, so it is more acceptable, so people can start 
believing in themselves about going into business.
    Senator Inouye. You have indicated that your fund has 
provided about $750,000 in loans?
    Ms. Drapeaux. Yes.
    Senator Inouye. Have they all been repaid on time?
    Ms. Drapeaux. No, we have a delinquency rate, but our 
delinquency rate is actually pretty good. It is right now I 
think sitting at around 17 percent of delinquency. We have a 
pretty rigorous training program. We have a 10-week small 
business training program. Just because you go through our 
program does not necessarily mean that you are going to receive 
a loan. It is very labor intensive. We provide a lot of one-on-
one technical assistance. Our staff goes onsite a lot and 
visits with people, and a lot of times when people have hard 
times, for whatever reason, because everything is tied to the 
economy. Even out there it is pretty driven by what is 
happening everywhere else.
    So we will do things like write notes. We do not do what 
typical banks do. We actually try to help them so they can 
succeed, if we need to. Just because that is what it takes to 
do business out there.
    Senator Inouye. How many jobs do you believe you have 
created by your activities, new jobs?
    Ms. Drapeaux. I would say many, primarily because a lot of 
our beginning borrowers which were micro-borrowers, which 
really turned out to be artists and home-based businesses. So 
we have a couple of hundred that are probably home-based. These 
are quill workers, quilters, beaders, a lot of artists. Since 
our loan fund was only--the maximum that they could borrow was 
$25,000, it was not enough money to really start any other type 
of business. So when they increased the amount it has really 
moved the Lakota Fund up and forward to other types of larger 
businesses, and even that is not a lot.
    Senator Inouye. Thank you.
    Mr. Hampson, in your prepared statement you speak of a 
joint venture with Lewis & Clark College?
    Mr. Hampson. Yes, sir.
    Senator Inouye. That the funds were cutoff at midstream?
    Mr. Hampson. No, our effort with Lewis & Clark College came 
as a result of the request by the Nez Perce tribe of Idaho to--
they asked us to serve their reservation with our going into 
business programs. We did not have money to do that at that 
particular point in time. So at that point we were not able to 
do anything.
    After a period of time we received a demo, which 
essentially was a demonstration program through SBA for the 
7(j) program that allowed us to go again outside of Oregon to 
do a demonstration program with tribes. We did classes at Fort 
Hall. We did classes in Spokane, Yakima, and both Colville and 
Nez Perce expressed an interest. But by the time that they were 
ready to do something those funds had expired. So it was not a 
matter of those funds being terminated prematurely, it was just 
a matter of, timing is everything.
    It goes back to the point about continuity. If you make a 
promise today and your funding is delayed, particularly with, 
as you know, the Federal domestic pipeline can be delayed 
anywhere from 6 months to a year. Then by that time you are 
already into the mid-point of the grant before you actually see 
the resource. You cannot make your commitments on a timely 
basis.
    The bottom line was what we did was we asked the SBDC to 
provide services. We facilitated a joint meeting between the 
tribe and the small business development center, and right now 
as of this moment the SBDC has committed to teaching their next 
level training class for the confederated tribes of Nez Perce 
and we will be providing other Native American-appropriate 
content and facilitation services to that process.
    Senator Inouye. Do you charge a fee to those who are 
seeking your assistance?
    Mr. Hampson. We do. We charge a fee, $10 a class, or $100 
for the entire series. Oftentimes that fee is picked up or 
reimbursed to tribal members by the tribe if they successfully 
complete the program. By successfully complete that means they 
have completed a business plan, their counselor has approved 
the plan, and authorized the tribe to reimburse them.
    Senator Inouye. Under this training program, how many jobs 
do you think you have developed?
    Mr. Hampson. We can only give you that data in Oregon 
because in Oregon we are supported by the economic development 
department of the State and as part of the small business 
providers network we all chip in and provide for an external 
evaluator. That evaluator surveys all of the program clients, 
including the SBDC network and the other minority and low 
income entrepreneurship programs.
    They issue a report, and the last 2 years--and this data 
has been submitted in the record for the appendices. The 
consultant that did the study estimated, based upon surveys in 
the 1998 to 1999 period, out of 1,556 clients served there were 
405 new jobs, and the succeeding year 480 new jobs where there 
were 1,205 people served.
    Senator Inouye. As I have indicated, the record will stay 
open until close of business 2 weeks from now, so if you have 
any additions to submit please feel free to do so. Like Senator 
Campbell, the committee will be submitting questions to all of 
you, if we may, for your consideration and response.
    Senator Campbell. Mr. Chairman, may I reflect on one thing 
that Mr. Danforth mentioned about the failure of some of the 
businesses on the reservations? I was thinking myself, the 
failure of outside businesses are probably roughly the same. I 
understand that about 80 percent of new startup businesses in 
the private sector, the non-Indian sector, are out of business 
within a couple years, and probably for the same reasons, a 
weak market or oversaturation, or the main reason I think is 
just not enough capital, undercapitalization.
    But I did want the record to reflect that I do not think 
Indians are going out of business any faster than anybody else. 
With the right training they have the same opportunities to 
stay in as anybody else does. But I wanted the record to 
reflect that.
    Let me ask just one last little tiny question, because I 
was also very impressed with Mr. Dorr's comments. How did you 
get the initial capital to start your business?
    Mr. Dorr. We grew slowly and we self-capitalized ourselves.
    Senator Campbell. Was it through any loans or grants 
though?
    Mr. Dorr. No programs.
    Senator Campbell. Or did you just shoestring it up?
    Mr. Dorr. Right.
    Senator Campbell. Congratulations. You did a wonderful job.
    Thank you, Mr. Chairman, I have no further comment.
    Senator Inouye. With that, we thank you very much. The 
record will be open for 2 weeks and the meeting is adjourned.
    [Whereupon, at 11:56 a.m., the joint committee meeting was 
adjourned.]
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