[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



  DOING BUSINESS WITH THE GOVERNMENT: THE RECORD AND GOALS FOR SMALL, 
                 MINORITY, AND DISADVANTAGED BUSINESSES

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

                               (110-105)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
    ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 6, 2008

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure





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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman

NICK J. RAHALL, II, West Virginia,   JOHN L. MICA, Florida
Vice Chair                           DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon             THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois          HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of   JOHN J. DUNCAN, Jr., Tennessee
Columbia                             WAYNE T. GILCHREST, Maryland
JERROLD NADLER, New York             VERNON J. EHLERS, Michigan
CORRINE BROWN, Florida               STEVEN C. LaTOURETTE, Ohio
BOB FILNER, California               FRANK A. LoBIONDO, New Jersey
EDDIE BERNICE JOHNSON, Texas         JERRY MORAN, Kansas
GENE TAYLOR, Mississippi             GARY G. MILLER, California
ELIJAH E. CUMMINGS, Maryland         ROBIN HAYES, North Carolina
ELLEN O. TAUSCHER, California        HENRY E. BROWN, Jr., South 
LEONARD L. BOSWELL, Iowa             Carolina
TIM HOLDEN, Pennsylvania             TIMOTHY V. JOHNSON, Illinois
BRIAN BAIRD, Washington              TODD RUSSELL PLATTS, Pennsylvania
RICK LARSEN, Washington              SAM GRAVES, Missouri
MICHAEL E. CAPUANO, Massachusetts    BILL SHUSTER, Pennsylvania
TIMOTHY H. BISHOP, New York          JOHN BOOZMAN, Arkansas
MICHAEL H. MICHAUD, Maine            SHELLEY MOORE CAPITO, West 
BRIAN HIGGINS, New York              Virginia
RUSS CARNAHAN, Missouri              JIM GERLACH, Pennsylvania
JOHN T. SALAZAR, Colorado            MARIO DIAZ-BALART, Florida
GRACE F. NAPOLITANO, California      CHARLES W. DENT, Pennsylvania
DANIEL LIPINSKI, Illinois            TED POE, Texas
DORIS O. MATSUI, California          DAVID G. REICHERT, Washington
NICK LAMPSON, Texas                  CONNIE MACK, Florida
ZACHARY T. SPACE, Ohio               JOHN R. `RANDY' KUHL, Jr., New 
MAZIE K. HIRONO, Hawaii              York
BRUCE L. BRALEY, Iowa                LYNN A WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania          CHARLES W. BOUSTANY, Jr., 
TIMOTHY J. WALZ, Minnesota           Louisiana
HEATH SHULER, North Carolina         JEAN SCHMIDT, Ohio
MICHAEL A. ARCURI, New York          CANDICE S. MILLER, Michigan
HARRY E. MITCHELL, Arizona           THELMA D. DRAKE, Virginia
CHRISTOPHER P. CARNEY, Pennsylvania  MARY FALLIN, Oklahoma
JOHN J. HALL, New York               VERN BUCHANAN, Florida
STEVE KAGEN, Wisconsin               ROBERT E. LATTA, Ohio
STEVE COHEN, Tennessee
JERRY McNERNEY, California
LAURA A. RICHARDSON, California
VACANCY

                                  (ii)

  





 Subcommittee on Economic Development, Public Buildings, and Emergency 
                               Management

        ELEANOR HOLMES NORTON, District of Columbia, Chairwoman

MICHAEL H. MICHAUD, Maine            SAM GRAVES, Missouri
JASON ALTMIRE, Pennsylvania          BILL SHUSTER, Pennsylvania
MICHAEL A. ARCURI, New York          SHELLEY MOORE CAPITO, West 
CHRISTOPHER P. CARNEY,               Virginia
Pennsylvania, Vice Chair             CHARLES W. DENT, Pennsylvania
TIMOTHY J. WALZ, Minnesota           JOHN R. `RANDY' KUHL, Jr., New 
STEVE COHEN, Tennessee               York
JAMES L. OBERSTAR, Minnesota         JOHN L. MICA, Florida
  (Ex Officio)                         (Ex Officio)

                                 (iii)








                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    vi

                               TESTIMONY

Ayers, Stephen, Acting Architect of the Capitol..................     3
Giordano, Catherine, President/CEO, Knowledge Information 
  Solutions, Inc.................................................     3
Marshall, Era, Director, Office of Equal Employment and Minority 
  Affairs, Smithsonian Institution...............................     3
Mosier, Roger, Vice President, John F. Kennedy Center for the 
  Performing Arts................................................     3
Rigas, Michael J., Deputy Associate Administrator, Office of 
  Small Business Utilization, General Services Administration....     3
Rouse, Terrie, Chief Executive Officer for Visitor Services, 
  Capitol Visitor Center.........................................     3
Sligh, Albert, Director, Office of Management, Federal Emergency 
  Management Agency..............................................     3
Smith, Dennis C., Small Business Coordinator, Capitol City 
  Associates, Inc................................................     3
Stephenwoof, Rosalind Styles, President, National Association of 
  Minority Contractors, Washington, D.C. Metro Chapter...........     3
Zingeser, Joel, Associated General Contractors of America........     3

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Altmire, Hon. Jason, of Pennsylvania.............................    42
Oberstar, Hon. James L., of Minnesota............................    43

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Ayers, Stephen T.................................................    44
Giordano, Catherine..............................................    48
Kaiser, Michael..................................................    54
Marshall, Era....................................................    57
Rigas, Michael J.................................................    62
Rouse, Terrie S..................................................    67
Sligh, Al........................................................    69
Smith, Dennis C..................................................    86
Stephenwoof, Rosalind Styles.....................................    90
Zingeser, Joel P.................................................    93

                       SUBMISSIONS FOR THE RECORD

Sligh, Albert, Director, Office of Management, Federal Emergency 
  Management Agency, responses to questions from the Subcommittee    83


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

 
HEARING ON DOING BUSINESS WITH THE GOVERNMENT: THE RECORD AND GOALS FOR 
             SMALL, MINORITY, AND DISADVANTAGED BUSINESSES

                              ----------                              


                        Thursday, March 6, 2008

                   House of Representatives
    Committee on Transportation and Infrastructure,
Subcommittee on Economic Development, Public Buildings, and 
                                      Emergency Management,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 11:06 a.m., in 
Room 2253, Rayburn House Office Building, the Honorable Eleanor 
Holmes Norton [Chairwoman of the Subcommittee] presiding.
    Ms. Norton. We were waiting for the Ranking Member, but he 
graciously indicated that we should go ahead. We will be 
pleased to hear his opening statement when he comes.
    The Subcommittee is very pleased to welcome our witnesses 
today. We look forward to learning from the testimony about 
small business participants concerning their experience in 
contracting with the Federal Government and equally from the 
testimony of agencies within the jurisdiction of this 
Subcommittee about their goals and accomplishments for small 
business and for minority, women-owned, and disadvantaged 
businesses.
    Small businesses are central to today's economy. The 
Federal Government is the largest small business contractor 
and, therefore, has a special obligation to this indispensable 
economic sector. The roughly 25 million small businesses in the 
United States account for fully 50 percent of the Nation's 
private non-farm national product; however, they receive only 
20 percent of Federal contracts. Women make up 30 percent of 
the small business owners nationally, but receive only 3.4 
percent of Federal contracts. Minorities are 18 percent of 
small business owners nationally, but receive only 6.8 percent 
of Federal contracts. Service-impaired veterans face the worst 
odds of all, with only .87 percent of Federal dollars going to 
their firms.
    I do not suggest that all of these small businesses should, 
would even desire, or would be qualified to do business with 
the Federal Government, or that rigid statistical parity is the 
goal. However, the Government fell $12 billion short of meeting 
its own modest contracting goals for small businesses. Yet, 
small businesses are responsible for the lion's share of new 
jobs. Because most of the jobs created by small businesses 
remain in this Country, their formidable job creation power has 
premium value for our economy and the American people. 
Moreover, considering increasing predictions for recession 
today, Federal procurement and contracting become even more 
important for small businesses.
    For almost 50 years, it has been the policy of the Federal 
Government to encourage the participation of small businesses 
in Federal procurement and contracting. The Small Business Act 
requires an affirmative Federal policy of doing business with 
small businesses--and I am quoting--``in order to preserve free 
competitive enterprise, ensure that a fair portion of the total 
purchases and contracts for supplies and services for the 
Government is placed with small businesses, and maintain and 
strengthen the overall economy of the Nation.''
    For minority-and women-owned businesses, there is an 
additional 14th Amendment constitutional obligation carried out 
in Federal law by Title VI of the 1964 Civil Rights Act. In 
Fullilove v. Klutz, the Supreme Court found that Congress had 
the authority to remediate historic discrimination in 
contracting through--and I am quoting from the decision by 
Justice Berger--``prospective elimination of ... barriers ... 
to public contracting opportunities.'' These statutes have been 
carried out in several ways, including targeting Federal 
procurement contracts and subcontracts for small businesses, 
management and technical grants, educational and training 
support, and surety bond assistance.
    It may be that insufficient agency-by-agency oversight 
contributes to the deficiencies in Federal small business 
contracting and procurement. The Small Business Administration 
does do oversight, but there has been little Congressional 
oversight to hold individual agencies accountable in 
implementing the small business practices of the Federal 
Government.
    At this hearing, we are trying to do our due diligence and 
help provide that accountability as a Subcommittee. The 
agencies before us today have submitted information to our 
Subcommittee that indicates that they have endeavored to meet 
the mandate required by Federal law. Three of the agencies--the 
Architect of the Capitol, the Smithsonian Institution, and the 
John F. Kennedy Performing Arts Center--technically are not 
covered by the Small Business Act but have voluntarily chosen 
to abide by the law.
    We look forward to hearing from all the Federal agencies 
for which we perform oversight: the General Services 
Administration, the Federal Emergency Management Agency, the 
Architect of the Capitol, the Capitol Visitors Center, the 
Smithsonian, and the John F. Kennedy Performing Arts Center. We 
thank our small business representatives as well: the National 
Association of Minority Contractors; Capital City Associates; 
the Associated General Contractors of America; and Catherine 
Giordano, CEO of Knowledge Information Solutions.
    We are prepared to hear from the first witness. I suppose 
we should go from left to right. It doesn't matter. But I will 
remind everyone to please turn off your phones and BlackBerries 
during a hearing in the House of Representatives.
    Ms. Stephenwoof, would you like to begin?

 TESTIMONY OF ROSALIND STYLES STEPHENWOOF, PRESIDENT, NATIONAL 
  ASSOCIATION OF MINORITY CONTRACTORS, WASHINGTON, D.C. METRO 
 CHAPTER; DENNIS C. SMITH, SMALL BUSINESS COORDINATOR, CAPITOL 
   CITY ASSOCIATES, INC.; JOEL ZINGESER, ASSOCIATED GENERAL 
  CONTRACTORS OF AMERICA; CATHERINE GIORDANO, PRESIDENT/CEO, 
KNOWLEDGE INFORMATION SOLUTIONS, INC.; ALBERT SLIGH, DIRECTOR, 
  OFFICE OF MANAGEMENT, FEDERAL EMERGENCY MANAGEMENT AGENCY; 
  MICHAEL J. RIGAS, DEPUTY ASSOCIATE ADMINISTRATOR, OFFICE OF 
 SMALL BUSINESS UTILIZATION, GENERAL SERVICES ADMINISTRATION; 
ERA MARSHALL, DIRECTOR, OFFICE OF EQUAL EMPLOYMENT AND MINORITY 
AFFAIRS, SMITHSONIAN INSTITUTION; ROGER MOSIER, VICE PRESIDENT, 
JOHN F. KENNEDY CENTER FOR THE PERFORMING ARTS; STEPHEN AYERS, 
   ACTING ARCHITECT OF THE CAPITOL; AND TERRIE ROUSE, CHIEF 
 EXECUTIVE OFFICER FOR VISITOR SERVICES, CAPITOL VISITOR CENTER

    Ms. Stephenwoof. Congresswoman Norton and esteemed Members 
of the Subcommittee on Economic Development, Public Buildings, 
and Emergency Management----
    Ms. Norton. Could I just indicate to you that your entire--
to all of you who are testifying, your entire statement will be 
received in the record, so you should try to keep that in mind 
when giving your testimony so we will have time for everyone. 
We do our have our very important witnesses, as well, from the 
agencies.
    Ms. Stephenwoof?
    Ms. Stephenwoof. I wish to express my sincere appreciation 
for the opportunity to appear before you today to discuss Doing 
Business with the Government: The Record and Goals for Small, 
Minority and Disadvantaged Businesses. I currently serve as the 
President of the Washington, D.C. Chapter and member of the 
National Board of Directors of the National Association of 
Minority Contractors.
    NAMC was established in 1959 to address the needs and 
concerns of minority contractors and to create parity in the 
construction industry. We have aggressively pursued equity and 
contracting for small, minority, and disadvantaged businesses, 
and attempted to create venues to review the procedures in 
place with the Federal Government, local governments, and 
private sector. One of our primary objectives is to 
continuously seek legislative action of minority business 
issues to advocate for change in laws that hinder minority 
businesses access to, or prevent minority business growth in 
the Nation's $400+ billion a year construction industry.
    In March 2006, the Washington, D.C. chapter hosted the Base 
Realignment and Closure Tri-Service Industry Outreach Forum to 
provide information to small and minority businesses for 
bidding on the 5-year $7 billion military construction workload 
contracts for the United States Army Corps of Engineers, the 
Navy, and the Air Force. The forum created a venue for small 
businesses, minority businesses, 8(a), HubZone, women-owned, 
and veteran-owned businesses to identify opportunities for 
joint ventures, partnerships, contracting and subcontracting 
prior to bidding period. These venues have created 
opportunities for non-traditional dialogue between the Federal 
Government, prime contractors and subcontractors exclusively 
for recruiting small and minority businesses for inclusion on 
teams for bidding. We propose and recommend similar forums to 
be conducted throughout the Federal Government to increase the 
level of small and minority business participation.
    NAMC has also met with the U.S. Department of commerce's 
Minority Business Development Agency, whose mission statement 
includes that it was designed to empower minority business 
enterprises for the purpose of wealth creation; to achieve 
entrepreneurial parity for MBEs by actively promoting their 
ability to grow and compete in the global economy and 
challenges faced by MBEs for developing programs that provide 
the keys to entrepreneurial success.
    However, the measurable success of its programs and 
services are not available. The State of Minority Business 
Enterprises Report issued in 2006, an overview of the 2002 
survey of business owners, indicated a great disparity of the 
average gross receipts of minority firms, which was $162,000, 
considerably lower than the $448,000 average gross receipts of 
non-minority firms. It also indicated that during the reporting 
period gross receipts of MBEs decreased by 16 percent, and over 
the same period of time the average gross receipts of non-
minority firms remained level. Again, it is imperative that a 
recent measure of the success of MBE programs should be 
tantamount to the Federal Government agencies dedicated to 
servicing MBEs and should include economic indicators of MBE 
business success with the Federal Government itself.
    NAMC is also working in partnership with the Associated 
General Contractors of America and with the U.S. Department of 
Transportation to create a Disadvantaged Business Enterprise 
Contractors' Tool Kit, which is meant to be a practical guide 
in establishing a contractor's DBE compliance program as 
implemented by the State and local governments where they work. 
The Tool Kit provides information ranging from getting started 
to assessing one's performance in meeting its own program. NAMC 
recommends this Committee review the model and consideration 
for expansion to its oversight agencies.
    NAMC sits on the MBE Advisory Committee established by the 
Washington Area Sanitation Commission to review proposed 
legislation by the State of Maryland for the establishment of a 
minority business utilization program. The Committee prepared 
and submitted comments on the proposed legislation and 
Commission's proposed Standard Operating Procedures for the MBE 
Program. Again, NAMC suggests the establishment of an SBE/MBE 
Advisory Committee which can assist in the assessment of 
existing programs and recommendations for improvement or 
implementation of an MBE program within your agency.
    In conclusion, NAMC recommends the Subcommittee on Economic 
Development, Public Buildings, and Emergency Management 
consider the following: establishment of an MBE Advisory 
Committee to review the existing MBE program, its effectiveness 
and measure of its success; two, conduct a study of the 
existing MBE programs by each Federal agencies and its 
effectiveness; three, host targeted forums created by Federal 
agencies to reach the small and minority community, and follow 
up with reports of their success; and, lastly, conduct 
extensive monitoring and reporting of small and minority 
business participation and publish its findings which include 
recommendations for penalties for non-compliance.
    NAMC stands ready to assist with the further pursuit of 
your desire to increase the level of participation of small and 
minority businesses with the Federal Government. And that ends 
my presentation.
    Ms. Norton. Ms. Stephenwoof, we will reserve questions 
until the end of all four of the panelists.
    We go to the next person to your right, Mr. Dennis Smith, 
Small Business Coordinator, Capitol City Associates, Inc.
    Mr. Smith. Thank you, Madam Chair. It is indeed a pleasure 
for me to be here this morning.
    In Capitol City I am a small business outreach coordinator. 
There, I work with the BRAC project in finding small 
businesses. I make this introduction to say to that as a result 
of being out in the community, working with many of the 
different businesses, they oftentimes call me with respect to 
small business issues. So what I am conveying to you today is 
oftentimes some of the comments that I receive from businesses; 
and conveying some of the advice that I oftentimes give to 
businesses with respect to some of the issues that they find.
    Ms. Norton. And that is where our interest lies.
    Mr. Smith. That is right, yes. So I would like to move 
directly, then, to, once again, my background. I just recently 
left the Missile Defense Agency, program manager at their small 
business office. They moved to Huntsville, Alabama as a result 
of BRAC, and I decided to stay here in the Washington, D.C. 
area.
    There, at the Missile Defense Agency, there is about a $4.2 
billion procurement budget. Of that procurement budget, 85 to 
90 percent of that went to five companies; and I find that that 
rate there is in fact a trend that you kind of see in Federal 
Government procurement today. And I want to move from there 
right to my points that I am making.
    Let's take, for instance, a current solicitation that is on 
the street now with AOC, the Architect of the Capitol. It is 
currently advertising in solicitation notice RFP060085 facility 
support services. AOC is soliciting for housekeeping, 
landscaping, snow removal, pest control, elevator, lift 
maintenance, and other services as necessary. The solicitation 
says the resulting firm fixed price contract will be awarded to 
one contractor.
    In FAR 2.101, bundling is described as the consolidation of 
two or more requirement previously provided or performed under 
separate small contracts into a solicitation of offers for a 
single contract that is unlikely to be suitable for award to a 
small business concern. There is a need here to challenge the 
acquisition plan. I would be very curious to see the 
acquisition plan prepared by the contracting officer. Each 
contracting officer should prepare an acquisition plan in 
accordance with FAR 7.105.
    This is just one example of what we, as small businesses, 
are up against. Were there alternative strategies that would 
reduce or minimize the scope of bundling here, or what was the 
rationale for not choosing alternatives? This right here, this 
question is asked during the acquisition plan and FAR 7.107, 
the contracting officer should have asked himself or herself 
this question.
    As a business person, should I complain as I look at this 
particular solicitation out on the street? Should I complain as 
a landscaping company to say, I cannot get a part of this 
solicitation? Well, the complaint really should be at the PCR, 
the Procurement Center Representative. I heard you say 
something about SBA doing its job.
    Ms. Norton. I said they did some oversight, unlike the rest 
of the committees.
    Mr. Smith. Section 125 of 13 C.F.R. states that the duties 
of the PCR, the PCR should be coordinating with the small 
business specialists on anticipated bundled contracts. Are they 
performing their duties? The PCR should ensure that they are 
necessary and unjustified bundling of contracts is avoided; 
assess impediments to small business primes.
    AOC's current acquisition is not an isolated bundled 
solicitation. I would compliment AOC in sending out their 
forecasts and sending out their notices, because everyone knows 
the Fed Bus Op is a farce. So AOC does a good job in sending 
out their notices to businesses if you subscribe there. But 
this is just one of many bundled contracts that I have seen 
come out of AOC this year or over the past year, say, fiscal 
year.
    Another small business impediment is subcontracting. One of 
the procurement vehicles that the government personnel 
recommends to small businesses, they say, oh, you should go and 
subcontract. Go talk to Boeing, go talk to Northrop Grumman. 
That is a nightmare by itself. But without going there, being a 
subcontractor to one of the large contractors is a very 
challenging task, but in the construction arena it is even that 
more difficult. And I want to talk about the construction arena 
because I am working on a BRAC project and I want to be 
specific to that.
    In accordance with FAR 19.7, a solicitation offer that is 
expected to exceed, in the case of construction, $1 million--in 
the case of non-construction it is $550,000--must present a 
subcontracting plan. In construction, the plan is too often a 
generic reiteration of a good faith effort that is verbatimly 
coming out of FAR itself. A prime contractor, when responding 
to a solicitation, often details their team. When they submit 
their solicitation, their proposal, they submit a proposal that 
will highlight who their mechanical is, who their electrical 
company is.
    But they should also include in there who their minority 
prime is. Not all, but some. I am not asking them to buy down 
the entire job at that time, but describing the way to do this, 
they should be encouraged by way of evaluation criteria. So to 
specifically identify two or more small business partners in 
the submittal of their solicitation.
    I can detail that and walk any of your staff through that 
point, if I could. I was a director of a small business in 
Prince George's County, minority business office. I have worked 
as outreach manager at EPA and, as I said, I worked at the 
Missile Defense Agency. So I have been through the gamut of all 
of these different institutions or government entities, so I 
know specifically that it is possible to happen.
    Once the plan is submitted, the Government then tells the 
prime contractor that they should report twice a year. So, in 
construction, they report twice a year in what is called a 294 
and a 295. The 294 and 295 is currently being replaced by the 
electronic subcontracting reporting system. It is the 
individual subcontracting plan and the summary subcontracting 
plan. And in reporting twice a year in construction is just 
grossly inadequate.
    No one should report twice a year. Under 49 C.F.R. Part 26, 
what DOT says to the States is that there should be a monthly 
report. So in the State jurisdiction we have a monthly report 
that we have to do. In construction, if you make a guy have to 
report once every six months, between Division 01 work and 
Division 04 work, it has all been done. So from setting up the 
fence to temporary electrical work under Division 01 to 
Division 04 masonry work, it has all been completed by then. So 
there needs to be some accountability and some understanding as 
to how the industry operates. So this right here is impractical 
if we have a reporting method twice a year in construction. 
Very much so impractical.
    The Office of Small Disadvantaged Business Utilization 
offers many remedies to small business concerns in order to do 
business with the Government. One of the remedies that you will 
hear from some of the OSDBU offices is that, well, small 
businesses, they need to do intelligence, they need to gather 
information. There is nothing more hostile than trying to go 
into a government office and to try to find some information.
    The thing is, though, is that what you have--and you have, 
in FAR Part 10 describes how the contracting officer should be 
conducting market research. So you have this information 
already. If the contracting officer did the market research, 
then you would wind up having information that would be going 
out to the small businesses. But let me be more specific, go 
back a little.
    In the OSDBU office, the director of the OSDBU office 
should have a direct relationship with the secretary of the 
agency or the under secretary. If that right there was 
enforced, then the OSDBU director would be saying to the agency 
heads, I want you, on a monthly basis, to come and to give the 
public a pronouncement as to what you were doing. If the public 
understood what the agency was doing, where they were going, 
the small business would in fact receive intelligence, would be 
able to do their research and have an understanding as to what 
the government agency was going to procure or what the 
government agency's mission was and where it was in fact going 
over the next fiscal year or two.
    The small businesses have an uphill battle when trying to 
do business with the Federal Government, even when they are 
awarded a contract. I had a contractor call me about a 
contract. This was an 8(a) firm who won an award, so they 
thought. The firm was told by ATEC, the U.S. Army Test and 
Evaluation Command, they had been awarded, via GSA e-Buy--which 
I am not as familiar with--a contract for $1.1 million. This 
was an award to establish an asset management system. This was 
in January of 2008.
    Then they were told, the next day, oh, no, they had not won 
the award. After they had been sent an e-mail and information, 
the firm was saying to me that--firms are very scared to in 
fact--or very afraid to complain, because they are afraid that 
they in fact may be stopped the next time they go after a 
solicitation. The award was made to Hewlett Packard instead. 
The small business was intimidated by the tone and reference to 
what they should do by the contracting officer or the COTAR.
    In summary, it is declared policy of the Congress that the 
Government should aid, counsel, assist, and protect insofar as 
possible, the interest of small business concerns in order to 
preserve free competitive enterprise, to ensure a fair 
proportion of total purchases and contracts or subcontracts for 
property and services for the Government, including, but not 
limited to, contracts or subcontracts for maintenance, repair, 
and construction, be placed with small business enterprises, to 
ensure a fair proportion of the total sales of Government 
property be made to such enterprises, and to maintain and 
strengthen the overall economy of the Nation.
    In accordance with Public Law 95-507, that stipulated that 
it is the policy of Government to provide maximum practical 
opportunities in its acquisitions to small businesses, small 
disadvantaged businesses, and women-owned businesses. This 
stipulation also extends to having the maximum practical 
opportunity to participate as subcontractors in contracts 
awarded by an executive agency. Let's make this legislation, 
Public Law 95-507, a reality. Thank you.
    Ms. Norton. Thank you, Mr. Smith.
    Our Ranking Member, Mr. Graves, has come, and I would like 
to ask if he has any opening remarks he would like to make.
    Mr. Graves. Thank you, Madam Chair. I want to say that I 
appreciate your holding this hearing today. I am looking 
forward to hearing the rest of the testimony this morning on 
small business contracting opportunities within the agencies.
    This is a very important issue to me. As a Member of the 
Small Business Committee also, I have been dedicated to 
fighting for the rights of small business owners. Small 
businesses play an essential role in our economy. In fact, they 
represent more than 99 percent of all employers, employing 51 
percent of private sector workers. Additionally, small 
businesses are indispensable for job creation: they produce 60 
percent to 80 percent of all new jobs.
    Because of the vital role small businesses play in the 
United States economy, it is important that we ensure that 
small businesses can navigate the Federal bureaucracy. The 
Federal Government should not discriminate against businesses 
because of their size but, instead, should encourage 
entrepreneurship. The Small Business Act directs the Federal 
Government to protect the interest of small businesses in order 
to preserve free and competitive enterprise, ensure that a fair 
portion of Federal Government contracts are placed with small 
businesses, and maintain and strengthen the overall economy of 
this Nation.
    However, many Government agencies are not achieving their 
goal for contracting with small businesses, particularly as 
prime contractors. I look forward to hearing whether the 
agencies represented here today are meeting those contracting 
goals and what programs they have in place to ensure that small 
businesses have the opportunity to compete for Federal 
Government contracts.
    Additionally, I am concerned about the practice of 
consolidating contracts, or contract bundling. This practice 
limits the ability of small businesses to compete and 
ultimately hurts the American taxpayer. Therefore, I ask for 
all of our witnesses today to help our Nation's small 
businesses by limiting within their agencies the bundling of 
contracts for larger companies. Also, I strongly encourage all 
of you to work to level the playing field for small businesses 
by continuing efforts to increase small business 
subcontracting, reduce contract bundling, obviously increase 
transparency in contracting data, and approve access to Federal 
procurement opportunities.
    Again, Madam Chair, I appreciate the opportunity to give my 
statement as a result of votes, and I very much appreciate this 
hearing. This is something I have been interested in for a long 
time.
    Ms. Norton. Thank you very much. I am sure that your 
background in the Small Business Committee will be central and 
important to this hearing.
    Mr. Joel Zingeser, Associated General Contractors of 
America.
    Mr. Zingeser. Thank you, Madam Chair and Mr. Graves, 
Members of the Subcommittee. My name is Joel Zingeser, of 
Grunley Construction, a local construction company here in the 
Greater Washington area, where I lead the firm's strategic 
planning, business development, and new technology programs, 
including our efforts in sustainable design and construction, 
and integrated project delivery opportunities.
    For over 50 years, our firm has specialized in renovations, 
restorations, and modernization of large-scale government and 
commercial buildings, including office, laboratory, and 
educational facilities. We have had the good fortune of working 
in this building and appreciate all the opportunities we have 
to work with the Federal Government. In addition, we have 
constructed new facilities in addition to existing buildings 
for both public and private sector clients.
    On behalf of the Associated General Contractors of America, 
we strongly support full and open competition for the many 
contracts necessary to construct improvements to real property. 
This includes competition among general contractors, specialty 
contractors, suppliers, and service providers. Over the years, 
it has been established that such competition energizes and 
improves the construction industry to the benefit of the 
industry as a whole and the Nation as a whole. As the 
Subcommittee considers the changing Federal procurement 
landscape, AGC offers the following points for consideration.
    At this point, I would like to stand on the submitted 
statement, discussing information about construction inflation, 
reprogramming authority, and agency consistency. Given your 
focus on small business and the involvement of small business, 
I would like to highlight three particular areas in my written 
statement.
    Contract bundling. Contract bundling has been a concern in 
the construction industry for several years. While there is no 
definition of bundling, it appears that the consolidation of 
various projects is occurring more frequently. Small contracts 
are being bundled to result in large dollar solicitations that 
small businesses are not able to compete for unless they 
partner with large firms. While on the surface this may not 
seem harmful, this practice can undermine the intent of the 
small business program by allowing large business to obtain 
work normally set aside for smaller firms. This confluence of 
pressure is leaving many small firms with fewer opportunities 
to grow in their own prime business area.
    Rather than creating additional set-asides or goals, the 
Congress should instead focus on how the existing programs can 
be improved to increase opportunities for small firms. We 
believe construction, as an industry, should be included in any 
revised definitions of contract bundling, to ensure that these 
consolidations are reviewed for potential negative impact on 
existing small businesses.
    A second point related to small business activity in our 
industry is the Alaska Native contracting program. Over the 
last few years, the volume of complaints AGC has received from 
its members about the growing reliance of the use of Alaska 
Native Corporations by Federal agencies as a contracting 
vehicle to easily attain small business contracting goals 
continues to increase. The fact of the matter is that, in 
today's Federal contracting market, ANCs have extraordinary 
special preferences that significantly reduce Federal 
contracting opportunities for traditional small businesses.
    Some ANCs have taken excessive advantage of their special 
benefits to obtain multi-million dollar sole-source government 
contracts. In April of 2006, the General Accountability Office 
issued a report demonstrating how ANCs have been using the SBA 
program, reporting that awards to ANCs went from $265 million 
in fiscal year 2000 to $1.1 billion in fiscal year 2004; by 
2005, ANC contracting dollars had more than doubled to $2.4 
billion; and between fiscal year 2000 and 2004, 77 percent of 
ANC contracts were sole-source awards.
    The SBA must better track the growth of ANCs. While the GAO 
report states that this program is fulfilling its purpose, it 
is clear that the Government must improve its management and 
oversight of the program. Congress should encourage agencies to 
examine the impact that these preferences have had on other 
disadvantaged groups and the overall effect of these awards to 
the Federal market.
    The third point I would like to touch upon is one that, 
actually, I personally have been very, very committed to within 
the AGC organization. Another major challenge that prime 
contractors continue to face is the inability to report the 
real total dollar amount of small business participation on 
contracts. Currently, prime contractors are not allowed to 
report subcontractor participation beyond the first tier 
subcontractor. Allowing prime contractors to report the dollars 
associated with small business participation below the first 
tier is critical data not only to demonstrate a full 
calculation of total subcontractor participation, but also to 
provide additional incentive to those prime contractors that 
achieve their subcontracting goals.
    I would like to add to this that we do have the movement 
away from the 294 and 295 forms to this electronic data system. 
That system holds the promise of being able to dig down and get 
in more real time real information about those second-and 
third-tier subcontracts. Now, the reason that is important is 
that it is critical to understand the construction industry 
operates differently than many other industries. In fact, a 
large contract for, say, $100 million, will go to 
subcontractors in packages that in many cases a small business 
cannot do at that first tier. But the real work, when you dig 
down, you will find who is doing the work, and it is the 
second-and third-tier subs under that contractor that is doing 
the work.
    For example, a large renovation project of $100 million 
might have $30 million in mechanical work. When you look to see 
who is really doing the mechanical work, you will find that the 
second-and third-tier subs are small businesses. So the flow of 
Federal dollars in the construction industry gets down to small 
businesses much deeper than it is recorded and reported, and it 
is because of this limitation of only being able to report at 
the first tier level. I hope that registers.
    In conclusion, thank you for the opportunity to provide our 
views on working with the Federal market. We believe this 
market offers tremendous opportunities for both construction 
contractors and the Federal Government. AGC looks forward to 
working with the Subcommittee on balancing the needs of the 
Government and creating an environment in which construction 
contractors can continue to work to improve the quality of 
construction delivered to the owner, the Federal Government, 
and ultimately the American taxpayer.
    I would be happy to answer questions about any of the other 
parts that I skipped over.
    Ms. Norton. Thank you very much, Mr. .Zingeser.
    We want to hear now from Catherine Giordano, who is the 
President and CEO of Knowledge Information Solutions, Inc.
    Ms. Giordano. Good morning, Chair Holmes Norton, Ranking 
Member Graves, and other Members of the Subcommittee. My name 
is Catherine Giordano. I am the CEO of Knowledge Information 
Solutions, located in Virginia Beach, Virginia. I am a value-
added network integrator with a full range of products and 
services to create, manage, and secure networks. We are an 8(a) 
woman-owned firm.
    I am appearing today on behalf of Women Impacting Public 
Policy, a national bipartisan public policy organization 
representing well over a half a million women and minorities in 
business, including 45 associations that partner with us. Thank 
you for holding this hearing and for inviting me to testify.
    I would like to spend some time this morning talking about 
my own experience with Federal contracting and then touch on 
policies that affect all small businesses as they seek Federal 
contracts. Let me say at the outset that while I have been very 
successful in the Federal contracting arena, it has not been 
without challenges.
    In 2002, when I bought this company, its revenue was 
roughly $9 million, and almost all of that was in the 
commercial arena. I made a conscious decision to expand my 
business by making a major component of that revenue Government 
business. Since that time, my business has grown 20 percent 
each year, with 90 percent of that revenue attributable to 
government contracting.
    One of the first steps we took was to get a GSA IT 70 
schedule contract. We submitted our paperwork in October of 
2002 and were awarded the contract in December of 2003. This 
year-long delay cost millions of dollars of lost revenue to 
KIS. We spent approximately $50,000 to get on the IT 70 
schedule, on internal and external resources. This is not just 
a problem specific to my company; many small businesses spend 
significant dollars preparing the paperwork for getting on 
schedule. I know Administrator Doan has made a big push to get 
contracts awarded 30 days after businesses submit their 
paperwork, and I applaud that effort.
    It is important to note that a small business must also 
maintain their schedule contract. We have spent approximately 
$20,000 for contract updates for each Multiple Award Schedule 
we hold. On that note, the time and effort for small businesses 
spending on implementing changes to their schedule contracts 
can be long and laborious: in some cases over a year.
    KIS has found GSA Multiple Award Schedules redundant and 
overlapping in categories of information technology delivery 
services. Each Multiple Award Schedule holder, such as KIS, 
must bid for each contract opportunity under the schedule, 
which adds to the cost of bidding and proposal costs. In other 
words, if you were awarded an 8(a) STARS contract, it only 
means you can bid on opportunities that are assigned to that 
contract; no business comes with the award. We estimate that we 
have spent $850,000 on competitive bids on these schedules. 
Needless to say, that is out of the reach of most small 
businesses.
    On a positive note, the 8(a) STARS contract has been good 
for KIS. It is run by a professional team in Kansas City, 
Missouri that practices rapid response and skilled contract 
officers. My only regret is that it is not utilized as the 
preferred GSA Multiple Award Schedule for small businesses. 
Redundant GSA schedules offering the same services and products 
force small businesses to participate in a number of schedules 
rather than just one. Redundancy is not exclusive to GSA; every 
agency has its own information technology services contract, 
for which we must also compete.
    Now let me turn to some policy issues that affect small 
women-owned businesses. The most pressing issue is the SBA's 
proposed rule on the women's procurement program, whose comment 
period ends March 31 of 2008. Public Law 106-554, passed in 
2000, established a women's procurement program because Federal 
agencies did not meet their 5 percent women-owned contracting 
goal. In fact, the Federal Government has never met the goal; 
the highest number it has ever achieved is 3.4 percent.
    The SBA studied the data for seven long years, only to 
publish, on December 27 of 2007, an unsatisfactory proposed 
rule: Women-Owned Small Business Federal Contract Assistance 
Procedures.
    The SBA chose the narrowest method of data analysis and 
identified only four NAICS codes that will be subject to 
restricted competition: cabinetmaking, engraving, other motor 
vehicle dealers, and national security and international 
affairs.
    But there is another hurdle to clear before these limited 
four categories can be eligible for set asides. An agency must 
perform an internal audit of its past contracting actions to 
show that it is rectifying past discriminatory contracting 
practices before any contract can qualify for a set aside. By 
requiring this additional finding of past discriminatory 
practices by agency, we believe this proposed rule sets forth a 
new legal standard which will be damaging not only to this 
program, but potentially every women business enterprise in the 
Country. Women Impacting Public Policy and its coalition 
partners are asking the SBA to withdraw this rule. In addition, 
many Members of the House and Senate have urged the SBA to 
withdraw the rule, and we are grateful for their support.
    There are other policies which affect the ability of women-
owned businesses to do business with the Government. 
Consolidated contracts, also known as bundled contracts, hurt 
small businesses. OMB reported in 2002 that for every $100 
awarded on a bundled contract, there is a $33 decrease to small 
businesses. A 2004 GAO report shows that Federal agencies are 
confused over what constitutes contract bundling. We urge the 
Subcommittee to clear up the confusion for the agencies.
    WIPP continues to believe that if you list us, it is 
important principle in subcontracting you must use us. Small 
businesses spend thousands of dollars in staff resources to be 
part of the subcontracting plan on a prime contractor's bid. We 
believe prime contractors should utilize the small businesses 
they include in their subcontracting plan unless the small 
business could no longer meet the requirements. There should be 
penalties assessed for violating the subcontracting plan.
    The Federal Government's ability to meet small business 
goals is far from impressive. According to SBA, fiscal year 
2006 Federal contracting numbers show that only 7 of 24 Federal 
agencies met the 23 percent small business goal. Additionally, 
only 10 major agencies met 5 percent women-owned contracting 
goals of 5 percent.
    In conclusion, it is not impossible for small women-owned 
businesses to be successful in Federal contracting. But our 
success does not rest solely on the quality of our products and 
services; Federal acquisition policy largely dictates if and 
when we will be successful. The Congress and the Federal 
agencies must work together to ensure that the policies they 
enact and the paperwork they create do not shut out the ability 
of women-owned businesses to succeed in the Federal 
marketplace.
    Thank you for your time.
    Ms. Norton. Thank you, Ms. Giordano.
    I want to thank all four of you. We had you come before our 
agency witnesses. Sometimes the protocol for the opposite 
because we would like them to respond to some of what they have 
heard here. Could I just ask, across the panel, what agencies 
have you personally or do you know personally of doing business 
with the Federal Government? What agencies?
    Ms. Stephenwoof. You mean that we work with specifically? 
Right now we are working with, under the BRAC we are working 
with the--I am sorry--okay, I am working with the U.S. Army 
Corps of Engineers specifically at this time.
    Ms. Norton. Mr. Smith, you mentioned the Missile Defense 
agencies?
    Mr. Smith. I was contracted as a program manager in their 
small business office.
    Ms. Norton. What other agencies in the Federal Government 
are you familiar with?
    Mr. Smith. That I work with? I work with EPA. As a 
consultant, I have written proposals, successful proposals for 
AOC.
    Ms. Norton. Architect of the Capitol?
    Mr. Smith. Yes. EPA. I work with the Army. I work with HUD. 
I work with many of these agencies.
    Ms. Norton. Mr. Zingeser, if you have done work in this 
building, what agency were you working with to do that?
    Mr. Zingeser. We are very, very fortunate to be working for 
the Architect of the Capitol, the General Services 
Administration, the Corps of Engineers, the NAFAC, and some 
work for some other three-letter agencies.
    Ms. Norton. I just want to put on the record your 
experience across the board.
    Ms. Giordano?
    Ms. Giordano. We are privileged to hold a number of 
contracts: GSA, NIH, all agencies within DOD. We also have the 
FBI, Department of Justice, the Securities and Exchange 
Commission, and several others.
    Ms. Norton. So we have heard from witnesses that run the 
gamut from construction to high tech, so we have a good cross 
section here.
    Ms. Stephenwoof, you indicated a forum, that a forum was 
held by your organization.
    Ms. Stephenwoof. Yes.
    Ms. Norton. You say that you recommend targeted forums 
created by Federal agencies to reach the small and minority 
business community. I want to know if any of you have had any 
experience with such forums or meetings that were called for 
small businesses by any Federal agency.
    Ms. Stephenwoof. I can start. This past fall----
    Ms. Norton. I am not talking about--I am speaking largely 
to the notion of intelligence, to the notions that Mr. Smith 
raised about notices to business. I am trying to understand how 
the small business community knows, except through in the 
ordinary course of business like every business person, about 
what kinds of business is available.
    Mr. Zingeser. I can just say that, in our industry, all of 
the agencies that I mentioned, perhaps with the exception of 
AOC--I am not sure that they do or do not do this, but, in 
general, GSA, the Corps of Engineers, NAFAC, they routinely 
hold programs for small businesses to attend and we, as a large 
business, attend those because it is very useful and helpful to 
us to meet new small business representatives. An awful lot of 
business cards get passed around; people get to know each 
other. And then within the Greater Washington Area, which is 
where we work, a number of the trade associations, in addition 
to agency, but the real estate trade associations and so forth, 
again, hold various meetings which encourage small business 
participation.
    Ms. Norton. So do you find that this leads to the kind of 
information that helps various small businesses get work with 
the Federal Government?
    Mr. Zingeser. I would think so. The only other point I 
would make is that most large general contractors themselves 
have their own outreach programs, which are really required as 
part of the FAR.
    Ms. Norton. Yes, but you criticized at least the way in 
which some records are kept. On page 4 of your testimony, Mr. 
Zingeser, you say that prime contractors aren't allow to report 
subcontractor participation beyond the first tier. The 
implication is that some of the work beyond the immediate or 
first tier subcontractor is in turn subcontracted. Is that what 
you are saying?
    Mr. Zingeser. Well, I definitely do not want to be 
misunderstood. I believe that the SBA regulations that the 
agencies must follow in scoring their small business programs 
will not allow those agencies to reach down to the----
    Ms. Norton. I am trying to find out--if in fact you think 
that some of the business gets further subbed, as it were, what 
is the reason that you believe the Government wouldn't want to 
know that?
    Mr. Zingeser. My point--let me make sure that I am clear. 
My point is real simple. I think that the agencies that are 
procuring construction are not doing all that bad a job in 
trying to meet these goals. I think the issue is that, in 
general, there are many more dollars that are truly flowing to 
small businesses----
    Ms. Norton. Mr. Zingeser, okay, I will take that point. Mr. 
Smith says that twice a year--and you understand the 
construction business the way he does--they have got to report 
twice a year. I can't imagine, in these twice a year reports, 
why they wouldn't want the Government to know, and by the way, 
beyond the subcontracts that we have, we want you to know about 
this, that, and the other and that the Government wouldn't want 
to record those.
    Ms. Stephenwoof. Well, if I could, I could speak to follow 
up on what he was saying. The Government, under the FAR, when 
they count the small business dollars, they only count the 
first tier.
    Ms. Norton. Well, that is what I know. I am trying to 
understand if there is a lot more work going on out there, you 
would think everybody would want that to be known.
    Ms. Stephenwoof. Exactly.
    Ms. Norton. So I know what you are testifying to. I am 
trying to understand, from your point of view, assuming Mr. 
Zingeser, who is in the business, is correct, why this wouldn't 
come out and why the Government, who is always criticized for 
its small business contracting work, wouldn't want to shout it 
to the hilltops. I mean, I am really perplexed here.
    Ms. Stephenwoof. That is a question we would like to have 
an answer to.
    Ms. Norton. Well, I can understand that in order to get the 
contract you may have to indicate what your small businesses 
are.
    Are you saying, Mr. Zingeser, that perhaps they won't know 
at that time that there are other subs that they will be using, 
or would a good contractor know, by the time she submitted a 
bid, that kind of information?
    Mr. Zingeser. No, I think it is two different things you 
are asking. When a job is bid is one thing, but when the job is 
underway there were these forms that were paper forms that have 
now been replaced by an electronic system. The potential of 
that electronic system is that it will not be that difficult to 
flush out and report up where those dollars are flowing below 
the first tier.
    Ms. Norton. Mr. Zingeser, I am asking you a question. I 
don't know enough about the business. Should the contractor 
know or should be required to indicate that she will be using 
subs beyond the contractor or the subcontractor that is 
reported initially to the Government, the first tier, as you 
call them? Would the contractor already know that information?
    Mr. Zingeser. The contractor will know, at the time of 
award of a subcontract, generally where the dollars are going, 
and can report that information. Your question is why isn't the 
Government seeking that, and the answer is I believe that they 
are not allowed to score that. They only are allowed to get the 
information----
    Ms. Norton. That is not the why; that is the what.
    Mr. Zingeser. Okay.
    Ms. Norton. And, you know, these figures become 
controversial and they are really better than we know, then, 
again, that is something that I will have to try to find out.
    Before I do more questions, I want to ask Mr. Graves 
whether he--so that is one of the things I am going to have to 
find out, because if they are better than we know, we want to 
know it.
    Ms. Giordano, you have got to make me understand this new 
rule, the narrowness of the rule and the choosing of cabinet--
identified four codes, cabinetmaking, engraving, motor vehicle 
dealers, and national security and international affairs--and 
these are codes to improve----
    Ms. Giordano. That there are----
    Ms. Norton.--to help to meet the 5 percent goal that they 
have habitually----
    Ms. Giordano. That is the narrowest----
    Ms. Norton. What do you think is at work here choosing 
these particular sectors or areas?
    Ms. Giordano. My belief is that they chose the narrowest 
form for the reluctance to implement the program from the 
outset, and by selecting----
    Ms. Norton. Well, why these particular areas--
cabinetmaking, engraving? Are there a lot of women in that that 
help you meet the 5 percent goal? That is a lot of work that 
the Government does there, is that it, and they need these 
people?
    Ms. Giordano. That is probably their rationale.
    Ms. Norton. Motor vehicle dealers?
    Ms. Giordano. Madam Chair, I can't speak to their 
rationale. Oh, it is other motor vehicle dealers, which means 
it is ATVs.
    Ms. Norton. All right, well, we will have to try to discern 
that too.
    Ms. Giordano. I would appreciate your asking the question 
to SBA, to be perfectly honest.
    Ms. Norton. I thought maybe in the course of doing business 
with them, in frustration with them----
    Ms. Giordano. We are a certified----
    Ms. Norton. Or that they had perhaps come forward at the 
time of the rule with a rationale, since they are not before us 
today.
    Ms. Giordano. We have yet to see that rationale in an 
explainable way.
    Ms. Norton. Okay.
    Mr. Smith, you indicate that 80 to 90 percent of the 
Missile Defense contracts went to five companies. Couldn't this 
be the nature of the work? I mean, it is pretty specialized 
work, isn't it?
    Mr. Smith. Oh, yes, it is specialized work, but 80----
    Ms. Norton. Those were major companies. That doesn't go to 
small--you are not speaking about small businesses, are you?
    Mr. Smith. No. Major companies: Northrop Grumman, Boeing, 
Lockheed.
    Ms. Norton. Well, that is the nature of the work. How about 
their record in small businesses, minority-and women-owned 
businesses and the like? Once they get this, once these five 
companies have the work, do they show, in your experience, were 
they able, then, to have----
    Mr. Smith. Subcontracting?
    Ms. Norton. Yes, to meet subcontracting responsibilities.
    Mr. Smith. Under DoD they have a comprehensive 
subcontracting plan. It is a test program that DoD has that is 
managed by DCMA, and under that particular plan it is very 
difficult to decipher whether or not they have in fact met some 
subcontracting codes.
    Ms. Norton. Part of this is, you know, it is hard to even 
find out what is happening, it seems to me, but let me ask you 
about the AOC contract. That is pretty easy to figure out.
    Mr. Smith. Yes, it is.
    Ms. Norton. Now, here we have this new Visitors Center, 
right? We are talking about the new Visitors Center, I suspect. 
And they are looking for various support services. I got some 
of them down: pest control. What else?
    Mr. Smith. Housekeeping, landscaping, elevator, lift 
maintenance. These are all under one contract. And they are 
asking for a company to come in to manage the building and to, 
in fact, have all of these services under their umbrella.
    Ms. Norton. So you believe that the overall company that is 
managing the business is going to have all of these services. 
Do you believe these services, in turn, will be subcontracted 
to small businesses?
    Mr. Smith. No. I mean, the thing is----
    Ms. Norton. Or do you think this is just a case of massive 
bundling?
    Mr. Smith. This is a case of massive bundling. I mean, the 
thing is, ideally, I would not want to be a subcontractor. If I 
am a landscape company, I want to come in and I want to have a 
direct contract with you as the prime.
    Ms. Norton. Why?
    Mr. Smith. Why? Because I would rather negotiate with the 
owner directly. That way I will have my 15 percent markup with 
the owner. If I go in and negotiate with the prime contractor, 
my markup is going to be brought down because he wants his 
markup as well.
    Ms. Norton. And, of course, that is the whole bundling 
issue. Well, let me put it this way. One would assume that the 
rationale for bundling would have been that the Government 
thought it was going to save money by putting all these 
contracts together. You know, the whole notion of putting 
things together is always about the more you can put them 
together, the less the cost in overhead to the Government, 
perhaps; the less in the cost in the kind of bookkeeping that 
the Government would have to do dealing landscaper by 
landscaper, housekeeper by housekeeper. These things seem to me 
to be very much unrelated.
    Mr. Smith. Very much so.
    Ms. Norton. Whether or not the Government could save a few 
cents by putting them together, my question really goes to the 
good faith of wanting to do contracting with the kinds of 
businesses who would do this kind of business. Let's look at 
the kind of business who would do it. Pest control. These are 
small businesses. Sometimes they are minority-owned and women-
owned businesses, but we know that they are small businesses of 
various kinds, unless you get some great big company that does 
it. But you already have the big company because that is who 
the prime is. In your view, does the bundling law contemplate 
that the services will be related?
    Mr. Smith. No, it does not. No. In this particular, the 
Architect of the Capitol is seeking a building management 
company that has experience in managing a facility itself, and 
they have a particular software that they want this company to 
in fact use. I am just suggesting that, fine, find your 
building management company and the software, but you, AOC, 
submit solicitations out for your landscape, for snow removal, 
for housekeeping, janitorial service, for elevator and lift 
maintenance service. Do that separately and place those 
companies in under the general management of the facilities 
management company. Don't have the facilities management 
company go out and get these people and bring them in.
    If I am going to negotiate, I would rather negotiate with 
you, the Government. I know I can get paid in a relatively 
reasonable time period. I know who I am working with. That is 
who I want to go to.
    Ms. Norton. What kinds of people are likely to end up, you 
think, getting these pest control, housekeeping, etc.?
    Mr. Smith. Well, the thing is what you wind up doing is in 
terms of this resulting firm, firm fixed price will be awarded 
to one contractor. This particular contractor is a large 
property management firm that oftentimes they themselves may 
perform some of this work themselves on some other private 
facilities that they have. They have relationships with firms 
in the private sector where they do this.
    I have attempted, at one time--I think it was the Thurgood 
Marshall Building, and they had a very similar solicitation 
last year or the year before last, when it came out bundled as 
such--to pull a team together to respond to this, where I went 
to one of the large property management firms and said can I 
pull a team together with you, and the property management firm 
said, oh, we have looked at that before. And AOC uses a 
particular firm that they generally use and they weren't 
interested in putting forth the effort to go after 
solicitations. But the small business firms then have to team 
or find themselves with a large building management firm.
    Ms. Norton. Ms. Giordano, your description of the Multiple 
Award Schedule made me wonder the advantage of being on the 
schedule in the first place. How has being on the schedule 
helped you?
    Ms. Giordano. Madam Chair, it is a license to hunt.
    Ms. Norton. Well, it must save you something. You know, you 
don't have to start from scratch, do you?
    Ms. Giordano. It is a vehicle that the Government agencies 
can utilize. Unfortunately, a number of DoD agencies will not 
utilize the GSA schedule.
    Ms. Norton. What do they use, then?
    Ms. Giordano. They have their own. And I had to compete for 
those as well, which are the exact same categories as all of 
the IT schedules, or information technology products and 
services schedules within GSA.
    Ms. Norton. The Multiple Award Schedule should at least 
limit the competition.
    Ms. Giordano. It limits the competition to those schedule 
holders. However, when a task----
    Ms. Norton. And what number would that usually be?
    Ms. Giordano. Thousands. And then what happens is those 
thousands or multiples of thousands compete with that RFP that 
has been issued under that particular Multiple Award Schedule, 
so you are constantly doing bid and proposal preparation.
    Ms. Norton. Ms. Stephenwoof, on page 2 of your testimony 
you indicated what you say is a great disparity of the average 
gross receipts of minority firms, $162,000, compared to 
$448,000 of the average of non-minority firms. Would this have 
something to do with the areas where minority firms are doing 
business? What are the areas in which these minority firms 
chiefly do business? Are they broad enough so that they could 
be fairly compared to the non-minority firms? And what would 
enable them to perhaps be broader?
    Ms. Stephenwoof. Well, these statistics were reported by 
the Department of Commerce's Minority Business Development 
Agency, and I do have here the statistical breakdown by trade 
and by jurisdiction. I do have that available.
    Ms. Norton. What are the major trades or areas in which 
these firms operate?
    And for Ms. Giordano I would ask the same question. Are the 
women-owned firms operating in a fairly narrow sphere or how 
across-the-board have they become? When you see this huge 
disparity between the 3.4 or whatever it is, they never even 
come close to making the goal in the 5 percent.
    Ms. Giordano. Our membership, Madam Chair, runs the gamut 
from people who manufacture products for commercial and 
Government use to the manufacturing of a nuclear fuse or 
nuclear batteries to be utilized in sending missiles off, 
ignition of missiles. There are a number of us who are 
information technology-related corporations and, of course, 
professional services. We run the gamut.
    Now, if I may, the Rand study said that--that was the study 
that was done for the SBA--that you could cut the data in any 
way they chose from 87 percent of under-represented industries 
or women-owned to zero, and they could be found under-
represented, so the SBA chose the four categories that were the 
narrowest. They gave them options of how they would utilize 
their information.
    Ms. Norton. Could I know from you whether or not your 
experience has been that the Federal Government has been 
generally timely in processing and paying out invoices?
    Ms. Giordano. I am 120 days in arrears with several 
agencies within the Federal Government as we speak, Madam 
Chair, which means----
    Ms. Norton. I think the law says you people have to be paid 
in 30 days, doesn't it?
    Ms. Giordano. Yes, ma'am, that is correct. I am limited to 
interest payment and----
    Ms. Norton. What do you mean you are limited to interest 
payment?
    Ms. Giordano. Well, there is one, I believe it is 1.5 
percent that I am only allowed to charge for late fee. We 
usually charge 3 percent in the commercial environment. That is 
the Federal late fee. I rarely get paid a late fee.
    Ms. Norton. So you don't get the late fee.
    Ms. Giordano. No, ma'am. It has been very, very rare. At 
one point, three years ago, the Federal Government owed me--in 
particular, the Department of Navy owed me--$4.3 million. It 
took me nine months to collect. Being a small business in 
business, providing services and products to the Government, my 
products were deployed into the war zone, being utilized by the 
military and, in fact, nine months later I got paid for it.
    Mr. Graves. Owed you that in late fees or in products?
    Ms. Giordano. Product delivered being utilized, whether it 
was on ships or on the war fighters themselves. I was carrying 
the payment for the Government; therefore, they were utilizing 
the products that I had to pay for on my back.
    Mr. Graves. How late was it?
    Ms. Giordano. Nine months.
    Mr. Graves. Nine months.
    Ms. Stephenwoof. Okay, I do have the response available 
now.
    Ms. Norton. This is close to criminal. I don't know how 
people stay in business. How do people stay in business? You 
can understand how large companies. What do you do, borrow 
because if you have a contract, they know that somehow the 
Federal Government will one day pay it? How does that work?
    Ms. Giordano. I am fortunate enough that I have a 
commercial business sector that has been capable of sustaining 
us, and we have very good customers----
    Ms. Norton. But I thought you said 80 percent of your 
contracts were Federal contracts.
    Ms. Giordano. That is correct. I also have a banker who 
believes in my company, and my home has been utilized as 
collateral more than once and has secured the loan 
requirements.
    Ms. Norton. That is not a good thing these days, is it?
    Ms. Giordano. But I still pay my employees.
    Ms. Norton. Ms. Stephenwoof?
    Ms. Stephenwoof. Yes. The first note that I wanted to make 
sure that was made on the record is that I just found that 
there is no current information about the report. It was 
amazing to me that a Federal Government agency is still using 
data from a 2002 survey and published the results in 2006, and 
there is no new information that we can use as minority and 
small businesses in terms of tracking and forecasting and 
planning for our economic development initiatives. But in this 
report it stated--you asked about the locations. The ranking 
areas where there is a high percentage of minority firms. Our 
Washington Metropolitan Area is not included.
    Ms. Norton. No, I wasn't interested in, sorry, areas of the 
Country; I was just trying to find sectors. These figures don't 
mean much across the board. They will give us a starting point, 
but unless we know that we are gradually seeing small 
businesses in a number of areas where the Federal Government 
does business, which, by the way, is a whole lot of areas--it 
is almost every area, I guess, that the private sector does 
business--then it is hard to know how to hold the particular 
agency accountable.
    Ms. Stephenwoof. But it is also reported by sector. But as 
you are experiencing your frustration, we also experience our 
frustration with getting information from the Government sector 
in terms of, number one, their goals and the deliverables. We 
can't find data that measures the success of the small business 
contracting plan. They always talk about the goals, but the 
data that gives you the statistical reporting of the success of 
the goals and the listing of those companies that participated 
is also our frustration, because, again, this report also 
reports by sector, by trade, and where the minorities across 
the board are participating and flourishing, and construction, 
again, is one of the highest trades that is in the competitive 
marketplace statistically, and the second being second only by 
real estate, rental leasing, and the retail trade.
    So the concern that we experience is the same thing that 
you experience. We try to grasp where is the market, where are 
the jobs, where is the business opportunity, and then it is 
like quick silver; they say we have a 51 percent goal on this 
project. And then you say, how do you propose to achieve it, 
what is your measure of success. And they will say, well, we 
try. And then you say, well, tell me what companies are you 
using that have satisfied your requirements, and they say, 
well, we don't have to report that. But then how do you measure 
your success? You know, you can't be a stated measurement. They 
can't be a statistical chart. It has to be some compliance. 
Follow the dollars. Like he said, how many dollars are actually 
paid to those businesses that have been identified as fitting 
within those categories--small, disadvantaged, women-owned, 
HubZone--those requirements. And those are the data that we try 
to capture so, if there is a hole in that process, then we can 
help to fill that void by creating some new opportunities or 
some new measures for fitting those businesses within that 
area. That is the frustration that we----
    Ms. Norton. Thank you. I think the hole is not that they 
don't know how to get it----
    Ms. Stephenwoof. They don't want to report the activities 
that they do when they don't----
    Ms. Norton. Well, again, I don't think that the way in 
which--if I could sort of close this panel, unless Mr. Graves, 
our Ranking Member has--it is apparent to me that you can't 
leave it to the Small Business Administration alone to look 
agency-by-agency; it is too many agencies. It is too much 
difference with agencies. The agencies under our jurisdiction 
certainly engage in construction, on the one hand; and if you 
look at FEMA, those contract are across the board in very 
diverse areas of life.
    But unless the Subcommittee takes an interest in the area, 
I don't see how any umbrella Committee, which has overall 
responsibility is going to keep track of--I don't know how many 
Federal agencies there are who do work contract with small 
businesses, but virtually every Federal agency does. So what we 
are going to do is to take what we have heard from you and try 
to use it to enable us to deal with the agencies over whom we 
have some oversight.
    I want to thank each of you for being our lead witnesses so 
that we would have some understanding of how to move forward 
and question the witnesses who come after you who are the 
agency witnesses. Thank you very much for coming.
    Panel two is Michael Rigas, Deputy Associtate Administrator 
of the General Services Administration Office of Small Business 
Utilization; Al Sligh, who is the Director of the Office of 
Management at FEMA. We will be pleased to hear your testimony 
at this time.
    Welcome to both of you. Mr. Sligh, am I pronouncing your 
name right?
    Mr. Sligh. Yes, you are.
    Ms. Norton. From GSA. Would you like to go first?
    Mr. Sligh. Chairwoman Norton, Members of the Subcommittee, 
thank you for the opportunity to appear before you today. My 
written statement goes into great detail on how FEMA is 
incorporating small, minority, and disadvantaged businesses in 
its acquisition strategy, meeting its social economic 
contracting goals, and engaging in the private sector across 
FEMA'S critical mission areas: preparedness, protection, 
response, recovery, and mitigation.
    As you know, the first priority of FEMA during the initial 
phase of a major disaster is and has always been to provide 
relief to the victims in the most efficient and effective way 
possible in order to save lives and property. FEMA'S goal is to 
use competitive strategies while also providing local and 
social economic businesses contracting opportunities whenever 
possible.
    I am proud to report that FEMA competed 81 percent of its 
procurement dollars in fiscal year 2007. FEMA went from last 
place within DHS for its competitive dollars in fiscal year 
2006 to first place in fiscal year 2007.
    Now let me address some our achievements in meeting social 
economic goals. First and foremost, FEMA has recently dedicated 
a full-time small business specialist whose primary 
responsibility is to increase contracting opportunities for 
small, minority, and disadvantaged businesses. This assignment 
will further help institutionalize our small and minority 
contracting efforts and help maintain a level playing field.
    To date, FEMA has achieved exceptional results in meeting 
and exceeding most of its social economic goals. From 2006 to 
the present, FEMA has awarded $2.4 billion to small businesses. 
In fiscal year 2006, FEMA awarded $1.8 billion to small 
businesses. This amount represents approximately 27 percent of 
the total procurement dollars awarded. In fiscal year 2007, 
FEMA awarded $485 million to small businesses. This amount 
represents approximately 33 percent of the agency's total 
procurement dollar awarded that fiscal year, thus exceeding our 
small business goal of 30 percent. Additionally, in fiscal year 
2007, the agency exceeded the small, disadvantaged business 
goal by approximately 12 percent, the 8(a) goal by 
approximately 7 percent, and the HubZone goal by approximately 
4 percent. During the same fiscal period, FEMA also exceeded 
the women-owned business goal of 5 percent.
    So far, in fiscal year 2008, FEMA is on target and has 
awarded $83 million to small businesses. This represents 
approximately 29 percent of the total procurement dollars 
awarded so far this fiscal year.
    The only category where FEMA needs improvement is service-
disabled veteran-owned small businesses. In fiscal year 2007, 
FEMA was 1.1 percent below its goal. This shortfall is not 
unique to the agency, but, rather, a common challenge that runs 
across the Federal Government. The service-disabled veterans-
owned small business program is relatively new and is not yet 
well known.
    Nonetheless, it is worth noting that the small, minority, 
and disadvantaged business investments made in fiscal year 
2007, approximately 14 percent were for professional, 
administrative, and management support services; approximately 
13 percent were for utility and housekeeping services; and 
approximately 10 percent were for information technology 
services. Another 18 percent covers both maintenance, repair, 
and alterations to real property, and the lease or rental of 
facilities.
    As the Committee considers how FEMA is working with small, 
minority, and disadvantaged businesses in procurement, we urge 
you to also take note of how we are engaging the private 
sector, small and large, across the homeland security 
landscape. With FEMA'S new structure and vision now in place, 
the agency is aggressively pursuing new inroads with the 
private sector and business community on various fronts to 
build a stronger emergency management system such as: one, 
standing up a new FEMA Private Sector Office; two, building new 
and enhancing existing preparedness partnerships; three, 
soliciting private sector participation in the development and 
refinement of the National Response Framework and national 
preparedness systems; four, creating stronger and more vibrant 
public-private partnerships through programs and initiatives, 
namely, Citizen Corps, Ready Business, and FEMA Aid Matrix, and 
other national, regional, State, and local planning exercises 
and training efforts. These efforts help to foster open lines 
of communication with our homeland security partners in the 
business and non-profit communities.
    Increasingly, we are leveraging the resources and expertise 
of our partners in the private and non-profit sectors, even 
above and beyond the important roles they have always played in 
the past. It is important, however, to give perspective on the 
opportunity and challenge involved in effectively engaging the 
private sector in emergency management. The magnitude and 
complexity of business opportunities--with its varying needs, 
capabilities, capacity--make coordination a daunting challenge 
and will require a long-term effort.
    FEMA, in any event, is up to the challenge. Through its 
Private Sector Office, the agency is building a network with 
non-government organizations, business and trade associations, 
local, regional, and national chambers of commerce, and looking 
to make significant progress in integrating the private sector 
as a full partner in incident management.
    We know the worst time to build relationships is during a 
disaster. We are building them today. We are committed to 
making the vision a reality. Thank you for the opportunity you 
have afforded us today to speak about the new FEMA.
    Ms. Norton. Thank you very much, Mr. Sligh.
    Mr. Rigas, am I--Rigas?
    Mr. Rigas. Rigas, yes.
    Ms. Norton. Of GSA.
    Mr. Rigas. Good morning. Thank you for the opportunity to 
appear before you today to discuss doing business with the 
Government and the General Services Administration's record and 
goals for small, minority, and disadvantaged businesses. I am 
Michael Rigas, Deputy Associate Administrator for Small 
Business Utilization at the General Services Administration, 
and I am pleased to be here this morning.
    As the premier acquisition agency of the Federal 
Government, GSA's mission is to help Federal agencies better 
serve the public by offering, at best value, superior 
workplaces, expert solutions, acquisition services, and 
management policies.
    GSA works hard to ensure that small businesses have ample 
opportunities to compete in GSA procurements. We know that 
small businesses are the engine of our national economy and 
that they bring new and innovative solutions to Government 
challenges, and that a successful and strong small business 
community is integral to job creation, community empowerment, 
and economic revitalization.
    GSA works hard so that small businesses--including 
disadvantaged, women-owned, HubZone, veteran-owned, and 
service-disabled veteran-owned small businesses--have every 
opportunity to participate in the Federal procurement process. 
And as an agency we actually exceed the goals Congress has set.
    The Small Business Act establishes, for Federal executive 
agencies, an annual goal of awarding 23 percent of prime 
contract dollars to small businesses. For GSA, this equated to 
$1.25 billion in fiscal year 2006. In fiscal year 2006, GSA 
spent over $1.7 billion, or 32 percent, of all prime contract 
procurement dollars on small business. That impressive result 
is 40 percent higher than the statutory goal and an increase of 
13 percent over fiscal year 2005 level of $1.5 billion. We are 
proud that we have surpassed the statutory goal.
    Washington, D.C., being the home of our Federal Government, 
is also home to many Federal buildings, of which GSA is the 
steward. Our Public Building Service contracts for a wide 
variety of services to support their mission of providing 
superior workplaces for Federal customer agencies at good 
economies to the American taxpayer. In fiscal year 2007, of the 
more than $1.8 billion spent in these areas, over $692 million, 
or 38 percent, were spent on contracts with small businesses. 
In the National Capital Region of Washington, D.C., over $244 
million has been spent by the Public Building Service on small 
business, equaling a percentage of over 45 percent of all 
procurement dollars spent by the Public Building Service going 
to small businesses.
    GSA has developed a number of outreach programs to heighten 
awareness within the small business community of GSA 
contracting opportunities. This includes small business fairs, 
trade group seminars, targeted informational and educational 
seminars, pre-award and post-award small business opportunity 
fairs. These efforts have helped GSA to exceed its statutory 
small business goals.
    But the story of GSA's support for small business doesn't 
end with our direct GSA contracting. GSA has a strong record of 
supporting small business contracting through the Government-
wide acquisition contracts and through GSA's Multiple Award 
Schedules Program.
    The Schedules Program provides ordering activities with a 
simplified procurement process whereby GSA establishes 
contracts with firms for commercial products and services. It 
offers Federal agencies a broad range of products and services 
from private sector vendors and suppliers at fair and 
reasonable prices that have been negotiated by GSA.
    And I am happy to report that 80 percent of the companies 
which hold GSA Schedules contracts are small businesses. In 
fiscal year 2005, through the GSA Schedules Program, Federal 
agencies awarded over $12 billion in Schedule orders to small 
businesses. That amount increased to over $13 billion for 
fiscal year 2006, which is approximately 37 percent of all 
prime contracting Schedule spending Government-wide going to 
small businesses.
    The ordering procedures applicable to the Schedules Program 
encourage ordering activities to consider and, where 
applicable, give preference to small businesses. GSA's online 
buying tool promotes increased access to the small business 
community by allowing customers to tailor their searches 
specifically for products and services provided by small, 
minority, veteran-, and women-owned businesses. Contracting 
officers ordering via the Schedules may make socioeconomic 
status a primary evaluation factor when making a best value 
determination.
    Madam Chairwoman, as an agency, GSA's focus on small 
business starts at the top. As one of the few Government agency 
heads who was an entrepreneur, a former small and minority 
business owner, and a Federal Government contractor, 
Administrator Doan is our agency's biggest advocate for small 
business. She knows from experience that starting a business is 
hard, and that sustaining and growing a business is even 
harder. She is the agency's biggest advocate for ensuring that 
doing business with GSA is not one of those hardships.
    Our Office of Small Business Utilization conducts hundreds 
of outreach events a year across the Country for small 
businesses to open doors to Federal contracting opportunities 
for them. We conduct one-on-one counseling sessions to help 
companies in understanding and participating in the Federal 
procurement process; we attend procurement conferences to 
conduct workshops that provide important information to small 
business owners on how to do business with GSA; and we consult 
with small businesses in person, over the phone, and by 
answering the many questions that are submitted in e-mail and 
letters.
    Madam Chairwoman, GSA has a strong record of supporting 
small businesses and small business contracting, and we pledge 
to continually work to improve on our already impressive 
performance record with regard to small business contracting. I 
thank you for the opportunity to appear before you today, and I 
would be happy to answer any questions you and other Members of 
the Committee may have. Thank you.
    Ms. Norton. Thank you very much.
    Mr. Rigas, you or Mr. Sligh can perhaps clear up this issue 
that I asked the panel about when it was alleged that there 
were contractors who weren't being counted because you can't 
count below the first tier. I am sure there must be a good 
reason for that. And apparently the Post-Katrina Emergency 
Management Act of 2006 places limitations on tiering on 
subcontracts. What is the Government getting at there, please?
    Mr. Rigas. Well, it is my understanding that, for 
subcontracting, SBA rates the agencies on their prime 
contracting small business dollars and on their subcontracting 
dollars----
    Ms. Norton. Say that again. I am sorry.
    Mr. Rigas. SBA rates agencies on their prime contracting 
dollars that go to small business, as well as the 
subcontracting dollars that they spend on small business. And 
with regards to subcontracting, they only allow agencies to 
count first tier.
    Ms. Norton. Yes, that I know.
    Mr. Sligh is, I guess, who has this in his statute, which 
apparently explicitly places a limit on tiering beyond the 
tiering of subcontractors? I am simply trying to find out what 
is the policy goal here, what is the reason, if there is a 
complaint from some that some are not being counted. That, of 
course, came from a contractor that said some of the 
subcontractors were in fact not being counted and, therefore, 
the figures are not accurate.
    Mr. Sligh. It is my understanding that the requirement is 
that we report to the first tier level and that, at FEMA, we 
have been doing that. And the difficulty for us may be a 
systems issue, that our systems may not be, at this point, 
robust enough to collect the data for below the first level.
    Ms. Norton. Well, I can understand that, but at least if 
they say--and each of you will have to explain to me how the 
Government can justify, in construction contracts, monitoring 
twice a year, going in twice a year. But at least at that time 
you would think that you would know whether or not there were 
small business contractors, minority, women-owned, 
disadvantaged business contractors. Do you monitor these 
contracts?
    Mr. Sligh. Yes, we monitor the performance under our 
contracts, yes.
    Mr. Rigas. Yes, we conduct subcontract----
    Ms. Norton. What is your response to Mr. Smith's criticism 
that twice a year monitoring of a construction contract 
misapprehends the construction business, that the business 
proceeds rapidly, is done, and, therefore, your monitoring 
misses the point? What is your response to that?
    Mr. Rigas. There is a difference between knowing and 
reporting. The electronic subcontracting reporting system can 
capture subcontracting levels down to the second, third, and 
fourth levels. However----
    Ms. Norton. Was that reported? Do you get credit for that 
in your report?
    Mr. Rigas. No, we don't. And you might want to ask SBA 
about that, because we would love to be able to----
    Ms. Norton. You don't have any idea? Is it possible to 
abuse it? There has got to be a reason why nobody wants to even 
know whether or not a sub-sub, or whatever the sector calls it, 
may involve one of the very groups that you are trying to 
target. You don't have any idea? I mean, I just can't believe 
that each Government agency carries out whatever SBA says 
without reading and understanding the policy reason for a 
particular goal. So I am left here knowing--see, when I hear 
something like that, my first response is these people are 
crazy. It's never my response. Far more analytical about it. I 
am saying they had something in mind. Our goal is to find out 
what they had in mind before I can criticize it. And if you 
don't know, but you are carrying it out--indeed, we put it in a 
statute and I don't know, because it looks like FEMA may not 
have been absorbing these tiers. So obviously there is 
something at work here; it may be abuses of one kind or the 
other. But even if that is the case, if in fact contractors and 
subs below the small business reported are being used, one 
would wonder why--since you say that it does show up--why that 
isn't reported.
    Let me ask you both about bundling. You heard the criticism 
of bundling. That is the kind of criticism we hear constantly, 
that essentially what you are doing is crippling opportunities 
for small businesses by grabbing up in a bundle services that 
would otherwise be available to small businesses, thus 
virtually at odds with the policy of increasing representation 
of these various--has either of you, would you give me the 
number of contracts that you bundle in each agency, whether it 
increases or not?
    Mr. Sligh. At FEMA, we have a competition advocate who has 
a specific responsibility of looking at contractual actions to 
identify and eliminate bundling where it occurs.
    Ms. Norton. Say that again.
    Mr. Sligh. Within FEMA, we have a designated competition 
advocate who has a responsibility to look at procurement 
actions specifically for bundling type activity and look for 
alternatives to bundling procurement actions so that 
procurements----
    Ms. Norton. And what has been the result of having a 
special advocate of that kind?
    Mr. Sligh. We get another look, other than the contracting 
officer, other than the normal process of putting together an 
acquisition strategy and moving forward with the procurement. 
We have someone going in looking specifically for any type 
bundling type activity. In addition to that, our small business 
specialist is looking for bundling type activity on behalf of 
the small business community.
    Ms. Norton. So are you saying that your agencies in fact 
are not doing much bundling, because you have got somebody 
there monitoring, saying you can't bundle this; these things 
are not related, there is no reason to bundle them? So you are 
just not doing it, you are not one of the agencies that are 
doing it?
    Mr. Sligh. I can only speak for FEMA currently. Currently--
--
    Ms. Norton. How long have you had this advocate trying to 
keep bundling from occurring at FEMA?
    Mr. Sligh. At least a year, maybe two.
    Ms. Norton. Would you repeat to this Subcommittee how many 
contracts have been bundled in each of your agencies over the 
last five years?
    Mr. Rigas, what are you all doing about bundling?
    Mr. Rigas. We have a similar process in place where our 
procurement plans are reviewed by our small business technical 
advisors in each region, and I know in Central Office, where we 
are located, in Washington, D.C., we have not had any bundled 
contracts. But there are 11 regions throughout the Country, and 
I would be happy to question each of them as to any----
    Ms. Norton. I want agency-wide, obviously. I would like to 
know for the last five years how many contracts have been 
bundled. We would like that in 30 days, please.
    I am informed by staff that the tiering prohibition is 
related to liability because only the prime contractor can sue 
or be sued by the Government. That doesn't answer my question 
about why you wouldn't get credit for it if in fact, in the 
course of doing business, you did--unless you are not even 
supposed to do sub-subs. But I can't believe that is the case.
    Mr. Rigas. I don't know. If I could build on that. Perhaps 
it may be that because the contract is between the prime 
contractor and the Federal Government, and within that contract 
is a subcontracting plan for them to subcontract out so much of 
their work to small businesses, and it could be that because 
the contractual agreement does not go beyond the Government and 
the prime, that we can't hold----
    Ms. Norton. Well, but even if you couldn't hold, you could 
get credit for it if in fact that occurred. I am only going by 
one contract, so I am not here to day that this is happening 
government-wide, but apparently it is the case that it is not 
being reported. You say the information is captured, though. Is 
it?
    Mr. Rigas. Yes. Actually, I just had someone send me some 
information here that it is not--apparently, the acquisition 
counsel has not approved the electronic subcontracting 
reporting system to collect any data below the first tier, 
although presumably it is capable of collecting such data.
    Ms. Norton. Well, we will just have to find out.
    Constant complaints ever since there have been goals about 
not meeting women-owned goals. Have your agencies been meeting 
its goal for women-owned businesses?
    Mr. Sligh. Madam Chairman, FEMA has met its goal for women.
    Ms. Norton. Typically or recently or what?
    Mr. Sligh. Typically.
    Ms. Norton. Congratulations.
    Mr. Rigas. Yes, we have actually--GSA has exceeded its 
women-owned goal for the last fiscal year 2005 and fiscal year 
2006.
    Ms. Norton. Your statistics were very impressive, but I do 
note that the National Small Business Association says that up 
to a third of SBA's list of top 100 small business contractors 
in 2005 were actually large businesses. The National Small 
Business Association is recommending that the size of the 
business be re-certified every three years, using a rolling 
average during this time. They say that this approach would not 
overburden small business. But this is quite an accusation. 
They don't report who they are, but I would--this was reported 
by the Eagle Eye Publishers, objective observers here, and I 
would like to ask each of you to look at the size of the small 
businesses you are reporting in these statistics and to look at 
them in the way SBA recommend over the last three years.
    Mr. Rigas. I know a lot has been done to address the issue 
that was raised by Eagle Eye, and I believe OFPP Administrator 
Dennett sent a memo to all chief acquisition officers to review 
their data because some of those businesses had either been 
acquired, they were small businesses that were acquired by 
large businesses or had simply outgrown their size standard. 
But that had not been reflected because I guess the period of 
time that folks went back to look back to review size standards 
had not been----
    Ms. Norton. That is a pretty large number. You know, the 
women-owned and minority-owned businesses have to graduate once 
they reach a certain level. I can't understand why it wouldn't 
apply across the board to small businesses. We are trying to 
help small businesses, really small businesses.
    What about this late payment? That was very distressing. I 
had, Mr. Sligh, a very distressing experience with FEMA where 
Federal Protective Service contractors were not paid on time, 
and scandalous results of not being paid on time. These are 
people who are security officers. I worked very closely, 
though, with Federal Protective Service and with ICE, and we 
were able to get those payments in fact done. They set up a 
whole system for making sure that they did not in fact 
encounter this problem, and, yet, the Small Business 
Association reports 30 percent of those that they surveyed 
reported experiencing extreme delays. Do you each pay within 30 
days, as the law requires? And if not, do you pay the 3 
percent, I think it is? Well, that is the private sector. We go 
cheap on that and say a percent and a half, apparently. Do you 
pay on time these small businesses?
    Mr. Sligh. As a rule, we pay on time. There are those rare 
occasions where we don't pay on time, and when those occasions 
occur, we pay the interest payments in accordance with the law.
    Mr. Rigas. I am not aware of any instances where GSA has 
been late paying, but I would be happy to----
    Ms. Norton. I wish you would check that. It seems almost 
criminal. Small businesses have a very hard time staying in 
business. The Federal Protective Service experience involved 
somebody who, because he had a Federal contract, he could 
borrow in order to pay his people, and that is what he did, 
just kept borrowing to pay his people in order to keep the 
contract. You might expect that of some failing business; you 
wouldn't expect it of the--so I really would like to make 
certain. We are, I alert you, we are going to be following very 
significantly this work. We don't believe, as you heard me say 
to the prior panel, we don't believe that SBA can take all of 
these agencies and do the kind of work we are trying to do here 
today. Therefore, we are going to be doing this work. Your 
statistics are impressive to us. We don't know whether or not 
the problems we heard about even apply to you, but we will know 
simply by the way we are going to keep in touch with you.
    What savings do you believe the Government is getting from 
bundling? Make me understand why the Government would bundle. 
What are the savings, overhead savings? What does the 
Government seek?
    Mr. Rigas. Well, as a small business advocate, we take a 
very critical look at proposed contracts that are bundled and 
as far as I know, in our office, we have not approved any. I 
believe the threshold standard--and I don't know if it is 
regulatory or if it is just a rule of thumb, that the savings 
to the Government have to be 10 percent or greater in order to 
justify a contract being bundled.
    Ms. Norton. And you believe you are complying with that, of 
course?
    Mr. Rigas. Yes.
    Ms. Norton. Well, the wholesale bundling that is going on 
leads us to believe that if not you, somebody is not. Could I 
ask what kind of small business contracts do your agencies 
have? Are they completely across the board? For example, there 
is concern that services can easily get stereotyped, by 
minority, by women. Do you perform small business--what are the 
major areas of small business contracts you perform?
    Mr. Sligh. Within FEMA, it pretty much runs the gamut: IT 
services, building maintenance, professional support services. 
I think generally in all areas we look for opportunities for 
small business participation and with that, once we identify an 
area where we have sufficient number of small business 
interests, then we target that as a small business opportunity.
    Ms. Norton. Now, GSA, you are just everywhere; you are all 
across the board. You do it for all these agencies.
    Could I ask you, Mr. Rigas, you heard the testimony of Ms. 
Giordano about the cost of getting on and staying on the 
Schedule, which made me wonder what in the world is the point, 
and I said, well, maybe you have limited competition, and she 
said, yeah, by the thousands, apparently. She also described 
the cost of getting on, spending the amounts of money one 
spends afterwards. One understands that for large contractors. 
It seems out of keeping with the Government policy of 
encouraging small business contracting. I say that to both of 
you, but particular GSA. Is there any way to cut down the cost 
of the GSA Schedule, which people die to get on and then find 
they are still spending lots of money to get on and stay one?
    Mr. Rigas. Well, I mean, there is no charge to get on to 
the GSA Schedule----
    Ms. Norton. We are not talking about a fee to get on.
    Mr. Rigas. Right.
    Ms. Norton. Mr. Rigas, give me a break. We are talking 
about what an agency has to do in order to, shall I say, 
qualify to get on the Schedule, which is supposedly the gold 
standard.
    Mr. Rigas. Right. I mean, getting on Schedule, I guess you 
can say it is akin to doing your taxes. You can do them 
yourself at some investment of time and energy, or you can hire 
an accountant to do your taxes for you, in which case it costs 
you money to do your taxes. But our office and our regional 
offices across the Country conduct regular sessions, training 
seminars on how to get on GSA Schedule, and once on GSA 
Schedule, how to market your Schedule, because as Ms. Giordano 
correctly said, it is a license to hunt, it is your ability to 
go out and generate----
    Ms. Norton. And I can speak specifically to your very 
helpful forums that help people get on. I think you may even do 
them weekly here. You do a lot of work that way. Again, it is a 
license to hunt. I am now speaking to the expense. Have you cut 
down what looked to be a kind of very difficult technical 
processes to get on in the first place, just the technical 
underpinning of what it takes to get on, then the costs related 
to that, and then the costs of staying on? And what would you 
say are the advantages to being on?
    Mr. Rigas. Right. Well, since Administrator Doan came to 
GSA, one of her top priorities was reducing the amount of time 
it took to get on GSA's Schedule, and within a year of her 
being here we reduced the amount of time through the MAS 
express program, the Multiple Award Schedule Express Program 
from 152 days to 30 days.
    Ms. Norton. I think that is the one Ms. Giordano was on.
    Mr. Rigas. Well, she was on, I think she mentioned, the IT 
Schedule 70, which is our IT hardware/software, and I am sure 
probably a few other Schedules as well. But the benefit to 
being on the GSA Schedule is for the investment of time and 
energy into getting this one contract vehicle, you are able to 
sell to every agency in the Federal Government. You are able to 
sell to the City of Washington, D.C. and certain other non-
profits. So you have access to the entire Federal Government.
    And as for other contract vehicles that are out there, that 
is actually something Ms. Doan has also spoken out against, the 
proliferation of other agencies developing their own contract 
vehicles, and it goes against what the purpose of GSA--GSA is 
here to take care of that work for the rest of the Government.
    Ms. Norton. Do most agencies use your Schedule?
    Do you use it, Mr. Sligh?
    Mr. Sligh. Yes, ma'am, we do.
    Ms. Norton. Okay.
    Mr. Sligh. And when we use them, one of the advantages I 
see to us is that we have a--I would call it a set of vendors 
that have already signed up to typical Government terms and 
conditions that will allow us to expedite the procurement, as 
opposed to someone who may not have dealt with----
    Ms. Norton. I would think everybody would want to have 
these kind of pre-screened folks. How many agencies don't use 
it, or do they use it sometimes and not other times? And why 
wouldn't an agency use it all the time?
    Mr. Rigas. It is my understanding every----
    Ms. Norton. Well, you said--no, I am responding to your own 
testimony.
    Mr. Rigas. Right. Yes. What I mean is some agencies make, 
in addition to GSA contract vehicles, create their own contract 
vehicles.
    Ms. Norton. And why would they do that is my question.
    Mr. Rigas. That is a good question.
    Ms. Norton. Well, maybe because everybody can't get on the 
GSA Schedule.
    Mr. Rigas. One example I know the Administrator has spoken 
about has been the NASA SEWP contract, which is a contract 
vehicle that NASA has to sell high-tech computers, hardware, 
software to the Federal Government, which is something which is 
in direct competition and provides the same kinds of goods and 
services that IT Schedule 70, which Ms. Giordano is on, GSA's 
contract vehicle sells and provides the same kinds of goods and 
services to the Federal Government that you can get from NASA 
SEWP. So all of the time and energy and Federal taxpayer 
dollars that are put into creating and maintaining this 
separate contract vehicle, in our opinion, doesn't need to be 
done.
    Ms. Norton. The staff said that if they are commercially 
available, generally commercially available, the law requires 
them to use a GSA schedule, and what you just described are 
what are commercially available, I believe. These are not 
specialized products.
    Mr. Rigas. Right.
    Ms. Norton. Well, that is something we have to enquire 
about.
    I want to thank both of you. You are the largest agencies 
among those that come under our jurisdiction and we want to 
keep in touch with you and encourage you on what is working, 
and particularly encourage you to have--and I noticed that both 
of you were here when the small business participants were 
here--to encourage you to take their testimony to heart. Thank 
you both for appearing.
    Now I want to call our last witnesses.
    Oh, excuse me, I am sorry. The Ranking Member.
    Mr. Sligh, would you come back? The last thing I want to do 
is the Ranking Member rattled on, but he had a very good 
question that I would like to hear the answer to.
    Mr. Graves. During a natural disaster, I am just curious 
how you reach out to small business, because there are a lot of 
opportunities and, obviously, with what happened down in New 
Orleans and Hurricane Katrina and Rita, there was a lot of 
small businesses participated, but it was as a result of the 
tiering and everything else. But I am just curious, when you 
have a disaster, if you have a tornado that comes in, or 
hurricane or whatever the case may be, a flood, what do you do? 
How does FEMA reach out and try to find those small businesses 
to do the actual work that is involved, or do you just leave 
that to someone else?
    Mr. Sligh. Actually, our outreach starts long before----
    Mr. Graves. You mentioned that in your testimony and I am 
curious about that.
    Mr. Sligh. We have undertaken a fairly extensive program to 
put pre-positioned contracts in place. What I am saying is we 
are putting contracts in place that we would use during a 
disaster situation. We are putting them in place in a 
competitive environment long before any disasters actually 
occur. When the disasters occur, we use the contracts that we 
need to use that are in our portfolio of contracts that are in 
place already. During the course of a disaster, we would start 
to look for small local businesses that might be able to 
support us as we start to get the disaster under control, and 
we would pull some contracts out and bring in other small local 
companies that could do this work. We are starting to build our 
arsenal for being able to do this through what we call a 
disaster registry. We are actually going out seeking, 
identifying small contractors in areas that are prone for 
floods, disasters, and pre-registering them so that, should a 
disaster occur, we can reach out and start to utilize those 
immediately.
    Mr. Graves. How do you determine where--I mean, it has got 
to be an awful tough job to try to pre-determine where 
disasters are going to be, but my question is, too--and it has 
got to be a horrendous task trying to update that, because, as 
was pointed out, companies get bought out, they get absorbed, 
they no longer meet the criteria of what a small business is, 
whatever the case may be.
    Mr. Sligh. We started to create this database and it will 
be a challenge to keep it up to date. It will be a challenge to 
definitely keep it current. And what we are looking at is 
basically, across the Country, identifying sources that could 
possibly help us in a disaster type situation.
    Mr. Graves. I know in Missouri, with the possibility of the 
new Madrid Fault and the earthquake there, I know you guys, or 
I assume you are pre-positioning. Kansas City is supposed to be 
one of the refuge cities, whatever the case may be. So what 
opportunities are out there right now? What sort of thing are 
you doing, for instance, in Kansas City to get ready for that?
    Mr. Sligh. I am not prepared to speak to those specific 
initiatives that we have in place, but I can get that 
information and provide it back.
    Mr. Graves. If you would, yes.
    Ms. Norton. Thank you very much, Mr. Sligh.
    Could I ask the last four witnesses from Architect of the 
Capitol, Capitol Visitor Center, John F. Kennedy Center, and 
Smithsonian to come forward now?
    I have this note that they are saying we could have 
Committee as a whole votes around 1:30. Even I vote in 
Committee as a whole. I vote on the House Floor in Committee as 
a whole, so I would have to go.
    I am going to ask you each to summarize your testimony, 
therefore, in about five minutes, if you can, because we want 
to hear from everyone. And if that bell rings, I don't have 
control over that. Let's start with Ms. Marshall of the Office 
of Equal Employment and Minority Affairs at the Smithsonian. 
Summarize your testimony, please.
    Ms. Marshall. Good afternoon, Madam Chair. I am the 
Director of the Smithsonian's Office of Equal Employment and 
Minority Affairs, and we really appreciate having this 
opportunity to testify this afternoon so we can tell you a 
little bit about our program and what we are doing to promote 
and utilize small and disadvantaged businesses.
    To summarize our efforts, I just want to say that the 
Smithsonian has a very effective and successful Supply 
Diversity Program. Our record, if you had an opportunity to 
look at it, would show that we have done a lot of things to 
support small businesses. Particularly, over the past two 
years, we have actually achieve double the Government-wide 
small business goals and quadrupled the disadvantaged business 
goals. We do this and we are very successful, and the reason we 
are so successful is that we have a cooperative working 
relationship among the Supply Diversity Program, the Office of 
Contracting, and procurement officials in our unit, and 
everyone enthusiastically supports it.
    Supplier Diversity at the Smithsonian is the way we do 
business at the Smithsonian. It is outlined in two of our 
Smithsonian directives; it is a part of our management 
excellence goals; it is in the Smithsonian strategic and annual 
performance goals. It really is the way we do business, and 
Supplier Diversity is a requirement in every manager's and 
procurement official's performance plan.
    I report to the head of the agency, so I think that speaks 
volumes about the commitment that the Smithsonian has for this 
program. I am responsible for providing leadership, direction, 
and management for the Supply Diversity Program, as well as the 
Equal Employment Opportunity program.
    Let me speak quickly, because I understand you do have to 
move quickly and leave here. So here are some practices that we 
employ to promote Supplier Diversity.
    At the beginning of each fiscal year, we work with the 
procurement officials in our top 10 spending units to identify 
projects that are suitable for small business. We require prime 
contractors to develop subcontracting plans, to identify 
opportunities for small businesses, and we have a cadre of 
Supplier Diversity zones in our museums, our research centers, 
and offices who advocate for the use of small business along 
with us. We provide diversity training; we participate in 
conferences, procurement fairs, and meetings; and we conduct 
vendor fairs and on-site capability assessments for firms who 
would work with us for our facility related projects.
    In the past year we provided advice and assistance to more 
than 650 small businesses. We create and operate a Supplier 
Diversity online database that allows businesses to set 
register, and we now have more than 1500 small businesses 
registered on that database. And that database is used by our 
managers and our procurement officials to look for the small 
businesses to meet their procurement needs.
    Finally, we are using information technology in a way that 
we feel is most effective. It helps us to ensure procurement 
information. Procurement officials enter their data into the 
Federal procurement data system Next Generation and our 
contractors are now registering themselves on the Central 
Contract Registration System. These practices have increased 
our ability to promote and use small business in our 
contracting and procurement activities.
    I want to close my remarks by saying once again that the 
Smithsonian is committed to Supplier Diversity and that 
contracting with small business and small disadvantaged 
business is not only our policy, it is the way we do business.
    Ms. Norton. Thank you very much. I am sorry to rush you 
like this, but you certainly gave us a lot of information. We 
have your chart, which is very impressive. May I ask you and 
all of the witnesses to look to make sure that your small 
businesses that you report are not on the top 100, the list of 
the Small Business Association which reports that one-third of 
those small businesses are in fact not small businesses? Would 
you please to do a three-year look at whether or not these are 
in fact small businesses? Because some of this reporting could 
be inadvertent.
    May I go to Roger Mosier, Vice President, John F. Kennedy 
Center for the Performing Arts? Would you summarize your 
testimony in five minutes, please?
    Mr. Mosier. Thank you. My name is Roger Mosier. I am the 
Vice President of Facilities for the Kennedy Center. Michael 
Kaiser, the President of the Kennedy Center, is out of the 
Country right now, so he has asked me to appear to read his 
testimony.
    We appreciate the Committee's interest in the promotion of 
small businesses, and I will provide an overview of the 
Center's efforts to promote the use of small, minority, and 
disadvantaged businesses in its contracting process.
    In fiscal year 2007, the Center received direct Federal 
funding of $17.5 million for the operations and maintenance of 
the presidential memorial and $12.8 million for capital repair. 
While our contracting activities are quite small in comparison 
with the other agencies appearing today, the Center is 
committed to awarding a fair portion of its Government 
purchases to small, minority, and disadvantaged business 
enterprises.
    The Center continually looks for opportunities to offer 
contracts to small businesses. Given the Center's relatively 
small budge, the opportunities for such awards are limited; 
however, each contracting action is evaluated as to its 
suitability for a small, minority, and disadvantaged business 
opportunity. In general, the Center's Chief of Contracting 
serves as our small business advocate. In addition, project 
managers and other contracting officer's representatives are 
also advocates for the program due to our track record of 
successful work with small businesses.
    Many basic services and minor repair contracts are awarded 
to small, minority, and disadvantaged firms. These operations 
and maintenance contracts range in size from around $2,000 for 
power lift repair services to just under $2 million for 
housekeeping services. On an ongoing basis, the Center utilizes 
small businesses for services as varied as fire extinguisher 
maintenance; elevator inspections; door repair; asbestos 
abatement; chiller and other equipment inspection, repair, and 
maintenance; pest control; moving services; and brass and 
bronze maintenance. Additionally, supplies such as carpet and 
flooring, lighting fixtures, safety shoes, uniforms, and 
condenser pumps are regularly purchased from small businesses.
    For construction projects, from capital projects to major 
maintenance, the Center utilizes small businesses for both 
consulting and contracted services. In the realm of 
professional services, the Center has contracted with small 
businesses for architectural and engineering services, cost 
estimating, and construction scheduling review.
    For general construction work, the Center has awarded a 
number of mid-sized contracts to small businesses. These have 
included the recently completed Roof Terrace Doors Replacement 
project, Motor Lobby Life Safety Upgrades project as well. Both 
of these projects were successfully completed within budget and 
on schedule by small businesses. Most recently, the Center 
awarded its Roof Terrace Life Safety project to a small 
business. This contract award was just under $3 million. In 
fact, in August 2005, the Center established a pre-qualified 
bidders list that includes six small businesses for general 
construction services and the Center solicited qualifications 
exclusively from small businesses to form this list.
    Beyond this arrangement, which typically provides a 
contracting vehicle for mid-sized projects that are often over 
$1 million, the Center has also established open contracts with 
small, disadvantaged general contracting businesses 
participating in the 8(a) program. These contracts are utilized 
for minor repair and significant maintenance projects that 
typically cost less than $250,000. The Center has worked with 
8(a) firms for many years and currently has four 8(a) firms 
under Indefinite Delivery Indefinite Quality contracts, with 
one set to graduate from the program after working with the 
Center for their entire 8-year tenure in the program.
    Based on the size and scope of the contract to be awarded, 
the contracting office will avail itself of the option to go 
directly to the Small Business Administration for set aside or 
may limit competition to only small, minority, and 
disadvantaged businesses. This method proved successful in the 
award of our housekeeping contract, which is in the third year 
of a four-year contract.
    While not every contract can be awarded utilizing these 
small business vehicles, many of the capital projects outlined 
in the Center's five-year comprehensive building plan will be 
of a size and complexity that will fit well with services we 
obtain through our small business relationships. In fact, with 
the majority of our large construction projects nearing 
completion and the focus of the Center's capital plan shifting 
to relatively smaller infrastructure projects, the Center 
expects to be able to further award contracts to small 
businesses in the future.
    In summary, our experiences with small, minority, and 
disadvantaged businesses have proven to deliver a successful 
outcome in a variety of areas, including services, supplies, 
consulting, and construction. As a result, we are proactive in 
seeking out opportunities for the appropriate award of small 
business contracts.
    We appreciate the Subcommittee's interest in this program 
and for including the Kennedy Center in this discussion this 
morning. Thank you.
    Ms. Norton. Thank you very much, Mr. Mosier.
    We will move to the Acting Architect of the Capitol, Mr. 
Stephen Ayers. Please summarize in five minutes your testimony.
    Mr. Ayers. Madam Chair, Congressman Graves, thank you for 
inviting me here today to discuss AOC's efforts to increase 
procurement opportunities for small businesses.
    I am happy to report that AOC is actively committed and 
making great strides in developing a program that enables and 
encourages small, disadvantaged, and women-owned businesses to 
effectively compete for contracts. As you know, the Legislative 
Branch agencies are not subject to the Small Business Act and, 
therefore, do not have authority to set aside procurements for 
small businesses. AOC procurement statutes require that all of 
our procurements over $100,000 be competed on a full and open 
basis.
    Nonetheless, we recognize the importance of encouraging and 
working with small businesses, and are implementing the 
following initiatives: first, the Small Business Subcontracting 
Program for construction contracts greater than $1 million; 
second, a Small Business Outreach Program; and, third, a Small 
Business set-aside program for procurements between $5,000 and 
$100,000.
    Last August, we launched our Small Business Subcontracting 
Program, requiring large businesses that are awarded 
construction contracts exceeding $1 million to submit and 
adhere to a small business subcontracting plan. This plan 
includes goals for the prime contractor for recruiting small 
businesses as subcontractors.
    The AOC awarded its first contract under this new program_
worth nearly $4 million_in late 2007. We require each large 
business to submit a semi-annual progress report detailing how 
well they are achieving the proscribed goals.
    A small business outreach program also has been launched to 
identify small businesses that are currently working with the 
AOC or interested in competing for work. As we expand our 
current vendor database to include small business information, 
our procurement staff continues to communicate business 
opportunities with diverse audiences through workshops, 
business fairs, and small business conferences.
    For example, last September, our staff participated in the 
Minority Procurement Workshop sponsored by the Committee On 
House Administration. We also plan to participate in the Small 
Business Administration's National Small Business Week in April 
of this year. In addition, we will soon enter into negotiations 
with SBA to solicit their assistance in establishing our small 
business program.
    Although our small business outreach program is relatively 
new, we can identify several contracts that were awarded in 
fiscal years 2007 and 2008 to small businesses that 
successfully competed against large businesses. Eleven 
contracts were identified totaling more than $10 million.
    In addition to the two earlier initiatives, we have begun 
implementation of a Small Business Set-Aside Program for our 
small business purchases between $5,000 and $100,000, when 
adequate competition exists.
    Recently, I formalized the AOC's Small Business Program by 
issuing a policy memo directing our staff to fully implement 
the directives I outlined previously. We have a strong interest 
in encouraging small and disadvantaged businesses to 
successfully compete for AOC contracts. This increased 
competition ensures we receive the best value for taxpayers' 
dollars while supporting employment opportunities and 
businesses in our community.
    Madam Chair, that concludes my statement, and I would be 
happy to answer any questions you may have.
    Ms. Norton. Thank you, Mr. Ayers.
    And, of course, we now hear the bell you were alerted would 
go off, and I am going to have to go to the Floor, as, of 
course, will the Ranking Member.
    Our final witness is Terrie Rouse, CEO for the Visitor 
Center.
    Ms. Rouse. Thank you. Thank you, Madam Chair and 
Congressman Graves for inviting me to participate in today's 
hearing. I would like to begin by thanking the Architect of the 
Capitol and Congress for giving me the opportunity to be part 
of history: in opening the doors to the largest expansion of 
the Capitol that is devoted to the citizens of the United 
States. I believe that the Capitol Visitor Center, CVC, is a 
symbolic door to Congress, a portal that will become an 
inviting place to remind visitors of their roles as citizens. 
As an extension of the Capitol, it will provide a fitting 
welcome and introduction to the People's House so all may 
witness the workings of our legislative process. Our mission is 
to inform, involve, and inspire generations of Americans.
    To provide the Subcommittee with a bit of background about 
myself, I am originally from----
    Ms. Norton. I would appreciate, Ms. Rouse, if you would go 
on.
    Ms. Rouse. I will skip that.
    Ms. Norton. We have that. Go on to your operations, because 
even though I don't have to go to the Floor, I do have to move 
out of here shortly.
    Ms. Rouse. Okay.
    Ms. Norton. So would you go to what you are doing on the 
subject matter of this hearing?
    Ms. Rouse. Sure. I have been serving as the AOC's Chief 
Executive Officer for Visitor Services for six months, and one 
of my top priorities has been to hire a diverse and 
professional staff to help prepare the CVC to receive visitors. 
We are planning a job fair in April and we are actively 
reaching out to Members of Congressional caucuses, including 
the Congressional Black Caucus, Congressional Asian Pacific 
American Caucus, Congressional Hispanic Caucus, and 
Congressional Native American Caucus to help inform potential 
candidates of job opportunities with the CVC.
    My goals for the CVC mirror those of the AOC: to 
aggressively work to hire personnel and award contracts to 
individuals and companies that reflect the diversity of our 
Country. I believe such efforts enhance our ability to serve 
Congress and all who will visit our Nation's Capitol.
    For our procurements, the Capitol Visitor Center team 
follows the same statutes and policies as the AOC. Over the 
past several months, three contracts of note have been awarded 
to support the new Office of Visitor Services. The first one 
awarded last spring provides food services in the CVC 
restaurant; another was awarded last fall to a small business 
to develop an advanced reservation system; and a third was 
awarded to a woman-owned small business for designing the CVC 
Web site.
    As we move forward, we are following the same small 
business program which Mr. Ayers discussed in his testimony. 
For example, we will soon be seeking small business suppliers 
for our gift shop to provide materials that are related to our 
mission. We agree that we have a vested interest in supporting 
small businesses because the use of small businesses helps 
facilitate competition and lowers prices by providing 
additional sources for our requirements and improves our 
relationship with the local community.
    Madam Chair, you have my commitment as CEO for Visitor 
Services for the CVC to work on ensuring that we continue to do 
business with small, minority, and disadvantaged businesses. 
Thank you.
    Ms. Norton. Thank you very much, Ms. Rouse.
    In all fairness, I think I should go to Mr. Ayers first, 
because, if he was in the room, he heard his agency called out, 
as they say, as a kind of textbook case in bundling that could 
perhaps have gone to small businesses, bundling of landscaping, 
housekeeping, and the like. If one is serious about small, 
minority, women-owned business, even though we are trying to 
make sure that they don't get stereotyped and that we also are 
mindful of professional and other services, I will have to ask 
you to explain why such services would have been funded.
    Mr. Ayers. I am happy to answer that, Madam Chair. I think 
there is a little confusion. I did hear an RFP number quoted 
and, with the great use of technology, was able to track down 
that RFP number, which was 060085, I believe I heard. And that 
06 means it is a fiscal year 2006 procurement, so it is not 
something that could be advertised today.
    Ms. Norton. So, in other words, it didn't happen today, but 
it did happen in 2006. So I have to ask why.
    Mr. Ayers. No, I don't think so. I looked up that 06 
procurement. It is for professional landscape services and it 
was awarded to a small business.
    I do believe that the one we are speaking of now is--and I 
think the gentleman brought up two examples. There was one that 
we did a few years ago for Thurgood Marshall Federal Judiciary 
Building. In a building like that, a standalone building, we 
will typically go out and award a contract to a single building 
management company to do all of the building management 
services in that building. They will then potentially sub out 
construction work, architect/engineer work, pest services, 
custodial, and the like.
    Ms. Norton. Do you then monitor to see whether or not small 
and disadvantaged businesses are subcontractors in such 
buildings? I mean, you say it is because it is a single 
building. Does that mean----
    Mr. Ayers. That particular example it is. I can give you 
another example. We have recently competed for facilities 
management services for our police buildings, and we have maybe 
20 police kiosks throughout the campus. We are going to bundle 
all of those little police kiosks together.
    Ms. Norton. What do you mean police buildings?
    Mr. Ayers. Police guard stations where you would see----
    Ms. Norton. Oh my goodness. Nobody would expect those each 
little guard station--please, Mr. Ayers, we are talking about--
I am not sure anybody would----
    Mr. Ayers. That is out on the street.
    Ms. Norton. Well, but I don't think anybody would bid to do 
one of the guard stations as you come into the house and 
somebody else do another guard----
    Mr. Ayers. That is exactly why we pooled them all together.
    Ms. Norton. We recognize that--you know what we are talking 
about. I shouldn't have to talk about whether a 2-by-4 guard 
station is what we are talking about, Mr. Ayers. Do you do 
bundling in the general course of business? At the Visitors 
Center, for example, would any of those services--because here 
is a clean slate to write on--be bundled, or would the services 
provided there be open to small business contractors?
    Mr. Ayers. That particular building we are managing 
ourselves. We are not turning that over to a building 
management company. So we are going out individually to 
purchase custodial services and purchase some building repair 
services.
    Ms. Norton. And are you using small businesses on that? Are 
you able to use small businesses?
    Mr. Ayers. We are able to use small businesses between 
$5,000 and $100,000. We are able to set aside for small 
businesses. Above $100,000, our procurement statutes require us 
to have full and open competition.
    Ms. Norton. With full and open competition, are you able to 
use small businesses?
    Mr. Ayers. Oh, absolutely.
    Ms. Norton. Because those things are not necessarily 
inconsistent or inimitable.
    I think it is you, Mr. Mosier, gave us no statistics, no 
overall statistics for the Kennedy Center. I recognize you are 
smaller than others. For that reason, it should be easy to know 
what your overall small business utilization, minority-owned, 
etc.
    Mr. Mosier. Well, we receive our appropriation in two basic 
categories, O&M and capital, and the O&M is fairly steady. In 
fiscal year 2007, it was about 25 percent utilization of small 
businesses, and in fiscal year 2008, so far, it is about 22 
percent. If you take utilities out of that, the numbers go up 
significantly, to 40 and 36 percent.
    Ms. Norton. So you are fairly small agencies. I have a very 
specific rundown for the Smithsonian, thank you. Does the 
Smithsonian use bundling?
    Ms. Marshall. We have had no problems with bundling, but a 
couple of years ago we did bundle, I believe,--well, not a 
couple, it has been about five years--we were bundling for 
supplies, and that no longer is being done. The way we are 
doing it now is since we have been able to go to the people 
soft system and what have you, we really aren't doing bundling.
    Ms. Norton. It occurs to me that precisely because of your 
size, there are many opportunities for smaller business 
contracts, because you don't let these mammoth contracts the 
way GSA does. I applaud the fact that the Legislative Branch 
agencies are using the same methodology. If you weren't, then, 
of course, it would be incumbent upon me to make sure that you 
were legislated into using it. But I think that you have 
understood that the difference is purely technical, the 
separation of powers branch not in fact intended to draw a 
distinction between you and Executive Branch agencies
    If I may so, I think, if anything, we in the Legislative 
Branch should be held to a higher standard. As I say, we are 
policing all those contractors in the private sector out there; 
we are telling all these agencies that are Executive agencies 
that we are monitoring you and what you should do. Well, I just 
want to say here for the record that I think that the 
Legislative Branch agencies should be held to an even higher 
standard, should set the example. I am not saying you aren't, 
but I am putting you on notice that this Subcommittee does 
intend to follow this issue. You heard me say that the SBA just 
can't possibly do it all. They can't do it at all for you 
because you are a Legislative Branch agency, so I want to say 
how much I appreciate your testimony, your work, and, with 
that, with the bell ringing in my ears, I think I should let 
you go and I should probably run to the Floor. Thank you very 
much.
    [Whereupon, at 1:33 p.m., the Subcommittee was adjourned.]

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