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




 
   MILITARY BASE REALIGNMENT: CONTRACTING OPPORTUNITIES FOR IMPACTED 
                              COMMUNITIES

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

                                HEARING

                               before the

                 SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
                     ORGANIZATION, AND PROCUREMENT

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                            FEBRUARY 8, 2008

                               __________

                           Serial No. 110-93

                               __________

Printed for the use of the Committee on Oversight and Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                     http://www.oversight.house.gov

                     U.S. GOVERNMENT PRINTING OFFICE
45-291 PDF                 WASHINGTON DC:  2008
---------------------------------------------------------------------
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092104 Mail: Stop IDCC, Washington, DC 20402ï¿½090001

              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 HENRY A. WAXMAN, California, Chairman
TOM LANTOS, California               TOM DAVIS, Virginia
EDOLPHUS TOWNS, New York             DAN BURTON, Indiana
PAUL E. KANJORSKI, Pennsylvania      CHRISTOPHER SHAYS, Connecticut
CAROLYN B. MALONEY, New York         JOHN M. McHUGH, New York
ELIJAH E. CUMMINGS, Maryland         JOHN L. MICA, Florida
DENNIS J. KUCINICH, Ohio             MARK E. SOUDER, Indiana
DANNY K. DAVIS, Illinois             TODD RUSSELL PLATTS, Pennsylvania
JOHN F. TIERNEY, Massachusetts       CHRIS CANNON, Utah
WM. LACY CLAY, Missouri              JOHN J. DUNCAN, Jr., Tennessee
DIANE E. WATSON, California          MICHAEL R. TURNER, Ohio
STEPHEN F. LYNCH, Massachusetts      DARRELL E. ISSA, California
BRIAN HIGGINS, New York              KENNY MARCHANT, Texas
JOHN A. YARMUTH, Kentucky            LYNN A. WESTMORELAND, Georgia
BRUCE L. BRALEY, Iowa                PATRICK T. McHENRY, North Carolina
ELEANOR HOLMES NORTON, District of   VIRGINIA FOXX, North Carolina
    Columbia                         BRIAN P. BILBRAY, California
BETTY McCOLLUM, Minnesota            BILL SALI, Idaho
JIM COOPER, Tennessee                JIM JORDAN, Ohio
CHRIS VAN HOLLEN, Maryland
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
JOHN P. SARBANES, Maryland
PETER WELCH, Vermont

                     Phil Schiliro, Chief of Staff
                      Phil Barnett, Staff Director
                       Earley Green, Chief Clerk
                  David Marin, Minority Staff Director

  Subcommittee on Government Management, Organization, and Procurement

                   EDOLPHUS TOWNS, New York, Chairman
PAUL E. KANJORSKI, Pennsylvania      BRIAN P. BILBRAY, California
CHRISTOPHER S. MURPHY, Connecticut   TODD RUSSELL PLATTS, Pennsylvania,
PETER WELCH, Vermont                 JOHN J. DUNCAN, Jr., Tennessee
CAROLYN B. MALONEY, New York
                    Michael McCarthy, Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on February 8, 2008.................................     1
Statement of:
    Jenkins, Luwanda W., special secretary, State of Maryland; 
      Hubert Green, president, Prince George's Back Chamber of 
      Commerce; John Watkins, president, Ingenium Corp.; and Rick 
      Weidman, executive director, Policy and Government Affairs, 
      Vietnam Veterans of America................................     5
        Green, Hubert............................................    14
        Jenkins, Luwanda W.......................................     5
        Watkins, John............................................    22
        Weidman, Rick............................................    29
    Pinson, Tracey, Director, Secretary of Army, Office of Small 
      and Disadvantaged Business Utilization; and Timothy 
      Foreman, Director, Secretary of the Navy, Office of Small 
      and Disadvantaged Business Utilization.....................    53
        Foreman, Timothy.........................................    71
        Pinson, Tracey...........................................    53
Letters, statements, etc., submitted for the record by:
    Foreman, Timothy, Director, Secretary of the Navy, Office of 
      Small and Disadvantaged Business Utilization, prepared 
      statement of...............................................    73
    Green, Hubert, president, Prince George's Back Chamber of 
      Commerce, prepared statement of............................    17
    Jenkins, Luwanda W., special secretary, State of Maryland, 
      prepared statement of......................................     8
    Pinson, Tracey, Director, Secretary of Army, Office of Small 
      and Disadvantaged Business Utilization, prepared statement 
      of.........................................................    56
    Towns, Hon. Edolphus, a Representative in Congress from the 
      State of New York, prepared statement of...................     3
    Watkins, John, president, Ingenium Corp., prepared statement 
      of.........................................................    24
    Weidman, Rick, executive director, Policy and Government 
      Affairs, Vietnam Veterans of America, prepared statement of    32


   MILITARY BASE REALIGNMENT: CONTRACTING OPPORTUNITIES FOR IMPACTED 
                              COMMUNITIES

                              ----------                              


                        FRIDAY, FEBRUARY 8, 2008

                  House of Representatives,
            Subcommittee on Government Management, 
                     Organization, and Procurement,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:13 a.m., in 
room 2154, Rayburn House Office Building, Hon. Edolphus Towns 
(chairman of the subcommittee) presiding.
    Present: Representative Towns.
    Also present: Representatives Clay and Cummings.
    Staff present: Mike McCarthy, staff director; Velvet 
Johnson, counsel; William Jusino, professional staff member; 
Kwane Drabo, clerk; and Benjamin Chance, minority professional 
staff member.
    Mr. Towns. The hearing will come to order.
    Today's hearing is a followup to a hearing that we did last 
year in which we examined the barriers that restrict small and 
disadvantaged businesses from actively participating in the 
Federal workplace. In that hearing, business owners testified 
about their difficulty in getting contracts from the Government 
and how more needs to be done to hold Federal agencies 
accountable for meeting their contracting goals.
    Today's hearing is about accountability. I want to tie up 
some loose ends from last year and followup on promises made by 
the Department of Defense to take action by examining DOD's 
contracting relating to military base property.
    DOD is currently implementing a new round of base 
realignments and closures [BRAC]. This round is the largest 
round ever undertaken by the Department of Defense. DOD plans 
to execute over 800 closures and realignment actions, which is 
double the number of actions completed in the prior four 
rounds. DOD will spend billions of dollars on construction, 
service, and product procurement contracts. However, it remains 
unclear whether the benefits of these contract opportunities 
will extend to businesses in the affected communities in a 
systematic manner.
    BRAC presents the Federal Government with the opportunity 
to change and redefine the way it deals with small, local, 
minority, and service-disabled veteran-owned businesses. All 
too often, Federal agencies become overly reliant on a handful 
of companies that command the lion's share of work. This 
dependence will only worsen if the Government does not take 
necessary and fair steps to increase the size and diversity of 
its vendor pool.
    In addition to BRAC, I am troubled by the lack of 
contracting opportunities at DOD facilities for service 
disabled veterans, people who have served our country 
honorably. The Federal Government does more than $415 billion 
in purchasing in 2006 alone, and veterans only get crumbs, and 
service-disabled get even less than crumbs. The Federal 
Government has a goal of 3 percent contracting with service-
disabled veterans, but they got less than 1 percent, really, in 
2006. That is up from the prior year, and I am glad to see 
progress, but what is so hard about doing business with men and 
women who have sacrificed so much for our country? I don't 
understand.
    Today we will hear from government and business officials 
in Maryland about contracts for expansion at Fort Meade and 
Aberdeen. Maryland has a rich base of successful small and 
minority-owned businesses to draw from, and DOD should take 
advantage of that resource. We will also hear from veterans 
groups about their difficulties receiving contracts at places 
like Arlington National Cemetery and Walter Reed Medical 
Center, where I would hope there would be a preference for 
veterans-owned businesses. If that is not the case, that may be 
something for us to pursue in legislation, because I want you 
to know I am very interested in that, and I am not going to go 
away.
    We have been talking about these issues for a long time, 
and now is the time for us to do something about them. It is my 
hope that we can work together to come up with a strategy to 
open up the door of opportunity and allow these businesses in.
    [The prepared statement of Hon. Edolphus Towns follows:]

    [GRAPHIC] [TIFF OMITTED] T5291.001
    
    [GRAPHIC] [TIFF OMITTED] T5291.002
    
    Mr. Towns. We are going to move right along. I understand 
we will be joined by some members from the Maryland delegation 
a little later on, which is fine.
    Let me ask that the first panel come forward. Why don't you 
just continue standing, because we swear our witnesses in. So 
why don't you just continue standing. Would you raise your 
right hands?
    [Witnesses sworn.]
    Mr. Towns. Thank you very much.
    Let the record reflect that they all answered in the 
affirmative.
    Let me introduce the panel.
    Luwanda Jenkins is special secretary of the Governor's 
Office of Minority Affairs for the O'Malley-Brown 
administration. Ms. Jenkins is responsible for working with the 
business community to expand minority and women-owned firms in 
the State of Maryland to fulfill commitments in State contract 
spending. Welcome.
    Hubert Green is president of the Prince George's Black 
Chamber of Commerce, where he is dedicated to assisting small, 
local, and minority-owned businesses in Prince George's County 
in their development and growth. Welcome, Mr. Green.
    We also have with us John Watkins, president of Ingenium 
Corp., and, of course, a minority-owned information technology 
management firm that provides services to both government and 
private industry. As a former Army general, Mr. Watkins was the 
deputy director of the Defense Information Systems Agency. 
Welcome to the committee.
    Rick Weidman served as the director of government relations 
for the Vietnam Veterans of America. He is a strong advocate on 
a full range of issues important to Vietnam veterans, including 
the expansion of Federal business opportunities for service-
disabled veterans-owned-by businesses.
    Your entire statement will be placed in the record, so I 
ask each witness to summarize their testimony within the time 
we have established for each of you. The yellow light means 
your time is about to run out; the red light means that your 
time is out. So please try to summarize within that period. So 
we will begin with you, Ms. Jenkins.

 STATEMENTS OF LUWANDA W. JENKINS, SPECIAL SECRETARY, STATE OF 
MARYLAND; HUBERT GREEN, PRESIDENT, PRINCE GEORGE'S BACK CHAMBER 
OF COMMERCE; JOHN WATKINS, PRESIDENT, INGENIUM CORP.; AND RICK 
  WEIDMAN, EXECUTIVE DIRECTOR, POLICY AND GOVERNMENT AFFAIRS, 
                  VIETNAM VETERANS OF AMERICA

                STATEMENT OF LUWANDA W. JENKINS

    Ms. Jenkins. [Inaudible.]
    Mr. Towns. Is your mic on? Push the button.
    Ms. Jenkins. [Inaudible.]
    Mr. Towns. I see we are having some mic problems.
    Ms. Jenkins. [Inaudible.]
    Mr. Towns. No, no, no, no. In a case like that, we will 
give you additional time. That is staff's fault.
    Ms. Jenkins. [Inaudible]--improvements and public school 
construction. For example, in transportation, $1.7 billion will 
be spent in roughly 31 BRAC-related projects. These projects 
are primarily focused on intersection improvements near 
Aberdeen Proving Ground, Fort Meade, and Bethesda Naval Medical 
Center. Our Department of Transportation has also requested 
$200 million for MARC train growth throughout the region, which 
is critical to commuter transportation throughout the Maryland-
D.C. area.
    In the area of environmental improvements, Maryland must 
maintain its water treatment plants. Five hundred million 
dollars in fiscal year 2009 will be used to support water 
treatment activities in nine Maryland jurisdictions, which are 
anticipating the greater amount of BRAC growth, and that is 
primarily our Central Maryland area.
    In the area of school construction, in order to support the 
28,000 new households scheduled to transfer into Maryland, we 
will spend approximately $400 million for new school 
construction in Maryland during fiscal year 2008, and we are 
anticipating spending another $300 million for school 
construction beyond 2008, primarily in those jurisdictions that 
will be BRAC-impacted.
    Having said all of that, what are some of the BRAC 
challenges facing Maryland's minority business community? I am 
going to summarize these into three high priority challenges, 
the first of which is a challenge that is universal to small 
and minority businesses regardless of whether or not you are 
looking at private sector or public sector activity, and that 
has to do with access to capital, having adequate capital for 
working capital, bid bonds, performance bonds. And in the case 
of BRAC activity, since so much of the initial work will be in 
the area of construction, having access to capital is critical 
for minority firms who are looking to take advantage of 
construction-related activities.
    The other two challenges are really challenges that are 
unique to the Federal space. Security clearances. Security 
clearances, as you all know--the whole process for security 
clearances can take up to 2 years. It is a costly process, and 
a process that creates a burden particularly to smaller 
businesses. Costs for security clearances can range anywhere 
from $60,000 to $150,000 per employee.
    However, the higher issue with security clearances is that 
security clearances oftentimes are the first barrier to 
accessing procurement opportunities. In other words, if you 
don't have a security clearance for Federal work, you are not 
allowed to even have opportunities to look at the RFPs and to 
review those RFPs. So, security clearances and helping firms to 
expedite and navigate that process is a clear challenge for our 
small and minority business community.
    And then, last, you have heard us mention, and we will 
continue to talk about, enhanced use leases. EUL is a tool that 
facilities use to leverage Federal assets to address unfunded 
needs on military installations, several of which are underway 
in the Maryland area. And, while these projects may not be 
directly tied to BRAC, each serves to support the growth and 
development that is scheduled to arrive in Maryland in the 
coming years. So, indirectly they are tied to BRAC. The concern 
in Maryland is that federally negotiated EULs do not require 
the adherence to Federal or State procurement laws, and this is 
where our laws would encompass minority business friendly 
goals, either DBE goals or MBE goals.
    So having stated those challenges, what are we in the State 
of Maryland doing to assist businesses to become BRAC ready and 
to take advantage of these business and contracting 
opportunities? My office, along with a number of individuals 
and programs throughout the State of Maryland,--you will hear 
testimony from some of the other panelists--we are coming 
together to do a variety of actions to help small and minority 
businesses become BRAC ready.
    First and foremost, we are in the process of conducting a 
BRAC opportunity study. This is a study to help us identify 
public procurement opportunities along with those small and 
minority businesses, which have the opportunity and are best 
positioned to take advantage of these opportunities: firms that 
may already have security clearances, firms that may have high 
capital opportunities. We are also working on information 
dissemination, so that we get information out to the minority 
business community, and we are looking to establish business 
development offices in close proximity to the bases so that 
firms have access.
    So, in conclusion, we are very fortunate in Maryland to 
have BRAC, that we are a winning BRAC State. We thank our 
Federal delegation for your support and continued opportunity 
to help us be ready for these opportunities, and we are looking 
for additional support to help us address some of the 
challenges.
    With that, I want to thank you, members of the committee, 
members of the Maryland delegation. We look forward to your 
continued partnership and support in this endeavor. Thank you.
    [The prepared statement of Ms. Jenkins follows:]

    [GRAPHIC] [TIFF OMITTED] T5291.003
    
    [GRAPHIC] [TIFF OMITTED] T5291.004
    
    [GRAPHIC] [TIFF OMITTED] T5291.005
    
    [GRAPHIC] [TIFF OMITTED] T5291.006
    
    [GRAPHIC] [TIFF OMITTED] T5291.007
    
    [GRAPHIC] [TIFF OMITTED] T5291.008
    
    Mr. Towns. Thank you very much, Ms. Jenkins.
    Thank you, Mr. Green. You may start.

                   STATEMENT OF HUBERT GREEN

    Mr. Green. Good morning, Mr. Chairman and members of the 
committee. My name is Hubert Green, and I am president of the 
Prince George's Black Chamber of Commerce, with offices located 
at 6009 Oxon Hill Road, Oxon Hill, MD. It is an honor and a 
privilege to appear before you today and share my views and 
those of the Prince George's Black Chamber in the areas of 
contracting opportunities for impacted communities as the 
result of military base realignment and closing.
    Incorporated in February 2001, Prince George's Black 
Chamber of Commerce is a Maryland-based business association 
representing small, local, and minority-owned businesses as an 
advocate and an educator. We promote and enhance the visibility 
of our business opportunity, address institutional barriers 
that impede business progress, and provide support and 
resources that empower our members to grow their businesses and 
enrich their lives.
    Since the BRAC decision of November 2005, the small 
business community has been in waiting, anticipating and 
preparing for an opportunity to participate in one of America's 
largest procurement opportunities ever. The BRAC decision will 
generate the single largest job growth in the great State of 
Maryland since the end of World War II, making Maryland the 
largest beneficiary of employment growth of any State affected 
by the 2005 BRAC process.
    You have heard about our diversity, and we are very proud 
of being the most diverse county in the States. We are proud of 
the numbers and the distinction they bring, but we are not 
satisfied because there could and should be more.
    Since the decision of 2005, planning should have been 
underway to accommodate the possible results. That has not been 
the case at the Federal or at the State level until recently. 
For whatever reason, significant development contracting 
opportunities that BRAC brings will not have government-
mandated opportunities. Federal guidelines that govern a 
certain type of partnership between the military and private 
developers allow for minority businesses participation quotas 
to be omitted sometimes in the interest of expediting the 
projects. This could mean that small and minority-owned 
businesses could be skipped over in favor of ones with more 
resources or that have an experienced association with the 
bases in question. Institutional barriers must be broken down.
    Inasmuch as BRAC is a Federal mandate, the Federal 
Government must take the lead in addressing the immediate needs 
and requirements that arise from BRAC decisions. It must create 
an environment in which people are willing to take risks, to 
risk capital and personal property to achieve the American 
dream of success and prosperity. You can accomplish this 
through a variety of financial, technical, and procurement 
assistance programs, as well as counseling and training 
partnerships. You focused on customer satisfaction by 
streamlining services to the small businesses. The Government 
must find a way to help the small, local, and minority-owned 
businesses overcome the challenges and reap the rewards that 
BRAC presents.
    There are a number of steps to take to remedy the situation 
in order to achieve the goals, but first we must level the 
playing field. Where disparities exist, we must remove the 
barriers. Traditionally, financial barriers often impede the 
progress of small and minority-owned businesses. With BRAC, 
access to market is just as important as access to capital.
    Just as access to capital and market are important, it is 
also important that regulatory barriers be addressed. Tearing 
down those barriers will aid immeasurably, and your 
requirements to develop relationships and short and long-term 
communication programs will expand the opportunities for small, 
local, and minority-owned businesses. The Federal Government 
has a unique responsibility to assure that minority, 
disadvantaged, and women owned businesses are an integral part 
of the communication process as it relates to the promotion of 
access to capital, small business assistance, and minority 
certification procurement opportunities.
    Your commitment must be one that is shared by the State 
governments impacted by BRAC decisions. Your partnership 
efforts should be outreach and procurement fairs, recruitment 
training programs, and connection with organizations that have 
small, local, minority, and women-owned businesses as their 
members.
    The SBA certification is one of the most important remedies 
to open doors to small businesses. It allows the reciprocity 
for State certifications and for Federal certification. 
Multiple certifications are costly, and small businesses just 
can't absorb that cost. So, there must be some kind of effort 
on the part of the Federal Government and the States to have 
those certification requirements have reciprocity between them, 
and the SBA should open all of its doors to offer assistance to 
small businesses in achieving that requirement.
    Given the multitude of opportunities that BRAC will 
present, if we are to ensure full participation of small, 
local, and minority-owned businesses in the process, every 
effort must be taken to unbundle contracts. Contract bundling 
occurs when requirements that previously were or could have 
been performed by small businesses are combined into a single 
procurement, resulting in an acquisition that is unsuitable for 
award to small businesses. It may be unsuitable for award for a 
number of reasons; it could be due to dollar value, technical 
diversity, size, or any combination thereof. We all know that 
DOD discourages the practice of bundling, but the practice 
still exists. The Defense Department must take broad steps to 
eliminate this unfortunate practice.
    In addition to unbundling contracts, every effort must be 
made to ensure prime contractors put forth their best effort to 
achieve subcontracting goals. There are various techniques to 
encourage prime contractors to subcontract and team with small 
business entities, with the most preferred being contractual 
incentives. In short, providing maximum opportunities for small 
and minority-owned businesses has to be the primary 
consideration in any acquisition strategy that has been 
developed to fulfill BRAC requirements.
    I would like to leave today confident that you will take 
the necessary action to enforce Federal regulations that 
guarantee a good faith effort is put forth by government 
agencies to ensure small, local, and minority-owned businesses 
have a fair and equitable chance at contracts and subcontracts 
that will emanate from BRAC decisions. Government must prove 
its commitment to small, local, and minority-owned businesses 
by ensuring steps are taken to remove the disadvantages and 
increase the opportunities to access the marketplace.
    Today, I shared with you the thoughts of the small, local, 
and minority-owned businesses served by Prince George's Black 
Chamber of Commerce. Mr. Chairman and members of the committee, 
I thank you for the opportunity to present my views and those 
of the Black Chamber, and we stand ready to assist you or the 
States in any effort to achieve parity and to serve in any way 
that we can to make a difference in the lives of small, local, 
and minority-owned businesses. Thank you.
    [The prepared statement of Mr. Green follows:]

    [GRAPHIC] [TIFF OMITTED] T5291.009
    
    [GRAPHIC] [TIFF OMITTED] T5291.010
    
    [GRAPHIC] [TIFF OMITTED] T5291.011
    
    [GRAPHIC] [TIFF OMITTED] T5291.012
    
    [GRAPHIC] [TIFF OMITTED] T5291.013
    
    Mr. Towns. Thank you so much, Mr. Green.
    Now we will hear from you, General Watkins.

                   STATEMENT OF JOHN WATKINS

    Mr. Watkins. Good morning, Mr. Chairman, committee members. 
Thank you very much for having the honor of participating here 
this morning.
    As you know, my name is John Watkins, president of Ingenium 
Corp., a local owned company in Upper Marlboro, MD, and founded 
in 1992 by an African-American long-time citizen of the State 
of Maryland. You know my background; I spent most of my adult 
life in the Armed Services. In fact, my last tour of duty was 
the completion and implementation of BRAC 88, where we actually 
created one of the activities that we will co-locate at Fort 
Meade. So, I have fond memories of having worked those issues.
    I don't come today to criticize where we are. Having been 
there, I know the daunting challenge that is in front of all of 
us. And, Mr. Chairman, I will tell you, in preparation for 
coming to talk to you today, I have actually been around to 
some of the installations, talking to the DOD representatives, 
or going up to Baltimore to meet with the district Corps of 
Engineers there. They all are ready to help move this along.
    Having said that, however, we have some challenges in front 
of us, and I would like to spend my time today--and I think I 
am going to parrot and support what you just heard here about 
contracting--and I say it in a way to help us all deal with the 
issue that is in front of us, large, omnibus contracts I call 
them.
    And, I am going to spank one out here for all of us, and I 
do it, again, not to criticize the process, but to talk about 
what I think we have to do. There is a one large contract I 
want to talk about that is called ITES-2. It is a large omnibus 
contract for which the DOD, the Army, and other services 
procure information technology services. It has been out there. 
It has a $20 billion ceiling. It is already in existence.
    So why is that contract there? It is much like other 
omnibus contracts. It permits the streamlining of acquisition, 
and, indeed, it might help, given the compressed timeframe that 
we have to implement BRAC 2005. But, there are some issues 
associated with those kinds of contracts when it comes to a 
place like the State of Maryland, where you have heard there is 
a rich heritage here of minority small businesses.
    What I think we need to do, to my colleagues here from DOD, 
I think we need to go back and take a look at those large 
omnibus contracts, see if we can't open them up for small and 
minority-owned businesses. If we look at ITES-2, for example, 
there are a total of three minority-owned businesses on that 
contract, two of which, if memory serves me well, are in the 
State of Virginia, although they have offices in Maryland.
    One is actually in the State of Maryland. If you look at 
the thousands and thousands of small and minority-owned 
businesses in the State of Maryland that will be competing for 
the BRAC 2005 work, and just use that contract alone. If you 
are going to do a large portion of business, you can see that 
we are going to preclude a large portion of the Maryland 
minority business community from participating. So, I urge you 
and DOD to take a look at those kinds of contracts. Again, when 
you go and talk to the impacted communities that are going to 
implement it, they are aware of the issues.
    The other thing I would say, you heard it from the Black 
Chamber here, and that is goals, setting goals. I absolutely 
believe that we need to have goals that are monitored 
throughout this process. It needs to start with the DOD, and 
let me give you one example of what I hear sometimes as a Black 
business owner: ``Not qualified.'' Well, I don't think that is 
the case at all. If you look at the kinds of work that Ingenium 
does for the DOD, I think there are well qualified companies 
here. What we need to do is make sure that there are absolutely 
no barriers in this compressed timeframe for which we are going 
to be dealing with here. Let me give you an example of what I 
am talking about.
    Before I started working with the State, my ideas of how I 
thought the State could help the impacted communities--those 
that are coming into Maryland as well as the places like Fort 
Monmouth--we started thinking about discussing technology, 
telework, for example. What do I mean by telework and how could 
it impact the Armed Forces? Telework is a capability, 
technology where we could go to places like Fort Monmouth--
small entrepreneur businesses go to places like Fort Monmouth, 
help them prepare to lose that work force, many of which will 
not move to the Washington area, as we all well know. The 
numbers I have seen said 30 to 50 percent of the people will 
not relocate for various reasons.
    Well, we can use technologies such as telework to help 
places like Fort Monmouth minimize the impact of losing that 
work force and, in fact, losing the work force at inopportune 
times. What do I mean by that? We can go into the offices, 
emulate how workflow occurs in the office, put the technology 
in place so that as people think about leaving places like Fort 
Monmouth--as opposed to moving to Aberdeen. They don't have to 
leave; we can put them into their homes and have them work 
using the technology.
    Also, we can go down to places like Fort Aberdeen, where 
Fort Monmouth is going to move to, put the technology there. 
Monmouth is probably going to hire people at Aberdeen even 
before they move down, connect them back to Fort Monmouth, and 
it is just as though they are working at Fort Monmouth.
    I use this as an example to say to all of us the 
entrepreneurial spirit in minority small businesses are here, 
prepared to support BRAC. and I close by saying as I have gone 
around and talked to all of the DOD locations--the only one I 
have not spent time with is Meade; I am going to there I think 
it is Thursday of next week--they are more than ready to work 
with us as we now try and provision Maryland to accommodate 
this huge inflow of manpower that is going to occur here in the 
next 2 or 3 years.
    Mr. Chairman, those are my comments, and I look forward to 
questions. Thank you very much.
    [The prepared statement of Mr. Watkins follows:]

    [GRAPHIC] [TIFF OMITTED] T5291.014
    
    [GRAPHIC] [TIFF OMITTED] T5291.015
    
    [GRAPHIC] [TIFF OMITTED] T5291.016
    
    [GRAPHIC] [TIFF OMITTED] T5291.017
    
    [GRAPHIC] [TIFF OMITTED] T5291.018
    
    Mr. Towns. Thank you very much, General Watkins.
    Mr. Weidman.

                   STATEMENT OF RICK WEIDMAN

    Mr. Weidman. Mr. Chairman, thank you for the privilege of 
joining you here today to present the views not just of Vietnam 
Veterans of America, but of the Veterans Entrepreneurship Task 
Force, which includes most of the large military and service 
organizations.
    It was eight and one-half years ago that the Congress 
unanimously passed on both sides of the Hill Public Law 106-50, 
the Veterans Entrepreneurship and Small Business Act of 1999. 
Contained therein was a requirement that not less than 3 
percent of all Federal contracts and not less than 3 percent of 
all subcontracts go to service-disabled veteran business 
owners.
    We are 8\1/2\ years down the line to implement this law 
correctly, and several statutes and an Executive order since 
that time, and, yet, many of the Federal agencies have not 
responded. Unfortunately, Department of Defense is one of 
those.
    Being a son of the city, I entered the military at 79 
Whitehall Street in New York City and served in Vietnam as a 
medic with the Americal Division, and am proud of my service in 
the U.S. Army. My father was a two-war veteran of the U.S. 
Army, fighting in both Korea and in World War II.
    And, I am proud of the Army, but I am not proud of what the 
Army is doing today in terms of reaching back and giving 
opportunities to earn their piece of the American dream to 
service-disabled veteran business owners. What is a little bit 
different about service-disabled veteran business owners and 
veteran business owners is we are the groups that include 
everybody else: We are Black. We are White. We are Latino. We 
are men. We are women. We are Native American. We are 
everything, and we all fought under the same flag of the white, 
red, and blue, and that is what unites us. So, the groupings 
include the National Association for Black Veterans in VET-
Force, the American GI Forum, the nation's largest Hispanic 
organization, and many of our most active members are in fact 
women business owners.
    We are all in favor of--and think it is a good thing--all 
of the other so-called special categories, when it comes to 
Federal contracting and subcontracting. However, you cannot 
cast those who have been injured in service to country--
lessened by virtue of that military service to country--aside 
as if it didn't matter, and, unfortunately, that too often 
happens. Let's take the BRAC as an example and DOD.
    DOD should be one of the leaders, along with the Department 
of Veterans Affairs. Department of Veterans Affairs is the 
leader, along with the State Department--thanks to General 
Powell when he was Secretary of State--in actually achieving 
the minimum goal of 3 percent for service-disabled veteran 
businesses in contracting and subcontracting. DOD, however, is 
near the bottom. It is really hard to reach your goal if you 
set the goal less than the legal minimum. So, there are 
elements of DOD that have set their goal, particularly on 
construction, at one-tenth of 1 percent, 1.2, 0.2 percent, and 
you are never going to get to the 3 percent if you have that.
    The military axiom applies here: ``A unit does well that 
which a commander checks well.'' Let me say that again, ``A 
unit does well that which a commander checks well,'' and we 
have asked the President's people on the Domestic Policy 
Council and at the Office of Federal Procurement Policy ``how 
can you issue an order and have agencies basically say we don't 
care what the commander-in-chief or the chief executive of the 
United States of America says in a direct order to you to all 
those folks in the agencies, and particularly within DOD, and 
let it go by the board?'' If it had taken 8\1/2\ years for our 
military to respond in Afghanistan or Iraq, or to any other 
threat to our Nation, we would be in deep trouble indeed. When 
you said do it, the attitude is can do and you make it happen, 
which is why veterans make such good employees and why veterans 
make good contractors.
    The two instances that you cited, Mr. Chairman--my time is 
almost up, so I can't get to it in great detail. I will say 
this, as part of trying to move down the line with DOD, we met 
extensively last spring with Dr. James Findley, who is the 
Deputy Under Secretary for Acquisition and Technology at DOD, 
and came up with seven points--that I will submit separately 
for the record from my statement--about things that we could 
agree on to try and move forward on in order to move DOD in the 
direction of at least achieving the bare minimum. It is not a 
goal; it is a minimum. That is what the statute says, a minimum 
of 3 percent, and of these things, a number of these things 
have been done.
    We were working on an eight-point, which was a memorandum 
of understanding to do a setaside for SDVOBs, service-disabled 
veteran businesses for all contracts at Arlington National 
Cemetery and at Walter Reed as a first step in the direction of 
jump-starting things within the Army in particular and within 
DOD in general. And, unbeknownst to the OSDBU Office or to the 
Assistant Secretary's Office for Acquisition and Technology, 
the Army turned around and issued all of the work that would be 
available for the next 3 to 5 years at Arlington National 
Cemetery and at Walter Reed to Alaska Native Corps.
    Now, Alaska Native Corporations are in fact an important 
part of the law, but you can't even question whether or not 
this was an appropriate activity. So, as a result, we felt that 
there hasn't been any significant effort. I come back to, ``a 
unit does well that which a commander checks well,'' and if 
there is a will, we can change it without any more statutes. We 
will continue to press for additional statutes, such as 
changing the ``may do a setaside for service-disabled vets'' to 
``shall do a setaside,'' but basically it is a question of 
will, of political will on the part of the administration, both 
at the DOD and in the executive branch in general.
    I see I am out of time, Mr. Chairman. I would be more than 
pleased to answer any questions and to get into greater detail 
on some of the recommendations about how this can help.
    The one last thing I would have to say is that it is not a 
zero sum game. All small groupings--whether women, minority 
groups, and service-disabled veterans--can rise together and 
get a greater share of the American dream and of the economic 
pie in the BRAC if, in fact, we work together and people stop 
trying to play us off against one another. And, this hearing 
today is a good first step toward that kind of cooperation that 
will benefit us all.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Weidman follows:]

    [GRAPHIC] [TIFF OMITTED] T5291.019
    
    [GRAPHIC] [TIFF OMITTED] T5291.020
    
    [GRAPHIC] [TIFF OMITTED] T5291.021
    
    [GRAPHIC] [TIFF OMITTED] T5291.022
    
    [GRAPHIC] [TIFF OMITTED] T5291.023
    
    [GRAPHIC] [TIFF OMITTED] T5291.024
    
    [GRAPHIC] [TIFF OMITTED] T5291.025
    
    [GRAPHIC] [TIFF OMITTED] T5291.026
    
    [GRAPHIC] [TIFF OMITTED] T5291.027
    
    [GRAPHIC] [TIFF OMITTED] T5291.028
    
    [GRAPHIC] [TIFF OMITTED] T5291.029
    
    [GRAPHIC] [TIFF OMITTED] T5291.030
    
    [GRAPHIC] [TIFF OMITTED] T5291.031
    
    Mr. Towns. Thank you.
    Let me thank all of you for your testimony and to say that 
we are doing something here today that is a little different 
from the normal pattern of hearings around here: we are having 
the stakeholders go first. Generally, we have the agency people 
go first. But the problem is they leave and they don't hear 
you, and I purposely arranged it this way because I want them 
to hear you. I want to be able to come up with a fix to this 
problem, and I think that, working together, we can. I think it 
is as you pointed out, Mr. Weidman, it is the will, of course, 
and the proper attitude, and if we have that, General, I think 
that you are right, that we can move this forward.
    And, I know that in situations like this we don't like to 
beat up on anybody. I understand that, and I recognize that, 
but sometimes, in order to fix something, certain things have 
to be said. So, what I am saying to the agency people, don't be 
too sensitive about this, because we are concerned, and I do 
believe that you are concerned. And, I think that we have to 
listen and to work together and to hear each other in order to 
be able to fix it.
    I do believe that this needs to be fixed. We are talking 
about a lot of money; we are talking about a lot of people; 
and, we are talking about people who have served our country 
well and should be at the table, and they should be able to 
benefit from this.
    And, I want to begin by first saying to you, General 
Watkins--and then I guess others who want to comment on it--
what more can be done now, without any additional laws or 
anything? What can we do to sort of move things? I know we have 
a problem with clearance. I know we have all these issues, but 
what do you think we can do to sort of put people at the table 
and to be able to benefit from this tremendous amount of money 
that is going to be spent here?
    Mr. Watkins. Mr. Chairman, as I indicated in my summary 
comments, I have no doubt that the DOD will work with us, and 
our comments were not contrived before we came here--I didn't 
hear that--but we all saying basically the same thing. I think 
fundamentally we have to work with DOD in this very comprised 
timeframe we call BRAC--and it is not just BRAC Maryland and 
BRAC USA; we happen to be focusing on Maryland today--to make 
sure that everyone understands that the will of Congress and 
the administration has to be upheld, that when we say we want 
to make sure that the playing field is level and that qualified 
businesses can in fact get in and participate--and that doesn't 
mean that you give business to anyone; you make it available-- 
that is exactly what we mean. So, I would start by addressing 
with the subsequent panel here how will the DOD go about making 
sure that those minimal goals that have been set and are 
expected to be met are in fact fulfilled?
    Now, I think what the State of Maryland is doing, I think 
is the right thing to do. What the State of Maryland is doing 
by putting together an advisory panel to the lieutenant 
Governor to serve as a conduit between the DOD and the Maryland 
business community is the absolute right thing to do. What I 
see ensuing there is the fact that this panel will work with 
the DOD and the agencies to make sure that we are connecting 
the small minority, veteran-disabled businesses to those 
business opportunities.
    It is absolutely the correct thing to do and, as I said 
before, I don't think we have to beat people over the head to 
get it done. What I do think, though--and I go back to the 
comment that says people tend to do well those things that are 
out there in terms of goal posts--I think we need to set some 
goal posts. DOD needs to set some goal posts, and we all should 
understand that they are not arbitrary. They are there to be 
met, and, by God, we are going to be checking to make sure they 
are met.
    So I would say goals. I would say the other thing is--and I 
know the DOD will take a look at those large omnibus contract, 
bundled contracts to see if there are opportunities to open 
those up again for companies that did not get a chance to 
participate, and even if you don't open them up, you could go 
to the primes and make sure that the primes on those contracts 
in fact open up business to these impacted areas. Again, we are 
talking about a very short timeframe, and we have to find a way 
to get that logjam opened up.
    Ms. Jenkins. As a followup to Mr. Watkins' comments, from 
the State's perspective, there are some things that can be done 
using Federal leverage that are not likely to require new laws. 
For example--and I want to echo the comments regarding 
relationship building with DOD--we have had some good 
experiences initially with working with DOD, and we would 
certainly like to continue that. There may also be other State 
agencies who have procurements that are headed toward Maryland 
related to BRAC beyond DOD that we would need those same 
relationships with.
    In the area of broad application of Federal procurement 
laws across the board and goals across the board, that is an 
area that, with just consistency and the application of 
existing DBE goals, that would have a humongous impact on work 
in the State of Maryland. Also, using political leverage on 
enhanced use leases with private developers, this is an area 
where, in the Stare of Maryland, we go beyond our laws and 
oftentimes just use political will to let developers know who 
are entering into privatized arrangements with the State of 
Maryland that this is an expectation, and oftentimes we are 
fairly successful with that.
    Last, there is a program that exists in Maryland that is 
jointly funded by both Federal and State government, but they 
exist specifically to provide guidance and technical assistance 
to small and minority businesses who are pursuing Federal work. 
It is a program called PTAP, the Procurement Technical 
Assistance Program. It runs under the small business 
development centers. It is funded by SBA and DOD through 
Defense Logistics Agency. The State of Maryland has a match to 
ensure that those operations are happening within the State of 
Maryland.
    That PTAP program is essential to helping our business 
community understand how to do business with the Federal 
Government. Currently, they are underfunded; they need more 
resources so that collectively they can be a resource and a 
tool in the State of Maryland to work with our office in 
ensuring that small businesses have access to security 
clearances and the other expertise that you need to do work in 
the Federal space.
    Mr. Towns. What can DOD do to ensure that small firms 
aren't eliminated by flaws within the security clearance 
processes, before even having a fair chance to compete? You are 
talking about $60,000 to $150,000 per employee, in addition to 
the process often taking 2 years. That, to me, is devastating 
to many small businesses. What can we do to facilitate this 
process and move it along?
    Mr. Watkins. I can probably start it and then others can 
chime in. I would first start out by saying $60,000 to $150,000 
to get someone cleared is pretty expensive even for large 
companies, but you are absolutely correct, Mr. Chairman. In 
small companies it is sometimes prohibitive, particularly if 
you are not going to gain lots of business as a result of 
getting a minimum number of people qualified here.
    So, one thing that could be done would be some assistance 
to these companies who are going to be competing for the 
classified work that could be collaborative, resources at the 
State and the Federal level. It is a burden. I can tell you 
that, having worked with some of the companies that are smaller 
than I am, when we do subcontracting with them where classified 
work is involved, to spend that kind of money and that amount 
of time to get people cleared is in fact a burden.
    So some kind of funding arrangement for BRAC kind of work 
as it relates to security clearance would be helpful. In fact, 
it may very well be a good experiment, again because, for lack 
of a better description, you have a pretty good sandbox to play 
in here in a defined period of time where you can work with 
locales such as Maryland to try to see if we can come up with a 
way of offloading that. So, my point would be some 
collaborative funding to aid the small companies, once they 
have been identified as companies who are capable of doing 
classified work.
    Now, I don't know the specifics of NSA, but I know NSA has 
a great outreach program where they really expedite the process 
of getting these small and minority-owned companies cleared. So 
that might be something we might want to look at to see if 
there is any way of taking that program and moving it along.
    Mr. Green. Mr. Chairman, from the small business 
perspective, we don't have the money to do all these clearances 
and to run these clearances, and it takes an awful lot of time. 
There has to be some way that there is some kind of fund 
established to allow small businesses to be a part of it to get 
those clearances.
    What happens is, while we are waiting on clearances, we 
can't do the work. The prime contractor, who has the 
relationship with the base and has had it for years, all of 
their people are working because they know the system, and the 
system has worked for them over a period of years. Streamlining 
the system--I am not sure what we can do. I know that security 
has to be at a premium for us in today's society, but somehow 
we must find a way to streamline the timeframe it takes to get 
those clearances and have a pool of money that is available for 
that kind of activity.
    Mr. Towns. Thank you.
    Any other comments on that?
    Mr. Weidman. I was just going to add, Mr. Chairman, there 
is no reason why you can't set up essentially a service center 
for small and medium sized enterprises to help people get pre-
qualified. It is actually less a problem for SDVOBs because so 
many already--particularly of the recently separated veterans--
come out of the military with a TSI clearance, and teaming 
arrangements and tradeoffs on consortia can help in that 
process to shorten it. But, it comes back to if there is a will 
to help small and medium sized enterprises, get people pre-
qualified at not such a great expense. DOD could set that up 
through the PTAPs very easily, sir.
    Incidentally, the PTAPs are one of the greatest resources, 
and we and VET-Force and all the major military service 
organizations refer people to the PTAPs all the time as the 
best, most consistently skilled and helpful resource out there 
across the country.
    Mr. Towns. Thank you very much.
    Let me just ask why are goals mandatory? Can you expound on 
that just a little bit? I want to make certain that is clear, 
in terms of why we should have mandatory goals.
    Mr. Green. Goals ensure participation. Everybody wants to 
achieve any goals established. And what it does is it opens the 
doors for small and minority-owned businesses to participate. 
If you don't have goals, prime contractors, unless there is 
State reform or Federal reform of the minority practices--
Maryland did a great job a few years back. They require their 
prime contractors to name their subcontractors in the contract. 
If he or she is not a certified minority, they kick that person 
out.
    So, if you have those kinds of tools available or working 
for you, small businesses can get work, and it increases the 
opportunity for them to achieve all the goals, but if we don't 
have some of the things that Maryland has undertaken, the rest 
of these States are never going to achieve the contracting 
goals that we want. And, we want to have those, because if we 
have them, then we all can pat ourselves on the back that we 
ensure that minorities receive 40, 35, whatever percent,age of 
it it may be.
    And I think that they should be directed to small 
businesses primarily based on where we are. In the Washington, 
DC, area, we have--Maryland; I am talking about Maryland--we 
have a strong small business community in Prince George's 
County. The percentages of participation should be higher in 
Prince George's County than it may be in Decatur, AL or Fort 
Benning, GA, or someplace like that. But we don't see those 
numbers tracking that way, so, I believe that we have to have 
goals in order to ensure everybody gets a fair and equitable 
chance at participation.
    Mr. Towns. Well, I thank you. Thank you very much.
    At this time, I will now yield to Congressman Clay from the 
great State of Missouri.
    Mr. Clay. Thank you, Mr. Chairman.
    Ms. Jenkins, as you are aware, enhanced use leases have 
become a very popular tool to accommodate realignment of 
military functions under BRAC. The problem with enhanced use 
leases is that they do not require private developers to adhere 
to either Federal or State procurement laws, including minority 
business participation goals. Instead, the arrangements allow 
for voluntary compliance on the part of the private developer 
with Federal and State contracting laws. What impact will this 
have on small and minority business participation in BRAC 
contracting activity?
    Ms. Jenkins. Thank you for that question. It will have a 
huge impact on the ability for small and minority businesses to 
participate by virtue of the fact that history has shown that 
voluntary efforts oftentimes don't net results that are 
meaningful.
    And, to the question that we just answered in terms of why 
goals, goals really do ensure participation, and without a 
goal, the likelihood the developers are going to do the right 
thing just because it is good business, you will find that 
inconsistently. Some will, because they have a good track 
record of doing public sector work. So, they will carry that 
behavior out on the private sector side, but many will not. So, 
having some type of broad-based required goal placed on EULs is 
the way to ensure that small and minority businesses have an 
entry to that work.
    Mr. Clay. It sounds like----
    Ms. Jenkins. That work that is occurring on federally 
owned, publicly owned land. That is really the critical factor 
for why it is justified to have some type of goal on an EUL 
project.
    Mr. Clay. It sounds like you are referring that a Federal 
law need to be in place.
    Ms. Jenkins. Yes.
    Mr. Clay. In my community, in St. Louis County, in the last 
round of BRAC we lost the personnel record center to Fort Knox, 
KY, and St. Louis County has to deal with the loss of 2,000 
jobs along with a considerable amount of land that will have to 
be redeveloped.
    Maybe Mr. Watkins or Mr. Weidman would like to contribute 
to what Ms. Jenkins said, but I would love to hear what we 
should look for in the process as we redevelop this land and as 
we try to replace the loss of jobs. Mr. Watkins.
    Mr. Watkins. Let me chime in. Let's go back to the question 
that the chairman asked, because I think it will dovetail in to 
where you are going as well, and that is why do you set goals. 
You set goals because there is something out there that you 
believe worthy of striving for. So the fact that the DOD, 
Congress, and succeeding administrations have set goals out 
there, it says that there is something that we want to achieve.
    Now, I also say that if you are going to set goals, 
mandatory goals, and you don't achieve them year after year 
after year, you have to ask yourself how serious are you. And, 
that is why I say goals with verifiable track records, so we 
can measure progress is absolutely key.
    Mr. Clay, back to your comment again, I remember--and it is 
in my submitted testimony--working with the late Senator Strom 
Thurmond from South Carolina, dealing with the kind of issue 
you are dealing with, where I was closing down facilities in 
his State--in this case Charleston, SC--and moving them to 
other locations. Well, we were sensitive--it didn't have to be 
on the DOD side--but it was the right thing to do, and that is 
to work with that representative--in this case Senator--to look 
at other things that we could help him work with to offset that 
loss of work.
    We did things like guaranteeing those people if they wanted 
to move any place in the country where we had an opening, they 
would be guaranteed an opening. We did what we called 
storefronts in Charleston, SC, where we would create entities 
down there where those people could continue working until such 
time as they could find work. Now, it wasn't make work; it was 
reaching out to that affected community to see how we could 
help them.
    I would say the same thing with land development. One of 
the things that I would be looking for is how do you backfill 
that loss of jobs and be sensitive to it. And, again, if my 
experience is what I think you will see--and I think it is, and 
the DOD still is--people will certainly be willing to work with 
you to see how it is that we can help minimize the impact of 
what is happening in communities because, after all, we are 
doing it for the betterment of the country, and it is in our 
best interest as a DOD, as concerned citizens, to make sure 
that we do the best we can to take care of those impacted 
communities.
    Mr. Weidman. Mr. Clay, the--I am sorry.
    Mr. Clay. Let me followup on what Mr. Watkins--and then I 
will come to you, Mr. Weidman. But let me tell you about the 
St. Louis community's experience with BRAC going back to the 
1990 round, where we lost even more jobs, and I felt like there 
was a lack of sensitivity on the part of DOD, because, when I 
got here in 2001, I had a meeting with DOD about the 
devastation they had left in the St. Louis community, and they 
had left a facility that used to be an Army ammunitionsite, 
where they just boarded it up and left the facility there with 
all kinds of PCBs in it, all kinds of other contaminants, and 
they didn't feel like they needed to do anything about it. Of 
course, we changed that tune, and they came back and had to 
clean it up. But initially they told me, ``we don't have to do 
anything for your community and don't care about your 
community,'' and we quickly sensitized them to what they had to 
do for that community. I don't know if other communities have 
experienced that, but we have.
    Mr. Watkins. I would certainly hope that initial experience 
is not what one would expect in the Defense Department; it 
certainly is not what I found. On the other hand, I don't want 
to mislead the committee. We have to make some tough decisions 
sometimes, and there was very little that we could do. But, to 
the extent that you went out of your way to work with the 
affected community and looked for solutions went a long ways in 
making sure that we had the right relationship as we continue, 
because you are right. You have long memories, and chances are 
we will have to come back to you again in the future for 
support.
    Mr. Clay. Thank you.
    Mr. Weidman.
    Ms. Jenkins. Can I add one final thought before we leave 
the topic of EULs? Because I think this is rather significant. 
The State of Maryland is looking at introducing legislation to 
deal with the impacts of EULs, and it essentially allows the 
State of Maryland to enter into negotiations with DOD on the 
payment in lieu of taxes, to negotiate taxing authority, to 
help cover the other infrastructure costs associated with EULs. 
As part of this legislation, we do intend to move forward on 
goals that would be placed for minority participation on EUL 
projects in Maryland. To the extent that the Federal level 
could look at something on your end, that might be a way that 
we can legislate a solution on BRACs to small and minority 
businesses.
    Mr. Clay. Thank you.
    Mr. Weidman. Just to followup on that, we can use the word 
goals, but all too often, when the Congress says goals, that 
means, ``this is what you will do.'' If you say goals often 
within the executive branch, to those who are actually doing 
it, and they regard it as a cute idea advanced by the Congress, 
as opposed to something that they have to do, that they better 
take seriously as a heartbeat. And, I will use as an example 
that the word goal doesn't appear anywhere in any of the laws 
pertaining to service-disabled veteran-owned small businesses, 
but people keep using the goals within the bureaucracy. We keep 
pointing out that the law says: ``a minimum of.''
    And, to followup on that if I could, Mr. Clay, it is the VA 
was not leading the way until such time as we went to the 
deputy secretary of VA, who is the chief operating officer, and 
asked him to put it in key people's, managers' evaluation that 
they had to achieve the 3 percent, otherwise they wouldn't get 
a bonus. And, it took off like a skyrocket, and VA is now 4.5 
percent.
    We have recommended to DOD that they do the same thing, 
that they put it not just in contract officers, but in 
decisionmakers--who often aren't the contract officers 
themselves--in their performance evaluation. You want a 
superior or an outstanding rating in order to be able to get a 
bonus? Then you better make this happen, not just for service-
disabled vets, but for minority-owned businesses and for women-
owned businesses and for hub zones.
    Mr. Clay. And it has made a difference in the service-
disabled community, the veteran business community and service-
disabled veteran business community, as far as putting those 
incentives into the law or into an agreement. You have seen the 
participation shoot up.
    Mr. Weidman. It would shoot up, and we are having problems. 
To talk about your district, we have a women-owned/service-
disabled veteran-owned, a service-disabled veteran herself, 
architect and design firm and design and engineering firm, and 
it is just not getting any work from DOD or the Army Corps of 
Engineers right there in St. Louis County. And, I would be glad 
to talk with you or your staff about it afterwards, sir. 
Perhaps you can start the ball rolling right there.
    Mr. Clay. Please share that with us. Yes. Thank you.
    Mr. Chairman, I yield back.
    Mr. Towns. Thank you very much. I just want to go into one 
other thing, Mr. Green. You mentioned a level playing field. 
You mentioned it three times, so it would seem to be pretty 
important. And, of course, you talked about access to capital 
you said was one thing, but access to the market was something 
else. So could you sort of expound on that before we close out?
    Mr. Green. Yes, sir. I think what I am trying to say to you 
is this: It is not the Federal Government's job to make us 
rich, to make anybody rich, but it is your responsibility to 
create opportunities for us. As a minority, there are so many 
barriers that we have to overcome. If we can remove some of the 
barriers, then we level the playing field. If you have goals, 
you increase the opportunity, and I think that is what small 
businesses and African-American businesses and minority 
businesses are talking about. Remove those institutional 
barriers that keep me from advancing.
    And, God knows the bureaucracy within the SBA itself is too 
much to overcome for a small business. If we need to have a 
certification, we have to hire somebody to do it for us. We 
don't have anybody to--there is no person that we can reach out 
to help us with that, we have to go and hire someone to do 
that. Well, we can't bear all these costs, so we don't get 
them.
    We can't get work because agencies have a certification 
requirement, and there is no reciprocity. We believe that there 
should be a single source certification whereby, if I have an 
SBA certification, I should not have to have a State 
certification, I should not have to have an Airport Authority 
certification. We should be able to apply for any work or do 
any work wherever there are some Federal dollars if we have a 
single source certification. That would open up doors, level 
the playing field, and increase opportunities, and that is what 
we are talking about, Mr. Chairman.
    Mr. Towns. Thank you.
    Thank you very, very much. We really appreciate your coming 
and testifying. Of course, as indicated, we switched it around 
today because I wanted the agencies to hear you, and, of 
course, now we will move into hearing the agencies. And, I am 
hoping that some of the things, some of the concerns that you 
have and some of the problems that you have, they might be able 
to give us some answers, and I think that is the reason why we 
did it this way.
    I just wanted to say to you that I am really concerned that 
when you have veterans, people that have served this country, 
who in many instances have been wounded, to come and not to 
have the opportunity to have a seat at the table, that really 
bothers me, and I think it is wrong, and I think that we have 
an obligation and responsibility on this side of the aisle to 
correct it. And, I want to let you know that I am committed to 
correcting it. We are not going to go away. We are going to 
continue to deal with this and push it, because it is broken, 
and it needs to be fixed. When I look at the people that are 
being left out, I recognize that we have to do something.
    So I want to thank you so much for your commitment and your 
coming today and testifying, and I look forward to working with 
you and trying to level the playing field. Thank you so much.
    Our second panel. Before you take your seat, let me swear 
you in. We swear everybody in here. Raise your right hands.
    [Witnesses sworn.]
    Mr. Towns. Thank you. You may be seated.
    Let the record reflect that they answered in the 
affirmative.
    Let me introduce our witnesses. We have today Tracey 
Pinson, who serves as the Director of the Army's Office of 
Small and Disadvantaged Business Utilization. Ms. Pinson 
advises the Secretary of the Army and Army staff on all small 
business procurement issues.
    We have with us Timothy Foreman, the Director of the Navy's 
small business programs. Mr. Foreman is responsible for the 
implementation of the Federal acquisition programs designed to 
assist small businesses.
    Let me just say to both of you that your entire statement 
will be placed in the record, and I ask all witnesses to 
summarize their testimony within the time we have established. 
Now, I am sure you know the procedure: the green light means 
start, the yellow light means think about stopping, and the red 
light means stop.
    So let me begin with you, Ms. Pinson. Let me thank you so 
much for coming to testify.

   STATEMENTS OF TRACEY PINSON, DIRECTOR, SECRETARY OF ARMY, 
  OFFICE OF SMALL AND DISADVANTAGED BUSINESS UTILIZATION; AND 
  TIMOTHY FOREMAN, DIRECTOR, SECRETARY OF THE NAVY, OFFICE OF 
          SMALL AND DISADVANTAGED BUSINESS UTILIZATION

                   STATEMENT OF TRACEY PINSON

    Ms. Pinson. Thank you, Mr. Chairman and Mr. Clay and other 
members of the subcommittee. It is a pleasure to appear before 
you to discuss the implementation of the Army's 2005 Base 
Realignment and Closure Program and its impact on local 
communities and, in particular, small businesses. My name is 
Tracey Pinson, and I am the Director of the Army Small Business 
Program Office, and I report directly to the Secretary of the 
Army.
    The Army has an aggressive, carefully synchronized BRAC 
implementation plan to meet the September 2011 deadline while 
supporting our national security priorities. The budget for the 
entire 6 year implementation period is approximately $17 
billion. About two-thirds, or $13 billion, will be spent on 
military construction.
    Under BRAC, the Army will close 13 Active Component 
installations, 387 Reserve Component installations, and 8 
leased facilities. BRAC realignments 53 installations and/or 
functions and establishes Training Centers of Excellence and 
Joint Technical and Research facilities. To accommodate the 
units relocating from the closing Reserve Component 
installations, BRAC 2005 creates 125 multi-component Armed 
Forces Reserve Centers and realigns the Army Reserve Command 
and control structure.
    In total, over 55,000 soldiers and civilian employees will 
relocate as BRAC is implemented. The actions required for the 
Army to successfully implement BRAC 2005 are far more extensive 
than all four previous BRAC rounds combined. Twenty-five 
percent of all required construction projects are planned for 
award by the end of fiscal year 2009 and 100 percent by the end 
of fiscal year 2010.
    We perceive BRAC as an expanded opportunity for small 
business participation. Historically, the Army has led the 
Federal Government in awards to small businesses. In fiscal 
year 2007, of the $93 billion in total awards to U.S. firms 
made by the Army, small businesses received 25 percent, or $23 
billion. The charts attached to my written testimony illustrate 
growth the Army has experienced in all small business 
programmatic areas.
    While there will be a tremendous amount of money spent on 
BRAC and BRAC-related projects, the process for allocating that 
money will not change. Some of our existing contracting 
officers have assumed responsibility to award these projects. 
The Army has a very qualified and dedicated cadre of small 
business advisors who work side-by-side with contracting 
officials to conduct market research for all requirements. All 
requirements are published in the Federal business opportunity 
publication.
    Once this research has been done, each requirement will be 
reviewed for performance by the small business community. This 
includes potential setasides for small businesses, HUBZone 
companies, or service-disabled veterans. Additionally, analyses 
will be done for suitability for award under the 8(a) program. 
If the award is not suitable for performance by a small 
business as a prime contractor, substantive provisions will be 
put into the contract to maximize small business participation 
as subcontractors.
    I visited Ft. Bliss several months ago and witnessed 
firsthand the great work that the Corps of Engineers is doing 
there in support of BRAC. This expansion program is one of our 
largest BRAC projects. To date, the Corps has awarded over $200 
million directly to small businesses. An additional $350 
million has been awarded to small business subcontracting. 
Unfortunately, the ability to obtain performance bonds 
continues to plague the ability of small businesses to access 
construction projects as prime contractors.
    Many of our projects for the construction of buildings are 
valued such that small businesses cannot bond them. Aggressive 
small business subcontracting goals are established under these 
circumstances. We are also restricted from using small business 
setaside procedures in the construction arena as a result of 
the small business competitiveness demonstration program, a 
statutorily mandated program.
    We anticipate that a significant amount of military 
construction funding will be spent during this fiscal year and 
fiscal year 2009 and 2010. The Corps has put very good 
projections in place for the utilization of small businesses. 
For example, the North Atlantic Division has projected that 
approximately 22 percent of their BRAC dollars will be spent 
with small business primes. The Corps' overall goal for 
subcontracting with small businesses is 70 percent. We 
anticipate that the subcontracting opportunities under BRAC 
will enable them to meet this goal.
    I would like to mention what the Army is doing to support 
the program for companies owned by service-disabled veterans. 
On January 9th of this year, the Secretary of the Army signed a 
memo to all Army contracting commands urging them to maximize 
opportunities for service-disabled veteran-owned businesses and 
to reemphasize the importance of this program. We have 
experienced exponential growth in our dollars awarded to 
service-disabled veterans, from $750 million in fiscal year 
2006 to over $900 million in fiscal year 2007. Additionally, we 
have posted on our Web site projections of over $2 billion in 
proposed service-disabled veteran-owned setasides.
    While there is no statutory goal for veteran-owned 
businesses, we believe them to be important to us as well, and 
we have awarded over $2 billion in contracts to those entities. 
The Army commitment to this program is unwavering.
    In summary, the Army has a carefully coordinated and 
synchronized plan for implementing BRAC mandates, while 
continuing to conduct critical missions in support of the 
global war on terrorism and homeland defense. We believe that 
the small business community has a critical role to play in 
this mission and are committed to ensuring that they have the 
maximum practicable opportunity to participate in BRAC as prime 
contractors and subcontractors.
    Thank you again for the opportunity to appear before you 
today, and thank you for your continued support of America's 
Army.
    [The prepared statement of Ms. Pinson follows:]

    [GRAPHIC] [TIFF OMITTED] T5291.032
    
    [GRAPHIC] [TIFF OMITTED] T5291.033
    
    [GRAPHIC] [TIFF OMITTED] T5291.034
    
    [GRAPHIC] [TIFF OMITTED] T5291.035
    
    [GRAPHIC] [TIFF OMITTED] T5291.036
    
    [GRAPHIC] [TIFF OMITTED] T5291.037
    
    [GRAPHIC] [TIFF OMITTED] T5291.038
    
    [GRAPHIC] [TIFF OMITTED] T5291.039
    
    [GRAPHIC] [TIFF OMITTED] T5291.040
    
    [GRAPHIC] [TIFF OMITTED] T5291.041
    
    [GRAPHIC] [TIFF OMITTED] T5291.042
    
    [GRAPHIC] [TIFF OMITTED] T5291.043
    
    [GRAPHIC] [TIFF OMITTED] T5291.044
    
    [GRAPHIC] [TIFF OMITTED] T5291.045
    
    [GRAPHIC] [TIFF OMITTED] T5291.046
    
    Mr. Towns. Thank you very much, Ms. Pinson.
    Mr. Foreman.

                  STATEMENT OF TIMOTHY FOREMAN

    Mr. Foreman. Thank you, Chairman Towns and Congressman Clay 
and staff of this subcommittee. I appreciate the opportunity to 
be here today and talk to you about this important topic, the 
BRAC, and how it is affected by small business and how small 
businesses can affect that.
    First off, I would like to tell you that I too report to 
the Secretary of the Navy directly, so it is my pleasure to 
work with the Honorable Donald C. Winter. I would like to 
initially thank you, Congress, for giving us so many tools that 
we can use that effectively help us in our efforts to achieve 
the various goals.
    Let me just briefly list them. One is just the small 
business program in general, the small business setaside 
program, the small disadvantaged business program, the 8(a) 
program, which is a subset of that program, the women-owned 
business program, the historically under-utilized business zone 
program, which really plays an interesting role in BRAC, and 
the long-overdue service-disabled veteran own small business 
program.
    We, additionally, have two other programs that we utilize: 
the Small Business Innovative Research Program and the Small 
Business Technology Transfer Program. Those are designed to 
bring technologies that are in the early stages into the war-
fighter hands earlier, and we also use them as a way to 
commercialize. It used to be the Department of Defense was a 
major buyer or, actually, a major, if you will, procurer of 
research and development. I mean, now you found--I think it was 
1976--the commercial marketplace has more research and 
development than the whole Federal Government, and it continues 
to increasingly have larger and larger chunks, so we have to 
utilize that.
    I do thank you for all those programs you have provided.
    The small business program does provide an opportunity to 
help the Navy accomplish our mission, and, more importantly, 
through those lower priced products and through the improved 
technologies, they are going to help us build the Navy and 
Marine Corps of tomorrow, and that is kind of a key logo that 
we would like to carry out as we look today for our missions 
and tomorrow for our growth.
    The long pull and I think our intent in the Navy--and I 
believe it is true for the Department of Defense--is the 
health, safety, welfare, and the quality of life that these 
programs can bring to our sailors and our Marines. I think we 
need to always look to them because they are the ones who serve 
this country and put themselves in harm's way. So, we look at 
it as it is an obligation that we do the best job, so we don't 
have service-disabled veterans coming back. We want to see 
safety. One of our most recent--what we call mentor-protege 
programs--is designed to reduce hearing loss on aircraft 
carriers. So, we are looking at various things like that.
    The HUBZone program is an interesting program in that it 
actually addresses--it came out of a legislative initiative out 
of a field activity in the Air Force, up through OSD, and has 
actually been put into place. What it does--the HUBZone program 
is where you have an economically distressed area, and in this 
distressed area, firms that apply--and are certified by SBA and 
who has a membership of 35 percent of their employees--can 
receive certain preferences, and those preferences are 
basically three that are straight up, one that is kind of a 
little bit off to the side.
    The three are sole source, the setaside provisions, and 
also a price evaluation preference provision, and it has a 
unique--which, by the way, the service-disabled veterans folks 
picked up--a unique subcontracting limitation ability. 
Historically, the subcontracting limitation said, ``you, the 
business, have to perform 51 percent.'' What this says is,m the 
HUBZone--historically under-utilized business sonar, the 
service-disabled--you and other firms of your like have to 
perform that 51 percent. That encourages partnering. That 
encourages joint ventures, which are really necessary for 
today's environment in which a lot of the contract awards are 
getting larger and larger.
    The service-disabled veterans have an additional advantage. 
They can literally claim everybody in their joint venture as a 
service-disabled veteran, so they can actually go to other 
small businesses and actually push that a little bit forward. 
So, that is an interesting twist which is available to the 
service-disabled veteran community.
    In terms of the programs that I mentioned earlier, there 
are also subcontracting programs, and--oh, by the way, I was 
delighted to sit here and listen to the group before, because 
it started the juices flowing and I think we will have some 
good things coming out of just sitting here listening. So that 
was an excellent idea--I like that--and I hope we do it again 
next time.
    Access to working capital, I agree. That is an absolutely 
crucial program for small businesses. As we move into these 
tough economic times--oh, I am over. I am sorry. As we move 
into these tough economic times, it should be noted that the 
DOD does have, in FAR 32, Part 32, what we call progress 
payment rates. Small disadvantaged businesses get 95 percent, 
small businesses get 85, and large businesses get 80. And, the 
idea is that we do have one group that does have a better 
progress payment. And, I think even more important than access 
to capital is its cash-flow, and that is absolutely critical in 
manufacturing.
    With that, I will stop and be happy to take any of your 
questions. Thank you.
    [The prepared statement of Mr. Foreman follows:]

    [GRAPHIC] [TIFF OMITTED] T5291.047
    
    [GRAPHIC] [TIFF OMITTED] T5291.048
    
    [GRAPHIC] [TIFF OMITTED] T5291.049
    
    [GRAPHIC] [TIFF OMITTED] T5291.050
    
    [GRAPHIC] [TIFF OMITTED] T5291.051
    
    [GRAPHIC] [TIFF OMITTED] T5291.052
    
    [GRAPHIC] [TIFF OMITTED] T5291.053
    
    Mr. Towns. I am happy you like this process, because we 
will continue this until we fix it. We will continue this way.
    Let me thank both of you for your testimony, and I want you 
to know that this is not a beat-up session, it really isn't. I 
really want to see how we can be helpful to solving a problem 
that I think we both--and all of us agree--exists. And, we have 
had some situations, things raised this morning that I think 
make a lot of sense, and I just want to start out with--I think 
it was Mr. Green who testified that multiple certifications can 
be extremely costly to small and minority business owners, and, 
of course, the Federal and State agencies have their own 
requirements, and there is little or no reciprocity between 
them.
    How can we streamline them? How can we streamline the 
certification process to ease the burden on small businesses 
and eliminate the multiple certifications? Because that is 
expensive.
    Ms. Pinson. Sir, if I could, I agree that there are 
multiple certifications out there, and, in fact, some of those 
certifications really don't get you any preferences, if you 
will. I can clearly say that on the Federal level, when you are 
certified as an 8(a), you get a preference; you are allowed to 
get sole-source contracts. HUBZone, you are allowed to get 
sole-source setasides and things of that nature. So, I believe 
in the notion, if you will, that maybe the Federal 
certification should be the overarching certification process 
for all these programs. And, then I know the State and 
localities, they may want to require local residents or 
something like that, but that should really be all that would 
be required additionally.
    But, I think that the Federal guidelines are tight. They 
are resistant, I think, to fraud and fronts, and things of that 
nature so I would support that the Federal certification 
process must be the overarching.
    Mr. Foreman. I would like to just follow on with that. 
There has been some historical progress in this whole area. 
When I first started with the Federal Government--that was back 
in 1970-something--we actually had a problem in that small 
businesses had to go to every post, camp, and station, fill out 
paperwork at every post, camp, and station. It either goes on a 
3-by-5 index card or to a folder. We have gone to what we call 
single point of entry, where everybody goes through the CCR, 
the centralized contractor registration data base, and that is 
the point of entry you have to go through. More importantly, if 
you are going to get paid, you have to be registered in that 
system.
    We have also gone to instead of everybody advertising their 
own way on the old CBD--we have gone to something called 
fedbizopps.gov, where all non-classified contracts are issued. 
There are, I think, about four or five exceptions; classified 
contracts are one of them. If we have a ship that is on the 
bottom of the ocean floor, we need to bring it up, we are not 
going to advertise. We are going to fix the problem and go 
after it. Again, the safety, health, and welfare of our men and 
women of the Navy and Marine Corps are key, but we have taken 
those steps in the right direction.
    When you talk about costs, the Army and the Navy and the 
Air Force all get that chip-in money to pay for the SDB 
certification process over at the SBA over year, and that we 
find to be very painful. Hopefully, that is going to be over 
with very soon. So, we do pay hundreds of thousands of dollars 
to SBA, and it really is a function that is inherently 
governmental. If you are going to go into certification, that 
is an inherently governmental function. I don't think it is 
something you should subcontract out, but I don't even like the 
idea. I like the idea of self-certification, and when we find a 
problem, fix the problem.
    Mr. Towns. And, there is a problem.
    Mr. Foreman. Well, I don't know so much if there are many 
front problems. I think there is a lot of that accusation, but 
we always have a challenge system, which is available to any 
interested vendor to say, ``I disagree, I don't think they are 
service-disabled or HUBZone or whatever.''
    Mr. Towns. OK, let's move on.
    The Department of Defense deploys men and women to protect 
our country. It has an obligation to support veterans, 
especially service-disabled veterans after they return home. 
About two-thirds of Federal procurements is DOD purchasing. 
Therefore, DOD plays a critical role in providing contracting 
opportunities to small businesses, however, the overall 
Department of Defense numbers for contracting with SDVOBs 
remain distant. The Federal Government has a goal of 3 percent 
contracting with service-disabled veterans, but they got less 
than 1 percent. So my question is why? Why haven't your 
agencies met your goal? What is preventing the agency from 
attaining this goal? What specific actions will you take next 
year not to have the same results as last year?
    Ms. Pinson. Sir, from the Army perspective--and clearly we 
create the bulk of the service-disabled veterans in the veteran 
community--if you refer to my last chart attached to my 
statement, you can see the growth that the Army has experienced 
and the dollars that have been allocated to this program. 
Unfortunately, I don't have control over the percentages, 
because the first chart shows that the total dollars that the 
Army has obligated has gone up exponentially.
    Mr. Towns. But it is much lower than the national goal.
    Ms. Pinson. I understand, sir. You can see that we went 
from $55 billion in 2004 to $93 billion in 2007. We are at 1 
percent for service-disabled veterans. From 2006 we did $785 
million with service-disabled veterans, up to $900 million in 
2007. Unfortunately, one-tenth of 1 percent in the Department 
of the Army is $100 million, and I don't have control over that 
growth, over those percentages.
    DOD was given the authority to do setasides and sole source 
awards with service-disabled veterans probably in 2004. The 
legislation authorizing us to do setasides, which is a tool to 
get competition just restricted among veterans, which helps get 
those contracts, was enacted in 2003. So, when you have the 
regulatory process and comment periods and things of that 
nature, it took almost a year to put that regulatory authority 
for setasides in place. So, I would say that the tools that we 
needed to try to get to the goals just were put in place in 
2004. Realistically, I believe it is going to take time to get 
to the 3 percent. If we go up $200 million, $300 million, $400 
million, $500 million a year, it will still take time for us to 
reach the 3 percent, and that is primarily because our base is 
so large.
    I remember when I came into the Army program, we did $29 
billion in 1995. We are now doing almost $100 billion, and you 
know why, because of the war. So, it is going to take time for 
us to get there, but we are doing a tremendous amount of 
outreach, capability briefings. Our people, they have it, sir. 
It is just going to take some time to get there. As I 
indicated, we have $2 billion in setasides projected for 
service-disabled veterans--$2 billion--and that is posted on 
our Web site. It is right here, $2 billion, but it is going to 
take some time to get to the 3 percent goal.
    Mr. Towns. What can we do to help you?
    Ms. Pinson. What can you do to help me?
    Mr. Towns. Yes. On this side.
    Ms. Pinson. Just work with me, sir. Just have some 
patience. That's all I would say.
    Mr. Towns. OK. I want you to know, and I need to tell you 
this: I am not going away.
    Ms. Pinson. I understand.
    Mr. Towns. I am not going away.
    Ms. Pinson. I understand. This is a serious program for us.
    Mr. Towns. Yes. And I am very concerned about it, and I am 
not going away.
    Ms. Pinson. I understand.
    Mr. Towns. And I want you to know that.
    At this time, I yield to my colleague, Congressman Clay.
    Mr. Clay. Thank you, Mr. Chairman.
    Ms. Pinson and Mr. Foreman, welcome today.
    Ms. Pinson, in your testimony you talked about performance 
bonds being a hindrance to small businesses. Are there any ways 
that we can be creative with performance bonds, as far as 
partnering with majority firms or mentoring with majority 
firms? Do you have any examples of that?
    Ms. Pinson. Yes, we do have a very robust mentoring 
program. I mean, the Mentor Protege Program within DOD is 
assigned to assist there. SBA has a surety bond guarantee 
program, but I think the limits are very, very low on that 
program. So, I would ask that you take another look at that 
program to see if that program could be adjusted to assist.
    Unfortunately, the projects that we are building are 
upwards of $50 million, $100 million, $200 million, $300 
million in the Corps of Engineers, because they are hospitals, 
they are barracks, they are dining facilities, operation and 
maintenance, things of that nature. So, they are very big 
projects, but I do believe that the partnering will help. But, 
the surety bond industry I think needs to come on as a partner.
    Mr. Clay. Wait a minute, now.
    Ms. Pinson. Yes, sir.
    Mr. Clay. I mean, in all due respect, what about breaking 
these projects up? They do them in other areas now? I mean, you 
have set up some real barriers here that don't help small 
business. Where does the sensitivity come in on your part to 
realize that we have to tackle this in a way that is not 
conventional with the way maybe you all do business, but 
actually attack this and say, ``let's be creative, let's do 
this a different way so we get more involvement.'' When does 
that occur?
    Ms. Pinson. That is definitely under consideration, but, 
unfortunately, you can't break a hospital up. We are spending 
$600 million to build a new hospital at Fort Meade, so that is 
one building that is costing $600 million. However, the 
infrastructure surrounding the building, the parking, things of 
that nature, that can be broken out, but the large structure 
itself cannot. But, there are tremendous subcontracting 
opportunities that are afforded, substantial goals, 70 percent 
in some instances, for small businesses, and then it is broken 
out by minority--women, HUBZone, things of that nature.
    But, there are some projects that just cannot be broken 
out, but I fight every day to unbundle, to unconsolidate. Every 
day I fight for that, and I do make progress. But, there are 
some instances where the economies of scale just say we need to 
consolidate, because we don't have the administrative resources 
to administer multiple contracts.
    I am just telling you what they tell me.
    Mr. Clay. Mr. Foreman, anything to add?
    Mr. Foreman. Within the Department of the Navy, BRAC really 
isn't a bundling issue, even when you do the reallocation, 
because these aren't things that we bought before. These are 
one-time things commanded by Congress in compliance. The 
example that we have, and the only one that really is local, is 
the Bethesda build-out of their hospital, where we are adding 
800,000 square feet or, if you will, revamping that hospital.
    There are two phases to that. It is $800 million for phase 
one, $300 million for phase two. There is probably going to 
be--we have both solicitations on the street. We looked at 
local firms first, as is required by DEFARs Part 26, and it 
looks like they are going to go out unrestricted for the 
baseline.
    The problem you have in Bethesda is that the hospital is 
surrounded by a huge community, a wealthy community--by the 
way, that doesn't help you when you go to do stuff; they want 
it done quickly with the least amount of disruption. We 
understand that, and we concur with that. We are very sensitive 
to it, and we are very sensitive to the things they are 
bringing to that hospital, all the neurological things that 
they are bringing. And, I have it in my statement, all the 
various things. I should have added on. I didn't know about the 
phase two, but the phase two is a huge parking lot they are 
going to put in. But, it is like an orchestra; you have to have 
somebody there who orchestrates everything so that things 
happen on time so that you can get in and get out.
    Mr. Clay. OK, let me ask my final question. My time is 
running out.
    Mr. Weidman, he talked about a woman-owned disabled veteran 
in St. Louis that cannot get any work. Could I get both of you 
all to look at her situation?
    Ms. Pinson. Sure.
    Mr. Foreman. Yes. We would be happy to.
    Mr. Clay. The St. Louis community has been hit hard by 
BRAC, and I am sure you are about to give out some contracts in 
that region, probably both of you. Would you all take a look at 
that situation for us and report back?
    Ms. Pinson. Absolutely.
    Mr. Foreman. Be happy to.
    Ms. Pinson. Sir, can I just mention one thing?
    Mr. Clay. Sure.
    Ms. Pinson. You asked me what can we do, and this is very 
critical. There is a law called the Comprehensive Demonstration 
Program, and it precludes DOD from setting aside contracts for 
construction for small businesses if DOD does 40 percent or 
more. Now, DOD is below 40 percent right now, so we are looking 
at turning on the ability of Army, in particular, but DOD to do 
setasides in construction. That has tied our hands for probably 
over 15 years now. We cannot do small business setasides for 
construction by law.
    Mr. Clay. OK.
    Mr. Towns. Thank you very much.
    We have been joined by Congressman Elijah Cummings from the 
State of Maryland. At this time we will recognize him.
    Mr. Cummings. Thank you very much, Mr. Chairman. I thank 
you for holding this hearing.
    To our witnesses, Maryland is the home to one of the 
country's most diverse business communities. According to the 
Department of Commerce, of the nearly half million firms in 
Maryland. 140,000 are women-owned, African-American firms are 
at 70,000, Hispanic firms 15,000, and Asian-owned stand at 
about 26,000. More importantly, due to the State's close 
proximity to Washington, DC, the majority of these firms 
already do business with the Federal Government. As such, these 
firms are better prepared for the work involved in the BRAC-
related business. They are more involved than perhaps their 
counterparts--better prepared, rather.
    I just want to know what steps has the agency taken to 
actively seek out these local businesses to inform them of the 
BRAC contracting opportunities and what have been the results 
to date? And, I want to make sure that whatever efforts are 
taking place, that they are effective and efficient, and not 
just some window dressing. And, I am not trying to accuse you 
of window dressing. It is just that I have been in this 
business a long time, and I have seen a lot of motion, 
commotion, and emotion, and no results in many instances.
    And, as I tell my contractors, when I meet with them every 
month, I have been around long enough now to see minority and 
women-owned business, people who work hard, give it their very 
best, bang on the doors, go to conferences, submit proposals, 
respond to proposals, give their blood, sweat, and tears get 
very little of anything. Now that I have lived long enough, I 
see them die on the battlefield, so I am trying to figure out 
exactly what we are doing to reach out to them, and what we are 
doing that is meaningful.
    A lot of times, what they find is that they meet with 
people at these events, and then when they call, they have to 
go through about 73 different numbers with answering machines. 
And, these are small businesses, they don't have that kind of 
time.
    I think the thing that upsets me is--my mom, who was a 
former sharecropper, used to say that a lot of people, when 
they are just on the verge of victory, they give up. In this 
instance, I think a lot of them are not on the verge of 
victory, and they give up. So, the opportunities are supposed 
to be there, the brochures look good, but that is not bringing 
any money into the firm. I am just wondering what you all have 
to say about that?
    Ms. Pinson. Well, if I could tell you about our outreach 
efforts. The Army did about $7.5 billion with minority 
businesses in fiscal year 2007, and I encourage the acquisition 
community to do substantive market research. That is really the 
only way we can ascertain capability out there, to decide if we 
should put something under the 8(a) program or we should do a 
HUBZone setaside or service-disabled veteran. So, we go out 
with what we call a sources sought, saying, ``we are looking 
for sources to do this work. Please come back and respond to us 
and tell us if you can do the work.''
    Now, I think we are getting more and more responses back. 
People realize we are serious, because the results of that 
market research are going to determine what the acquisition 
strategy will be. So, we encourage--because we do a lot of 
sources sought--we encourage companies to go out.
    In addition to that, we do a number of outreach events. We 
have the one in Upper Marlboro, which you have been at, I 
believe, before.
    Mr. Cummings. Yes.
    Ms. Pinson. The OSDBU directors, we participate in that. 
There was a BRAC conference just this week. Mr. Foreman and I 
just decided that we are going to do a specific BRAC outreach 
initiative for Maryland and Virginia. We think that is 
necessary. Outreach is key and, yes, people may not get a call 
back right away. Unfortunately, our staffs are very slim and we 
get a lot of companies that come in, but we just have to beef 
up the market research and beef up the outreach, in my mind.
    Mr. Foreman. From the Navy's standpoint, I spent more time 
in Maryland than I have in any other State. I will be on my 
third trip. Now we have NAVAIR, which is located at Pax River 
in Maryland, and I will be going to Upper Marlboro too. I have 
done one conference down at Pax River. I have another one, a 
service-disabled veteran-owned program. They are our service-
disabled veteran-owned small business champion and, of course, 
we push these things on to various commands not because they 
are fully capable. They have a product mix that is not very 
good. Buying aircraft is a lousy product mix, but they have a 
lot of technology that is fascinating, and I think one of the 
ways you buildup the small businesses is give them a bite at 
the apple in those little areas. And, they can work their way 
in, so we have the Marine Corps, which does a lot of supply 
stuff. They are also a champion.
    But, I have been to Congressman Bartlett's conference. This 
will be my second one down at NAVAIR this month. I plan to go 
to the one in Upper Marlboro, and my office is very small. I am 
one of four staff members, and I have taken the lead role as 
being the advocate for service-disabled veterans. I get the 
phone calls. I talk to the people. I walk them through the 
process.
    Mr. Cummings. Thank you, Mr. Chairman.
    Mr. Towns. Thank you, Congressman Cummings.
    We get a lot of complaints from contractors, people who are 
trying to do business with the Government. However, there are 
currently few protections in place for small firms working on 
subcontracts. More often than not, subcontractors only play a 
role in helping the prime contractor to actually attain the 
contract, and they never end up seeing the work at the end of 
the day. There are no enforcements in place that require prime 
contractors to actually give the work to the subcontractor once 
the contract has been awarded.
    What procedures are used by your individual departments for 
reviewing subcontractor compliances? And, how are they dealt 
with when you know that they are violated, they are not 
following through?
    Ms. Pinson. Well, we monitor the performance of the primes. 
They are required to submit reports on a quarterly basis in 
terms of how they are meeting their goals, and if they are not 
meeting their goals, we do have the ability to issue cure 
notices, which means tell us why we shouldn't terminate this 
contract. And, then we----
    Mr. Towns. How often do you do that?
    Ms. Pinson. Sir, I couldn't tell you how often we do it, 
but we probably don't do it as much as we should. I am not in 
the contracting process, so I am not a contracting officer. 
That would be issued by a contracting officer.
    Mr. Towns. I understand that, but you have access to the 
material. You are in a very responsible position. Let's face 
it, now, you two can do a lot of good, and I need to further 
add that you can do a lot of harm. So, that is the reason why 
we are really having this discussion here this morning.
    I want to work with you. If it is more staff, we want to 
work with you to get more staff. Whatever is needed to fix 
this, we want you to sort of share with us. I understand 
government. I have been in it 40 some years, so I definitely 
understand. So, the point I am saying to you is, we want to 
have a sort of open dialog here, and we want to fix this. Some 
people need help, and I think you are in a position to do some 
good, a lot of good, both of you.
    Ms. Pinson. Right. We have an agency that is dedicated to 
subcontracting compliance, the Defense Contract Management 
Agency. That is all they do, is monitor the compliance of our 
major primes, and I think they do a good job. I mean, they work 
with SBA. They rate these companies. They monitor these 
companies. That is one area that companies do not complain to 
me about, and that is I didn't get any work from the prime. If 
I knew about it, then I could go and take a look at that 
particular prime to see what is going on. But, we have 
compliance processes in place, but I don't hear a lot of 
complaints.
    Mr. Foreman. One of the most interesting things, people who 
come to work directly with anybody in the Department of 
Defense--within the Navy specifically, but it applies to 
everybody--generally, we find they come through the 
subcontracting arena. I mean, that is how they get their 
introduction into posts, camps, and stations, and various 
procurement opportunities.
    One of the unique things that the Navy has done in 
Bethesda, we went out, we said, ``here are the minimum goals 
required in your solicitation.'' That is one of the areas we 
rate you in order to get the award, so the major prime who gets 
it, they have to do 35 percent with small, 15 percent with 
small disadvantaged business, 9 percent for HUBZone, 10 for 
women-owned business, 3 for service-disabled, and 3 for just 
veterans.
    Mr. Towns. And if they don't, Mr. Foreman? If they don't?
    Mr. Foreman. If they don't, then they are subject to what 
we call liquidated damages, the most horrendous one, which is 
hardly ever used, but it will go into past performance. We now 
have an automatic system on past performance, and that would 
grade them down. We are no longer going to say you provide us 
your past performance evaluations, and we will go back and 
check them. And, they only give you the good ones, of course. 
This will give us a system. It is starting to be in place now, 
and that should be a real nice tool in the future. So, you can 
see it and I can see it. We can both see who the non-performers 
are.
    Mr. Towns. I raise this because we are getting complaints, 
and I am afraid that if something is not done, people stop 
complaining, and that is my concern. I mean, I can point out 
all kinds of situations and circumstances where that has 
occurred, where, if nobody is doing anything, why would I say 
anything? And, people get to that point, and I am just sort of 
concerned that this is not happening here.
    At this point, let me yield to my colleague for his last 
round.
    Congressman Cummings, do you have anything further?
    Mr. Cummings. Yes, just one question. Just a few questions.
    Sometimes we sit here and we ask you questions, and a lot 
of times, the people that we ask questions to don't have the 
power. And, it is a dilemma because, on the one hand, you don't 
want to say things that, if somebody saw you on C-SPAN, you 
would get fired, but, on the other hand, it creates a problem 
for us, because if you can't get things done, that is a 
problem. Do you all feel like you have the authority that you 
need to do what you need to do? I just throw you the lemon, and 
then I set you up to fall in it. I am sorry.
    Ms. Pinson. I think, based on the role that we play, we are 
facilitators. Our job is to ensure that the Army is a favorable 
climate for doing business with small business, and I think we 
are.
    Mr. Cummings. OK.
    Ms. Pinson. We awarded $23 billion to small businesses, 24 
percent. I don't have the power to award a contract. No, I do 
not. I don't have the power to put liquidated damages on a 
prime. I don't have that authority. I do not, but I think I 
have substantial influence over the process to make our 
acquisition community respond to the mandates of the law and 
the regulations.
    Mr. Cummings. You, Mr. Foreman, mentioned the liquidated 
damages, and you said it is rarely used. That is supposed to 
be, I guess, the tool for enforcement, is that right?
    Mr. Foreman. It is one of the tools, sir, but some of the 
problems they go--I should say challenges. In order to utilize 
the way it was written in statute--and, basically, I worked the 
FAR case that developed this--and we cop out a lot. We just use 
congressional language when in fact we are not quite sure where 
we are going with this--you have a requirement and you are 
supposed to do X, and you are trying to frustrate that plan. 
You have a small business liaison officer who has been dead for 
10 years. We will just use that as an example.
    And, we issue a show cause letter. We say, ``you have a 
problem. Fix this problem; you are not making your goals. We 
are going to come back at you.'' Well, they can either do 
nothing, which the show cause letter is good, or they can 
answer stupidly like, ``well, we have now brought in this new 
anal trainer who is going to take over this program,'' 
something crazy or they will respond correctly. Generally, they 
take care of some of those issues. If they miss the goal, you 
can only assess that at the very end of the contract, so the 
contract is over. So, the reward for the contracting officer to 
pursue liquidated damages--and he can do it unilaterally--he 
will be in court for a long while.
    Mr. Cummings. I get the point. I get the point. In other 
words, it is a toothless tiger.
    Mr. Foreman. You got it.
    Mr. Cummings. OK. So are there any other tools?
    Mr. Foreman. Any other? I'm sorry.
    Mr. Cummings. Tools, tools. In other words, enforcement 
tools.
    Mr. Foreman. With the subcontracting thing, we do a lot of 
things, even though we don't maybe utilize liquidated damages. 
Sometimes we twist the arm and say, ``why don't you hold a 
conference, Mr. Contractor, and I want you to bring in all 
these service-disabled veterans and sit down with your 
engineering folks.'' And, that has been somewhat successful as 
an understated tool, but it is one that can be utilized.
    The best tool we have is leadership, to bring energy to the 
process, to identify those challenges. I sent out a memorandum 
recently to our acquisition folks and service-disabled 
veterans, and I went through what the Assistant Secretary of 
Navy, RD&A, research, development and acquisition, to the 
procurement community saying, ``this is very important to us.'' 
Another thing we have to constantly do is teach----
    Mr. Cummings. OK, I am going to have to cut you off, 
unfortunately, because I am running out of time, because I want 
to get to this. Talk about the enhanced use leases, because I 
am very concerned about them. It seems to me that one way to 
get these businesses in the process and give them an 
opportunity is to give them opportunities to these leases, and 
I am just wondering, what are we doing with regard to making 
sure that these disadvantaged businesses get these 
opportunities?
    I know other businesses are getting them, and it gives them 
a leg up to accomplish a lot of things, and it just seems to 
me--I wonder, do we have any provisions anywhere to make sure 
that they get their share? Do we have a document that tracks 
those enhanced use leases? What is the deal there? And it seems 
to be ever-increasing.
    Ms. Pinson. Sir, I can speak to my colleague that we are 
really not that familiar with that process.
    Mr. Cummings. Oh, OK.
    Ms. Pinson. But it sounds similar to what we did with the 
privatization program, military housing privatization, where we 
got a developer to come in. We did not pay them a contract 
price; they put all their money up front. And that was not your 
traditional Federal acquisition regulation contract, which this 
sounds like it is not.
    Notwithstanding, under the Residential Community Initiative 
Program, we still required that developer to develop goals for 
doing business with the local communities and with small 
businesses. So it sounds somewhat analogous to that, but I 
think Tim and I both will go back and take a look at that, 
because if we have a partnership with a developer to build 
something on a military property, then they should have some 
goals.
    Mr. Cummings. Well, what I will do is I will submit some 
written questions, and if you will followup on them, I would 
really appreciate it.
    Ms. Pinson. Yes, we will.
    Mr. Cummings. Mr. Chairman, again, I thank you.
    Mr. Towns. Thank you very much.
    Ms. Pinson. May I just add, too? We need to incentivize the 
primes. Unfortunately, you get more flies with honey than you 
do with vinegar. And, a lot of times, when we put incentives, 
monetary incentives, on the contract to have them exceed their 
goals, it happens, and we are using those incentives more and 
more.
    Mr. Towns. First of all, let me thank both of you for 
coming and testifying. I know the question was asked about your 
power, but I am not going to deal with that. But, I would like 
for you to let whomever that you should let know that 
Congressman Towns is a nice person, but we are about to wear 
out his patience. I think you should let them know that.
    In many instances, we are dealing with veterans, people who 
served this country honorably, and they are being disrespected. 
That, to me, is wrong, and I want you to know that I am going 
to stay here. I am going to stay on this. I am not going to go 
away, and the last time I got 90 percent of the vote, so I 
might get re-elected, OK? [Laughter.]
    So I want to let you know that. Thank you very much for 
coming today.
    [Whereupon, at 12:10 p.m., the subcommittee was adjourned.]

                                 
