[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]




 
                       FULL COMMITTEE HEARING ON
                        HEROES OF SMALL BUSINESS

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

                                HEARING

                               before the


                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                              May 20, 2009

                               __________

                               [GRAPHIC] [TIFF OMITTED] TONGRESS.#13
                               

            Small Business Committee Document Number 111-024
Available via the GPO Website: http://www.access.gpo.gov/congress/house


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                   HOUSE COMMITTEE ON SMALL BUSINESS

                NYDIA M. VELAZQUEZ, New York, Chairwoman

                          DENNIS MOORE, Kansas

                      HEATH SHULER, North Carolina

                     KATHY DAHLKEMPER, Pennsylvania

                         KURT SCHRADER, Oregon

                        ANN KIRKPATRICK, Arizona

                          GLENN NYE, Virginia

                         MICHAEL MICHAUD, Maine

                         MELISSA BEAN, Illinois

                         DAN LIPINSKI, Illinois

                      JASON ALTMIRE, Pennsylvania

                        YVETTE CLARKE, New York

                        BRAD ELLSWORTH, Indiana

                        JOE SESTAK, Pennsylvania

                         BOBBY BRIGHT, Alabama

                        PARKER GRIFFITH, Alabama

                      DEBORAH HALVORSON, Illinois

                  SAM GRAVES, Missouri, Ranking Member

                      ROSCOE G. BARTLETT, Maryland

                         W. TODD AKIN, Missouri

                            STEVE KING, Iowa

                     LYNN A. WESTMORELAND, Georgia

                          LOUIE GOHMERT, Texas

                         MARY FALLIN, Oklahoma

                         VERN BUCHANAN, Florida

                      BLAINE LUETKEMEYER, Missouri

                         AARON SCHOCK, Illinois

                      GLENN THOMPSON, Pennsylvania

                         MIKE COFFMAN, Colorado

                  Michael Day, Majority Staff Director

                 Adam Minehardt, Deputy Staff Director

                      Tim Slattery, Chief Counsel

                  Karen Haas, Minority Staff Director

        .........................................................

                                  (ii)

  
?

                         STANDING SUBCOMMITTEES

                                 ______

               Subcommittee on Contracting and Technology

                     GLENN NYE, Virginia, Chairman


YVETTE CLARKE, New York              AARON SCHOCK, Illinois, Ranking
BRAD ELLSWORTH, Indiana              ROSCOE BARTLETT, Maryland
KURT SCHRADER, Oregon                TODD AKIN, Missouri
DEBORAH HALVORSON, Illinois          MARY FALLIN, Oklahoma
MELISSA BEAN, Illinois               GLENN THOMPSON, Pennsylvania
JOE SESTAK, Pennsylvania
PARKER GRIFFITH, Alabama

                                 ______

                    Subcommittee on Finance and Tax

                    KURT SCHRADER, Oregon, Chairman


DENNIS MOORE, Kansas                 VERN BUCHANAN, Florida, Ranking
ANN KIRKPATRICK, Arizona             STEVE KING, Iowa
MELISSA BEAN, Illinois               TODD AKIN, Missouri
JOE SESTAK, Pennsylvania             BLAINE LUETKEMEYER, Missouri
DEBORAH HALVORSON, Illinois          MIKE COFFMAN, Colorado
GLENN NYE, Virginia
MICHAEL MICHAUD, Maine

                                 ______

              Subcommittee on Investigations and Oversight

                 JASON ALTMIRE, Pennsylvania, Chairman


HEATH SHULER, North Carolina         MARY FALLIN, Oklahoma, Ranking
BRAD ELLSWORTH, Indiana              LOUIE GOHMERT, Texas
PARKER GRIFFITH, Alabama

                                 (iii)

  
?

               Subcommittee on Regulations and Healthcare

               KATHY DAHLKEMPER, Pennsylvania, Chairwoman


DAN LIPINSKI, Illinois               LYNN WESTMORELAND, Georgia, 
PARKER GRIFFITH, Alabama             Ranking
MELISSA BEAN, Illinois               STEVE KING, Iowa
JASON ALTMIRE, Pennsylvania          VERN BUCHANAN, Florida
JOE SESTAK, Pennsylvania             GLENN THOMPSON, Pennsylvania
BOBBY BRIGHT, Alabama                MIKE COFFMAN, Colorado

                                 ______

     Subcommittee on Rural Development, Entrepreneurship and Trade

                  HEATH SHULER, Pennsylvania, Chairman


MICHAEL MICHAUD, Maine               BLAINE LUETKEMEYER, Missouri, 
BOBBY BRIGHT, Alabama                Ranking
KATHY DAHLKEMPER, Pennsylvania       STEVE KING, Iowa
ANN KIRKPATRICK, Arizona             AARON SCHOCK, Illinois
YVETTE CLARKE, New York              GLENN THOMPSON, Pennsylvania

                                  (iv)

  
?

                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page

Velazquez, Hon. Nydia M..........................................     1
Graves, Hon. Sam.................................................     2

                               WITNESSES

Reister, Mr. Stephen, Principal, Steel-T-Heating and Air 
  Conditioning, Englewood, CO....................................     3
Storey, Ms. Dona, President, Quality Technical Services, Inc./
  GOVtips, LLC, Virginia Beach, VA...............................     6
McClain, Ms. Barbara, McClain COntracting, Andalusia, AL.........     8
Mirman, Mr. Lee, Broker/Owner, Investments in Sarasota, Sarasota, 
  FL.............................................................    10
Pochapsky, Dr. Gene, Vice PResident, OmniTech Group, Freeport, PA    12
Prestemon, Mr. Greg, President, Economic Development Center of 
  St. Charles County, St. Charles, MO............................    15
Bacon, Mr. Sutton, President & CEO, Nantahala Outdoor Center 
  Inc., Bryson City, NC..........................................    17
Brown, Ms. Chandra, Vice President, Oregon Iron Works, Inc. 
  Clackamas, OR..................................................    19
Farra, Mr. Kirk, In-Synch Systems, Zelienople, PA................    22

                                APPENDIX


Prepared Statements:
Velazquez, Hon. Nydia M..........................................    35
Graves, Hon. Sam.................................................    37
Reister, Mr. Stephen, Principal, Steel-T-Heating and Air 
  Conditioning, Englewood, CO....................................    39
Storey, Ms. Dona, President, Quality Technical Services, Inc./
  GOVtips, LLC, Virginia Beach, VA...............................    45
McClain, Ms. Barbara, McClain COntracting, Andalusia, AL.........    54
Mirman, Mr. Lee, Broker/Owner, Investments in Sarasota, Sarasota, 
  FL.............................................................    59
Pochapsky, Dr. Gene, Vice PResident, OmniTech Group, Freeport, PA    61
Prestemon, Mr. Greg, President, Economic Development Center of 
  St. Charles County, St. Charles, MO............................    69
Bacon, Mr. Sutton, President & CEO, Nantahala Outdoor Center 
  Inc., Bryson City, NC..........................................    72
Brown, Ms. Chandra, Vice President, Oregon Iron Works, Inc. 
  Clackamas, OR..................................................    76
Farra, Mr. Kirk, In-Synch Systems, Zelienople, PA................    82

                                  (v)

  


                       FULL COMMITTEE HEARING ON
                 CELEBRATING OUR SMALL BUSINESS HEROES

                              ----------                              


                        Wednesday, May 20, 2009

                     U.S. House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
2360 Rayburn House Office Building, Hon. Nydia Velazquez 
[chairwoman of the Committee] presiding.
    Present: Representatives Velazquez, Shuler, Dahlkemper, 
Schrader, Nye, Altmire, Ellsworth, Bright, Graves, Bartlett, 
Akin, Buchanan, Luetkemeyer, and Coffman.
    Chairwoman Velazquez. Good morning. I call this hearing to 
order. Today we are celebrating Small Business Week and the men 
and women who keep our economy running.
    It takes a special kind of person to start a business. As 
most of you know, being your own boss doesn't mean a 40-hour 
work week and 2 months' paid vacation. Quite the opposite, it 
means spending more time in the office than your friends with 
conventional jobs.
    At the end of the day, you don't do it for the hours. You 
do it because you are the hardest working people in America. 
You are also some of the most resourceful and the most 
resilient. These are the traits that have helped people like 
you who lost out of past recessions. And these are the traits 
that will lead the way back to prosperity.
    When entrepreneurs do well, America does well. Whether it 
is the tech start-up in Silicon Valley or the family-owned 
restaurant down the street, small businesses are the engine 
driving this economy. In fact, entrepreneurs create roughly 70 
percent of all American jobs. They also have a proven record 
for stemming recessions.
    Take the down turn of the mid 1990s, for example. During 
that time, entrepreneurs created 3.8 million new jobs. With 
unemployment now at 8.9 percent, we could use that kind of 
growth again. That is why both this Committee and the rest of 
Congress have taken steps to strengthen entrepreneurship.
    On its own, the American Recovery and Reinvestment Act 
contains $15 billion in tax relief for small firms. It is also 
expected to generate $21 billion in loans and investment. That 
is capital you all can use to start growing again. Meanwhile 
the stimulus contains important provisions for helping small 
firms win government contracts. In terms of infrastructure 
projects alone, entrepreneurs stand to gain $29.9 billion.
    But we aren't just giving you the opportunities. We are 
also giving you the tools to seize those opportunities. Later 
today I will be with my ranking member on the House floor to 
present H.R. 2352, the Job Creation Through Entrepreneur Act of 
2009. That bill is going to provide critical resources to help 
your business grow and adapt.
    Because let's be honest. The economic landscape looks very 
different today than it did a year ago. H.R. 2352 will give you 
the training you need to re-tool your businesses and emerge 
from the recession stronger than before. That is critical 
because we are really counting on you to turn things around.
    This morning we have a very diverse cross-section of the 
small business community. We have a finance firm. We have a 
heating and air conditioning business. We have the nation's 
only streetcar manufacturer. And you have come from all over 
the country: Clackamas, Oregon; Andalusia, Alabama; Virginia 
Beach. But while it may seem like your businesses have nothing 
in common, you do share one critical common thread: the key to 
recover.
    As Americans reevaluate the old way of doing business, we 
are increasingly looking to small firms. Men and women like 
yourselves who are the real heroes of American industry, today 
we celebrate you.
    I would like to thank all of our witnesses for being here 
today. I am so pleased they could join us and look forward to 
hearing from you.
    So I now would like to recognize the ranking member, Mr. 
Graves, for his opening statement.
    Mr. Graves. Thank you, Madam Chair. And thank you for 
holding this hearing, highlighting the successes of our 
entrepreneurs from all across the nation. It is very fitting 
that we honor these folks given that it is Small Business Week. 
And thank you all for coming from so many different places.
    Each year we pay tribute to America's small business owners 
and workers. These are the men and women who use their 
entrepreneurial talents to make our lives better, help sustain 
our economy, and expand opportunities for all.
    Small business owners from across the country are gathered 
in Washington to be honored for their accomplishments. 
Entrepreneurs exemplify the value of hard work, ingenuity, and 
achievement. It is especially important to recognize small 
businesses that have prospered despite the difficult economy.
    We salute small companies for the strong commitment to 
their communities and their contributions to our nation. Small 
businesses empower America's economy. Small firms create the 
bulk of new jobs and account for 51 percent of our workforce. 
These companies are on the cutting edge of research, hiring 40 
percent of all technology employees, and acquiring 13 times 
more pathos per employee than large firms.
    Small firms are also leaders in trade. Trade boosts our 
prosperity and strengthens our ties with other nations and 
creates new opportunities for America's workers. Almost one-
third of all U.S. exports are generated by small businesses. 
And 97 percent of all U.S. exporters are small companies.
    The number of women minority and veteran-owned businesses 
are growing rapidly and comprises an increasing percentage of 
our economy. These successes are impressive, but there is a lot 
more we can do. Our economy is lagging, and many small 
businesses are hurting.
    Let's make sure small firms have the tools to prosper. They 
need the access to capital, counseling, and programs to help 
expand their businesses. Increasing taxes, employer mandates, 
and regulatory burdens will simply cripple smaller firms. By 
supporting legislation to keep taxes low, promote free trade, 
and allow small businesses to pool together to purchase health 
insurance and reduce frivolous lawsuits, we can help small 
companies compete.
    Again, Madam Chair,--I think she had to step out for a 
little bit--I thank you for holding this hearing.
    Mr. Nye. [Presiding] Thank you, Mr. Graves. I will be 
filling in for the Chairman just for a few minutes here.
    I want to recognize my colleague, Mr. Coffman, for the 
purposes of introducing our first panelist from his district. 
Mr. Coffman?
    Mr. Coffman. Thank you, Mr. Chairman.
    It is a pleasure to welcome a fellow Coloradan and 
constituent as Stephen Reister to the Committee. Mr. Reister is 
the owner of Steel-T Heating and Air Conditioning in Englewood, 
Colorado. He has received several industry awards for his 
ozone-friendly business practices and his community awareness 
efforts.
    Outside of his business, Mr. Reister is also a civic leader 
who sits as a board member on the Cline Valley Water and 
Sanitation Districts. He is active in a number of civic 
organizations, including the United Way's gift of warmth 
program.
    Welcome to the Committee, Mr. Reister. We look forward to 
hearing your testimony.

 STATEMENT OF STEPHEN REISTER, PRINCIPAL, STEEL-T HEATING AND 
                        AIR CONDITIONING

    Mr. Reister. Madam Chairwoman Velazquez, Ranking Member 
Graves, and members of the Committee, Madam Chairwoman 
Velazquez, Ranking Member Graves, and members of the Committee, 
thank you for having me here today.
    Once again, I am Steve Reister, one of the owners of Steel-
T Heating and Air Conditioning in Englewood, Colorado. I am 
here to represent both our employees, the fantastic 41 of them 
that we have right now, and our company.
    My father purchased this company in 1989, amidst a 
recession that looked very similar to the one that we are 
looking at today. His friends counted him down, assumed he 
would soon file bankruptcy and go out of business.
    Many changes quickly occurred in our business. The first 
thing he did was not gave a pay cut. He gave all the employees 
a raise. That's what small business owners do. They take care 
of their people. And he knew by taking care of his people, 
happy employees make happy customers. And happy customers tell 
a friend.
    My father opened the first 401(k) plan in our industry, 
gave paid vacation, four-star competitors to follow suit if 
they wanted to keep up with us. Our company grew leaps and 
bounds over those first few years.
    My brother and I have taken over the company, and we are 
now 20 years old. We do have those 41 employees. We are down 
from the 100 that we had just a few years ago. Many of them 
have now only been with us since the beginning, but they have 
retired with our company. And that makes us very proud.
    We have 26 American-made Ford trucks on the road today. We 
would like to add to that fleet. We are increasing our 
advertising this year in hopes of offsetting the nation's woes.
    We have three distinctive divisions of the company: new 
construction making up 70 percent of the company, replacement 
or retrofit making up 18 percent of our company, and 12 percent 
commercial building.
    Our revenues have been as high as $12 million a year. This 
year we hope to have half of that. But I don't want the 
Committee to feel bad for us. We have a plan. We have gotten 
together as a team of managers and owners, and we decided we 
are not going to participate in this recession.
    We as Americans have 100 percent control over one thing in 
our life: our attitude. And our attitude at Steel-T in our team 
is very strong, and we will keep her going.
    Colorado has a 50,000-unit furnace replacement market. That 
market is one we plan on tapping into. We have 20 competitors 
that have already gone out of business. And we see no reason to 
be one of them.
    In the past, we have questioned our father and how he 
didn't want to take advantage of bank loans or lines of credit. 
We had paid taxes on our profits already. Why didn't he 
disburse them to us? Why not take advantage of those banks and 
government agencies who for so many years gave out excessively 
high lines of credit with zero or no accountability?
    My father held steadfast. Now my brother and I follow in 
his footsteps, even if our education was a bit slower than he 
would have liked. His leadership has placed us in a position to 
ride out this storm. A storm we should have all seen coming, 
one we should have made provisions for.
    So what can this federal government and this body do for us 
today? Give small business tax incentives to help drive the 
economy out of this mess. Give us a reason to buy new vehicles. 
Allow us to depreciate them over two years, instead of the 
current seven.
    Newer vehicles are better for the environment. They leave a 
much smaller carbon footprint. And if you saw some of the 
vehicles my competitors are driving today with black smoke 
pouring out of them, you would want them off the road, too.
    Offer tax credit when we purchase new manufacturing 
equipment. As we earn money to educate our employees, allow us 
to keep more of that money to reinvest in them. Our 
manufacturers all offer extended training. We can send them all 
over the country for this training. We will have better 
employees, who are able to work faster and longer in our 
industry without injury.
    Our current federal tax rate is extremely high. We don't 
see any of the loopholes that so many people talk about. We, 
like most other companies here, are subchapter S corps, which 
means our personal taxes and company profit taxes are the same. 
They all come from one pool.
    We pay full tax on those profits and very rarely get the 
opportunity to remove them from the company; instead, leaving 
them in the bank for operating capital to keep employees 
working.
    If you leave the money in there too long, though, we can 
either loan it back to ourselves and pay ourselves interest or 
we can pay taxes on it again. That doesn't make a lot of sense 
to me.
    We also have health care for our employees, to the tune of 
$145,000 a year and rising. Help us keep those soaring costs 
down, not by giving us socialized medicine but by limiting the 
paperwork that we have to do for both the insured and the 
insurer.
    Give small business' smart guys out there the opportunity 
to create software plans to manage our health care system in 
the private sector. This will keep premiums low, reduce 
overhead so doctors can spend time with their patients. This 
nation will persevere through this current economic down turn. 
We are a nation of believers in God and the innate goodness 
that dwells in its citizens.
    This is the greatest nation on Earth. Our entrepreneurs 
will strive to reach the American dream, the dream pursued by 
our forefathers and offered in our Constitution to those who 
are willing to sacrifice to achieve it. This body of Congress 
and Obama administration should embrace those entrepreneurs and 
reward them for their risks we take and our willingness to grow 
the economy and employ its people.
    Thank you, Madam Chairwoman Velazquez, Ranking Member 
Graves, and members of the Committee, for your time and 
willingness to hear my testimony. I pray that God will grant 
you the wisdom to leave this country and nation, restore its 
shine as a beacon to the world of what a democracy can and 
should be.
    [The statement of Mr. Reister is included in the appendix.]
    Mr. Nye. Thank you very much for being with us.
    I am going to introduce Ms. Storey next for her opening 
statement. Mr. Bacon, I did not forget you. I understand that 
Mr. Shuler is interested to introduce you, and we want to give 
him the opportunity if he can make it to do that. So we will 
just put you on hold for a few more minutes.
    Ms. Dona Storey is President and CEO of Quality Technical 
Services, Incorporated, located in my district, in Virginia 
Beach. QTS is a minority and women-owned business that provides 
consulting and manages interior design projects. Ms. Storey has 
earned several awards for her contributions to the business 
community, including being named by the SBA in 2007 as 
Virginia's Women in Business Champion of the Year.
    I met yesterday with Ms. Storey yesterday. And I was 
impressed with her perspective on the small business community 
and with the fact that she has spent a lot of her time giving 
speeches and participating in mentoring programs, educating 
other entrepreneurs about how to navigate the often difficult 
world of government contracting. So we appreciate what you have 
been doing for the small business community, looking forward to 
hearing your thoughts, Ms. Storey.
    Ms. Storey. Thank you very much.

 STATEMENT OF DONA A. P. STOREY, PRESIDENT, QUALITY TECHNICAL 
                  SERVICES, INC./GOVtips, LLC

    Ms. Storey. I will not read from my text, but I would like 
to hit some of the highlights. I come here, actually, to 
express two very strong feelings: number one, gratitude. I am 
the American dream. I am the daughter of a Filipino steward 
post-World War II who came to this country, who had lost 
everything and believed this was the land of opportunity. He 
taught this to his two daughters, I being the older of the two.
    My dad at the age of mid 30s became a millionaire. And he 
did so by figuring out what coin-operated laundromats were all 
about. He grew a business from that, building into buy shopping 
centers.
    Unfortunately, he died a very young man, leaving two 
daughters. And what he left behind was the legacy of this is 
the land of opportunity.
    I have been in business for 29 years. In the last 15, I 
have had the great opportunity to learn how to do business with 
the federal government. Now, some people might laugh and say 
that is an opportunity. But I will tell you being a successful 
management consultant for 14 and a half years did not in any 
way allow me to even dream of how I could actually grow my 
firm.
    I took all of the lessons learned from my father as an 
entrepreneur, and I put them in place. And I learned the 
federal government, all of this stuff around contracting.
    Now, what I am here to talk about today is when I say in 
gratitude, I am so grateful for what has happened to me and my 
firm and my company. But what I am here to talk about is how we 
need to shortcut and re-engineer small business program. I am 
not here to complain. I make a big issue of that. But I am here 
to say, what can we do to think like entrepreneurs and 
reexamine our small business programs?
    As an example, we have women's centers. We have PTACs. We 
have SBDCs. In tight times like this, I as a taxpayer know that 
they need more funding, but I know that it is very difficult to 
continue to fund more projects. I think we need to take a look 
at how we can consolidate some of the administrative sides of 
these programs.
    The one thing I did find out in the drum that I pound out 
around this country is there is no better customer than the 
federal government. And having done business with a lot of the 
big names, the J&J, Ritz Carlton, J.P. Morgan Chase,--I could 
go on and on--when I do business with the federal government, I 
know my rights. I can read the regs.
    If I hit a bump in the road on any contract, I don't need a 
team of lawyers. I will never outgun the corporate attorneys 
that they have in the country. But what I can do is read a reg, 
understand what my rights are, and go into any meeting on my 
investment.
    In taking a look at some of the programs that we have out 
there today, they are excellent pointer programs. But what they 
miss is the one thing that people call me for.
    Years ago we laughingly said that the SBA should call my 
business ``1-(800)-Dona, can you help me?'' The SBA sent me 
hundreds of companies. People find me from around the country. 
I don't know how they are finding me, but they find me through 
different contacts.
    What our programs are missing is the lessons learned from a 
person like me, who stumbled. I didn't know what I didn't know. 
And I kept hitting walls, and I kept asking. I was very needy, 
but I was tenacious in finding out.
    Nothing can grow a small company like doing business in the 
federal sector. It is absolutely the single fastest way of 
catapulting your firm to that true next level. The hurdle is 
understanding the culture. But any corporation I go into, they 
have their own culture.
    Secondly, the one challenge financially is--and I am sorry 
I am speaking so fast, but the one challenge is lines of 
credit. Because the opportunity is so great, you will find 
yourself needing a larger line of credit than you typically 
would be if you grew commercially.
    You have to know how to read and be tenacious and willing 
to read the regs, but they are understandable. And I am 
convinced that all of these things around you can't get paid, 
it is too difficult to get through the door, folks, I continue 
to say this is a myth that is perpetrated by all the big firms 
that are trying to keep the small guys out.
    If I can learn--and I used to never say this publicly, but 
I came out of school working for a cosmetics industry, Estee 
Lauder and Revlon. Now, yes, it is a girlie industry, but it is 
the toughest industry I have ever worked in. I mean, federal 
government is nothing compared to what cosmetics was. And so I 
keep saying if I can do this, I know others can. And I am 
trying to get the word out to encourage them.
    I thank you all, Mrs. Velazquez, certainly Congressman Nye, 
Mr. Graves, for allowing me this opportunity to talk here about 
how we need to get the word out more efficiently and 
effectively to let other businesses do for themselves what this 
country allowed for my family.
    Thank you.
    [The statement of Ms. Storey is included in the appendix.]
    Mr. Nye. Thank you very much.
    At this time I am going to yield to Mr. Bright to introduce 
the next witness.
    Mr. Bright. Mr. Nye, thank you very much.
    Madam Speaker, I am proud to welcome Ms. Barbara McClain to 
the Small Business Committee today. Ms. McClain is from the 
great Town of Andalusia, Alabama, is one of my constituents. As 
you know, she has been named a small business hero for the 
success of her small business in Covington County or Andalusia, 
Alabama.
    Ms. McClain is owner and President of McClain Contracting 
Company, Inc., a firm that has provided a range of services to 
military basis and other federal installations. Ms. McClain 
began her career as a bookkeeper and payroll clerk in 1968 and 
worked for several firms before incorporating her own business 
in 1990, selling ATVs and watercraft.
    Ms. McClain later transformed the business and became a 
license construction company receiving an SBA certification as 
a HUBZone and 8(a) firm in timber 2005. With the program's 
assistance, McClain Contracting proposed by expanding its work 
to the federal level.
    The company has been awarded over $13 million in contracts 
by Kessler Air Force Base and performed work for other military 
and veteran service facilities in Mississippi. Having gained a 
reputation for quick, quality work, McClain Contracting is 
currently seeking to expand its services throughout the 
Southeast United States or the Southeastern region.
    In these uncertain economic times, it is incredibly 
important that we cultivate and support the entrepreneurs in 
our communities like Ms. McClain. Small businesses created, as 
our Chairman indicated, 70 to 80 percent of all the new jobs in 
our economy. Additionally, many small businesses are started 
during recessions, when the entrepreneurs have nothing but a 
vision and the work ethic to make their businesses successful.
    So, again, I commend Ms. McClain and the thousands of small 
business owners around the country for the work they are doing. 
It is my pleasure and privilege today to welcome Ms. McClain to 
the Small Business Committee and ask for her testimony this 
morning.

       STATEMENT OF BARBARA MCCLAIN, McCLAIN CONTRACTING

    Ms. McClain. Madam Chairwoman, distinguished members, it is 
like a dream come true for a sharecropper's daughter from south 
Alabama to be in this building and in the presence of such an 
elite group of dedicated Americans. I am so humbled and 
overwhelmed. This could happen only in America. To be asked to 
testify to this Committee under the heroes of small business is 
such an honor.
    McClain contracting company, is a small woman-owned, Native 
American-owned construction company located in the Southeast 
Alabama town of Andalusia. The corporation is owned by me and 
my son, Kevin McClain.
    The company got its start in 1990 as McClain Motors, 
Incorporated, doing business as McClain Yamaha, a Yamaha 
dealership that sold ATVs and watercraft. We changed the name 
of the corporation in '97 and became McClain Contracting. The 
company became a general licensed contractor by the State of 
Alabama.
    We had achieved some success and had won some contracts on 
road and bridge projects in Alabama, but it was tough to find 
regular work. Our workforce consisted of me, my son, and four 
employees.
    Sometimes the only recourse to laying off our workforce was 
to go to the bank and borrow money to make the payroll so our 
valuable employees could take their wages home to meet their 
obligations. We did this without hesitation because we have 
always tried to treat our employees like family. We do what was 
best for them.
    I was not content and decided to pursue opportunities with 
the federal government. I was aware of the opportunities that 
could be available to our company in this direction. I 
contacted the Troy University Small Business Development Center 
for Assistance. Counselors with the Troy Small Business 
Development Center first met with me and my son in October of 
'04. I began the process of applying for 8(a) and HUBZone 
certification.
    Much of my time in '04 and '05, 14 months, in fact, was 
spent working through the exhausting and frustrating 8(a) and 
HUBZone certification process. I was certified 8(a) by the U.S. 
Small Business Administration September 15th of '05.
    It wasn't like the federal government suddenly started 
handing over work, far from it. But certification was the best 
thing that ever happened to our family and our employees' 
families.
    After marketing to the federal government for 11 months, I 
negotiated my first federal contract August 24th of '06 with 
Kessler Air Force Base, Biloxi, Mississippi. The contract was 
called SABER. SABER is a simplified acquisition of engineering 
requirements, which was a on-call service of the air force base 
to do odd jobs, things like fixing and replacing air 
conditioners, plumbing, building remodeling.
    The contract was for one year. We completed this task in 
four months. The contracting officer was so pleased with the 
quality of our work, our ability to meet our commitments, that 
I negotiated another contract. Believe me things haven't been 
the same since.
    Our reputation spread to other nearby federal installations 
like the Navy Seebee base in Gulfport and the VA hospital in 
Biloxi, awarding us contracts. Soon we began to expand beyond 
our success in Mississippi and secured contracts in the Florida 
panhandle.
    We Have completed $24,400,000 of contracts for federal 
agencies, such as the Air Force, the Navy, the Army Corps of 
Engineers, the Veterans Administration, and the General 
Services Administration. We actually completed these contracts 
in 32 months. I am grateful more than words can express.
    We now have 31 full-time employees. Our strength lies with 
our employees. And we could not do what we have accomplished 
without them. The success of our business is due to hard work 
and dedication of our personnel, and I also give much of the 
credit of our business success to the staff at the Troy Small 
Business Development Center and the SBA office in Birmingham 
for their assistance in helping me apply for the SBA 
certification.
    I am feeling really good about our recent success, but I am 
not content to enjoy it without expressing an interest in 
sharing my story to help others who might be tempted to give up 
when thing get tough.
    We have all heard the comment that ``I am from the 
government, and I am here to help you.'' This is really true 
with the U.S. Small Business Administration. The personnel, the 
different programs, and training available to help anyone to 
succeed in the business world is available for the asking. 
Don't give up. Don't be afraid to Ask for help. Help others 
anytime you can.
    In Alabama, 97 percent of employment is by small business. 
This means we Really need Mr. Tom Todt and his staff at the 
Alabama District Office of the U.S. Small Business 
Administration in Birmingham, Alabama. Only in America and with 
grace of God could someone like me have the opportunity for 
help and the chance to help others.
    In closing, I want to thank each of you for the support you 
give the Small Business Administration. You touch so many lives 
all over the U.S. through the Small Business Administration.
    And one other thing. I am so thankful that I live in 
Congressman Bobby Bright's district. Although he is young in 
Congress, you will see great things happen because he is here.
    [The statement of Ms. McClain is included in the appendix.]
    Mr. Bright. That was great. I added that last statement for 
her, Madam Chairman.
    [Laughter.]
    Chairwoman Velazquez. Thank you, Ms. McClain. That wasn't 
supposed to be part of the script
    Ms. McClain. Thank you.
    Chairwoman Velazquez. But thank you for such a beautiful 
story--
    Ms. McClain. Thank you.
    Chairwoman Velazquez. --and sharing it with us.
    And now I will recognize the gentleman from Florida, Mr. 
Buchanan.
    Mr. Buchanan. Thank you, Madam Chair.
    You can add that tagline at the end of mine, too, if you 
would like.
    [Laughter.]
    Mr. Buchanan. It is my pleasure today to introduce one of 
my constituents from the great State of Florida, Lee Mirman, to 
the Committee. Mr. Mirman is an owner of investments in 
Sarasota, not just real estate but in the high tech business. 
He is located, obviously, in my district. His business has been 
awarded Sarasota Magazine's 5-star real estate award for two 
consecutive years. He is very entrepreneurial, owned many 
businesses. And he is in a very successful high tech and real 
estate business.
    I welcome you here to the Committee and am delighted to 
have you from my district and look forward to your comments 
today.
    Mr. Mirman. Thank you.
    Chairwoman Velazquez. The gentleman is recognized for five 
minutes.

STATEMENT OF LEE MIRMAN, TRC CIPS, BROKER/OWNER, INVESTMENTS IN 
                            SARASOTA

    Mr. Mirman. Good morning. Chairwoman Velazquez, thank you 
for convening this panel to spearhead the conversation about 
what is required to have success in today's environment. 
Congressman Buchanan, it is a pleasure to come up from Florida. 
Thank you very much for your focus on empowering small 
businesses.
    To provide a context from my perspective, I will share that 
my instincts and interests have drawn me to explore various 
experiences in different parts of the world. Both my wife and I 
are Duke MBAs, but much of what we have learned comes from 
getting our hands dirty, from working from the ground up, and 
learning by trial and error. This morning, though, I am not 
going to focus on the processes that have led to my success 
but, rather, the underlying philosophies.
    First, relationships are fundamental. We seek out the win-
win by interacting with each individual we come in contact with 
with respect and integrity. We look for ways to collaborate and 
build synergies. In our vision, someone does not need to lose 
for us to gain. There is plenty of opportunity to go around.
    I believe that in doing this, we also attract the type of 
individuals that value these principles. I don't think in terms 
of hierarchy.
    We are all working together toward a common goal. We have a 
policy about who we work with. We must know, like, and trust 
them. In the big picture, it does not matter how much money 
they have or how smart they might be, but if they are nice 
people, good people, then we will do business.
    I would like to borrow the meaning behind the word 
``sustainable.'' For me it applies to respecting the 
environment and also respecting people. Making decisions based 
on the long-term relationship, this is a sustainable business 
practice.
    In the spirit of honoring the important contributions of 
individuals, allow me to acknowledge the part one young lady, 
Sara Del Monte, daughter of my colleague, played in bringing us 
here today. You and your mom embrace the spirit of 
collaboration and cooperation that will continue to nurture 
success of all of us.
    Being a citizen of the globe, the United States is a 
conglomeration of immigrants, wanderers, who come from 
generations of immigrants. Americans of past generations have 
wanted to stay close to home, but each generation is a 
completely new one. Some amongst this great melting part are 
seeking out their ancestral homes. They are returning to 
villages they once fled in places like India.
    My wife speaks to our children exclusively in Spanish. We 
also teach our children Chinese and expose them to many 
European languages. We want them to be world citizens. While we 
would love to be wired to be able to speak many languages 
ourselves, we want them to stand on our shoulders, to have 
access to more of their potential, and to be equipped to do 
things differently than the previous generation.
    Diversifying the international markets makes sense 
pragmatically. Investors still need to put their money to work 
for higher risk protection. And we have identified 
opportunities abroad.
    That said, however, I have always had the instinct to 
engage with many countries and cultures. It only feels natural 
to leverage that same intuition as I take my business and the 
people working with me abroad so that we may follow our 
children.
    Sustainable business practices. Lisa and I aim to be 
emissaries in this respect as well. Our goal is progress, not 
perfection. While in France recently, I interacted with several 
thought leaders on this topic of sustainable development. One 
was a commercial building developer from here in Philadelphia. 
He operates 200 commercial centers around the United States.
    Going forward, they will only build green, not just because 
it is the healthier thing to do but because governments and 
insurance companies will require it in the future. He is 
getting a head start. In my business, we are seeking out 
opportunities to contribute to keeping our air, land, and water 
cleaner to set an example.
    In conclusion, I am looking to align myself with people 
that are not encumbered by previous ideas. All of us in this 
room can not even fathom what will transpire in the 
globalization and sustainability fronts.
    Lisa and I both come from entrepreneurial parents that 
encouraged us to follow this path. We were able to emulate what 
it means to go out on your own, to work hard, and struggle to 
build something. It certainly has made us stronger. So I 
appreciate the opportunity to engage with you here this 
morning.
    Today's hearing is entitled ``Heroes of Small Business.'' 
At the age of 40, I feel I am still too young to be considered 
a hero for deeds I have done. I hope to have the courage, 
however, to lead and contribute my energy towards the health 
and harmony amongst people, country, and the world.
    [The statement of Mr. Mirman is included in the appendix.]
    Chairwoman Velazquez. Thank you, Mr. Mirman Just 
incredible. It is so beautiful to listen to all of these 
wonderful stories. Especially here in Washington, it is a 
breath of fresh air. Thank you.
    Now the Chair recognizes the gentle lady from Pennsylvania, 
Ms. Dahlkemper.
    Ms. Dahlkemper. Thank you, Madam Chairwoman.
    It is my pleasure today to introduce Dr. Eugene Pochapsky 
from Western Pennsylvania. Dr. Pochapsky is the founder, 
shareholder, and Vice President of OmniTech Partners, 
Incorporated. Located in Freeport, Pennsylvania, OmniTech 
produces electro-optical systems for military and law 
enforcement applications.
    Dr. Pochapsky is responsible for new product design and 
development, engineering, and technical support. He lends his 
expertise to some of the most advanced equipment, keeping 
America's Service men and women safe.
    OmniTech's and Dr. Pochapsky's efforts are a true small 
business success story. Dr. Pochapsky earned a BSEE degree at 
the University of Pittsburgh and then went on to achieve his 
Master's and doctoral degrees from Carnegie Mellon University.
    He began his career as an electrical engineer for Syracuse 
Research Corporation in Syracuse, New York. Before coming to 
OmniTech in 1996, Dr. Pochapsky was the chief technical person 
for Star-Tron Technology, where he personally designed multiple 
night vision products.
    His lifelong dedication to his work has garnered him 
numerous patents in the electro-optics and night vision fields. 
I welcome Dr. Pochapsky and thank him for his time today.
    Mr. Pochapsky. Thank you, Congresswoman Dahlkemper.

  STATEMENT OF GENE POCHAPSKY, VICE PRESIDENT, OmniTECH GROUP

    Mr. Pochapsky. Madam Chair, Ranking Member Graves, I 
appreciate this opportunity to testify this morning before this 
Committee.
    OmniTech Partners is located, as we said, in Freeport, 
Pennsylvania, about an hour northeast of Pittsburgh. Our 
mission is to provide state-of-the-art night vision 
technologies to U.S., state, and local governments in the 
United States and around the world. On behalf of our 70 
employees, we are honored to be invited to testify here this 
morning.
    We have three business units: Optical Systems Technology, 
where we actually manufacture and sell night vision equipment, 
service it; Keystone, where we design, develop, and prototype 
these advanced night vision systems; and FrigiLite, 
Incorporated, which designs environmentally safe remote source 
lighting solutions for refrigerated display cases.
    We have grown from 6 to 70 employees since our founding in 
'95 because we invent, design, and manufacture real products, 
including over 7,500 AN/PVS-22 and 27 night vision sites. Our 
success relies upon our dedicated employees, who design, 
fabricate, and deliver these cost-effective, leading-edge, 
high-quality systems to our customers.
    We offer all of our employees competitive salaries and 
training opportunities, top-of-the-line medical benefits, and a 
company-matched 401(k) program. And we recently purchased an 
additional facility for optical fabrication three or four miles 
down the road from our existing facility.
    Our customers are principally war-fighters and law 
enforcement agencies. And in the past they have possessed a 
significant nighttime tactical advantage to perform operations 
at night to limit casualties and offset disadvantages in 
numbers or in available intelligence. Today, we are facing an 
increasingly well-equipped opponent at home and abroad. And we 
no longer enjoy this advantage fully. But Optical Systems 
Technology is working to counteract this.
    We invented and developed the first generation of in-line 
sites that now predominate in the DOD and DOJ. We provide 
thermal systems for augmenting goggles to provide multi-
spectral capabilities to the war-fighter.
    And, as I mentioned before, we are installing a new 
facility for manufacturing optics, which are currently 
manufactured offshore, such as source, does not exist in the 
U.S. And this exposes critical technology to the non-U.S. 
citizens and allows our national security interests to be 
compromised often when this information goes overseas.
    I cite these programs as examples from our business 
perspective of what innovative small business can do at finding 
solutions and reducing costs. But there are issues which affect 
these high tech small business like us, and I appreciate that 
you have provided me with this opportunity to address them.
    Even though we are flexible and efficient, small companies 
have trouble with federal acquisitions successfully because 
they view small businesses as risks.
    Although the system currently allows small business to bid 
on production opportunities, the best value criteria encourages 
procuring agencies to select large businesses over small 
businesses, even when the latter offer significant price and/or 
performance advantages.
    Taxes are also a major impediment to the growth of small 
businesses. High marginal income tax rates directly affect S 
corporations, like us. We generate federal income tax burden 
that is about ten times what our shareholders currently 
withdraw from the company every year.
    We are typical of high tech small businesses in that we 
require and indeed reinvest in facilities, equipment, and 
inventory to help hold our current market share, allow for new 
product development, and continue our growth.
    Only a small portion of these investments can be expensed. 
Thus, we pay income taxes, in a large part, from the same pool 
that is available for reinvestment to the business. These taxes 
cannot currently be deferred until the shareholders might 
withdraw them in the future as taxable income. And that would 
be most helpful to small businesses to be able to do that.
    In fact, in our case, we could probably employ about 20 
more manufacturing personnel, about one-third more employees if 
we could defer those taxes until they were actually applied to 
income and withdrawn.
    The fewer taxes we pay, the more people we can employ, the 
better benefit packages we can introduce for our employees, and 
the more competitive we are in the world market. And we do 
export all over the world and compete all over the world. We do 
it very well, actually.
    Conversely, high marginal tax rates can also impede our 
ability to develop technology and encourage entrepreneurs like 
us to sell our technology to large and possibly foreign 
companies and then increase the potential for technology 
transfer to offshore interests.
    The federal government can strengthen innovative small 
businesses by ensuring that the federal acquisition regulations 
protect and encourage small businesses. And you can strengthen 
us by reducing the tax burden on small companies that invest in 
their employees and in our own technologies.
    Madam Chair, members of the Committee, on behalf of 
OmniTech Partners, thank you for this special recognition and 
for the invitation to testify today. I would be glad to answer 
any questions afterwards. Thank you.
    [The statement of Mr. Pochapsky is included in the 
appendix.]
    Chairwoman Velazquez. Thank you.
    The Chair recognizes Messrs. Luetkemeyer and Akin.
    Mr. Luetkemeyer. Thank you, Madam Chairwoman. It is 
certainly an honor today to be able to present to you Mr. Greg 
Prestemon, who is one of the leaders, not only in our area but 
in the nation, with regards to economic and small business 
development.
    Since Greg's arrival at the Economic Development Center in 
1993 in St. Charles County, the county has grown from 232,000 
to 350,000 today. In fact, St. Charles County continues to be 
one of the fastest growing counties in the State of Missouri, 
which is located just outside the St. Louis area.
    As President and Chief Executive Office of the Development 
Center of St. Charles County, Greg has served 16 successful 
years at the helm of the Economic Development Center, which 
highlights the way that St. Charles County has grown and 
prospered, particularly through its work at the Economic 
Development Center and Partners for Progress.
    Since 2000, the St. Charles Economic Development Center's 
504 loan program has helped finance projects around the state 
totalling nearly $250 million while creating or retaining 5,774 
jobs. These accomplishments do not even include the thousands 
who have attended EDC business training events and Greg's and 
his staff's involvement in countless special projects, such as 
workforce housing, health care, and education initiatives, and 
the road tax campaign.
    Recently the center was named the 504 lender of the year by 
the U.S. Small Business Administration as part of National 
Small Business Week 2009. Congratulations, Greg.
    In calendar 2008, the EDCs boasted more than $22.5 million 
to 37 businesses throughout Missouri, with a total project 
value of more than $60 million, that helped create or retain 
jobs.
    Not only Greg has been a good friend of my district as well 
as Mr. Akin's, we greatly appreciate his being here today and 
look forward to his testimony. And I will yield the balance of 
my time to my fellow congressman, Congressman Akin.
    Mr. Akin. Thank you, Blaine.
    We just are so thankful to have Greg Prestemon here today. 
I have been in Congress nine years. I don't hardly remember a 
time when we are not coming out to St. Charles and chatting 
with Greg about what is going on in the small business 
community. They have really accomplished a lot there.
    And it shows that what happens when you take a town, 
basically was a town, and you put this kind of leadership in 
place and now it's becoming the fastest growing area in the 
State of Missouri and it's a lot more city-like. In fact, you 
can go from where Greg's office is, and it's about as far from 
there into the bridge into St. Charles as it is from the bridge 
into the downtown St. Louis area, just a tremendous amount of 
growth. That is because of the attention to the needs of small 
business and really understanding it.
    Greg, we are delighted to have you up here in Washington, 
D.C. Thanks so much for joining us. And thank you for your 
leadership through this matters.
    I yield back, Madam Chair.
    Chairwoman Velazquez. The gentleman is recognized for five 
minutes.
    Mr. Prestemon. Thank you very much.

 STATEMENT OF GREG PRESTEMON, PRESIDENT, ECONOMIC DEVELOPMENT 
                  CENTER OF ST. CHARLES COUNTY

    Mr. Prestemon. On behalf of the Board of Directors of the 
EDC and our members, I want to thank Chairwoman Velazquez, 
Ranking Member Graves, and all of the members of the Committee 
for the opportunity to speak today.
    The people of St. Charles County are very fortunate to have 
not one but two congressional representatives that appreciate 
and support small business in Representatives Akin and 
Luetkemeyer. We appreciation that. We have seen great benefit 
from having had that.
    The EDC has operated the 504 program on a regional basis 
for nearly 20 years and as of 3 years ago on a statewide basis. 
We hope incidentally to secure the permission to operate in 
southwestern Illinois shortly.
    We have benefited from a close relationship with the Small 
Business Development Center of the University of Missouri--we 
provide office space, use of our conference rooms, and office 
support.
    Finally, we have benefited from a close relationship with 
the Small Business Development Center of the University of 
Missouri, which I know is under the auspices of this Committee. 
We provide office space and basic administrative support, and 
they provide the expertise.
    And then, finally, we have benefited over time from support 
from the U.S. Department of Commerce for our incubator 
facilities that we have ongoing. So we are been blessed to 
have, I think, an integrated system to help small businesses in 
our area grow. And I want to thank on behalf of my board this 
Committee for the leadership in this area.
    Congressman Luetkemeyer went over some of the activity of 
the EDC and our 504 program over the last few years. And so I 
won't belabor those or restate those stats.
    Each one of these business expansions translates into real 
benefits for real people. You know, like certified development 
companies all around the United States, that's the kind of 
entity we are.
    We finance businesses, really, of all types, from auto 
repair shops to restaurants to day care centers to advanced 
manufacturing facilities and everything literally in between 
that.
    In our case, all of the jobs created are in Missouri, but 
the 504 program is national in scope. And this Committee should 
feel very proud, I think, of the impact the groups like the EDC 
have by enabling success for the real heroes of our economy, 
which are the folks who are sitting at the table with me: the 
owners and the employees of these growing companies.
    Like the rest of the country, St. Charles County has felt 
the impact of the turbulence in our national economy. Our 
largest industries are home building, financial services, and 
automotive assembly, all of which are obviously facing 
significant challenges.
    So if there was ever a time when our flagship program, the 
504 program, was indispensable, this was that time. I am here 
to report to you some encouraging signs of some local recovery 
that we think we are seeing.
    The last quarter of 2008, we saw a precipitous decline in 
504 loan application activity, which we attribute to the 
general loss of confidence at both the borrower's standpoint 
and the lender's standpoint. However, I am happy to report that 
we seem to be seeing a bubbling up of some new activity.
    Since April 1st, we have approved seven loans. And our loan 
officers are attributing that to the temporary reduction and 
fees that were part of the package earlier this year.
    The point that I want to make is that this has moved 
borrowers and probably lenders from being on the fence to off 
the fence. It's been enough to spur the new activity. And I 
think you should be encouraged to be seeing that. From talking 
with my colleagues around the United States, they are seeing 
the same kind of activity.
    One final point. We have been fortunate to have a very 
excellent relationship with the St. Louis District Office of 
the SBA. I want you to know that you have a hard-working, 
responsive, and dedicated group of people who are doing a great 
job for the people, a job to stimulate small business growth in 
eastern Missouri. I suspect you don't hear as many compliments 
about SBA staff as you might. And I want to say that, at least 
from our district office standpoint, it has been terrific.
    So, again, Chairwoman Velazquez, Ranking Member Graves, 
members of the Committee, I sincerely appreciate the 
opportunity to testify before you today and would be more than 
happy to answer questions.
    [The statement of Mr. Prestemon is included in the 
appendix.]
    Chairwoman Velazquez. Thank you.
    I now recognize the gentleman from North Carolina, Mr. 
Shuler.
    Mr. Shuler. Thank you, Madam Chair. Again, thank you for 
your leadership, a wonderful panel today.
    Our next witness is Sutton Bacon, the President and CEO of 
the Nantahala Outdoor Center. Although it is a small business 
of a core of 120 employees and obviously grows during the 
spring, summer, and fall, the NOC is noted as one of the 
largest outdoor recreation companies in the United States.
    With some 80 different river and land activities at the 
NOC, Mr. Sutton is responsible for the overall business 
strategies and operations for 38 individual business units 
managed by the companies' comprehensive real estate portfolio.
    I will add that some 22 Olympians actually train and call 
my hometown, Swain County, home and obviously the crossroads of 
the Nantahala River and the Appalachian Trial.
    And, with that, congratulations to the Nantahala Outdoor 
Center by being one of our great economic thriving businesses 
within an area. And this is an example of how utilizing and 
through conservation utilizing our God's great gifts of our 
environment, land, water, and our mountains to be able to 
utilize that resource in the right way to be able to create 
jobs and activity for people in this country.
    So, with that, I yield back, Madam Chair.
    Chairwoman Velazquez. The gentleman is recognized for five 
minutes.

STATEMENT OF SUTTON BACON, PRESIDENT AND CEO, NANTAHALA OUTDOOR 
                          CENTER INC.

    Mr. Bacon. Madam Chairwoman, Ranking Member Graves, and 
members of the Committee, thank you for the opportunity to 
testify today. My name is Sutton Bacon. I live in Asheville, 
North Carolina. And I am the CEO of the Nantahala Outdoor 
Center.
    Established in 1972, NOC is an employee-owned company 
located at the intersection of the Appalachian Trail and the 
Nantahala River near Bryson City, North Carolina. We are one of 
the largest outdoor recreation companies in the country, 
offering 80 different adventure programs in 10 states and 12 
countries. We receive over 500,000 visitors annually. In fact, 
NOC guests paddle enough river miles on federal lands each year 
for 2 trips to the moon and back.
    We are also a diverse company. We operate five retail 
stores, four restaurants, a summer camp, and lodging for all 
price ranges. And, as Representative Shuler mentioned, 22 
Olympians and Olympic coaches have called NOC home.
    During my tenure at NOC, we have been recognized as the 
Nation's premier paddling school by The New York Times, the 
best place to learn by Outside Magazine, and as one of the best 
outfitters on Earth by National Geographic ADVENTURE Magazine.
    Our economy in western North Carolina continues to suffer 
from the loss of traditional manufacturing jobs as textile, 
garment, and furniture plants continue to close. This evolving 
economic paradigm is particularly acute given the large federal 
land holdings in our area, most notably the Great Smoky 
Mountains National Park, Nantahala National Forest, which 
diminish our tax base to fund public services. Fortunately, 
outdoor tourism, led by NOC, is becoming the backbone of our 
region's future.
    A recent study conducted by Western Carolina University 
quantified the economic impact of NOC on western North Carolina 
to be $48 million per year while supporting 579 full-time jobs.
    In these tough times, instead of hunkering down, we feel 
that a down turn is a terrible thing to waste and that it is 
more important than ever to innovate through a recession to 
gain long-term strategic advantage.
    We are busy reevaluating our business models, employing 
high technology to streamline processes, and gain greater 
efficiencies and developing aggressive strategies to grow 
revenue through innovation and new product development.
    In 2009 we anticipate growing revenues by nearly 20 percent 
and in 2010 by as much as 40 percent. We are replacing all of 
our enterprise technology systems, which will make us more 
efficient.
    We are launching a new e-commerce Web site, opening a new 
riverside restaurant, rebranding several retail operations, and 
introducing numerous new programs' itineraries and destinations 
to increase our top line. Most importantly, we are creating 300 
new seasonal jobs and up to 80 new full-time jobs.
    In addition, today I am eager to announce NOC's plans to 
open an 18,000 square foot flagship retail store and activity 
center in Gatlinburg, Tennessee. The new store will occupy an 
anchor position in Gatlinburg's downtown shopping and 
entertainment district and is located at the entrance to the 
Great Smoky Mountains National Park, the nation's most visited 
National Park. It will serve as an outdoor activity center and 
will be a launching pad for a wide range of outdoor activities 
in the Smokies, including whitewater rafting, kayaking, 
flyfishing, hiking, and biking. It will also be LEED-certified, 
which is a national certification program for green building. 
And we will be the first retailer in the entire Smokies gateway 
to be LEED-certified.
    When it opens, it will become the largest retail store in 
the Smokies and will create approximately 55 new jobs in North 
Carolina and Tennessee.
    In closing, I fell in love with the outdoors at summer camp 
in western North Carolina. And I can personally attest to the 
value of being introduced to the outdoors as a child and of the 
federal government's efforts to enhance outdoor recreational 
opportunities for our country's youth.
    NOC takes over 100,000 children from diverse backgrounds on 
outdoor experiences every year. And we are creating a new 
nonprofit foundation to take even more. We are a testament that 
small businesses from across the country can capitalize on 
these new youth development initiatives.
    As you have heard, America's outdoor recreation economy is 
an increasingly strong and vital part of our nation's economy, 
especially in rural areas like western North Carolina. In these 
tough times, Americans, both children and adults, need more 
than ever the physical, emotional, and psychological benefits 
that outdoor recreation provides. In the last 37 years, 
whenever there has been economic uncertainty, our guest numbers 
have always increased, affirming the importance of outdoor 
recreation during difficult times.
    I appreciate the opportunity to speak with you today. Thank 
you for your attention, and I would be pleased to answer any 
questions you may have. Thank you.
    [The statement of Mr. Bacon is included in the appendix.]
    Chairwoman Velazquez. Thank you, Mr. Bacon.
    And now I recognize Mr. Schrader.
    Mr. Schrader. Thank you very much, Madam Chairwoman.
    It is my honor to introduce a true friend of small business 
growth in Oregon. That would be Ms. Chandra Brown. Chandra is 
currently Vice President of Oregon Iron Works and President of 
a newly created subsidiary of Oregon Iron Works called United 
Streetcar. That is the only modern streetcar manufacturer in 
the United States of America. This is an innovative company 
that strives to keep manufacturing jobs here in this country.
    In 2005, Chandra was also appointed to the Oregon 
Innovation Council by Governor Ted Kulongoski and in the same 
year selected as one of Oregon Business Magazine's top 50 
business leaders in our state.
    She is also a founding member in her spare time and Vice 
Chair of the Oregon Wave Energy Trust, a nonprofit that 
promotes wave energy and creates more energy-efficient and 
sustainable jobs in Oregon.
    Chandra and this company in my opinion are a testament to a 
small business' ability and willingness to evolve and grow in 
creating opportunities or taking advantage of opportunities 
here in our economy, even in the worst of times. In my opinion, 
she is truly a heroine of small business.
    Thank you, Madam Chair.
    Chairwoman Velazquez. Proceed.

STATEMENT OF CHANDRA BROWN, VICE PRESIDENT, OREGON IRON WORKS, 
                              INC.

    Ms. Brown. Good morning, Chairwoman Velazquez and Ranking 
Member Graves. And I would very much like to thank you for your 
kind introduction, Congressman Schrader. It is a pleasure to be 
here representing Oregon Iron Works.
    I think on this panel I am representing the big and the 
old. I am not going to be actually reading my testimony. What I 
am going to do is share a story with you. And that is about how 
U.S. manufacturing is absolutely alive and well. So I am tired 
of hearing about all of the stuff with U.S. manufacturing 
because this small business is going to tell you some of the 
good stories and how we are achieving that.
    I think the best story to start out with, really, is with 
United Streetcar. But to give you a little bit of history, 
about what is Oregon Iron Works, the name doesn't really 
indicate what we do. We were actually founded in 1944. I wasn't 
around then, but I hear it was an old foxhole in the City of 
Portland, a couple of guys working there during the war, 
welding and fitting up machinery parts.
    Basically in the '70s we moved from Portland -- and current 
management bought. And we moved from the City of Portland to 
Clackamas County, which is where our headquarters are now.
    We also have a facility in Vancouver, Washington. Basically 
in the '70s, we had gone from about 4 or 5 employees to 40 
employees. Where are we at now? Again, just kind of compressing 
history, now we have almost 400 employees. We do over $100 
million annually in revenue. We have just recently formed this 
wholly owned subsidiary: United Streetcar. Basically we have 
had approximately a growth rate of 13 percent annually since 
1984. And we have about 305,000 square feet on almost 38 acres 
of land.
    We are still a small business, and we are very proud of 
that fact. And we are very grateful. Some of our land purchases 
were done due to SBA financing. And so credit given back in the 
'70s even. So we are very grateful for that.
    What are we doing right now with United Streetcar? We 
realize that to be alive and well in manufacturing, what must 
you have? Diversity, innovation, and an incredible workforce. 
You have to have those three criteria.
    And we have been blessed to have an incredibly skilled 
workforce. We have got the machinists, the welders, the fitters 
that have been trained up in the Northwest. It was due to the 
shipbuilding industry in the war. We have been able to retain 
that skilled workforce, which enables us to build the projects 
that we do.
    We started out doing hydroelectric work. Then we started 
building bridges across the United States. Then we went into 
some defense work. We started building boats. And we have been 
very successful in some federal appropriations and getting some 
funding for some special operations boats.
    From boats we went into aerospace. We built some space 
launch complex work down at Vandenberg and Cape Canaveral. But 
we are always looking to the future. So diversity has been one 
of the keys, why we have had this nice continued growth rate.
    But diversity means you have to be continually innovating. 
You must be looking to the future. So what is the next product? 
You know, we hear about manufacturing going down. Let's talk 
about where the future is.
    We believe the future is in things like renewable energy. 
So it doesn't take a rocket scientist to know if you can build 
boats and things that survive a harsh marine environment that 
hopefully we could build wave energy. So we have built one of 
these devices which was off the coast of Oregon. There are 
several more that we believe are going to be built in the next 
year or two.
    So that's a new market that we think will be emerging in 
the United States. So I think at some point wave could surpass 
solar as a renewable energy for this country. So we want to be 
at the cutting edge. And we want those jobs in the United 
States being done here as we build this new renewable energy.
    Now, talking about streetcars, I am the President of United 
Streetcar, a wholly owned subsidiary of Oregon Iron Works. We 
are incredibly excited about this because the story of United 
Streetcar is a story of insourcing jobs. What we have done is 
taken jobs from the Czech Republic and brought them to the 
United States. We formed an agreement with Skoda as our Czech 
partner. So we have the license to manufacture, exclusive 
license to manufacture, modern streetcars throughout the United 
States.
    There are over 64 cities looking at streetcars right now 
across the United States. It is fantastic, not only as a model 
of transport, but it is green jobs. And it is an economic 
development model for our urban centers. It is an incredible 
success story in Portland.
    So we are very, very proud. We recently were awarded a 
contract to build a production run of six cars for the City of 
Portland. And we currently have finished our prototype car, 
which is under testing right now. And hopefully this summer it 
will be given to the city, and the public will be riding on the 
first modern streetcar built in the United States in 58 years.
    So something that we are incredibly proud of and incredibly 
happy, but how did it start? It started with the upper 
management of our company knowing how incredibly skilled our 
workers are that we could do it.
    You know, I basically heard that there were no streetcars 
built in the United States except for old and historic 
trollies, which are wonderful, but that is not a modern 
transportation option.
    So when we heard that, I said, ``Well, my company can build 
it. We build boats. We build bridges. We build lots of 
different things. Of course, we could build a streetcar.'' And 
then it is making that work. And there was a federal 
appropriation involved for this prototype streetcar, thanks to 
our delegation, which did a great job. And that started us down 
this path.
    And now we believe this could be another 100 million dollar 
business unit that could be spun out of this company building 
green transit projects here in the United States because right 
now even Portland's cars were all imported from Europe. So at 
now least we are giving that U.S. option.
    And that is where we would like to say in terms of issues, 
one, we are incredibly supportive of the Buy America Act and 
all that everyone has done with that. We think that is critical 
to U.S. manufacturing. We appreciate that.
    The one issue we do see coming down the pipeline is related 
to bonding. We talk about the credit issues. All streetcars 
will have to be bonded. And while we have a bonding capacity of 
over $100 million that we can bond with this decrease in AIG 
and the security companies' willingness and ability to give the 
bonds out as well as our increasing growth, we don't ever want 
to turn work away because we can't get a bond.
    And it wouldn't be because we couldn't. It is because we 
have passed our capacity. We have too much work bonded because 
right now more work needs bonding because of the higher risk 
cities don't want to take on.
    So we worry a little bit about that and would wonder how 
the federal government could potentially help with backing that 
up for bonding. As I said, we don't just want to turn away work 
once we hit our bonding cap. Hopefully we are not there yet.
    In addition, there are issues with incremental funding, 
which we would love to see something for small projects, not 
these huge, large projects, things that are maybe under 30 
million, where they are not incrementally funding the Corps of 
Engineers so we have to wait each year to see if they will have 
enough money to build the whole hydroelectric project, which 
causes delays and much greater costs.
    So, again, in the interest of the taxpayers, we think small 
projects that can be fully funded from the start will have much 
greater benefit across the line.
    [The statement of Ms. Brown is included in the appendix.]
    Chairwoman Velazquez. Time has expired, Ms. Brown.
    Ms. Brown. Oh. Thank you.
    Chairwoman Velazquez. Thank you very much for your 
testimony. And you will have time during the question and 
answer period to expand on your testimony.
    Now I recognize the gentleman from Pennsylvania, Mr. 
Altmire.
    Mr. Altmire. We are so proud to have all of you here. 
Congratulations. It is wonderful to hear all of these stories, 
one after the other, of the good news that is happening in the 
country.
    We have had some good news in western Pennsylvania, too, on 
the small business front, one of whom we are very happy to 
have, Mr. Kirk Farra here, from the spectacular Town of 
Zelionople. It is a great place.
    He is President of In-Synch Systems, LLC in Zelionople. In-
Synch is a veteran-owned software company that creates state-
of-the-art products for the law enforcement community. It was 
founded in 1999. And the company has rapidly expanded and 
serves clients all across the company. The company's top 
product, a record management software, allows agencies to 
better communicate within the entity and to outside legal 
organizations.
    Again, congratulations to all of you. And welcome, Mr. 
Farra.

           STATEMENT OF KIRK FARRA, IN-SYNCH SYSTEMS

    Mr. Farra. I am very pleased and honored to be here, 
Chairman Velazquez. I am a man of few words. So I doubt very 
much that I could possibly talk for five minutes.
    I am a very technical person, founded In-Synch Systems back 
in 1999, after working for about 15 years in the industry. I 
really wanted to make a difference and kind of had chosen kind 
of the law enforcement field, providing software and services 
there because we had analyzed that there weren't that many good 
software systems, spent a lot of years developing a product, 
kind of finally had some opportunities where we actually made 
some money. The past few years we have really accelerated in 
our growth.
    We have been hiring through the recession. We are hiring 
now. So if you know any technical people that need jobs?
    I just want to talk a little bit about our company. We 
really try to hire people that can become family members. We 
are a very family-oriented business. Everybody enjoys working 
together.
    We are passionate about supplying systems that could really 
provide safe and just communities. That is really what we are 
all about. Chances are someone, some police department in or 
around where all of you live is using our system to make a 
safer and juster community.
    Just one other thing that I wanted to talk about is the 
federal grants for law enforcement. It is very, very important 
for our business because it indirectly is the way that we are 
funded. In prior years, we were in two federal programs where 
the appropriations have gone away that directly helped us.
    But we really, really expect a stimulus package for the 
burn grant and the cops technology grants and all those other 
grants that when that money is released we are really going to 
go grow rapidly again and be able to provide our system to even 
more communities throughout the United States.
    That is about all I had.
    [The statement of Mr. Farra is included in the appendix.]
    Chairwoman Velazquez. Thank you, sir. Thank you for the 
great stories. It is just wonderful to be here in the presence 
of so many hard-working businesses in America, especially at a 
time when n to only we are facing an economic down turn but the 
news that we watch or that we read just how it has been 
difficult to get this economy growing.
    We all know, at least the members who sit on this 
Committee, that you hold the key to success and how can we get 
this economy growing again by creating jobs.
    I would like to make a question and have all the members of 
the panel answer it. What do you think is the single biggest 
challenge facing small businesses today? And how should it be 
addressed? We can start with Mr. Bacon.
    Mr. Bacon. I think that from my perspective, one of the 
biggest challenges is consumer confidence. And I think it is 
important for government and the media to convey the good news 
and the work that many of the panelists are doing here today 
and the success stories, that there are segments and sectors of 
the American economy that are growing. There is good news.
    I think that if that can permeate down to consumers and 
increase consumer confidence, I think we will all be better 
off.
    Chairwoman Velazquez. Mr. Reister?
    Mr. Reister. I would agree that the media has just 
cannibalized what business is doing right now. And the 
negativity that they are thriving on continually just depresses 
the people who have funds to buy to produce new products, to 
purchase homes, to improve their homes. That is one of the 
biggest challenges we face.
    There were a few things in the stimulus package that 
address that but not in a manner that I would have seen or 
believed truly is going to strive to grow the economy. And so 
that would help if we could get more money into the hands of 
small business owners and allow them to feed from the bottom 
up, not from the top down.
    Ms. Storey. In our particular case, since I speak from the 
aspect of doing business with the government, a couple of 
things are happening. And that is in my area, we do not bid in 
the small business area. I always have to go up against the big 
guys, unrestricted. We are seeing profit margins and bids 
coming in at what we consider to be crazy prices that they are 
absolutely doing to keep the door open.
    Well, the big guys can bid that low. It is very difficult 
for us to be competitive because that would put me in the hole. 
So you take that. And then you take a look at every year I call 
it the grovel to the bank. And that grovel means that I have 
got to stand there and justify my profitability or lack thereof 
of those contracts that we do bring in because the bank--and I 
apologize if there are any bankers in the room, no offence, but 
they will look for any reason not to have you hold onto that 
line of credit or, heaven forbid, you are in the best and worst 
case scenario, ``I won a big contract,'' worst case scenario, 
need to expand the line of credit, they don't want to do it. So 
for right now that is a big challenge.
    Chairwoman Velazquez. Thank you.
    Mr. Mirman?
    Mr. Mirman. I would like to see a little bit more of a 
longer-term focus. Right now you have cities around the world 
that are focusing on their bid for the 2016 Olympics, cities 
like Chicago, Madrid. And, in fact, in Chicago, they are 
working on a technology right now that as they expect millions 
of people to come to Chicago for the Olympics, they are looking 
to harness the energy created by people walking on floors.
    And it is not so much the floor and the energy that they 
are going to create that the Olympics will not have to rely on 
outside sources of energy, they are going to create all their 
own energy from the technologies that they are using, but they 
are focusing on something that is not going to happen. It is 
still seven years out.
    And I think that we have this preoccupation in the United 
States that we need to have something by this afternoon or by 
tomorrow. When I was abroad, there are lots of cycles, ups and 
downs. And there are going to be many more. But the focus is 
from a much longer-term perspective. And I would like to see us 
embrace that here.
    Chairwoman Velazquez. Ms. Brown?
    Ms. Brown. Our biggest challenge is actually related to a 
skilled workforce. We hear this again and again, but 
particularly for us, we are looking for welders, fitters, 
drillers, machinists. We have a very aging workforce.
    We are a union shop, very blessed to have many of our guys 
40-50 years with us. It has been an incredible run. But they 
are getting older, and they are getting tired. And we don't 
have the folks coming in behind because things like industrial 
arts have left our high schools for some folks that have never 
even experienced welding or fitting or some of these jobs of 
your hands.
    And we actually don't have much trouble finding, funnily 
enough, the engineers and the project managers and the 
professionals, but if we can't continue to have a skilled 
workforce, which earn way better than family wage jobs, health 
care taken care of, all sorts of other great things, I think 
that is going to be a problem for us in the future.
    Chairwoman Velazquez. Yes, Mr. Prestemon?
    Mr. Prestemon. Well, two things. One is I think speaking 
positively about the economy from a leadership standpoint, from 
the presidential as well as the congressional leadership is 
important. So I don't disagree with what I heard Mr. Bacon say.
    I hear recurring concerns about the escalation in health 
care costs. And small business owners are not advocating any 
particular solution to that other than that they do believe 
that it has the potential to undo a lot of the profitability of 
some of their companies.
    Mr. Farra. Just as a follow-on to what he said, as an 
employer, we want to provide very, very good health care to our 
employees. The challenge is we don't have any control over the 
cost of it. And it just goes up and up and up. And you just 
don't know what to do sometimes, you know. Getting control of 
that would help a lot of small businesses, I think.
    Chairwoman Velazquez. I guess we are working on that.
    Ms. McClain?
    Ms. McClain. I didn't intend to complain. I am so honored, 
you know, and so excited to be here. But since you have asked--
    [Laughter.]
    Ms. McClain. The real problem we face is bonding. Now, we 
have perfect credit. My husband and I have been married 44 
years. You know, there is not a thing in the world wrong with 
us or what we are doing, but our bonding company wants us to 
leave all the profit in the company, not to take anything out 
ourselves.
    We leave it in the company, we pay 38 percent taxes. Okay. 
Then we take it out, we have got to pay 51 percent taxes. We 
pay 30 percent federal, 5 percent state, 7.65 percent for 
Social Security and Medicare. Then we have to match that 7.65 
as the employer. So that is 51 percent.
    Well, I can't make them understand that that is not 
logical. You can't pay 38 and then 51 and work for 11 percent. 
I mean, I don't really know what the answer is, but our problem 
has been bonding.
    Like the lady down there said, we have to compete with the 
larger companies. And we have to have large bonded in order to 
do this.
    Chairwoman Velazquez. Thank you.
    Ms. McClain. That has really been our struggle, is bonding.
    Chairwoman Velazquez. Okay. I hear you.
    Dr. Pochapsky?
    Mr. Pochapsky. Thank you. We have similar issues, but I 
think for a smaller high tech manufacturing and development 
company, probably the most important for us is getting capital 
equipment, facilities, and then keeping highly compensated and 
skilled employees.
    We do that, specially in a small, growing S corporation. 
The funds that you have available to do that are the same funds 
that are being taxed. And most of your expenses against that 
are either deferred or they can't be taken because you are 
putting it into inventory.
    So I would say protecting the pool of cash that is 
available for a small company to grow, especially growing small 
S corporations are going to pay very high tax rates without 
actually taking money out of the business.
    If that structure can change so that yes, if the owners 
take money out of the business, that should be taxed. But you 
want to be able to protect the pool that helps small companies 
grow.
    Chairwoman Velazquez. Thank you.
    Mr. Pochapsky. Thank you.
    Chairwoman Velazquez. Mr. Luetkemeyer?
    Mr. Luetkemeyer. Thank you, Madam Chairwoman.
    I appreciate everybody being here this morning and their 
testimony. It is interesting to listen to the concerns. And, as 
you have described your various businesses and opportunities 
that you have taken advantage of, it was great to listen to 
some of the things. I wrote down some of the highlights of some 
of your comments.
    I was grateful for the opportunity that is available in 
this country. As an entrepreneur, you have visions, small 
business person. You have to have an attitude of self-reliance, 
of determination; a strong work ethic; respect for your 
employee; sacrifice; innovative ideas; willing to be able to 
change or adapt to whatever situation you have; and, most of 
all, get the government out of the way, do no harm to you. And 
this is what we here on this Committee hopefully are able to 
do--
    Chairwoman Velazquez. Will you yield?
    Mr. Luetkemeyer. Yes, ma'am.
    Chairwoman Velazquez. Did I hear that or did you add that? 
I am just teasing you.
    Mr. Luetkemeyer. So we are excited that you are here giving 
some ideas and getting help. And you are helping us. Chairman 
Velazquez has been instrumental in trying to do this and trying 
to get government out of the way to help you do what you do 
best, which is lead our country.
    One quick question for you here with regards to something 
that we are currently considering legislation that would have 
an effect on raising energy prices. Producers, consumers, 
transportation firms, everybody, how would a steep increase in 
energy prices affect your company?
    And we can just go down the line very quickly. We don't 
have to have a lengthy explanation but just briefly give us an 
idea of how these are going to impact you.
    Mr. Bacon. One of the things that we are making strategic 
investments in is green energy, solar. We purchase most of our 
electricity from hydropower. So we are looking at bringing and 
adding to the grid additional packs. So that is our 
perspective.
    Mr. Luetkemeyer. Okay. Very good.
    Mr. Reister. We saw this last year and the year before when 
gas prices soared through the roof. And we had to charge strip 
charges to our customers to get to their houses. In many cases, 
they don't have the money to pay the service call in the first 
place. And we donate a lot of those service calls back, but we 
can't afford to do that on a long-term basis.
    So if the energy costs keep going up, we have to come up 
with new ways to provide that service, whether that be from 
satellite locations so we are not driving as far or 
diversifying our deployment field. But if we do that, they are 
not going to be working full days because we are going to move, 
then, throughout the Denver metro area. Obviously our traffic 
has increased over the years.
    It will help us sell more energy-efficient furnaces, but 
that is going to cost our homeowners money to do that.
    Mr. Luetkemeyer. Thank you.
    Ms. Storey. In our particular case, it costs our customers 
more because there are trip charges or transportation charges 
from the manufacturers. Therefore, any time the customer has to 
pay more for fuel, they are going to look at us to say, ``What 
else cane you cut out of our end.''
    Number two, what we did was a 20 percent cutback, having 
our employees stay home one day a week we set up to 
telecommute. The good news is that was great. The bad news is I 
am now paying overhead for the office space I took, thinking I 
had the employees there. So the impact is negative as the 
energy cost goes up.
    And we must work in the LEED program. So energy impacts us 
in a 360 mode.
    Mr. Mirman. In real estate, energy cost, increasing energy 
cost, actually increases somebody's overall cost of living. And 
what that means is they have less disposable income all across 
the board, whether it is for incidental health care or their 
mortgage payment, et cetera. And so how it affects our 
business, it affects our business because people can afford to 
buy less house and have less money to spend.
    And so it reconfigures the way people live. They don't want 
to commute. They want to live in urban centers. Urban centers 
are not prepared yet to deal with that huge influx of people 
because there are a lot of density issues that we are seeing.
    The other thing that happens is people are looking 
elsewhere. We expect ten percent of the baby boomers to leave 
the United States and move to foreign countries because there 
are lower costs of living there.
    Ms. Brown. That is actually a very complicated question for 
us. Obviously increasing energy negatively impacts us because 
we transport such huge goods. I mean, some of our things weigh 
250 million pounds. And that is by barge or by truck or by 
rail. Certainly that is a huge expense.
    However, on the other side, it is an equation because, for 
example, when the gas prices have risen, obviously public 
transit goes up. And the investment in streetcars goes up. So 
we can potentially sell more product or more wave energy 
devices. So for us it is a mixed bag.
    Mr. Prestemon. Yes. And that is an incredibly complex 
question.
    A couple of things. In Missouri, the vast majority of the 
electrical power that is produced is produced by coal. And that 
is both good and bad, I guess, in that the rates are really 
low. So I can't say that electric utility rates have been an 
impediment to growth in Missouri up to this point in time.
    What we are concentrating on over the next few years is to 
come up with programs and strategies to help businesses, 
really, of all types use less energy, use the energy more 
efficiently, and wait to see how, regardless of whatever 
happens with the regulatory environment from Washington, D.C., 
we think that is a reasonable strategy to take.
    Mr. Farra. I think it would definitely negatively affect 
our company because our customer base is police officers. And 
they have to drive their vehicles around. And if energy prices 
go up, their whole budget gets taken up by feeding the gas 
tanks of the cars. And that eats up their discretionary income 
to spend on other products.
    Ms. McClain. Well, it is my opinion that the fuel process 
actually pushed the economy to the point it is now. It was 
already going down, but when the price of gas went up rapidly, 
everybody's utilities, their gas bill, you know, everything 
affects something else. And that is what happened when the gas 
prices went up. It took away a lot of profit from everybody's 
business.
    Mr. Pochapsky. I don't have anything to add to that.
    Chairwoman Velazquez. I recognize Mr. Bright.
    Mr. Bright. Thank you, Madam Chairman. I will tell you this 
has been one of the best. I am a new member to this Committee. 
And I will say that over the last five months, I have had the 
opportunity and privilege to sit in on many of these hearings. 
And, Madam Chairman, to me this has probably been if not the 
best, one of the best. And I want to thank the panelists.
    I really don't have any questions, just basically a 
statement for the record and for your information. I want to 
thank you. You truly are the heroes that make our economy and 
our country strong. So thank you for your time, your 
dedication, your commitment.
    One last statement, and I will close. You truly are heroes. 
And you truly are the product of the American dream. So keep up 
the good work.
    It is my privilege to have Ms. McClain in my district and 
to see how she just resonates with honesty and integrity. And I 
know that goes for each one of you. So thank you for what you 
are doing for our country and our economy.
    Just let us stay plugged in with you. And you stay plugged 
in with the U.S. House and the Congress and let us know what we 
can do to make your businesses strong and not just be a person 
that is committed to helping you in your small business but 
help us be your partner and help you be successful in the 
future.
    So thank you very much. And thank you very much, Madam 
Chairperson, for allowing us to have this great opportunity to 
hear within the Beltway.
    Chairwoman Velazquez. Thank you.
    Mr. Coffman?
    Mr. Coffman. Thank you, Madam Chairman.
    And I want to say coming here today, you truly are the 
heroes, I think. And the American dream is to own your own 
business. I was in small business for a while and also served 
in Iraq with the United States Marine Corps. And I am not sure 
which one is tougher.
    Mr. Reister, a question of you. When we heard the testimony 
today, it seems that most of the witnesses were heavily engaged 
in government in some capacity as a customer or as a contractor 
related to government.
    And, yet, can you tell us about your business in terms of 
what your--I mean, have you benefited from government programs? 
What is your interaction with government? If you could 
elaborate on that, please?
    Mr. Reister. Thank you, Congressman Coffman.
    I would have to say having a gun pointed at you is much of 
a hero than what we are doing out here. So thank you for your 
service to our country.
    We don't pursue government jobs. And the reason we don't 
pursue government jobs is we really don't want government 
involved in our business and we don't want to be in 
government's business. It affects us.
    The jobs that we have done in the past, Davis-Bacon jobs, 
we have hired employees to do those jobs outside of the current 
employment pool. We took specific employees and allowed them to 
run the jobs for us.
    Then when the Davis-Bacon job ran out, they didn't want to 
come back to work for us at a competitive wage that we were 
able to offer that was competitive with the marketplace. They 
wanted the Davis-Bacon wages to continue. And that is just not 
reality.
    Their lifestyles exceeded their income in those cases 
because they left for a year and a half. But they spent what 
they made, spent more than what they made, put themselves in a 
bad position. And then many times, the ones who did come back, 
we had to give personal loans to get them out of financial 
trouble. Those monies were never replaced by us.
    So we don't typically pursue government jobs based on those 
types of issues.
    Mr. Coffman. Let me ask you about financing, your financing 
of these. And anybody else can certainly elaborate on this. And 
that is that we had met when you came into my office as a 
constituent, expressed concerns to me about credit lines and 
just small business. At the time that you met with me, you 
expressed concern that the credit markets were really frozen at 
the grass roots of our economy.
    And I wonder if you could expand on that to the Committee? 
And certainly anybody else can expand on that as well. Please, 
Mr. Reister?
    Mr. Reister. Those markets are still frozen. The monies are 
not there. We have had them pursue us, our banks, to loan us 
money. But we don't need the money. So it's very easy to give 
money to somebody who doesn't need those funds.
    When you do need to pursue those funds and you are trying 
to apply for them, most of the competitors that we have out 
there, they have closed out the lines of credit. They have 
turned them off.
    And, as I said, 20 heating contractors, qualified heating 
companies, not a guy, his son, and his dog. I am talking about 
employing 20, 30, 40 people have gone out of business. They 
don't exist anymore. And these are companies that existed for 
20, 30, 40 years in our marketplace.
    So, as I see it, I don't know how you turn the faucet back 
on, but the efforts that this body has made through the 
stimulus package did not achieve the desired effects. They may 
be giving it to GM through your guy's body, but GM is not 
giving it to the tier three suppliers that work for them. They 
are holding back financing, our companies are, that we work 
for, the builders, or the bank. They are allowing us to go 120, 
200 days to achieve and receive our payment.
    And then usually it is a partial payment, not a full 
payment. We are able to absorb those costs because we continue 
to reinvest in our company, even at the cost of being taxed on 
those funds. Other companies out there didn't do that, and they 
have folded up as a result.
    Mr. Coffman. Would anybody else like to comment on that?
    Ms. Storey. I would like to comment, if I could. I would 
start by saying I am married to a retired Marine, who now works 
with me. And he does declare that my small business is tougher 
than his 21 years in the Marine Corps. So I had to get that in.
    I will say that what Mr. Reister has just described is what 
we in government contracting call bundling. It is just that 
bundling in the government is a little different--and I spoke 
to that a little bit earlier--than bundling in the commercial 
world.
    I agree with exactly what he says about the lines of 
credit. You know, when you don't want it, they chase you down 
like a dog. And when you really need it, they just run from 
you.
    I tend to disagree -- and I wouldn't have said this 16 
years ago, but right now I feel that, again, government 
contracts is one of the safest places to be. I do agree that it 
is quite a bit different than the commercial landscape. And I 
have been saying this for years, way before the stimulus 
program. But now that there is stimulus money on the street, 
people want to know how do we get a part of it.
    I will end my comment with saying, though, that we are 
headed toward what I am calling the perfect storm. The perfect 
storm to me is right now we have a very young inexperienced 
workforce, acquisition workforce, not only DOD but all the 
agencies. If you combine that with a poorly trained, 
inexperienced group of contractors, to me that is the storm.

    You have a lot of folks that on two sides of that contract 
may not really know what they are doing. And it opens the door, 
I am sorry to say, for potential corruption but, most 
importantly, poorly intended bad consequences that can cost the 
government money. So, again, I would advise taking a look at 
that.
    Mr. Coffman. Thank you, Madam Chairman.
    Madam Chairman, can I make one comment on that?
    Chairwoman Velazquez. Sure.
    Mr. Coffman. Thank you, Madam Chairman.
    I just want to let you know that in the Armed Services 
Committee, we have a defense acquisition reform panel. We are 
moving forward with legislation now out of that committee. In 
fact, it was voted on the House floor. It is in conference 
committee.

    One of the provisions of that bill will be to strengthen, 
to really greatly strengthen, the contracting capability of the 
Department of Defense.
    Chairwoman Velazquez. Yes, coupled with the fact that this 
Committee has been proactively looking at contracting practices 
and holding the government agencies accountable. Almost every 
year we produce a report of how each agency is complying with 
the 23 percent goal for small businesses.
    Also, the HUBZone, where there has been mismanagement and 
fraud. We have requested from the Government Accountability 
Office to do not one but two investigations. And, as a result 
of that, we are implementing certain controls to prevent fraud.
    Let me recognize the gentle lady from Pennsylvania, Ms. 
Dahlkemper.
    Ms. Dahlkemper. Thank you, Madam Chairwoman.
    As a new member of Congress and a former small business 
owner, just five months ago, I listened to your stories with 
envy in some ways. I miss my small business. I miss being a 
part of that. I think you all do what you do because you love 
being a small business owner, as well.
    When I was running for office, someone said to me, 
``Politics is not for the faint of heart.'' I think being a 
small business is not for the faint of heart.
    I want to thank you for all you do. Thank you for your 
testimony. I would like to recognize your monumental 
achievements today, and I would also like to recognize that 
this is the 46th annual National Small Business Week. I am 
pleased that this Committee has invited you heroes of small 
business to testify here today.
    One of the issues I want to ask the panel to just address 
as a whole is health care. This is a debate that we are just 
beginning, and we need your input. As the person in our small 
business who made those tough decisions every year about our 
health care plan for our employees. I know that if one employee 
gets sick all of a sudden your premiums go up 24 percent. How 
can we continue to sustain this? Many small businesses can't 
and then have had to, unfortunately, drop coverage for their 
employees. None of us I think want to do that. What I hear from 
you and what I did as an employer was treat my employees as my 
family. No one wants to do that to your employees.
    If I could ask your opinion maybe on a couple of issues? 
Individual mandates. Do we need to mandate that everyone have 
some kind of health insurance coverage? What about issues of 
price transparency, of being able to actually look at your 
services and compare price, cost, procedures, doctors, 
hospitals or anything else you might want to share specifically 
on our health care debate as we move forward?
    I will start with Dr. Pochapsky, please.
    Mr. Pochapsky. Yes. We just really view that as part of the 
compensation package. And it is part of the way we attract 
employees. So we shop around for health care. We have a decent 
pool. We used to be members of a high tech council. We have 
gotten big enough where now we have a big enough pool of 
employees where we can shop for health care and provide it to 
our employees as a benefit.
    So it is getting expensive. We have to be very careful 
where we get it from. But it is part of the total compensation 
package. It is part of how we attract our employees and keep 
our employees.
    Ms. Dahlkemper. Do you think everyone should be mandated to 
be covered?
    Mr. Pochapsky. Who is going to pay for it, then? I mean, I 
don't know how that is going to work if that is the case. I 
know if it is a mandate and everybody can get health insurance 
from somewhere, why would we then offer health insurance? It 
would probably be the first thing that a company would do.
    Ms. Dahlkemper. So you see it as an advantage to your 
company over others to attract?
    Mr. Pochapsky. It is just part of the compensation package. 
I don't know if it is advantage over anybody else, but it is 
part of what you have to pay an employee, someone who works for 
you. And if you want to keep a good employee, you give them 
good health insurance. You make that part of your compensation 
package.
    Ms. Dahlkemper. Okay. Ms. McClain?
    Ms. McClain. I think any company that could afford to pay 
the premium would certainly offer their employees health 
insurance. Now, we offer Blue Cross health insurance and dental 
insurance. We find that our employees expect this of our. And, 
you know, we are glad we can do it.
    The first years we was in business we did not offer health 
insurance. We did not have the money to pay for it. We pay half 
the premium, whether it is single coverage or family coverage. 
The company absorbs half of it, and we are glad to do this.
    Ms. Dahlkemper. Mr. Farra?
    Mr. Farra. We just see it as a cost of doing business. If 
there were some sort of mandate that every business had to 
provide that, I think you would see a lot of small businesses 
go out of business.
    But, you know, on the other hand, a small child in an inner 
city area, they need to have that. So it is kind of who pays 
the bill? Do the businesses pay the bill or does the government 
pay the bill?
    Ms. Dahlkemper. Right now everybody is paying about $1,000 
a year for all of the people who aren't insured. But, you know, 
we are paying for it. I am curious, because I want to know I 
struggled with this as a small business owner. Where your 
feelings are on this because it is a debate that is going to 
happen this summer.
    Mr. Prestemon. In terms of a mandatory requirement on small 
business, that would not be responded to with a well battery of 
small business owners.
    The recurrent theme that I hear, control costs and get 
access to pools, insurance pools, particularly for the company 
that maybe only has five people or ten people in it, there is a 
recurrent frustration. I know there are both market-oriented 
ways and governmental sponsored ways to accomplish that. I 
haven't heard business owners talking in any detail about that, 
but the pooling and cost control are the two things that I 
hear.
    Ms. Dahlkemper. Ms. Brown?
    Ms. Brown. Well, we are a union shop. And we are a large 
shop. And we have incredible health care. We take care of 
everyone across the board. That is not an option. It is not 
really an issue. It is part, as everyone has said, kind of the 
whole package. So we pay a huge amount for that, but that is 
part of what we do for the skilled workforce.
    I would say we would echo that, of course, we want to 
control costs. Of course, the way it is now, it is a huge issue 
for the unions and for a lot of other folks across the board. 
And you know obviously price transparency, I believe that is 
probably a good thing as well. So yes, that is--
    Chairwoman Velazquez. Time has expired. But I would allow 
for the other members of the panel to respond very briefly. We 
are going to have votes in the House any minute. So I would 
like to recognize the gentleman, Mr. Schrader.
    But do you have any of you who want to comment?
    Ms. Storey. May I make a quick comment, please?
    Chairwoman Velazquez. Sure.
    Ms. Storey. Radically different. Yes, we do a 70/30 split, 
but, quite frankly, my opinion is it is none of my business. It 
should be a consumer item that they buy. I do not believe it 
should be provided by employers.
    I am a simplistic thinker. You will have to forgive me. I 
don't pay for their car insurance, their home insurance, 
shouldn't be medical. And when my employee walks through the 
hospital door to the ER, it doesn't cost my employee any more 
than the IBM employee or somebody else. I don't understand why 
our system is that way. It shouldn't be.
    Mr. Bacon. I have a brief comment if you don't mind.
    Chairwoman Velazquez. Yes?
    Mr. Bacon. We have a unique perspective on health care. We 
are self-insured. Our health program is self-insured. And we 
take great strides in providing health care. We also offer it 
to all employees as a staff benefit to help improve our 
retention. So at this point, I think we are okay.
    Chairwoman Velazquez. Okay.
    Ms. Dahlkemper. Okay. Thank you.
    Mr. Reister. Just one brief comment. Just if you allow us 
to pool the companies, so my industry, if we were able to pool 
together, become--
    Chairwoman Velazquez. That is my legislation.
    Mr. Reister. Perfect.
    Chairwoman Velazquez. So that we could spread the risk.
    Mr. Reister. Absolutely. And that will reduce our premium.
    Chairwoman Velazquez. And negotiate the premiums. Yes.
    Mr. Schrader?
    Mr. Schrader. Thank you, Madam Chairwoman.
    I, too, would like to thank everyone for making the long 
trip from back home to Washington, D.C. It gives us, 
particularly in this body when times are so tough and you get a 
lot of negotiate news, to see heroes and heroines out there 
struggling to make a go of it and coming up with good old 
American entrepreneurship to make things happen. So my hat is 
off to you and many others, millions of others, across the 
country. So I appreciate that.
    Quick question for Chandra, if I could. Expand just a 
little bit on that incremental funding you were talking about 
for some of the small businesses. Is that something that we 
have heard before?
    Ms. Brown. I would be happy to expand on it. I will try to 
be short, since I've worked a long time on these issues, 
incremental funding. It is kind of like when we build a boat, 
for example, We are only getting, let's say, the boat. Make a 
really simple example. It costs $3 million. And we only get one 
million in the first year, which can only build a part of the 
boat. You are never going to get the full boat for that amount. 
This is very common on Corps of Engineers projects and 
hydroelectric.
    So we bid the one portion. And that is never the best way 
to bid. We could possibly do it faster and quicker and cheaper 
if you could do the full three million up front, rather than 
you get one million. Okay. Next year we are going to decide if 
they know it has to be funded because you can't have a quarter 
of a boat, but, you know, it goes like that usually over the 
course of three years in this incremental funding.
    And it's fine for the larger businesses. But for small 
businesses if there can be some type of cap, you know, like for 
smaller projects, like under 20 million, that those would be 
fully funded versus funded year by year and constantly going 
back and not 100 percent sure when that money is going to flow, 
that would be very helpful for small businesses across the 
United States.
    Mr. Schrader. Thank you.
    Ms. Brown. Thank you.
    Mr. Schrader. I yield back.
    Chairwoman Velazquez. Okay. Well, I am sincerely, sincerely 
grateful for participation this morning. It has been an 
extraordinary hearing. And it is just great as a member of 
Congress to be able to listen to the stories of small 
businesses. I know that you are the one creating the jobs.
    And the key to get this economy back on track again is by 
providing tools. You know, we might have some difference of 
opinion in terms of the role that the government can play. I do 
recognize that, but I also recognize that sometimes if we focus 
on legislation and programs that are focused on providing tools 
for businesses to be able to grow and expand, such as the 
federal marketplace, affordable credit.
    We all know that all of those large banks are getting help 
from the government. It doesn't trickle down to the small banks 
that are the ones providing the credits for our communities.
    We were able to include provisions in the stimulus package 
for the Small Business Administration to work with the 
financial institutions so that we could increase the guarantee 
for those loans, reduce the fee, and provide a loan 
stabilization program that will give a $35,000 loan free, 
interest-free, loan for those small businesses who are 
struggling to pay existing debt.
    So, with that, I ask unanimous consent that members will 
have five days to submit a statement and supporting materials 
for the record. With objection, so ordered.
    This hearing is now adjourned. Thank you.
    [Whereupon, at 11:51 a.m., the committee was adjourned.]

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