[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
SUBCOMMITTEE HEARING ON THE ROLES
OF FEDERAL LABS IN SPURRING INNOVATION
AND ENTREPRENEURSHIP ACROSS THE U.S.
=======================================================================
HEARING
before the
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
SEPTEMBER 24, 2009
__________
[GRAPHIC] [TIFF OMITTED] TONGRESS.#13
Small Business Committee Document Number 111-047
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 SUBCOMMITTEE
______
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 W. TODD AKIN, Missouri
DEBORAH HALVORSON, Illinois MARY FALLIN, Oklahoma
MELISSA BEAN, Illinois GLENN THOMPSON, Pennsylvania
JOE SESTAK, Pennsylvania
PARKER GRIFFITH, Alabama
(iii)
C O N T E N T S
__________
OPENING STATEMENTS
Page
Nye, Hon. Glenn.................................................. 1
Schock, Hon. Aaron............................................... 2
WITNESSES
Lee, Ms. Cynthia, Associate Director, Langley Research Center,
National Aeronautics and Space Administration.................. 4
Underwood, Mr. Bruce, Technical Manager, Wallops Space Flight
Facility, National Aeronautics and Space Administration........ 6
Sebesta, Mr. Paul G., Center Director, National Center for
Agricultural Utilization Research, USDA Agricultural Research
Service, Peoria, Illinois...................................... 8
Seywald, Dr. Hans, President, Analytical Mechanics Associates,
Inc., Hampton, Virginia........................................ 10
Suber, Mr. Chris, President, Construction Development Services,
Inc., Norfolk, Virginia........................................ 12
Johnsen, Mr. Peter B., Chief Technology Officer, Biofuels
Manufacturers of Illinois, LLC, Peoria, Illinois............... 13
APPENDIX
Prepared Statements:
Nye, Hon. Glenn.................................................. 22
Schock, Hon. Aaron............................................... 24
Lee, Ms. Cynthia, Associate Director, Langley Research Center,
National Aeronautics and Space Administration.................. 27
Underwood, Mr. Bruce, Technical Manager, Wallops Space Flight
Facility, National Aeronautics and Space Administration........ 27
Sebesta, Mr. Paul G., Center Director, National Center for
Agricultural Utilization Research, USDA Agricultural Research
Service, Peoria, Illinois...................................... 31
Seywald, Dr. Hans, President, Analytical Mechanics Associates,
Inc., Hampton, Virginia........................................ 38
Suber, Mr. Chris, President, Construction Development Services,
Inc., Norfolk, Virginia........................................ 41
Johnsen, Mr. Peter B., Chief Technology Officer, Biofuels
Manufacturers of Illinois, LLC, Peoria, Illinois............... 43
(v)
SUBCOMMITTEE ON CONTRACTING AND
TECHNOLOGY HEARING ON THE ROLES OF
FEDERAL LABS IN SPURRING INNOVATION
AND ENTREPRENEURSHIP ACROSS THE U.S.
Thursday, September 24, 2009
U.S. House of Representatives,
Committee on Small Business,
Washington, DC.
The Subcommittee met, pursuant to call, at 12:45 p.m., in
Room 2360, Rayburn House Office Building, Hon. Glenn Nye
[chairman of the Subcommittee] presiding.
Present: Representatives Nye, Ellsworth, and Schock.
Chairman Nye. Thank you all for being here. Our apologies
for getting started a little bit late. We had a vote called
right about at the beginning of the hearing time. The good news
is that we only had one more vote today, and that was it, so we
won't be interrupted again.
What I would like to do is go ahead and call this hearing
to order. And I am going to read an opening statement, and then
I am going to provide an opportunity for the ranking member of
the Committee to make any remarks he would like to make and
then give you all an opportunity to make your statements. And,
again, pleased to have you here today.
Small businesses are the most innovative sector of our
economy. Not only are they responsible for some of the most
important technological breakthroughs of the past century, but
they are also going to be responsible for 60 to 80 percent of
the new jobs as they drive our economy to recovery.
One of the most successful ways we have to help support the
growth of innovative small businesses is through partnerships
with Federal labs and research facilities. Last year, small
businesses won 4,000 contracts through USDA Federal research
facilities, amounting to over $100 million. Meanwhile, NASA
awarded an additional 2,500 small business contracts, totaling
$400 million. All told, fiscal year 2008 saw a $143 billion
investment in research and development.
At face value, these are significant investments, the kind
that go a long way to spark innovation. But the benefits don't
just stop at the laboratory door. Rather, they go on to support
regional economies through job creation and product
commercialization.
In today's hearing, we will examine the role that Federal
labs play in local markets and the support they provide
entrepreneurs nationwide. We will also look for ways to ensure
that procurement policies continue to work for small firms and
that promising research makes its way from the laboratory to
the marketplace.
In local economies across the country, Federal labs have
brought tremendous growth. In Hampton Roads and on Virginia's
eastern shore, NASA labs sustain roughly 11,000 jobs and
generate a billion dollars in economic output each year. At the
national level, the impact of these facilities is also
significant. Every year, the NASA Wallops Flight Facility and
Langley NASA Research Center help create 25,000 jobs and $2.8
billion in revenue, thanks in large part to the ingenuity of
the small businesses with whom they work.
Through R&D grant programs, Federal agencies work with
entrepreneurs to develop critical innovations. As a result of
these partnerships, small firms have successfully pioneered
breakthroughs in sectors ranging from health care to defense.
But while there is no shortage of entrepreneurial innovation,
the best ideas don't always make it to market. The real
economic benefit of R&D occurs when inventions get to the point
where they can be sold to both Federal agencies and private-
sector clients.
One of the businesses you will hear from today, Analytical
Mechanics Associates from Hampton, Virginia, developed cutting-
edge computer simulation and modeling software to enable NASA
to design the spacecraft of the future. That same software is
now used by interior designers and architects to help plan new
offices and homes.
But, unfortunately, the overall rate of commercialization
is not yet where it should be. We must do more to help good
products get to market, and it is important that our Federal
labs have an increased focus on enhancing the process. Not only
will this bring new products and technologies to the market,
but it will help create jobs and speed our economic recovery.
For small firms already making marketable products, the
Federal Government can be a critically important customer. Last
year, the Federal marketplace grew by 9 percent, and today it
is more important than ever that we ensure that the procurement
process is fair for small businesses. Our entrepreneurs must
have the tools they need to compete effectively and win Federal
contracts.
So, as Congress moves forward, we will be making
procurement a priority. By reauthorizing and enhancing SBA's
contracting programs, we can ensure every small firm has a part
to play in the innovation economy.
This past Monday, President Obama spoke about the
importance of investing in research and development, not just
to spur the growth of jobs today, but to maintain our position
as the world leader in science, innovation, and breakthrough
technologies.
Across the country, small businesses are already leading
the way, and Federal laboratories are playing an important role
in supporting their progress. It is my hope that we can build
on their momentum and harness it, not only to strengthen small
firms but to fuel our economy and to power the future of
American innovation.
So, again, I would like to thank everyone for being here.
And, at this point, I will yield to Mr. Schock, our ranking
member, for any opening comments.
[The statement of Mr. Nye is included in the appendix.]
Mr. Schock. Good afternoon. Thank you, Mr. Chairman, for
holding this hearing to study the impact that the roughly 1,000
Federal labs across this country have in spurring economic
growth and opportunity in the States and local communities in
which they operate.
I would also like to extend thanks to each of our
witnesses, who have taken the time to provide this Committee
with their testimony and have traveled here today in person.
Each year, the Federal Government spends about $143 billion
on research activities, of which less than half is spent by
Federal employees. That means there is a significant
opportunity for Federal laboratories to engage in collaborative
research with business or institutions within their local
communities, providing a boost to the surrounding economy.
The importance these laboratories provide to the domestic
marketplace through the exchange of ideas, inventions,
research, and innovation cannot be understated. A number of
inventive advancements developed in this country can be
directly attributed to research done in conjunction with these
Federal laboratories. In my hometown of Peoria, Illinois, the
National Center for Agricultural Utilization Research, or Ag
Lab, was one of the first to discover the uses, benefits, and
power of the penicillin bacteria. The innovation these
laboratories invoke is a vital component to keeping good-paying
research-and-development-related jobs right here in the United
States.
The success of these laboratories show that there is, in
fact, an appropriate level of government involvement in the
field of scientific research. However, it is important that we
find what is the right level of involvement. Should the
government be the sole proprietor of the innovative research
done in this country? Or should we promote policies that engage
private research, protect inventive property rights, and
incentivize an equal participation in research and development
from the private sector? It is important that we develop
policies that continue to ensure our domestic industries
participate in these fields and are assisted, rather than
impeded, by the Federal Government.
Today, I anticipate that we will hear several different
accounts of how the Federal research laboratories from
different agencies are working to ensure that they have
collaborative entrepreneurial partners in the communities in
which they work, whether through the universities in their own
backyard or with local businesses. And I look forward to
hearing how each has made working with their local community a
priority in their business model.
Additionally, I look forward to gaining insight into how
some of these laboratories have been able to have a significant
impact on the local economy, encouraging research-related
businesses to flourish in the immediate areas. Specifically,
what steps have these laboratories taken that are different
from others? How can they be replicated by others to ensure
that these research facilities are serving the American public,
including small businesses in the area, rather than simply
conducting research of interest to the bureaucrats here in
Washington?
It is also equally important that we hear from the small
businesses here today. It is the direct role of this Committee
to ensure the integrity of the contract process so that small
businesses receive their fair share of Federal research and
procurement dollars.
What adjustments could be made to the procurement or
research award process with laboratories on some of these
public-private ventures to ensure that small businesses can
bring their innovative skills to assist the Federal Government
and improve economic development in the area in which the labs
are located? I look forward to the insights that they can
provide regarding the ease or difficulty in which they are
obtaining some of these contracts.
Again, I thank all of the witnesses for traveling here
today. At the end of this hearing, I hope we will gain a better
understanding of what formulas or models work best for Federal
laboratories to help promote economic growth and development
with the local business community and in which they reside.
With that, Mr. Chairman, I yield back.
[The statement of Mr. Schock is included in the appendix.]
Chairman Nye. Thank you, Mr. Schock.
I would like to go ahead, and I am going to call on our
witnesses to present their opening comments one by one.
We have a 5-minute rule that we are going to try to ask you
to stick by. I know sometimes that can be a challenge. But in
order to help you with that, you will notice in front of you
when you are speaking a lighting system. The green one indicate
you have time left. When it gets to yellow, 1 minute. Red means
your 5 minutes are up. So if you get to the red, I hope you
will please try to go ahead and wrap up your comments.
I would like to start by again thanking everyone for taking
the effort to be with us and make the trip to be here today.
And I would like to introduce, first, Ms. Cynthia Lee, who
is the associate director of the Langley Research Center for
NASA. Ms. Lee oversees the operations of the center and serves
as senior adviser to the center's director. Langley was founded
in 1917 and is the Nation's first civilian aeronautical
research facility and NASA's oldest field center.
Ms. Lee, thank you for being with us today, and we are
looking forward to hearing your comments.
STATEMENT OF CYNTHIA LEE
Ms. Lee. Good afternoon. I am Cindy Lee, the associate
director at NASA Langley Research Center, located in Hampton,
Virginia. Thank you for the opportunity to testify before the
Subcommittee regarding the significant role of high-tech small
businesses in the research being performed at NASA Langley.
As you know, Langley is one of 10 NASA centers, and one of
two facilities located in Virginia. NASA Langley provides a
critical agency role through a diverse portfolio of work in
aeronautics, exploration, science, space operations, and
education. We are helping to transform the Nation's air
transportation system to ensure safer, environmentally
friendly, and efficient air travel. We are contributing to the
science that will enable better understanding of our home
planet, and we are helping develop the vehicles to support
future human space activities.
There are currently about 3,700 employees at Langley,
approximately half of whom are private-sector contractors
working on or near-site. Of these private-sector employees,
over one-third are employed by small businesses. During 2008,
NASA Langley made a total of nearly 900 awards to small
businesses and obligated in excess of $150 million on both new
and existing small business contracts for services ranging from
commodities to research.
Today, I am going to highlight three examples of small
businesses providing high-tech, cutting-edge research to
Langley.
Science Systems and Applications, Incorporated, or SSAI, is
a minority, woman-owned business of nearly 550 employees that
is playing a critical role in science research and technology
development. They contribute heavily to the Atmospheric Science
Data Center that is located at Langley. This data center is one
of the premier national repositories of atmospheric data
important to understanding global climate change. Their efforts
in data archiving and processing have resulted in major system
performance improvements while significantly reducing costs.
SSAI has continually shown a dedication to supporting the
NASA mission, and has recognized the importance of attracting
and retaining specialized expertise for Langley. In addition to
their technical excellence, they provide outstanding services
to the community and to their employees through training and
their scholarship programs. SSAI was recently selected as
Langley's 2009 Small Business Prime Contractor of the Year.
Analytical Services and Materials, or AS&M, is a minority,
woman-owned business of approximately 130 employees. For many
years, they have provided analytical and experimental services
that have contributed to NASA mission success across high-
visibility aeronautics and space exploration programs. AS&M
employees are part of a formidable team that has delivered
thousands of computational solutions to the Constellation
Program. Acting upon recommendations of the Columbia Accident
Investigation Board, AS&M employees provided key analyses
leading to corrective actions for improved Shuttle safety.
Responding to a 911 call from the National Transportation
Safety Board, NASA brought AS&M experts in to help us analyze
aircraft structural failures associated with airline accidents.
Their work has been recognized with numerous awards, including
the NASA Engineering and Safety Center Engineering Excellence
Award and the 2006 Small Business Administration National Prime
Contractor of the Year.
Analytical Mechanics Associates, or AMA, is a small
business of nearly 90 employees who deliver critical support to
NASA's exploration, science, and aeronautics programs. Their
high-caliber team has provided key support to NASA's
Constellation Program, including analysis of human lunar
architecture concepts; the Ares launch vehicles, and the Orion
crew module landing system.
AMA has provided critical support to NASA's science
missions to Mars, including modeling and simulation for entry,
descent, and landing. They also supported the recent Inflatable
Reentry Vehicle Experiment flight demonstration at Wallops
Island. AMA was nominated this year for NASA's prestigious
George M. Low Award in the small business services category.
Small businesses are important to Langley because they are
innovative, cutting-edge, agile, responsive, and provide
technical excellence. Because Langley realizes the value of
this community, we are heavily engaged in outreach activities
for small businesses. In 2009, we communicated with small
businesses over 5,000 times. We also have a Small Business
Administration Procurement Center Representative on site. NASA
Langley has spent approximately one-third of our procurement
budget on small businesses for the last 12 years, and we have
exceeded our small business goals for the past 9 years.
Again, I would like to thank you for the opportunity to
appear before the Subcommittee today, and I look forward to
addressing your questions.
Chairman Nye. Thank you very much, Ms. Lee.
I would like to now recognize Mr. Bruce Underwood, the
technical manager of Wallops Space Flight Facility for NASA.
Wallops Space Flight Facility was established in 1945 and is
NASA's principal facility for management and implementation of
sub-orbital research programs.
Mr. Underwood, thank you for being with us.
STATEMENT OF BRUCE UNDERWOOD
Mr. Underwood. Thank you, and good afternoon. My name is
Bruce Underwood, and I am Chief of the Advanced Projects Office
at NASA's Wallops Flight Facility. I am pleased to be here
today to share with you the successes of small businesses at
Wallops.
NASA's Wallops Flight Facility, part of the Goddard Space
Flight Center in Greenbelt, Maryland, is located in a remote
area of Virginia's eastern shore and is NASA's principal
facility for the management and implementation of suborbital
research programs.
Employing approximately 1,000 civil servants and contractor
employees, Wallops is a major economic influence in the
Maryland and Virginia regions, providing high-tech jobs in the
areas of science and aeronautics. Wallops is one of the
region's largest employers and is the largest technical
employer within 100 miles.
Because of the nature of the mission and the remoteness of
our campus, Wallops relies heavily on small businesses for
support services. Wallops has found that there are intrinsic
benefits that come with working with small businesses,
including better customer focus, less bureaucracy, and often
lower overhead costs. Wallops takes pride in being small but
innovative and has found that the small businesses we work with
share this important characteristic.
Wallops currently has six active construction contracts,
all of which have small businesses as the prime contractors.
One of these contractors, Construction Development Services,
Incorporated, is based closely in Norfolk, Virginia. CDSI
performed the renovation of the X-85 launch building at Wallops
Island, a contract that was awarded on February 20, 2008, in
the amount of $1.1 million through the Small Business
Administration's 8(a) Program.
Prior to the completion of the original period of
performance, funding became available to award two options for
the original contract. These two areas of work were for a fire
sprinkler system for the building and for new fabric door
systems. As a small business, CDSI was able to offer Wallops an
exceptional price for sprinkler and door systems that resulted
in a minimal cost increase to the contract. A new period of
performance was established, and the work completed
satisfactorily and ahead of schedule.
CDSI was an exceptional contractor to work with on the
renovation of X-85, the range's main meteorological station.
Our launch range worked seamlessly during the construction
period, which was a major concern. The supervision and
coordination of this project was outstanding, as the contractor
kept the project on schedule while balancing various
subcontractors as well as several contract modifications during
the life of the contract.
In August and September, two new contracts were awarded to
this 8(a) firm for work at Wallops. One is for a new fire
detection system in all of Wallops's buildings, and the other
is for a grouping of small projects at other various
facilities.
In fiscal year 2008, Wallops awarded 59 new contracts to
small businesses, adding to the already existing 46 open
contracts with small businesses. Fiscal year 2008 total
obligations for new contracts to small businesses were $5.5
million, with another $41.5 million in modifications to
existing contracts obligated. These numbers reflect the value
of small businesses to Wallops and their important role in
NASA's work.
Contract awards for Wallops are managed by the Goddard
Space Flight Center, which works to ensure that small
businesses continue to be a vital part of Wallops's operation.
As part of this process, Goddard's Small Business Office
reviews all procurement requests that are expected to exceed
$100,000. Should there be qualified small businesses, the
action is set aside for the small business community. In
addition, all other actions that are not set aside and are
above $550,000 are reviewed, and subcontracting goals are
provided to be incorporated in the request for proposal and
later into the contract of the successful offerer. Through
these procedures, Goddard fosters opportunities for small
businesses to provide their services in support of Wallops'
mission.
While Wallops depends on small businesses for the success
of its operations, the surrounding community relies on the
success of Wallops to sustain and grow the local economy. The
partnership between Wallops and small businesses is integral to
a thriving economy on Virginia's lower eastern shore. And we at
NASA are committed to building upon the current successes of
that partnership to the benefit of all those involved with and
touched by it.
Again, thank you for the opportunity to appear before the
Subcommittee today, and I look forward to your questions.
[The joint statement of Ms. Lee and Mr. Underwood is
included in the appendix.]
Chairman Nye. Thank you very much.
I am going to yield to Mr. Schock to do the next
introduction.
Mr. Schock. Thank you, Mr. Chairman.
Welcome, Mr. Sebesta.
Director Sebesta has been with the agriculture lab in my
hometown of Peoria since November of 2008. Under his
leadership, the lab works to develop new industrial and food
products from agricultural commodities, as well as develop
techniques that are used to control agricultural pests that
decrease crop yields, pose health hazards, and limit exports
for American crops.
Director Sebesta has a long history in scientific research
at the university and Federal level. He has been published
nearly 20 times and given numerous professional presentations
around the country on various research and development topics
relevant to the agricultural community.
Welcome, and thank you for traveling to be with us.
STATEMENT OF PAUL G. SEBESTA
Mr. Sebesta. Thank you, Congressman.
Chairman Nye, Ranking Member Schock, members of the
Subcommittee, it is an honor to be here today to testify before
you, and I thank you for asking me to attend. My name is Paul
Sebesta. I am the center director of the National Center for
Agricultural Utilization Research at USDA Agricultural Research
Service Laboratory in Peoria, Illinois.
Nationwide, ARS operates over 100 laboratories and employs
more than 8,100 people, with a budget of approximately $1.2
billion. The center in Peoria currently employs over 245 people
and has a budget of more than $35 million annually.
ARS recognizes that small businesses are critical to our
economic recovery and strength, to building America's future,
and to helping the United States compete in today's global
marketplace. The staff of the center also recognizes the fact
that we are part of the local community and that the
investments we make have significant impacts on the local
economy. In fiscal year 2009, thus far we have made over
$231,000 in purchases from 19 different small businesses in the
central Illinois region.
ARS strives to assist and protect the interests of small
business concerns in order to preserve free, competitive
enterprise, which will strengthen the overall economy of our
Nation. ARS annually exceeds all Federal small business
procurement preference program mandates, and its small business
coordinators and procurement personnel are extremely
conscientious in assisting Americans to create, build, and grow
small businesses. Thus far in fiscal year 2009, ARS has awarded
69 percent of its purchase contracts, or over $91 million, to
small or disadvantaged businesses.
In order to focus on the regional and local economic
impacts of ARS's contracting, I would like to focus on the
Midwest. A recent review of prime contracts through the third
quarter showed that ARS's Midwest area, of which the Peoria
center is a part, is on course to not only meet but, in most
categories, to far exceed its fiscal year 2009 small business
goals.
The complete results of this survey, as well as the
complete analysis of ARS's contracting nationwide, can be found
in the appendix of my testimony.
The data reveals that two-thirds of all Midwest-area
contract dollars have been awarded to small businesses. It also
shows that the area has nearly tripled the 3 percent mandatory
Federal-wide goal of contract dollar amounts to be awarded to
service-disabled, veteran-owned small businesses.
Examples of ARS's Midwest area's commitment to finding
local small businesses and forging strong business partnerships
are three NCAUR small business contractors in central Illinois
that have been providing supplies and services to the center
for several years.
Maurer-Stutz is an architect and engineering firm who has
an indefinite-delivery, indefinite-quantity contract with the
Midwest area office. Task orders issued to Mauer Stutz average
$40,000 annually.
Poly Generics Company has been providing Environmental
Protection Agency-regulated hazardous waste pickup for over 5
years to NCAUR. Orders placed with Poly Generics Company
average $33,000 annually.
Herr Petroleum has been providing diesel for supplemental
heating for the NCAUR facility for over 2 years. Orders placed
with Herr Petroleum total approximately $23,000.
Additionally, a new 5-year operations and maintenance
contract for NCAUR has just been awarded to AMERITAC, a small
business located in Concord, California, in an amount in excess
of $10 million. The contract staffs approximately 37 local
employees, which has created job opportunities in Peoria.
Materials used in direct support of the operation of the
facility are also provided under this contract. A significant
portion of those materials are purchased locally from small
businesses.
The center in Peoria was established by Congress in 1938
and has occupied the same building since that time. In addition
to being one of its oldest, the facility is also one of ARS's
largest, at over 270,000 square feet. Currently, we are in the
midst of a major multiphase modernization project. The
contracts associated with this project also present
opportunities for small businesses and are a boon to the local
economy.
The current modernization contractor is Hammer Logistics,
located in Caseyville, Illinois. The majority of work performed
on the modernization contracts is subcontracted to local
contractors, and materials are purchased through local
suppliers. From 2000 through 2009, $21.6 million in
appropriated funds have been allocated to NCAUR for
modernization. These construction projects create many jobs
within central Illinois and stimulate the economy through
material purchases.
The American Recovery and Reinvestment Act will
significantly advance this modernization project, as well as a
large number of other ARS construction projects nationwide. The
ARRA appropriated $176 million to ARS to conduct deferred
maintenance projects on its facilities.
Thirty-eight projects have been selected across the agency,
of which Peoria is the largest. The total projected cost for
the Peoria project is estimated to be $40 million, which ARS
estimates will create approximately 435 jobs.
As discussed earlier, ARS in the Midwest area have a strong
history of awarding significant portions of contracted dollars
to small businesses, and it is highly likely that this will
continue as ARS works to obligate its ARRA funding.
In conclusion, Mr. Chairman, ARS realizes that Federal
procurement is associated directly with the economic well-being
of firms, municipalities, and cities. The agency, in concert
with its area offices, will continue to seek partnerships with
small businesses and continue to not only meet but to far
exceed Federal and departmental small business goals.
Mr. Chairman and Ranking Member, thank you again for your
invitation to testify today. I look forward to answering your
questions.
[The statement of Mr. Sebesta is included in the appendix.]
Chairman Nye. Thank you very much.
I would like to go on now and introduce Dr. Hans Seywald,
who is the president of Analytical Mechanics Associates,
Incorporated, headquartered in Hampton, Virginia. AMA is a
small business specializing in aerospace engineering,
information technology, business analytics, and visualization
solutions.
Doctor, thank you for being with us today.
STATEMENT OF HANS SEYWALD
Mr. Seywald. Thank you, Congressman Nye, Congressman
Schock, and distinguished members of the Small Business
Subcommittee on Contracting and Technology.
Thank you for the invitation and the opportunity to testify
before the Committee. Specifically, we are here to discuss our
experience in working with NASA, our role in generating
innovative technology, and our success in stimulating local
economic activity.
We are sincere in our hope that small business continues to
be the driver of America's innovation engine. We seek not only
to support NASA's mission to lead the world in space,
exploration, science, and aeronautics, but also to help ensure
America continues to be an economic leader in the 21st century.
Headquartered in Hampton, Virginia, home is where the heart is.
Our passion is to help NASA Langley and Wallops Flight Facility
in their honorable pursuits.
Analytical Mechanics Associates, or AMA, is a small
business celebrating almost 50 years of service to NASA and the
industry. We specialize in engineering, information technology,
visualization, and business analytics. Armed with this skill
set and our passion to do excellent technical work, AMA has
supported a broad range of past, present, and future NASA
missions, including space shuttle, International Space Station,
the Orion spacecraft and ARES launch vehicle developments for
the Constellation Program, Mars missions, Earth science
missions, and the Hyper-X flight experiment.
AMA's current management, Dr. Renjith Kumar and myself,
took over the company in 1997 after economics and health forced
the previous owners to sell the business. With just five
employees and limited cash flow, the company was barely viable
and could have folded at any time, but it didn't.
Our primary motivation in taking over the company had
little to do with the ambition of running a business. Like so
many small technical firms in their infancy, the primary
objective was to do cutting-edge engineering research and
development. Had the company gone out of business, an
interesting small business innovative research grant that we
were working on would have evaporated. We didn't want that to
happen.
So that is our story, how two engineers evolved into
entrepreneurs. We believe we are not alone. We believe that
this is the true spirit of business in America, small business
in America.
The company survived in part because we were able to enter
the company into the SBA 8(a) program. We were actually
surprised that we were still solvent at the end of the first
year. Not only had we not lost our life savings, we were able
to pay ourselves a meager salary and, at the end of the day,
made a profit. This exceeded our expectations. So we made a
$5,000 donation to a local high school in an economically
disadvantaged area. The school later told us that it was the
largest donation that they had ever received.
Let's now fast-forward 12 years. Today, AMA has almost 100
employees with some full-time consultants. We have experts in
multiple aerospace engineering disciplines, information
technology, business analytics, modeling and simulation, and
visualization and multimedia.
The majority of our business falls under government
contracts for NASA, but we have also started doing some work in
the commercial sector. Over the last few years, our commercial
business has fluctuated between 10 percent and 30 percent, with
an overall increasing trend.
In a hyper-competitive global market, it is not easy for a
small business to establish a presence in the high-tech
industry, but we are making good process. Could we have done it
without the relationship to NASA? Absolutely not.
Before we could cross over into the commercial market, we
needed to assemble a critical mass of talent. The contract work
at NASA enabled us to grow and retain these critical skills. In
addition, being able to refer to our NASA work helped build the
trust of new commercial clients.
Today, most of the solutions that we provide to our
commercial customers are spinoffs or extensions of technologies
that we developed for our customers at NASA. Also, our work at
NASA provides a somewhat steady funding stream, helping bridge
funding gaps that we face in the much more volatile commercial
sector.
I think I need to skip a bunch of things.
Let me briefly touch on the role in education. We, as a
company, place high importance on education and its role in the
wellbeing of our community and country. We are privileged to
help mold and educate future generations of aerospace and IT
professionals through our internship programs, oftentimes in
collaboration with NASA. There is nothing that captures the
imagination of young minds more than space flight.
In conclusion, I would like to reiterate our sincere thanks
for the opportunity to share our thoughts and story with the
distinguished Committee. We would like to thank NASA for the
continued support for almost 50 years. We are committed to the
NASA mission and hope our efforts continue to help America
pursue her highest goals.
Thank you.
[The statement of Mr. Seywald is included in the appendix.]
Chairman Nye. Thank you very much, Doctor.
I would like to go ahead now and introduce Mr. Chris Suber,
president of Construction Development Services, Incorporated,
based in Norfolk, Virginia. Construction Development Services
provides general contracting, project management, design build,
and consulting services to their clients and is a certified
8(a) small business established in 2000.
Mr. Suber, thank you for being with us.
STATEMENT OF CHRIS SUBER
Mr. Suber. Thank you, Congressman Nye, Mr. Schock. And I
would like to also thank my partner here today with me, Joe
Slavinsky.
Construction Development Services, or CDSI, began servicing
the Hampton Roads area in 2000, performing residential and
light commercial projects. In May of 2006, CDSI became
certified as a small disadvantaged business 8(a) general
contractor.
This certification has allowed us to diversify and perform
different types of construction projects, such as residential,
institutional, commercial, and infrastructure. Each project has
varied in cost and complexity with various scopes of work,
including roofing, masonry, site work, HVAC, electrical, fire
protection systems, sewage lift stations, and utilities. We
have completed each project successfully by partnering with the
government and understanding their needs and requirements.
My primary customer is the Federal Government at the
military bases located in Hampton Roads and NASA Wallops
Island. We currently service Norfolk Navy Base, NASA Wallops
Island, Little Creek Amphibious Base, Portsmouth Naval Shipyard
and Medical Center, and Langley Air Force Base.
In the last 3 years, we have completed over 75 different
projects, ranging from $500 to $4.5 million. We have also
consistently employed 20 to 25 personnel and employed
approximately 75 different small, service-disabled-veteran-
owned business, woman-owned businesses, and other
subcontractors, vendors, and a multitude of tradespeople
through this opportunity. These projects have been traditional
design build and bid build, and they have all been awarded on a
firm fixed price.
CDSI strives to know government contracting. As a result,
we are able to adapt and use our in-depth experience gained
while working at other small businesses and my partner Joe's
experience as a Civil Engineer Corps officer in the Navy
Seabees. Our goal is to be the Federal Government's contractor
of choice for any type of project, including renovations,
design build, contingency operations, and emergencies.
As Mr. Underwood testified, CDSI recently completed the
renovation to launch project building X-85 at NASA Wallops
Island. We demolished the existing facility down to its bare
structural columns, concrete slab, and removed all exterior and
interior walls and utility systems in total. We then renovated
the facility, to include a new front entrance lobby area, which
required pile-driving operations, new masonry/EIFS/storefront
exterior, newly framed walls with interior walls, ceiling and
floor finishes, along with a completely new electrical and HVAC
system, men and women's restrooms, three 30-foot fabric-type
roll-up doors, along with a new fire alarm and sprinkler
systems. All work was in compliance with all the latest ADA
requirements.
The project involved 15 different subcontractors from both
the eastern shore and Hampton Roads area. The project created a
multitude of job opportunities, both for CDSI and all of our
vendors and subcontractors, of which 90 percent were small
businesses themselves, and employing approximately 85 different
people during the various construction phases of the project.
This project provided the scientists and technicians with
far better working conditions, very modern finishes, amenities
and utility systems which bettered the overall environment to
conduct their research.
We look forward to participating in similar type
construction projects that improve the quality of life for
researchers and, at the same time, help the economic climate of
the local area.
Thank you for this opportunity, and we look forward to
answering any questions.
[The statement of Mr. Suber is included in the appendix.]
Chairman Nye. Thank you, Mr. Suber.
Again, I am going to yield to our ranking member, Mr.
Schock.
Mr. Schock. Thank you, Mr. Chairman.
It is my pleasure to welcome back to Washington, D.C., Dr.
Peter Johnsen, who is the chief technology officer for Biofuels
Manufacturers of Illinois, or BMI, which is also located in
Peoria, Illinois.
BMI is assisting with the operation and construction of a
biodiesel plant to be located in Mapleton, Illinois. BMI is
also active in the development and education of the pennycress
crop as a renewable energy source.
Dr. Johnsen has 30 years' experience at the university,
government, and private-sector levels and the research and
development field, helping to bring scientific innovations into
the marketplace. Dr. Johnsen is also the former director of the
agricultural lab in Peoria, and in 2004 he was named the
Federal laboratory director of the year.
Dr. Johnsen, appreciate you coming to D.C. And joining us
here today, and I look forward to your testimony.
STATEMENT OF PETER B. JOHNSEN
Mr. Johnsen. Mr. Chairman and Congressman Schock and
members of the Committee, thank you for the invitation to
testify before you today on the importance of small businesses
working with Federal research facilities to promote innovation
and entrepreneurship.
I believe that I may have a unique perspective in that I
have been both a director of a national laboratory and am also
now involved in several small technology companies working with
Federal research facilities. I spent 20 years with USDA
Agricultural Research Service and 12 of those as the director
of the National Center for Agricultural Utilization Research in
Peoria, Illinois.
And as a scientist and administrator, I was an early user
and adopter of the National Technological Transfer Act, or the
CRADA, Cooperative Research and Development Authority, to work
with many companies to commercialize new discoveries. I have
seen firsthand the benefit, and even the necessity, of Federal
laboratories working with the private sector in creating
economic value from basic science discoveries.
Since leaving the government, I have been involved with
several companies that have approached technology
commercialization in very different ways. In one, we took
fundamental knowledge discovered by a USDA laboratory and
refined the concept to develop a commercial product and methods
to manufacture an advanced biobased product.
Absorbent Technologies, Incorporated, makes ZEBA, a starch-
based "hydrogel" which holds and releases water similar to a
sponge below the soil. Each ZEBA granule holds 500 times its
weight in water and reduces the amount of water and nutrients
required to produce greater yields and higher-quality crops.
This company made use of the CRADA process early on and quickly
achieved results that gave it the ability to obtain venture
capital funding to bring its products to the marketplace.
Today, we are selling this innovative product for commercial
agriculture and lawn and garden applications in more than 10
countries worldwide.
I also serve as the chief technology officer of Biofuels
Manufacturers of Illinois, as Congressman Schock mentioned. Our
plan is to build and operate a production facility for
biodiesel in central Illinois. But what distinguishes our
effort is that we have been working with the USDA ARS to
develop a new energy crop called pennycress. Pennycress is a
member of the mustard family that has seeds with 36 percent
oil, or twice that of soybeans, that can be used to make high-
quality biodiesel fuel.
The crop is planted in the fall after corn harvest, grows
as a winter annual, and then is harvested in late spring before
soybean planting. So farming pennycress uses traditional
equipment and allows farmers to grow two crops in 1 year,
earning additional income. And, as a nonfood crop that does not
displace food crops from the land or marketplace, it avoids
both the food-versus-fuel and the indirect land use
controversies completely.
The economic impact of this new crop is significant. A
single biodiesel plant will purchase $100 million of pennycress
seed each year. And Illinois alone has the capacity for 18 such
operations, with the economic impact of pennycress as an energy
crop across the Midwest corn belt being extraordinary.
It was USDA research scientists who discovered the
potential of pennycress as a remarkable new energy crop, but
the only way for the Nation to benefit from this discovery was
for the government to collaborate with the private sector.
However, there are a number of issues that have made it very
difficult for a small business like ours to work effectively
with the government in completing this.
We have made significant investments in sponsoring research
at two Federal laboratories and the university through CRADA
agreements to develop this crop. And, clearly, it takes
significant financial upfront capital to create such an energy
crop, develop its logistics infrastructure, and optimize
processing technology.
Because this energy crop meets the strategic objectives of
both USDA and DOE in creating a sustainable energy source, we
have competed for competitive grants to develop this crop. One
of the requirements of these grant applications is that a 20
percent financial match be made by the applicant, and for small
businesses like ours this is a very difficult problem.
It is ironic that BMI is funding USDA and university
research rather than being able to obtain contracts from them
to perform the important task of creating a new environmentally
friendly and sustainable energy source. It would be helpful if
the Committee were to examine the policies that require small
businesses to provide significant financial matches in grant
application processes. This is a very difficult process for the
small companies and limits the scope and duration of the
project proposals. We would propose that these be eliminated
entirely or be scaled to the resources of the small technology
company.
In my many years as a university professor, director of a
government laboratory, or in a private company, I have seen the
evolution of laws and policies that enhance the ability of the
Nation to benefit from public investment in science and
technology. I hope that I have provided information today and
in my written statement that this Committee will consider in
its work to maximize the opportunities of small businesses to
work with Federal research laboratories to promote
entrepreneurship and innovation.
Thank you for this opportunity, and I would be happy to
answer questions at the appropriate time.
[The statement of Mr. Johnsen is included in the appendix.]
Chairman Nye. Great. Thank you.
And, again, thank you to all of our panel members for being
here and for your opening statements.
I am going to ask a number of questions and then offer
opportunities for the other members of the Committee to ask
some questions.
I want to just start with Ms. Lee. I want to follow up on
something you mentioned in your opening statement. And you
outlined some successful examples of small businesses with whom
you are working through Langley, one of whom is here. And, in
fact, you mentioned that Langley had exceeded its small
business target, I think you said, over the last 9 years in a
row, and I am impressed to hear that.
And I was hoping you would maybe provide us with a little
bit more detail on some, perhaps, some examples that we can use
and apply to others and tell us, kind of, how you did that or
if there are particular advantages at Langley or things that
you have done that have helped you surpass that goal and what
might we learn from your example.
Ms. Lee. Thank you, Chairman. I would be happy to.
So, for us, small business is a contact sport. And we have
a small business office located at Langley that does
significant marketing and outreach. They counsel small
businesses. They provide things like an automatic e-mail system
that is actually a NASA system, such that companies can provide
their area of expertise or their core competency and
automatically gets update from FedBizOpps on either government-
wide or NASA procurements.
But we also do a host of other things. We do conferences,
expos and market research to ensure we know what companies are
out there and what they are providing. And then regionally, we
do a lot of things.
Overall in our procurement office, 63 percent of our
procurements--this is not just small business--are for funds
that are for work performed in Hampton Roads. And so,
regionally we have a Hampton Roads Technology Council. We have
an AeroSpace Day, where we match local businesses with NASA,
and together we go up to the General Assembly and we talk about
the aerospace community and what we bring to the Commonwealth.
So we raise awareness in that way for our small businesses.
We have texpos, where we invite industry in so that they
can see the areas of work that NASA's interested in. And then
we have open houses, as well.
And then a couple of things that are a little bit unique to
NASA Langley, we have things called tech fusion and tech
infusion workshops. Now, tech fusion workshops are between our
prime contractors and SBIR--or small business innovative
research--proposal winners, such that those prime contractors
can be made aware of those innovations. And then we target our
prime contractors with additional goals beyond our own goals.
So we ask them to meet some of them upwards of 30 percent
goals. So, goals just like ours that they have to meet. And so
it is incumbent upon them to understand what our small
businesses are doing.
And then, likewise, we have many of our researchers that
may not be aware of the contribution small businesses can make.
So we have what are called tech infusion workshops, where we
bring NASA program folks together with the SBIR community so
that they can share and learn about each other's needs and
contributions that they can make.
So, there are a host of things that we do. It is not any
one answer that have made us successful, but it is continuing
to get out there and understand the community and then set
stretch goals for ourselves that has made us successful.
Chairman Nye. Okay, great. Well, appreciate that.
And I would like to follow that up by a question to Mr.
Underwood. Wallops has been doing a lot of good work. And I
wanted to note that, next year, a Taurus II rocket will launch
to supply the International Space Station, noting also that
there are additional commercial launch opportunities
developing.
Can you please just give me some thoughts on where you see
that going and how that will affect the local small business
community?
Mr. Underwood. Yes, certainly.
It is quite exciting, actually, for us. And we kind of view
it as a major landscape changing, both figuratively as well as
literally, in what is happening at Wallops, because over the
next year and a half we have at least 40 and as much as perhaps
90-some million dollars' worth of construction activities that
we are going to have to undertake in order to create the
infrastructure to accommodate the Orbital Sciences
Corporation's needs. Some of that will be from Federal
investments, and some will actually be through the Commonwealth
of Virginia's investments in their infrastructure through our
commercial space port. All of us in this exercise will be
utilizing small businesses to one degree or another to help
with those construction activities.
And then, along with that are obviously, beyond the
facilities, the brick-and-mortar aspects of accommodating the
new vehicle and the growth in our launch activities. We are
actually going to have Orbital Sciences Corporation bringing a
large contingent of new employees to the area, of which they
are going to be needing a lot of services, themselves, purely
on the commercial side of what is going to happen. They are
going to need workforce for engineers and laborers. They are
also going to be needing component parts. All of these
opportunities most easily or most effectively are provided by
the local economy as opposed to having to bring them in from
outside. So the first place that all of us tend to look is in
our own backyards for these opportunities.
So I think the combination of what the Federal Government
is going to be doing on the NASA side, as well as what the
State, THE Commonwealth of Virginia, as well as what Orbital
Sciences themselves are going to be doing, are going to create
an enormous amount of opportunities over the next year. It is
quite exciting at Wallops.
Chairman Nye. Have you found that finding small business
local in the community has been a challenge in terms of your
interest in local small business community makeup? Or is that
something that has worked out well?
Mr. Underwood. It is kind of a constant supply-and-demand
juggle, which is, if there aren't the opportunities, then it
takes a while for the companies to react when they do show up.
So, in which cases, many of us at Wallops, both on the
commercial side and the government side, are working with
organizations such as the local community colleges and things
like that to make sure that we are waking them up to the
opportunities that are forthcoming. So then we hopefully have a
workforce that is interested in the local folks coming out of
the high schools, and go into area where we can keep them at
home and actually employ them. So that is one particular aspect
of what we are doing, working with the local community colleges
and universities to be aware of the opportunities that are
coming.
But, yeah, in many cases, the growth happens faster than we
can accommodate it, so we have to look elsewhere. But that is
not our first means of searching.
Chairman Nye. Okay. Thank you.
I want to ask both Dr. Seywald and Mr. Suber, you mentioned
that your businesses are 8(a) businesses. And I want to
actually take the opportunity to ask you if you could comment
on how the program has been helpful in terms of opening doors
specifically for your companies, but also if there are any
challenges that you have had with the program and if there are
things that you would like us to know in terms of how we might
make the programs work better or anything that you would change
about it.
And I will offer the opportunity to both of you to comment.
Mr. Seywald. The program was absolutely essential for us in
the beginning when we were, like, five people. It means, like,
three income-generating people and two on overhead. SBA helped
us tremendously in getting on the 8(a) program. And once we
were on the 8(a) program, we were more attractive to the prime
contractor as a teaming partner.
Small businesses, microbusinesses, like less than 10
people, have really no way of interacting directly with NASA or
other Federal labs. It is typically as a subcontractor, and
there it is more like throwing darts. It is very difficult
making yourself attractive for a prime contractor, and it is
hard to pick the right one if you have a choice.
So, if the prime contractor loses--and the prime contractor
usually loses not because of the sub not performing well or not
having a great background; it is based on the qualification of
the prime. So performance of the sub is not really a big issue
there in the potential survival or demise of the small
business.
Yes, the SBA program was extremely helpful in the
beginning. And, without it, we would probably not have
survived.
Mr. Suber. Like Dr. Seywald said, it also made us more
attractive, as well. Some of the challenges that we faced were,
I guess, not similar to the service side of it, but bonding was
an issue. We know that anything over the 35 mark you need a
payment bond, and anything over 100,000 requires a performance
and a payment bond, which is directly tied back to the capital
of the company.
And so, many times, you know, if personally you, as the
individual owner or group of owners, may not have all of the
capital necessary to get the appropriate bonding, you can have
all of the capabilities to service a contract but not be able
to be awarded it because of the bonding.
The other piece of the challenge, I would say, is getting
to the right person that could help you find or get that
contract at a base where you don't already have a relationship.
For Langley, for NASA Wallops, for all of the bases that I
mentioned, we had previous relationships, where we knew
someone, where we could get past the gate, get in the door,
talk to the right people. That seems to be a challenge.
So if we had an opportunity--you can't always get to the
right folks, like Ms. Lee said, at some forum or something like
that. If there was another way that you can get to the right
person, that would be helpful.
But it was critical to our success, as well.
Chairman Nye. Great.
And I want to offer, actually, an opportunity generally for
any of the three of you, the business owners here, to provide
any more comments on the contracting process.
And if there are other things that you think particularly
work well or barriers that you have identified that make it
difficult for you, I want to offer an opportunity for anyone to
add additional comments on things that they think we ought to
know.
Mr. Johnsen. Well, one of the things that is a little bit
different for the agricultural community from, say, NASA or
Department of Energy is that there are not a lot of technology
contracts that are awarded to do discovery or development work.
The only funding that comes in that direction tends to be in
the form of competitive grants, and those are very, very
difficult.
I mentioned one issue with the matching process, but there
are other elements that make small businesses be disadvantaged
in competing for those grant systems that relate to, for
example, in the loan guarantee programs that require that you
have a money center bank cosponsor your application with a loan
guarantee program.
Where we have been able to put together a consortium of
community banks who are willing to help us with the project,
the USDA requires that a large money center bank, with the
experience of a similar-size project, be the lender of record.
And that means that small community companies and banks can't
build the capacity to go after the larger kinds of
opportunities.
So that is another problem for small businesses within the
agricultural sector.
Chairman Nye. Go ahead. I will yield to Mr. Schock.
Mr. Schock. I am just curious, for the benefit of the
Committee, if you can talk a little bit more about that. I
heard you say that they not only require a specific bank but
also that bank have a history on like projects.
Mr. Johnsen. Exactly.
Mr. Schock. Well, how does that spur innovation? If you are
doing something new, how can a bank have history on this kind
of specific project?
Mr. Johnsen. That is the conundrum. It is sort of a catch-
22, in that the loan guarantee programs are typically designed
around development of rural infrastructure. And so, these are
sort of classic construction projects. But if you want to come
forward to build a new technology, a new kind of operation, you
sort of fall in the gap with the rules that surround both the
expertise of the company and the expertise and the resources of
the lending institution.
And so it has just been very difficult to kind of move an
innovative project forward with these traditional programs.
Mr. Schock. And do you know, based on what you are being
told, are those rules? I mean, in other words, are those
regulations promulgated by rules? Are your Federal folks
telling you--I won't call them what I was going to say--
Mr. Johnsen. Well, I will tell you where the language
resides. The language resides in the Federal Register, a
description of the program. And so, when we get ready to
respond to the requirements of the program, we have discovered
that we can't qualify even to make the application, because we
cannot get a money center bank to--because there are none in
the central Illinois and the Midwest that are prepared to help
us move a proposal like that forward.
But, like I said, we have put together a consortium of
community banks, who have very solid financial standing now, a
lot of money to lend. But they cannot go before the--and this
is the Rural Development Agency that we--and we can talk more
offline about this specific program. It is a 9003. It goes on
and on.
Mr. Schock. Okay, great. Thank you.
Chairman Nye. Well, I appreciate that. It sounds like you
have highlighted a very practical challenge.
Again, I offer the opportunity to anybody else on the
business side that wanted to comment on other challenges, if
you have any.
Mr. Seywald. In our experience, the contract bundling made
it very difficult. Small businesses, even if they have great
capabilities, typically cannot go directly to NASA and get
these micro contracts. They really depend on the prime
contractors. And so, it is not often the capability of the
small business, it is the relationship to the prime contractor
that plays a major role.
Chairman Nye. Okay. Yeah, and of course that is something
that we have heard a number of times.
Again, I also want to offer an opportunity to our agency
representatives to make any comments about particular tools
that they have found useful in attracting small businesses or
helping achieve small business contracting goals or any
obstacles that you find that you think we might be helpful in
solving or that we at least ought to be aware of.
Ms. Lee. I think one thing--you mentioned the Small
Business Administration. And one of the things that we make
sure in our small business office is to refer folks to the
Small Business Administration Small Business Development
Center, because we have 29 of those in Virginia, and it really
does assist those small businesses in how to start up.
We also send folks to the DOD Procurement Technical
Assistance Centers, or PTACs. That helps a small business learn
how to do business with the Federal agencies. And so we hear
from our small businesses that that has been very effective in
helping them learn how to work with Federal agencies.
Now, on the other side, once we have a contract with a
small business, we look at a little bit different approach in
terms of what they have to do in the way of reporting. Often,
with our prime contractors, we have very rigorous costing
performance reporting requirements, earned value management and
things like that, that would be required. For small companies
we don't necessarily require that level of rigor, because we
know that that is something a small company wouldn't be able to
do for us. And so, while we do expect costing performance that
is excellent, we still look at different ways to help them do
that reporting for us.
Chairman Nye. Okay. Thanks.
I think I will yield now to Ranking Member Schock for any
other questions that he might have.
Mr. Schock. Thank you, Mr. Chairman. You have asked a lot
of good questions, so I don't have as many left.
But I would ask specifically for one of my guests, Dr.
Sebesta, if there is anything that we can be doing here in
Washington, either through policies or providing you dollars
for infrastructure, that would better help you create, kind of,
agricultural utilization clusters there in Peoria or allow for
better synergies to take place.
Mr. Sebesta. Thank you, Congressman.
We are always looking for opportunities to partner with
small business and with creative companies, such as BMI, in the
development of technologies that come out of our research
center. And perhaps we could have another dialogue later on how
we might be able to do that and bring people together that we
need to have that conversation.
Our scientists are evaluated by the impact of their
research, and that impact is measured by the amount of private-
sector partners we have on that research and how that research
is bettering American lives. And so we need to look at how we
can develop that further.
Mr. Schock. Okay. Very good.
Dr. Johnsen, I am interested in your reaction to the 2007
energy bill. The Small Business Administration, as a result of
the 2007 energy bill, was required to create some special types
of venture capital that invest in small businesses involved in
the development of renewable fuels.
And I am wondering if you are aware of that and whether
such a venture capital company would help your company,
specifically BMI.
Mr. Johnsen. We are aware of that. One of the challenges
for most venture capital systems and programs is that they
require that there be a large body of intellectual property
protection--that is, a barrier to entry from other companies.
When you are trying to do something similar to BMI, which
is to create a whole national system of growing pennycress,
where many other biodiesel companies would then take a crop
that has so many economic and environmental and social
advantages and make a renewable fuel, a company like ours,
which is almost doing the public duty of the USDA in developing
these kinds of activities, sort of falls short in the eyes of
the venture capitalists. Because they are looking for, how can
I invest in a company, make sure it makes the most money
relative to anybody else that competes. And so, for a company
like us that is trying to invent a system which is open, which
serves the greatest national need, is a very difficult thing
for venture capital.
That being said, I think that those kinds of programs can
enhance something that we have in Peoria called PeoriaNEXT,
which is a partnership between, say, the Ag lab, Bradley
University, Caterpillar research and development, the
hospitals, where we are trying to actually create a business
cluster around the research and development technologies.
One of the things that PeoriaNEXT lacks is, sort of,
operating funds to develop the relationships between the Ag
lab, the scientists at Bradley University, the scientists that
are at Caterpillar, where they can create businesses so that
those businesses can then grow and compete for opportunities.
So those kinds of, sort of, nurturing of that
infrastructure to grow clusters is something that is a
shortfall in our region and would be very helpful to growing
small businesses that are particularly around science,
technology, and agriculture.
Mr. Schock. Very good.
That is all I have.
Chairman Nye. Great.
Well, this is very helpful to us. And I want to thank,
again, our panelists for taking the time to be here today and
for the hard work that you are doing out in our communities to
try to spur innovation. I appreciate your being here and
sharing your thoughts and your expertise with us and wish you
all a very safe trip back home. Thank you very much for being
here.
I am going to ask for unanimous consent that members have 5
days to submit statements and supporting materials for the
record.
Without objection, so ordered.
Chairman Nye. This hearing is now adjourned.
[Whereupon, at 1:50 p.m., the Subcommittee was adjourned.]
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