[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
DOING BUSINESS WITH THE
GOVERNMENT: THE RECORDS
AND GOALS FOR SMALL, MINORITY
AND DISADVANTAGED BUSINESSES
=======================================================================
(111-59)
HEARING
BEFORE THE
SUBCOMMITTEE ON
ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 17, 2009
__________
Printed for the use of the
Committee on Transportation and Infrastructure
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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
JAMES L. OBERSTAR, Minnesota, Chairman
NICK J. RAHALL, II, West Virginia, JOHN L. MICA, Florida
Vice Chair DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of JOHN J. DUNCAN, Jr., Tennessee
Columbia VERNON J. EHLERS, Michigan
JERROLD NADLER, New York FRANK A. LoBIONDO, New Jersey
CORRINE BROWN, Florida JERRY MORAN, Kansas
BOB FILNER, California GARY G. MILLER, California
EDDIE BERNICE JOHNSON, Texas HENRY E. BROWN, Jr., South
GENE TAYLOR, Mississippi Carolina
ELIJAH E. CUMMINGS, Maryland TIMOTHY V. JOHNSON, Illinois
LEONARD L. BOSWELL, Iowa TODD RUSSELL PLATTS, Pennsylvania
TIM HOLDEN, Pennsylvania SAM GRAVES, Missouri
BRIAN BAIRD, Washington BILL SHUSTER, Pennsylvania
RICK LARSEN, Washington JOHN BOOZMAN, Arkansas
MICHAEL E. CAPUANO, Massachusetts SHELLEY MOORE CAPITO, West
TIMOTHY H. BISHOP, New York Virginia
MICHAEL H. MICHAUD, Maine JIM GERLACH, Pennsylvania
RUSS CARNAHAN, Missouri MARIO DIAZ-BALART, Florida
GRACE F. NAPOLITANO, California CHARLES W. DENT, Pennsylvania
DANIEL LIPINSKI, Illinois CONNIE MACK, Florida
MAZIE K. HIRONO, Hawaii LYNN A WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania JEAN SCHMIDT, Ohio
TIMOTHY J. WALZ, Minnesota CANDICE S. MILLER, Michigan
HEATH SHULER, North Carolina MARY FALLIN, Oklahoma
MICHAEL A. ARCURI, New York VERN BUCHANAN, Florida
HARRY E. MITCHELL, Arizona ROBERT E. LATTA, Ohio
CHRISTOPHER P. CARNEY, Pennsylvania BRETT GUTHRIE, Kentucky
JOHN J. HALL, New York ANH ``JOSEPH'' CAO, Louisiana
STEVE KAGEN, Wisconsin AARON SCHOCK, Illinois
STEVE COHEN, Tennessee PETE OLSON, Texas
LAURA A. RICHARDSON, California
ALBIO SIRES, New Jersey
DONNA F. EDWARDS, Maryland
SOLOMON P. ORTIZ, Texas
PHIL HARE, Illinois
JOHN A. BOCCIERI, Ohio
MARK H. SCHAUER, Michigan
BETSY MARKEY, Colorado
PARKER GRIFFITH, Alabama
MICHAEL E. McMAHON, New York
THOMAS S. P. PERRIELLO, Virginia
DINA TITUS, Nevada
HARRY TEAGUE, New Mexico
VACANCY
(ii)
Subcommittee on Economic Development, Public Buildings, and Emergency
Management
ELEANOR HOLMES NORTON, District of Columbia, Chair
BETSY MARKEY, Colorado MARIO DIAZ-BALART, Florida
MICHAEL H. MICHAUD, Maine TIMOTHY V. JOHNSON, Illinois
HEATH SHULER, North Carolina SAM GRAVES, Missouri
PARKER GRIFFITH, Alabama SHELLEY MOORE CAPITO, West
RUSS CARNAHAN, Missouri Virginia
TIMOTHY J. WALZ, Minnesota MARY FALLIN, Oklahoma
MICHAEL A. ARCURI, New York BRETT GUTHRIE, Kentucky
CHRISTOPHER P. CARNEY, ANH ``JOSEPH'' CAO, Louisiana
Pennsylvania, Vice Chair PETE OLSON, Texas
DONNA F. EDWARDS, Maryland
THOMAS S. P. PERRIELLO, Virginia
JAMES L. OBERSTAR, Minnesota
(Ex Officio)
(iii)
CONTENTS
Page
Summary of Subject Matter........................................ vii
TESTIMONY
Amirian, Ray, Nastos Construction Company, District of Columbia
Small Business Winner, 2009.................................... 34
Ayers, Stephen T. AIA, Acting Architect of the Capitol........... 4
Giordano, Catherine President/CEO, Knowledge Information
Solutions, Inc................................................. 34
Hansen, Jacob, Director, Acquisition Management Division, Federal
Emergency Management Agency.................................... 4
Mosier, Roger, Vice President of Facilities, The John F. Kennedy
Center for the Performing Arts................................. 4
Riggs, Tamela, Deputy Assistant Commissioner for Vendor Alliance
and Acquisition, General Services Administration, Public
Building Service............................................... 4
Rouse, Terrie S., Chief Executive Officer for Visitor Services,
Capital Visitor Center......................................... 4
Stephenwoof, Rosalind Styles, President and CEO, Capitol City
Associates, Inc................................................ 34
Watley, Rudy, Supplier Diversity Program Manager, Office of Equal
Employment and Minority Affairs, The Smithsonian Institution... 4
Zingeser, Joel, Associated General Contractors of America........ 34
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Carnahan, Hon. Russ, of Missouri................................. 54
Norton, Hon. Eleanor Holmes, of the District of Columbia......... 55
Oberstar, Hon. James L., of Minnesota............................ 59
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Amirian, Ray..................................................... 60
Ayers, Stephen T................................................. 62
Giordano, Catherine.............................................. 74
Mosier, Roger.................................................... 91
Riggs, Tamela.................................................... 94
Rouse, Terrie.................................................... 104
Stephenwoof, Rosalind Styles..................................... 108
Watley, Rudy..................................................... 113
Zingeser, Joel................................................... 116
SUBMISSIONS FOR THE RECORD
Ayers, Stephen T. AIA, Acting Architect of the Capitol:..........
Chart entitled, "Smithsonian Institution Contract Awards to
Small and Small Disadvantaged Business Fiscal Years 2004-
2008".................................................... 66
Chart entitled, "Status of SI Supplier Diversity FY 2009
Goal Accomplishments..................................... 67
Memorandum of Understanding between the Small Business
Administration and the Architect of the Capitol.......... 68
Hansen, Jacob, Director, Acquisition Management Division, Federal
Emergency Management Agency, responses to questions from the
Subcommittee................................................... 79
.................................................................
Riggs, Tamela, Deputy Assistant Commissioner for Vendor Alliance
and Acquisition, General Services Administration, Public
Building Service:..............................................
Chart entitled, "FY 2009 PBS National Capital Region
Preliminary Small Business Goaling Achievement".......... 98
Responses to questions from the Subcommittee............... 99
Rouse, Terrie S., Chief Executive Officer for Visitor Services,
Capital Visitor Center, responses to questions from the
Subcommittee................................................... 106
Watley, Rudy, Supplier Diversity Program Manager, Office of Equal
Employment and Minority Affairs, The Smithsonian Institution,
responses to questions from the Subcommittee................... 115
ADDITION TO THE RECORD
The Associated General Contractors of America, Ken Simonson,
Chief Economist, fact sheet.................................... 122
Thor Construction, Richard Copeland, Chairman, written testimony. 123
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
DOING BUSINESS WITH THE GOVERNMENT: THE RECORD AND GOALS FOR SMALL,
MINORITY AND DISADVANTAGED BUSINESSES
----------
Thursday, September 17, 2009
House of Representatives,
Subcommittee on Economic Development, Public
Buildings and Emergency Management,
Committee on Transportation and Infrastructure,
Washington, DC.
The Subcommittee met, pursuant to call, at 1:55 p.m., in
Room 2167, Rayburn House Office Building, Hon. Eleanor Holmes
Norton [Chair of the Subcommittee] presiding.
Ms. Norton. I apologize for the delay. Votes delay and
continue to delay. Since I vote on some matters on the House
floor, I finished those matters on which I vote. The Ranking
Member is still allowed to vote on some matters that I am not
allowed to vote, although his people don't pay as many Federal
income taxes as mine do per capita, as I shall remind him, but
these are the last votes of the day. So I only hope with all
the arrangements Members make to leave that he will be able to
come.
This Subcommittee is pleased to welcome our witnesses
today. We look forward to hearing the testimony of our small
business witnesses concerning their experiences in contracting
with the Federal Government. And we are also pleased to receive
the testimony of agencies within the jurisdiction of this
Subcommittee about their goals and accomplishments for small
businesses and for minority-owned, minority-women-owned and our
disadvantaged businesses.
The subject of today's hearing could not be more timely or
important because of the government's critical interest in
ensuring that small minority and women-owned businesses are
given an equal opportunity for Federal contracts.
According to information supplied us by the Department of
Justice, there is strong evidence that these small businesses
continue to face barriers in numerous areas of business that
unlawfully limit their opportunities. For example, minority and
women-owned businesses experience discrimination from business
lenders, are charged higher prices for essential materials, are
intentionally subjected to unnecessarily high bonding
requirements, and are excluded from subcontracting
opportunities by prime contractors. Robust implementation of
the Federal programs enacted to support these businesses is
necessary to ensure that the government does not unlawfully and
unconstitutionally participate in or perpetuate these barriers.
Today's hearing is a follow-up of our March 6, 2008,
hearing on the subject when we alerted our agencies that we
would be holding annual oversight hearings on issues and
progress in small business contracting. Among the issues we
addressed last year were bundling of contracts by Federal
agencies that makes it difficult for small businesses to
compete, the benefits of competing on the GSA schedule, small
business outreach by Federal agencies, and how agencies account
for small business participation in procurement. We look
forward to examining agency efforts to address these as well as
new issues that may have arisen.
This Subcommittee places a strong emphasis on business,
small businesses, because they are central to the U.S. economy,
particularly during what is now being called the Great
Recession. The Federal Government as the largest small business
contractor has a special obligation to this indispensable
sector, especially in today's economic turndown. The roughly 25
million small businesses in the United States account for 50
percent of the Nation's private nonfarm gross national product;
however, they receive only 20 percent of Federal contracts.
Women make up 30 percent of the small business owners
nationally in 2008, but received only 3.4 percent of contracts.
Minorities own 18 percent of small businesses nationally, but
receive only 6.8 percent of Federal contracts in 2008.
Because most of the jobs created by small businesses remain
in this country, their formidable job creation power has
premium value for our economy and for the American people.
Small businesses with fewer than 500 employees accounted for 64
percent of the 22.5 million net new jobs between 1993 and the
third quarter of 2008, according to the Small Business
Administration. Of course, many Federal contracts necessarily
go to large contractors, so Federal agencies are in the best
position themselves to analyze their contracts in order to make
a fair and practical allocation of contracts that should go to
small businesses under the law.
We are particularly interested in how agencies make these
allocations, considering that small businesses are responsible
for the lion's share of new jobs. Unfortunately, however, the
difficulty of establishing and maintaining small businesses,
even in the best of economic times, means that many of these
businesses and the jobs they generate do not survive; however,
they are quickly replaced by new risk takers, characteristic of
successful entrepreneurship in this country.
The Small Businesses Administration said in a recently
released report to the President that the recession's credit
freeze in the short-term funding market had a particularly
harmful effect on the ability of small businesses to operate.
The American Recovery and Reinvestment Act provided an
important opportunity for the Federal Government to offer a
lifeline to small businesses in this tough economy. As of
August 14, 2009, the SBA reports that 23.7 percent of the 8.37
billion in Recovery Act contract dollars have gone to small
businesses, and those Federal agencies have been meeting
disadvantaged business category goals with stimulus spending as
well.
SBA reports that 10.6 percent of contracts are awarded to
small disadvantaged businesses, 87 percent to aid a firm, 6.4
percent to HUBZone firms, 4.3 percent to women-owned firms, and
3.1 percent to service-disabled-veteran-owned firms.
How have the businesses under our jurisdiction, this
Subcommittee's jurisdiction, used stimulus funds or other funds
available to them to help fill the gap for small businesses in
today's economic climate? In stimulus funding alone the General
Services Administration is receiving approximately $5.5
billion, the Federal Emergency Management Agency, or FEMA, is
receiving $210 million, and the Smithsonian is receiving $25
million. We will be interested to know the number and type of
opportunities for small business contracting that have been
generated by agencies under the jurisdiction of this committee.
For almost 50 years it has been the policy of the Federal
Government to encourage the participation of small business in
Federal procurement and contracting. The Small Business Act
requires an affirmative Federal policy of doing business with
small businesses--and here I am quoting--"in order to preserve
free competitive enterprise, ensure that a fair portion of the
total purchases and contracts for supplies and services for the
Federal Government is placed with small businesses, and
maintain and strengthen the overall economy of the Nation," end
quote.
For minority and women-owned businesses, there is an
additional 14th Amendment constitutional obligation carried out
in Federal law by Title 6 of the 1964 Civil Rights Act and by
other Federal legislation to assure that Federal dollars do not
fund discriminatory activities. In Fullilov v. Klutz, the
Supreme Court found that Congress had the authority to
remediate historic discrimination by contracting through,
quote, --"prospective elimination of barriers to public
contracting opportunities," end quote.
Tough competitive standards must be enforced for small
businesses and small disadvantaged businesses as for large
contractors; however, targeting Federal procurement contracts
and subcontracts for small businesses and for management and
technical grants, educational and training support, as well as
security bond assistance are obligations under the law.
Although the Small Business Administration has oversight
for encouraging small business participation by Federal-sector
agencies, only continuing and regular oversight by the
authorizing and appropriation committees with whom we will be
working on these issues in concert can hold individual agencies
accountable to implement the small business policies of the
Federal Government. We believe that this Subcommittee has the
obligation to increase the momentum established with our first
hearing, considering the so-called Great Recession that has
seized the country and most of the world.
The agencies before us today have submitted information to
our Subcommittee on their progress in meeting the requirements
of Federal law. Three of these agencies, the Architect of the
Capitol as a legislative agency, the Smithsonian Institution,
and John F. Kennedy Performing Arts Center, technically are not
covered by the Small Business Act, but to their credit
voluntarily abide by the law.
We will be happy to hear from all the Federal agencies for
which we perform oversight, General Services Administration,
the Federal Emergency Management Agency, the Architect of the
Capitol, the Capitol Visitors Center, the Smithsonian and the
John F. Kennedy Performing Arts Center. We offer our thanks in
advance as well to our small business witnesses.
Our first panel consists of the Federal witnesses, and we
can proceed left to right. Thank you. Our first witness, Tamela
Riggs, Deputy Assistant Commissioner for Vendor Alliance and
Acquisition, General Services Administration, Public Building
Service.
TESTIMONY OF TAMELA RIGGS, DEPUTY ASSISTANT COMMISSIONER FOR
VENDOR ALLIANCE AND ACQUISITION, GENERAL SERVICES
ADMINISTRATION, PUBLIC BUILDING SERVICE; JACOB HANSEN,
DIRECTOR, ACQUISITION MANAGEMENT DIVISION, FEDERAL EMERGENCY
MANAGEMENT AGENCY; RUDY WATLEY, SUPPLIER DIVERSITY PROGRAM
MANAGER, OFFICE OF EQUAL EMPLOYMENT AND MINORITY AFFAIRS, THE
SMITHSONIAN INSTITUTION; ROGER MOSIER, VICE PRESIDENT OF
FACILITIES, THE JOHN F. KENNEDY CENTER FOR THE PERFORMING ARTS;
STEPHEN T. AYERS, AIA, ACTING ARCHITECT OF THE CAPITOL; AND
TERRIE ROUSE, CHIEF EXECUTIVE OFFICER FOR VISITOR SERVICES,
CAPITOL VISITOR CENTER
Ms. Riggs. Thank you. Good afternoon, Madam Chair.
Ms. Norton. Could you turn your mike on or put it closer to
you?
Ms. Riggs. Better?
Ms. Norton. A little bit.
Ms. Riggs. Now----
Ms. Norton. Say something, and we will know.
Ms. Riggs. Okay. Testing.
Ms. Norton. Okay. That is good.
Ms. Riggs. Thank you. Good afternoon, Madam Chair and
Members of the Subcommittee. Thank you for the opportunity to
appear before you today to discuss the General Services
Administration's record and goals for small minority and
disadvantaged businesses. I am Tamela Riggs, Deputy Assistant
Commissioner for the Public Building Service's Office of
Acquisition Management at GSA, and it is my pleasure to be here
today.
As the premier acquisition agency of Federal Government,
GSA's mission is to help Federal agencies better serve the
public by offering, at best value, superior workplaces, expert
solutions, acquisition services and management policies.
GSA's focus on small business starts with their agency
leaders, who recognize the importance of small businesses in
our Nation's economy and in helping the Federal Government to
accomplish its work. We know that small businesses bring new
and innovative solutions to government challenges, and that a
successful and strong small business community is integral to
job creation, community empowerment and economic
revitalization.
Our agency works hard to improve small business access to
our procurement programs. GSA has continually increased its
efforts to purchase products and services from small business,
which has led to not only meeting our small business goals, but
exceeding them.
The Small Business Act establishes for Federal executive
agencies an annual goal of awarding 23 percent of prime
contract dollars to small businesses. At GSA in fiscal year
2008, over $1.8 billion, or 38 percent of all prime contract
dollars, went to small businesses. We are proud that in 2008 we
surpassed the small business statutory goal and all of the
socioeconomic goals that were set for our agency.
GSA's Public Building Service procures services related to
real estate. PBS's largest contracting areas are repair and
alteration of buildings, construction of buildings and
operations and maintenance. In fiscal year 2008, of the more
than $2.4 billion eligible in those areas, 1.2 billion, or 50
percent of the dollars, was awarded to small businesses.
GSA's Federal Acquisition Service creates procurement
vehicles that cover more than 4 million commercial products and
services and has a strong record of helping other Federal
agencies achieve small business contracting. The FAS Multiple
Awards Schedules Program offers small businesses a tremendous
opportunity for potential work with Federal, State and local
governments. I am happy to report that 80 percent of all
scheduled contracts are with small businesses. In fiscal year
2008, using these scheduled contracts, Federal agencies awarded
over $13 billion in awards to small businesses, which is
approximately 36 percent of the total dollars spent in that
program.
Within GSA there are many resources available to help small
businesses and to provide them with useful information. In
addition to the support provided through FAS and PBS, our
Office of Small Business Utilization provides direct support to
the small business community. They have resources, small
business technical advisors in each of our 11 regional offices
as well as our headquarters. And our GSA Web site, GSA.gov,
provides valuable information and links to a variety of
resources and small business information.
GSA has consistently demonstrated its commitment to small
businesses, and we are proud that we were able to exceed our
goals in 2008. Additionally, we are very excited to be part of
the efforts under the American Recovery and Reinvestment Act.
We recognize, however, that the large influx of funding for
recovery projects, while increasing the overall amount that GSA
is able to award to small businesses, may negatively impact our
percentage goals. For example, many of our construction
projects funded by the Recovery Act by nature of their size and
complexity are unlikely to be won by large businesses.
Therefore, GSA has significantly increased its small business
outreach and education efforts to heighten the small business
community's awareness of Recovery Act contracting
opportunities.
GSA also remains committed to negotiating aggressive small
business subcontracting plans with prime contractors. We are
now publicizing prime contractors' contact information on line
at GSA.gov and hosting partnering events that provide
opportunities for small businesses to present qualifications
and form relationships with prime contractors.
Madam Chairwoman, our agency is strong, innovative and
determined to find new and promising ways to ensure that the
small business communities continue to partner and excel when
working with us.
I thank you for the opportunity to appear before you today,
and I will be happy to answer any questions which you may have.
Ms. Norton. Thank you very much, Ms. Riggs.
The next witness is Jacob Hansen, Director, Acquisition
Management Division of FEMA.
Mr. Hansen. Chairwoman Norton and Members of the
Subcommittee, thank you for the opportunity to appear before
you today. I will submit a written statement for the record in
the near future. In addition to my oral statement, I will be
pleased to respond to any questions you may have today.
FEMA's mission is to support our citizens and first
responders to ensure that as a Nation we work together to
build, sustain and improve our capability to prepare for,
protect against, respond to, recover from and mitigate all
hazards. FEMA's procurement goal is to use competitive
strategies while also providing local and socioeconomic
business contracting opportunities whenever and wherever
possible.
I am proud to report that FEMA has competed 85.5 percent of
its procurement dollars to date in fiscal year 2009. This is up
from 78.1 percent competition statistics in fiscal year 2008.
This is a major accomplishment, and FEMA leads all DHS
components in the percentage of procurement dollars awarded
through competition thus far in fiscal year 2009.
Form should follow function in addressing diversity on
emergency management contracting. Accordingly, FEMA is working
to develop an organization that more closely reflects the
diversity of our stakeholders. Further, the businesses with
which we choose to work and invest taxpayer money to build our
capabilities must also reflect this mission. As a measure of
our commitment, FEMA has dedicated a full-time small business
specialist whose primary responsibility is to increase
contracting opportunities for small, minority and disadvantaged
business. The position is currently being filled by a senior
member of my staff as we look for an experienced permanent
replacement. It is anticipated the position will be filled
during the first quarter of fiscal year 2010.
Having a dedicated small business specialist helps to
institutionalize and focus attention on the small and minority
contracting efforts, as well as helps to maintain a level
playing field.
FEMA continues to work to meet and exceed our socioeconomic
contracting goals. In fiscal year 2007, for example, FEMA
awarded $485 million to small businesses. This amount
represented approximately 33 percent of the Agency's total
procurement dollars awarded in that fiscal year, thus exceeding
the then small business goal of 30 percent set by DHS. However,
in fiscal year 2008, while FEMA increased awards to small
businesses to $495.3 million, that figure represented only 26.8
percent of the Agency's total procurement dollars, which was
less than the 31.9 percent goal for fiscal year 2008.
As of September 15th, 2009, in fiscal year 2009, FEMA has
awarded $405.5 million to small businesses, which represents
29.5 percent of the Agency's total expanded procurement
dollars, just under the 31.9 percent target for this year.
Hopefully the next 2 weeks we will continue to see an increase
in the percentage of contract dollars awarded to small
businesses as the end of the Federal fiscal year typically
tends to be very busy.
The reason why FEMA did not meet its goal in fiscal year
2008 is largely attributable to Hurricanes Ike and Gustav, as
FEMA thought it necessary to activate a significant number of
preposition contracts, all of which were awarded competitively
to large businesses.
With respect to the areas in which FEMA has exceeded its
goals, slightly more than 6 percent of the procurement dollars
have been awarded to women-owned businesses, and approximately
5.6 percent of procurement dollars have been awarded to small
disadvantaged businesses.
FEMA will continue to work to meet the Agency's service-
disabled-veteran-owned small business, SDVOSB, and historically
underutilized business empowerment zones, the HUBZones, small
business goals of 3 percent respectively. To date in 2009, FEMA
has awarded 2.9 percent to SDVOSBs, and has awarded 1.03
percent to HUBZone small businesses.
It is worth noting that the small minority and
disadvantaged business investments made in fiscal year 2009,
approximately 22 percent were for professional services, 20
percent were for management support services, 14 percent were
for ADP and IT services, and 5.1 percent were for housekeeping
services.
As the Subcommittee considers how well FEMA is working with
small minority and disadvantaged businesses across the
procurement continuum, we urge you also to take note of how we
are engaging the private sector, whether large or small, across
the Homeland Security landscape. FEMA continues to aggressively
pursue initiatives with the private sector and business
community on various fronts to build a stronger emergency
management system. These initiatives include, one, the FEMA
Private Sector Division of External Affairs established a
dialogue with the private sector year round. Working with
acquisitions and other FEMA programs, the division increased
awareness among private-sector audiences of all sizes of key
resources on how to do business with FEMA, disaster
preparedness and recovery information, training, and other
resources.
The division also maintains an on-line portal with
resources and training for businesses of all sizes--that
address is www.fema.gov/private sector--as well as a growing
distribution list of almost 18,000 subscribers nationwide who
received private-sector preparedness tips and other updates.
The division also developed and piloted a basic training course
for disaster reservists who work with the local businesses in
declared disasters.
Two, FEMA is building new and enhancing existing
preparedness partnerships.
Three, FEMA is soliciting private-sector participation in a
development and refinement of the National Response Framework
and the National Preparedness System.
Four, FEMA is creating stronger and more vibrant public/
private partnerships through programs and initiatives, namely,
the Citizens Corps, Ready Business, and the FEMA Donation
Management System and other national, regional, State and local
planning exercise and training efforts. These efforts foster
open lines of communication with our Homeland Security partners
and the business and nonprofit communities.
We are leveraging the resources and expertise of our
partners in the private and nonprofit sectors even above and
beyond the important role they have always played in the past.
It is important, however, to give some contextual perspective
on the opportunity and challenge involved in effectively
engaging the private sector in emergency management.
The magnitude and complexity of the business community,
with its varying needs, capabilities and capacity, makes
coordination a daunting challenge and will require a sustained
and long-term effort. Through its Private Sector Division of
External Affairs, FEMA continues to build a network with
nongovernmental organizations; business and trade associations;
and local, regional and national Chambers of Commerce, and
anticipates making continued significant progress in
integrating the private sector as a full partner in incident
management. We know that the worst time to build private-sector
relationships is during a disaster. Thus, we are building them
today in a sustainable and ongoing manner.
Thank you for the opportunity to speak about FEMA's record
and goals in working with small, minority and disadvantaged
businesses.
Ms. Norton. And thank you, Mr. Hansen.
Now, my good friend and the Ranking Member has been good
enough to stop by after the last vote and people clear out of
Dodge. And he has got to clear out for a plane, so I am
interrupting the testimony, if you will forgive me at this
time, to hear the Ranking Member's statement, with appreciation
that he did stop by before running off.
Mr. Diaz-Balart. Thank you, Madam Chairwoman, and I thank
all the witnesses. I apologize for the interruption. I also
want to thank the Chairwoman for always being so kind and
understanding. Thanking you also for holding this very
important hearing.
Small business obviously--the Small Business Act directs
the Federal Government to protect the interests of small
businesses in order to preserve the competitive enterprise and
free market, and a fair share of Federal Government contracts
are awarded to small businesses. And obviously nobody can deny
the importance of small businesses to our economy and to
strengthening our economy.
Also, we all know, unfortunately, that the national
unemployment rate has risen to 9.7, the highest since 1983.
Florida's unemployment rate is even above the national average
at 10.7 percent. And the Chairwoman knows Florida very well,
has been there a number of times. So job creation has to be a
priority.
Obviously, when you look at job creation, it is small
businesses. That is who creates jobs. So obviously small
businesses have also developed more patents per employee than
larger businesses, for example, which much greater number
coming from the smallest firms, smallest companies and smallest
firms, with fewer than 25 employees. Not only do they create
jobs, but they are also innovators.
In Florida, small businesses account for more than 99
percent of the State's employers, and they provide 44 percent
of private-sector jobs. Those are astonishing numbers. When you
want to incentivize the economy, and you want the job creation,
you have to look at small businesses. And those numbers are
very plain.
Now, despite the importance of protecting the interests of
small businesses, unfortunately many government agencies are
continuing to really fall short of their goals for contracting
with small businesses. Last year only 1 of 24 agencies scored
by the Small Business Administration met all of its small
business contracting goals. I am very pleased, however, that
GSA met its 2008 goals. That is a step in the right direction,
and we are very proud of that. But despite this progress, we
need to continue to pressure agencies to continue to work with
small businesses to achieve those goals.
Obviously, in addition, agencies must ensure that
contracting practices are fair, they are accessible, and they
are transparent, obviously to maximize small business
participation. And as I stated a little while ago, supporting
small businesses is crucial, always is crucial, but
particularly now with the unemployment rate as high as it is.
And again, as I said a little while ago, if you want to create
jobs, you have to look no farther than small businesses.
I want to thank you all for being here today. I apologize
that I do have to step out. And again, thank you, as always,
for being so courteous with me.
Ms. Norton. Thank you very much, Mr. Diaz-Balart.
Now we go on to Mr. Watley.
Mr. Watley. Good afternoon, Chairwoman Norton. My name is
Rudy Watley, and I am the Supplier Diversity Program Manager in
the Office of Equal Employment and Minority Affairs at the
Smithsonian Institution. On behalf of the Institution, let me
express my appreciation to you for holding this hearing on the
use of small, disadvantaged, minority and women-owned small
businesses in Federal contract operations. And let me thank you
for inviting the Smithsonian Institution to participate in this
discussion and share with you a few of our Supplier Diversity
Program achievements and ongoing initiatives.
The Smithsonian is the world's largest museum and research
complex. With 19 museums, 9 research centers, 137 million
artifacts, 18 libraries and the National Zoo, the Smithsonian
stands out as a unique entity and a leader in science,
research, history, art and culture.
The Smithsonian Institution is a trust instrumentality of
the Federal Government that has been a public-private
partnership since its establishment 163 years ago. Its mission
is the increase and diffusion of knowledge, and the support of
the administration and Congress is essential to the achievement
of this mission. The Institution's leadership believes that
diversity and inclusion are integral components of the mission,
and it is expressly committed to diversity in all aspects of
its workforce and business operations.
Diversity and inclusion have long been a part of the
Institution's strategic plan and performance plan, our policy
statements and directives. Doing business with small, minority
and women-owned business is a reflection of that commitment.
Over the past 3 years, the institution has spent roughly 40 to
50 percent of its contract and procurement dollars with small
businesses, and, as indicated in the materials attached to my
written statement, you can see that the Institution has
consistently achieved and exceeded all of its procurement
preference goals except one, service to disabled-veteran-owned
small businesses. Our SDVOSB goals, like SBA's governmentwide
goal, is 3 percent, and over the past year we increased our use
of these firms from 1 percent in fiscal year 2007 to 2.8 in
fiscal year 2008. We have made progress, and we are actively
pursuing and zeroing in on projects that can be performed by
these firms.
As shown in the chart provided for fiscal year 2009, we
have exceeded and more than doubled our accomplishments. These
accomplishments speak for themselves. Specifically we have
spent 49 percent of our Federal contracting dollars with small
businesses, a whopping 20 percent with small disadvantaged
businesses, 12 percent with 8(a) small disadvantaged
businesses, 10 percent with women-owned small businesses, and
we found a way to exceed our HUBZone goal with 5 percent of
contracting dollars to help HUBZone firms.
While achieving our procurement goals for service-disabled-
veteran-owned small business remains a challenge, we are
actively pursuing opportunities to do business with these
firms.
The success of the Smithsonian Supplier Diversity Program
is the result of unwavering commitment from the top, starting
with the Secretary. Dedication and collaboration from all
managers and perseverance on the part of all procurement
officials are the ingredients that makes the program work as
well as it does. I am pleased to say that the collaborative
relationship among the Supplier Diversity Program, our Office
of Contracting, Procurement and Property Management, as well as
the major buying units at the Smithsonian is exemplary.
Let me share with you some of our supplier diversity
accomplishments this year. Thirty-eight percent of our American
Recovery and Reinvestment Act funds allocated to the
Smithsonian were spent in contracts with minority small
businesses. Specifically, 9.5 million of the 25 million the
Smithsonian received in Recovery Act funds were obligated to
8(a) small businesses. Using our Supplier Diversity Program
infrastructure, we were able to move swiftly to galvanize and
employ these firms to participate in this great opportunity.
This is a testimony to the effectiveness of our program and the
Institution's commitment to supplier diversity.
Let me share one more example of the success of the
Smithsonian's commitment to supplier diversity that I believe
will have historic significance. As the result of aggressive
outreach initiatives, minority-owned firms were identified and
competed in the design competition for the new National Museum
of African American History and Culture, and the winning firm
is minority owned. We are currently in negotiation with a
minority firm to perform the architecture and engineering
design services for the new museum. We are particularly proud
of this accomplishment.
In closing, let me reiterate, as evidenced by our
accomplishments, the Smithsonian Institution's commitment to
diversity throughout its operations remain strong, and we will
continue to engage a wide array of small disadvantaged,
minority and women-owned firms, as well as service-disabled-
veteran-owned firms in our business relationships.
Thank you again for this opportunity to share our story,
and I am happy to answer questions.
Ms. Norton. And thank you, Mr. Watley.
The next witness is Roger Mosier, Vice President of
Facilities, John F. Kennedy Center for the Performing Arts.
Mr. Mosier.
Mr. Mosier. Good afternoon, Madam Chairwoman. My name is
Roger Mosier, and I serve as Vice President of Facilities for
the John F. Kennedy Center for the Performing Arts.
The Kennedy Center is unique in that it serves the dual
purpose of being the national cultural center and the memorial
to President John F. Kennedy. Each year the Kennedy Center
reaches over 2 million people with more than 2,000 performances
in all performing arts disciplines. Every season our focus is
on developing programming that achieves national and
international acclaim as is befitting our role as the national
cultural center. We appreciate the committee's interest in the
promotion of small businesses. I will provide an overview of
the Kennedy Center's efforts in this regard.
In fiscal year 2009, the Center received direct Federal
funding of $36.4 million for operations and maintenance and
capital repair. While our contracting activities are small in
comparison to the agencies appearing with me, we are committed
to awarding a fair portion of our Federal purchases to small
minority and disadvantaged business enterprises. The Kennedy
Center continually looks for opportunities to offer contracts
to small businesses. Given our relatively small budget, the
opportunities for such awards are limited; however, each
contracting action is evaluated as to its suitability for
small, minority or disadvantaged business opportunity.
In general, the Center's Chief of Contracting serves as our
small business advocate. In addition, project managers and
other contracting officers representatives are also advocates
for this program due to our track record of successful work
with small businesses.
Regarding operations and maintenance funding, many basic
services and minor repair contracts are awarded to small
businesses, including minority businesses, disadvantaged
businesses. These contracts range in size from $3,000 for sign
language interpretation for Federal employees to approximately
$2 million for housekeeping service. On an ongoing basis the
Center utilizes small businesses for services such as elevator
maintenance and inspection, asbestos abatement, indoor air
quality monitoring, artwork and textile maintenance, pipe organ
maintenance, emergency generator maintenance, fire pump
maintenance, and various mechanical and electrical equipment
inspection, repair and maintenance services. Additionally,
supplies such as carpet, air filters, paint, light bulbs and
many more are regularly purchased from small businesses.
For construction projects, from capital projects to major
maintenance, we utilize small businesses for both consulting
and contracted services. For professional services we have
contracted with small businesses for architectural and
engineering services, cost estimating, and contraction
scheduling review.
For general construction work we have awarded a number of
contracts to small businesses ranging in size from $20,000 to
nearly 5 million. These have included recently completed work
to upgrade life safety systems on the Center's Roof Terrace
level and a project to paint the exterior columns of the
facility. Both of these projects were completed within budget
and on schedule.
This summer we awarded a construction contract of $4.9
million to a small business for the renovation of the concert
hall support spaces, including practice rooms, rehearsal rooms,
lockers and offices. This project is one the largest capital
projects we currently have in progress.
Most recently we awarded approximately $1.8 million in
miscellaneous life safety work to a small business for
construction work, and that is just getting under way.
The Center has also established open contracts with small
disadvantaged general contracting businesses participating in
the 8(a) program. These contracts are utilized for minor repair
and significant maintenance projects that typically cost less
than a quarter million.
The Center has worked with 8(a) firms for many years and
currently has four 8(a) firms under indefinite delivery and
indefinite quantity contracts. This summer 8(a) firms
refurbished the Center's coat check room, renovated the African
Room, and repainted a significant portion of the concert hall
ceiling.
The Center has achieved success in working within the 8(a)
program by actively pursuing opportunities to promote the use
of small minority and disadvantaged businesses, including
meetings with a marketing firm representing 8(a) firms. This
allows us to remain current on the breadth of companies
participating in the program as well as their capabilities.
Based on the size and scope of the contract to be awarded,
the contracting office will avail itself of the option to go
directly to the Small Business Administration for a set-aside,
or it may limit competition to only small minority and
disadvantaged businesses. This method proved successful in the
award of our housekeeping contract, which is in the final year
of a multiyear contract. A new small business procurement for
the next housekeeping contract is currently ongoing.
While not every contract can be awarded utilizing these
small business vehicles, many of the capital projects outlined
in our 5-year comprehensive building plan are of a size and
complexity that fit within the services we obtain through our
small business relationships. The Kennedy Center's capital plan
includes a number of relatively smaller infrastructure projects
that we have been able to award to small businesses.
In summary, our experiences with small minority and
disadvantaged businesses have proven to deliver a successful
outcome in a variety of areas, including services, supplies,
consulting and construction. As a result we are proactive in
seeking out opportunities for the appropriate award of small
business contracts. We appreciate the Subcommittee's interest
in this program and for including the Kennedy Center in this
discussion this afternoon. Thank you.
Ms. Norton. Thank you, Mr. Mosier.
The next witness is Stephen Ayers, the Acting Architect of
the Capitol.
Mr. Ayers. Thank You, Madam Chairwoman, for inviting me
here today to discuss the AOC's efforts to increase procurement
opportunities for small businesses. We have made tremendous
progress in our efforts to implement programs that enable and
encourage small businesses to effectively compete for AOC
contracts.
Specifically I have directed our staff to implement two
programs to actively award contracts to companies that reflect
the diversity of our country, above and beyond the standard
requirements of Federal regulations. These include a small
business set-aside program for small purchases between $5,000
and $100,000, and a small business subcontracting program for
construction contracts exceeding $1 million. Additionally, we
have recently partnered with the Small Business Administration
to further utilize small business programs.
On August 10th, SBA Administrator Karen Mills and I signed
a Memorandum of Understanding to establish the roles and
responsibilities of each of our agencies in the implementation
of the use of small business programs at the AOC. The
Memorandum of Understanding, while preserving the separation of
powers between the legislative and executive branches,
establishes the support activities, roles, and responsibilities
necessary for the AOC to fully utilize small businesses
identified under the SBA Act and SBA's regulations.
Our Small Business Subcontracting Program, which was
launched in August of 2007, requires large businesses that are
awarded construction contracts exceeding $1 million to submit
and adhere to a small business subcontracting plan. This plan
includes goals for prime contractors recruiting small
businesses as subs, and they must meet or exceed the Small
Business Administration's statutory goals for Federal executive
agencies.
When contracts are awarded to large businesses under this
program, we require each one to submit a semiannual progress
report detailing how well they are achieving the prescribed
goals. On October 1st of this year, our Small Business Set-
Aside Program will be fully in effect for small purchases
between $5,000 and $100,000. Under this program our contracting
officers make every effort to identify and use small
disadvantaged, women-owned, veteran-owned, and service-
disabled-veteran-owned small businesses.
Along with these programs, we continue to reach out to
identify small businesses that are currently working with the
AOC or are interested in competing for work with us in the
future. We also continue to reach out to new vendors, and the
data received is used to identify small businesses that can
compete for our requirements. Vendors not previously used by
the AOC can also submit literature to our Small Business
Office, and they can find information on that on our Web site.
As we continue to expand our current vendor database to
include small business information, our procurement staff
continues to communicate business opportunities with diverse
audiences through workshops, small business fairs and small
business conferences.
Madam Chair, the AOC is leading the way in the legislative
branch in encouraging small disadvantaged and women-owned
businesses to effectively compete for contracts. We are working
to meet or exceed our goals through the three major initiatives
I mentioned, the Small Business Set-Aside Program, the Small
Business Subcontracting Program, and our partnership with the
Small Business Administration. We obviously have a vested
interest in supporting small businesses in order to help
facilitate competition and to support local communities in a
sustainable way. We look forward to our continued work with
this Subcommittee and the Congress to ensure that our efforts
result in strong small business participation in future AOC
solicitations.
That concludes my statement, and I would be happy to answer
any questions you may have.
Ms. Norton. Thank you very much, Mr. Ayers.
The next and final witness is Terrie Rouse, the Chief
Executive Officer for the Capitol Visitor Center. Ms. Rouse.
Ms. Rouse. Thank you, Madam Chair, for inviting me to
participate.
Ms. Norton. Please put your microphone closer or turn it
on.
Ms. Rouse. Is that better?
Ms. Norton. That is.
Ms. Rouse. Thank you, Madam Chair, for inviting me to
participate in today's hearing.
As the Capitol Visitor Center prepares to welcome its 2
millionth visitor, we are on track to double the number of
visitors to the Capitol as compared with previous years. We are
pleased at this outcome, and even more pleased to report that
the average time a visitor waits before entering the facility
is 6 minutes. This compares with a wait that could have
stretched to several hours in recent years.
The Capitol Visitor Center is also providing the public
with opportunities to experience Congress' rich history in the
Exhibition Hall, which will feature approximately 50 new
historic documents beginning October 12th. From today through
September 23rd, we will host a series of public programs to
celebrate Constitution Week at the Capitol.
The Visitor Center's goal to work with and develop new
opportunities for small and minority businesses is in line with
the goals of the Architect of the Capitol. My staff and I have
worked aggressively to hire personnel and award contracts to
individuals and small companies that reflect the diversity of
our country. I believe that such an effort enhances our ability
to serve Congress and all who visit the U.S. Capitol.
Specifically regarding our procurements, the Capitol
Visitor Center team follows the policies of the Office of the
Architect of the Capitol. As we move forward, we are
incorporating the aims of the Small Business Program, which Mr.
Ayers discussed in his testimony.
At the present time, based on our continued and internal
assessment of products in our gift shops, more than 70 percent
of the merchandise is produced by small business vendors.
Approximately 25 percent of our vendors are women-owned
businesses. As we are still in the ramp-up phase of operation,
we are constantly reviewing our merchandise and our vendors in
order to make sure that we are offering our visitors high-
quality merchandise from a variety of vendors.
We will be working with officials in the Small Business
Administration and the Government Printing Office to explore
opportunities for increasing the percentage of minority,
disadvantaged and small business vendors who are contributing
to our gift shop inventory. One of the goals is to hold a small
business fair and invite vendors to speak with gift shop
representatives regarding their products and their potential
for sales at the Visitor Center gift shop.
The gift shops are also developing a purchasing strategy to
enable the Capitol Visitor Center to showcase merchandise
representative of the States and territories of the United
States. We expect that the results of the strategy will be
apparent in the gift shops by spring 2010 during our busiest
visitor season. Attracting small minority and disadvantaged
businesses will play a major role in the development and
success of the strategy.
We have also reached out to merchandise and trade
organizations, including the Museum Store Association and the
producers of the New York International Gift Fair, for
information on minority-owned businesses in order to further
expand our reach and support of these businesses.
Madam Chair, you have my commitment that I will continue to
work to ensure that we do business as much as possible with
small minority and disadvantaged businesses. Thank you, and I
am happy to answer any questions.
Ms. Norton. Well, I am very pleased first to welcome my
good friend and neighbor in the region, who, unlike the Ranking
Member and others on the committee, didn't have a plane to
catch and cared enough about this matter to spend at least a
little time with us today. And I want to welcome Representative
Edwards, who tells me she doesn't have an opening statement at
this time. So I will proceed with questions.
I appreciate that your testimony shows that agencies are
making an effort, and as I indicated, we could not have
anticipated that the effort would have been ever so much more
necessary. Nobody has a dime to spend except the Federal
Government these days. I know you know that; we are the only
game in town. And the only reason we have money to spend is
because we can write checks with money not in the bank.
Therefore, people are really looking to us to make sure that it
all gets done.
I want to ask the same question for those of you who have
stimulus all the way down. Some of you, I have to say there is
nobody who cares about your general jurisdiction except me, and
that is because I represent the District of Columbia and in
many ways the region. It is an extremely rich region for
minority businesses, women-owned businesses and small
businesses generally. So it is doing better because the Federal
Government is expanding; therefore, we are probably going to
put an extra burden on you and ask you to try even harder than
you already have.
So in stimulus funds, let us just get it on the record,
given when--and I know that we have had an issue in our larger
Committee about outlays versus obligations. I think I would be
satisfied with obligations at this point. I want to know for
those who have stimulus funds what the percentage is. You can
give me small businesses, because this hearing is about small
businesses generally. It is about small women-owned businesses,
it is about small minority-owned business, and it is about
small disabled-veteran-owned businesses. So if you want to
break those down, be my guest, but I want to know what
percentage of stimulus funding, the stuff that is being pumped
into the economy as I speak, has gone to any of those
categories.
I will begin with Ms. Riggs.
Ms. Riggs. Thank you, Chairwoman.
Ms. Norton. A little louder.
Ms. Riggs. A little louder. Yes, thank you.
Of our recovery, you know, GSA received the 5.55 billion.
We have awarded to date approximately 1.3 billion. Of those
contracts, of the 1.3-, we see about 48 percent of our
contracts going to small business. Numberwise in terms of
contracts, they are competing very well.
Ms. Norton. Say that again.
Ms. Riggs. I say in terms of the number of contracts that
we are awarding for recovery, the small businesses are
competing very well. Just barely under 50 percent are going to
small. Dollarwise, however, we see far more dollars going to
the large with recovery because so many of our dollars are
going to the large construction projects. So we will see.
Ms. Norton. And I appreciate that, and I also appreciate
because you are doing the biggest construction project in the
history of the United States and happen to be doing it right
here in the District of Columbia, DHS, and it will be going on
for years. But as I go down the line, first, when you indicate
what your dollars are, I appreciate, for example, that you are
abiding by the notion of setting aside. You set aside, I think,
$5 million for small businesses, or is it small disadvantaged
businesses? Which is it? Five million dollars has been set
aside for small or small disadvantaged businesses. Which is it?
Ms. Riggs. I apologize. I do not have that exact number.
Ms. Norton. It may be small businesses. I have no argument
with that.
But let me tell you a complaint I have already received.
This complaint is applicable to each and every Federal agency.
A $50 million contract to do the electrical work has already
been awarded. We received a complaint from an electrical
contractor that, well, you awarded it to--first of all, the
business is Clark Construction. See, I call names out in this
place; that is how you track people. Fine. This is an excellent
company. They competed for it, and they received it. They
competed for--then we competed the contract, the electrical
contract, very lucrative contract today, $50 million in one
region.
The complaint came from a small electrical contractor. When
he called to try to compete as a subcontractor--I picked GSA
because I received a complaint, but I assure you this is the
kind of complaint we hear from small contractors all along.
This is how they evade the small disadvantaged business and
small business contract. This guy who has the electrical
contract, Dynalectric--called his name out. Glad you got it,
got it fair and square. But the subcontractor said when he then
went to say, now we are ready to be a subcontractor, he was
told, well, we already have our subcontractor, and therefore
there is nothing for the rest of you. Out of $50 million, this
is the message I get. Now they are going to have to come in and
see me to correct the record, but this is the message I get. I
know I have got a requirement. I am going to meet it in the
most amenable fashion I can. I got me a either a disadvantaged
business or small business; maybe even in good faith says,
Dynalectric, we worked with them in the past, and so we know
they are good. Later for all the rest of you out there, no
matter what your record is, no matter how you would compete.
That may not be what is happening, but, Ms. Riggs, should
$50 million in electrical contract--by the way, Dynalectric
gets to keep what isn't given to the subcontractor. And one of
the abuses that we believe we see is, shall we say,
preconceived small businesses who kind of--help us out here.
Even some of the complaints, go pay off small businesses, don't
even get to do it as long as the goal is reached. Don't think
that with a billion dollars--and I can tell you there is one
Member and only one Member who struggled for that money for
GSA. I don't intend to use that $1 billion to defeat this
practice, to the extent it exists, to call out people who are
doing it, so that in the other agencies across the government,
not necessarily those who are here, we send the message we are
going to break that abuse. Technically within the law;
outrageous violation of the intent of Congress.
So it suggests to me, since he thought he was getting away
with this, that GSA just looked at the bottom line and didn't
raise the issue until this electrical contractor got in touch
with this Member of Congress.
What can you tell me, Ms. Riggs?
Ms. Riggs. I can tell you that, generally speaking, we are
being very attentive and growing aggressively moreso each day
with our subcontracting plans, and not only monitoring the
submission of the subcontracting plan, but also the adherence
to that plan. With St. E's, I do not have--St. Elizabeth's
development--I do not have the specific information that you
have about that company.
Ms. Norton. You don't even know about this. In the biggest
contract you have, you have no--do you know of this complaint?
Ms. Riggs. I am not personally aware of that.
Ms. Norton. Well, when do they get up to your level, Ms.
Riggs?
Ms. Riggs. The folks in our project areas may very well,
and in fact the contracting officer is here with me.
Ms. Norton. Where is the contracting officer? Step to the
table, contracting officer. We are really here to try to find
out some information. We are tired of hearing the complaints.
Agencies have not been held accountable. The best way to hold
them accountable is to take the DHS mammoth--and $1 billion,
that is only the first, it is going to be $5 billion before it
is all over, DHS. Do you know of the Dynalectric contract and
of the complaint that came from their electrical contractor?
Ms. Echols. Yes, ma'am, the subcontractor--the contractor
that you are talking about did give me a phone call.
Ms. Norton. What has been done, if anything, to make sure
that there is not a pass-through to a favored minority or small
business given this complaint?
Ms. Echols. The project executive and I, we actually had
the general contractor, Clark Design/Build come in. We actually
had a roundtable discussion to let them know that we weren't
going to tolerate this kind of action.
Ms. Norton. Let me thank you. Say your name again, please.
Ms. Echols. Bonnie Echols of the General Services
Administration, St. Elizabeth's project.
Ms. Norton. Ms. Echols, you do have some credibility with
me, because you have worked with us to try to make sure that
minority businesses do have access to this larger-than-ever
Federal contract.
But it does suggest to me that, unless one monitors these
people as these contracts are given, it is not are worth a
darn, shall we say. They have gotten into these habits because
committees like us, and certainly the Appropriation Committee,
have only monitored--only monitoring is by SBA, and they don't
have any jurisdiction.
So we are going to have to ask you, and then I think it
should have been reported to Ms. Riggs. She needs to know,
because she is in charge of the whole kit and kaboodle, so that
she can be on the lookout for this happening elsewhere.
I suspect that this happens throughout the government.
Everybody says I know what my goal is. I got at least one. I am
not even looking for any others. And then Members of Congress
get these complaints, and nothing happens. They don't do
anything. And all of y'all are violating the law. And then we
are left to try to find and make phone calls. We are not going
to do it anymore, not on something as big as this.
So I am going to ask you to develop a procedure--you are
doing very well in developing a procedure for hiring, and I
thank you for it. I want you to develop a procedure for
tracking the subcontracts to see where they go and to inform
all the contractors, inform Clark that Clark is going to be
held accountable for it. Clark does excellent work. It is going
to do excellent work abiding by the law with respect to small
business and small minority businesses. And I want to see Clark
contracting staff. Because I am going to give them the message
myself. I am not going to be sitting in the District of
Columbia with people coming to me from Maryland, Virginia, and
D.C., and by the way, these contracts are open to people all
over the United States, knowing that I am the Chair of the
Committeewith complaints. We are going to correct the
complaints before they occur. We are not going to be a
complaint-tracking service.
Let me go to Mr. Hansen. Stimulus funds, who got stimulus
funds in the categories I am speaking of?
Mr. Hansen. Chairwoman Norton, the $210 million in stimulus
funds for FEMA went to firefighter assistance grants.
Ms. Norton. This is more difficult because here, Mr.
Hansen, unlike Ms. Riggs, has to work through the States. And
one of the reasons we are holding this hearing is that we know
we are, Ms. Edwards and I and this Subcommittee and Mr.
Oberstar, are personally accountable, because unlike Mr.
Hansen, these people report directly to us. There is no State
between us and GSA contracting.
All right, Mr. Hansen, I will be interested to hear how you
do it therefore.
Mr. Hansen. Well, the $210 million were grants to modify,
upgrade, or construct non-Federal fire stations. So really none
of the stimulus funds came to my acquisition management
division.
Ms. Norton. That doesn't mean you have no responsibility,
Mr. Hansen.
Mr. Hansen. The grants division, we can get that
information for you, ma'am, but I would have to go to a
different department within FEMA.
Ms. Norton. These fire grants, and in the other part of our
jurisdiction, this is very important to us, what do the States
know about their obligation with respect to minority--and what
kind of contracts are these, Mr. Hansen?
Mr. Hansen. Again, ma'am, these are grants handled through
our grants department. And I am going to have to go to them to
get you more details.
Ms. Norton. What is funded by these grants, Mr. Hansen?
Mr. Hansen. In this particular case, it was construction of
non-Federal fire stations.
Ms. Norton. That is what I thought, Mr. Hansen. You can see
that it is not a lot of money. And you can see how people under
some great compulsion to spend it, because we are putting them
under that compulsion, could easily go to the fastest, best in
their judgment, quickest way to spend it. So I am going to have
to ask you, within 30 days--and you know, the contracting
officer should remain at the table, please. We may have other
questions for you.
I am going to ask you and Ms. Riggs to get to us, Ms.
Echols and Ms. Riggs, through Ms. Riggs, to get to us within 30
days what the record has been thus far in small business
contract awarding under the fire grants, the more than $200
million you now have.
Mr. Hansen. Yes, ma'am.
Ms. Norton. Thank you, sir.
Mr. Watley.
Mr. Watley. Chairwoman Norton, the Smithsonian Institution
received $25 million in Recovery Act funds. Of that $25 million
that we received, we awarded $9.5 million to 8(a) disadvantaged
businesses. There were 11 contracts awarded to these small
businesses. And that constituted 38 percent of our Recovery Act
dollars. The type of work that was done was construction,
general construction, facilities engineering, maintenance
contracts. And that is how we spent that money.
Ms. Norton. That is thus far?
Mr. Watley. Thus far.
Ms. Norton. How have you been able to award--in terms of
your overall goals, how does that compare with your overall
goals?
Mr. Watley. Compared to our overall goals? We included--
early on when we got the Recovery Act funds, we included that
money in there to make sure that we did. Let me just take a
look at the figures we have.
Ms. Norton. And this is disadvantaged businesses you are
talking about, the $9 million.
Mr. Watley. To 8(a) small, disadvantaged businesses, that
is correct.
Ms. Norton. While you are looking for that, I understand
that Ms. Edwards also has an appointment and may need to leave
before I get to her.
So, Mr. Watley, I will come back to you.
Meanwhile, Ms. Edwards may have questions for any of them,
any of you, and as long as for as much time she shall consume
she may proceed now.
Ms. Edwards. Thank you, Madam Chairwoman.
And of course, I won't consume that much time. And I
appreciate it. I have another Committee assignment in just a
few minutes. And I do thank you for holding this hearing,
because you have been incredibly vigilant about our pursuit and
our oversight responsibility to ensure that all of our
businesses get the fullest benefit of participation,
particularly with these stimulus funds.
My question actually goes to sort of a process. I think
when small businesses come to me, one of the biggest obstacles
that they say they encounter is this procedure that is supposed
to result in an efficiency of bundling contracts. And so then
that leaves it to the decision-making of a prime contractor
about what or whether to subcontract. And then there becomes
this sort of ongoing process of, you know, knowing who you know
in order to get the contract. And the next thing you know, you
look down a list, and it is the same, old folks even though
they may be small, minority, and disadvantaged businesses or
women-owned businesses, that are getting the same contracts
over again.
And so I want to talk about, you know, just the process and
get some thoughts, particularly from GSA, about what might be
done to loosen that up, to expand the availability of
opportunities. And I know it may be an administrative or
bureaucratic pain, but I am just tired of looking at the same
list of contractors and subcontractors. And you know, you got
contractor prospectives out there who have the potential to do
really great work for us and increase our level of competition
and our knowledge about what some other businesses are doing,
but they can't even get a bid in edgewise.
And so help me understand what you are trying to do to open
the process and also to do it with a degree of transparency.
Too often the complaint, and I think the Chairwoman has spoken
to this, the complaint that we hear is that we just don't know
and that prospective solicitors don't know and don't
understand, and as a result, they may be assuming that they
have been left out or cut out or not made an award for reasons
that may be perfectly justified, but the level of transparency
or the lack of transparency makes it very difficult to
understand the process through which these contracts have been
awarded. So help me understand that.
Ms. Riggs. Absolutely. I think we have done a lot to
improve the transparency, to use that word. We have
significantly increased our outreach to small businesses. And
in particular, not only--but in particular new small businesses
who are interested in working with the government either as a
prime or as a subcontractor. And we have certainly increased
our number of personal involvement, our presence at industry
outreach events. We have strengthened our Web site materials
enormously so those folks who are comfortable using that as a
tool have a lot more available to them.
But we have also begun to use different tools. We are now
using Twitter, social media to get information out to those
communities about business opportunities. So it is still going
on FedBizOpps for those who are used to doing that. But we are
also putting it out there through Twitter. And we are getting
quite a lot of response from that. We actually established a
vendor-specific support line that vendors can call into and
speak to a human and ask them for help and ask them questions
about the procurement process. And through that we are reaching
a lot of folks, teaching them how to find out more about who
our primes are. We have published that list, and we will
continue to, of our prime contractors on the Web site, but we
are also teaching small businesses how to go into the Federal
Procurement Data System, FPDS, and look for our primes to see
what we are buying and in turn what they may be able to
provide.
Ms. Edwards. But what really compels the primes to open the
doors? You know, if there is one significant contract, what
really compels that prime contractor to open their doors? And I
am not talking about meeting a goal that GSA might set forward,
but expanding business opportunity and their knowledge of other
businesses there. And it just doesn't seem to me that we--I am
not quite sure whether the rules are in place, and certainly
the law is not in place that compels our prime contractors,
particularly on these huge contracts, to really open their
doors to other vendors. And then please don't leave out the
question of bundling of contracts.
Ms. Riggs. Oh, absolutely.
In bundling, in fact, that question was asked at a previous
hearing, and so I know we looked, we had, GSA had no bundled
contracts last year. We do have one this year that is underway.
The procurement is actually underway as we speak in the IT
environment. So we have very few, in fact one, but relatively
no bundled contracts. What entices the prime----
Ms. Norton. Would the gentlelady yield? I wonder if any of
the rest have any bundled contracts while you are getting an
answer to that question.
Ms. Edwards. Any of the other agencies?
Mr. Ayers. No, ma'am.
Ms. Edwards. And so, well, then how would one become a
subcontractor then? Because you have subcontractors. Mr.
Hansen?
Mr. Hansen. Well, first on the topic of bundling, that is
counter to my leadership philosophy. To really, truly have a
small business program, it has got to be a cultural event
within an organization.
And I can give you a practical example. I recently hired a
new chief of contract operations in charge of my contract
operations who served in the past as the director of small
business programs for the Department of Defense. And he served
as the associate administrator for government contracting and
business development of the Small Business Administration. This
is my top layer of leadership. It takes that type of leaders in
your organization to build that culture within the organization
to let your workers know what is expected. Small Business and
FEMA is exactly where we want to go. I don't want to bundle
contracts; I want to unbundle them.
Ms. Edwards. Any of our other witnesses?
And then I think, lastly, and Madam Chairwoman, I am going
to have to slip out, on the question of transparency, I heard
GSA's response. I want to hear from our other agencies about
the methods that you have put in place to ensure not just that
we here in the committee have a sense of what you are doing,
but that the business community, the small business community,
really has a sense that they are getting a fair shake.
Mr. Watley. Well, Congresswoman, for Smithsonian, one of
the things we do is take our referrals from small businesses
directly to the large businesses and pass that information on
to them. What I do in the supplier diversity program is I
negotiate with our Office of Contracting, and more often for
construction projects our facilities unit, the subcontract plan
prior to the contract award. And we include the percentages in.
And after those percentages are included in the contracts, then
we refer those small businesses that are interested, the
electricians, the trades folks to our contractors.
Ms. Edwards. Thank you.
And Ms. Riggs, before I leave, can you tell me that, once
you do these kind of outreach efforts to small businesses, how
do you track the ones that actually come back and eventually
awards are made to them? Do you track that?
Ms. Riggs. We do not currently. And that is something that
we are putting into place.
Ms. Edwards. Because, I mean, the question is, how do you
know that all of this outreach business is really effective?
Ms. Riggs. Absolutely. And particularly now that we are
using so many different tools, we really want to know which
ones are most effective in reaching them. So we have began to
capture the feedback that we are getting from the vendors, and
certainly on return calls telling us the results of the
conversation. But we are looking to put something more formal
into place.
Ms. Edwards. That would be great, because I have to share
with you, when I talk to our small businesses, they say, oh,
yeah we go to those seminars and outreach things all the time,
never gotten a contract. And so it would be helpful I think on
an ongoing basis for the Chairwoman and this Subcommittee to
really hear from you, and that is each of you, what is the real
result of your outreach efforts? Because otherwise, I would
say, why bother to spend the money on outreach if no one is
ever going to get a contract? Thank you.
Thank you, Madam Chairwoman.
Ms. Norton. Thank you very much, Ms. Edwards, for those
important questions.
Remember, Ms. Edwards and I are saying that a contractor
has to make sure that he meets the standards of the Federal
Government, very high when it comes to building or doing any
service for the Federal Government. But to meet that. If the
lesson we get back is, to meet it, I am going to use the same
subcontractor in perpetuity, you are doing nothing to carry out
the congressional intent to increase and for that matter help
train small businesses, because they do get contracts. And if a
small business gets a contract and begins not to perform up to
your expectation, you are supposed to yank that contract. You
are supposed to have things in the subcontract that makes that
possible.
But the failsafe notion, which we believe has been abused
even further, that people have gotten a subcontract to meet the
requirement and then didn't even do the work, nobody better try
doing that on a billion dollar project at the DHS. We
understand that having familiarity with a subcontractor who has
performed well means you want to go back to that subcontractor.
But how in the world do you know that there is no other
subcontract electrician in this region or in this country
except the one you have used, Dial Electric? How in the world
can you say, especially since so many are out of work, that you
got the one and only who can live up to the standards of the
Federal Government? That is where our patience runs out and
where we do not believe outreach is occurring. I want to just
say that Ms. Echols has already shown that there are ways to
increase the numbers because of the GSA workshops which went
on, as I recall it, for 2 days for several sessions. And at the
end, is this not true, Ms. Echols, small businesses qualified
at the end for 8(a) contracting? Am I correct on that? Or how
did that work?
Ms. Echols. You are correct, yes.
Ms. Norton. So what she did was to essentially sit them
there, and by the end of it, if you had met all that it took to
indicate that you had, you were an 8(a) contractor, having sat
through. Now of course that is going to increase the number of
contractors. Some may have come back or already were just to
refresh. But we are either going to be hearing--and the
gentlewoman said that we hear complaints that people didn't get
contracts. We are going to continue to do that.
If my answer is simply, I know, but the contractor, the
electrical contractor did award X number of electrical
contractors, I am going to tell them, look, you can't expect
every electrician in the region to have received a contract.
And if there are goals to be met, then the goals have to go to
where the small businesses are. They are at the subcontracting
stage.
Mr. Watley, would you continue so we can more quickly go
through this?
Mr. Watley. In fiscal year 2009, we awarded $158 million;
$18 million was awarded to D.C. contractors, and $6 million was
awarded to small businesses in the District.
Ms. Norton. You have presaged a question I am going to ask
not for rendition here because you weren't asked to bring
region-specific information to this hearing, but I will ask you
within 30 days, each of you, to supply me with the percentages
awarded in this region. And the reason I pick out this region
is it is the National Capital Region, and it is where you would
expect more people to come forward. I want it by region, by
State, by District of Columbia, Maryland, and Virginia, and by
category, percentage and dollar amount. Names of contractors
would give me a sense of whether or not the same contractors
are simply getting the same business over and over again.
Again, I do not mean to say that that shouldn't happen. I
mean to say, though, when you have a mammoth contract like the
electrical contract, and you can find only one person is a red
flag that is going to go up.
Mr. Mosier, your answer on stimulus broken down by those
categories.
Mr. Mosier. Madam Chairman----
Ms. Norton. And would each of you, by the way--you can't
perhaps do this right now, but I want last year versus end of
fiscal year now or up to this point. You won't be able to give
me the end of the fiscal year. You will only be able to give me
if it is up to the quarter or give me up to the quarter of last
year, so that we will have some sense of whether or not
agencies are doing their best to make up for the losses--you
can't make up for them all--that small businesses are
encountering in mammoth amounts in contracting.
Mr. Mosier.
Mr. Mosier. We have not received any stimulus funds.
Ms. Norton. Mr. Ayers?
Mr. Ayers. The Architect of the Capitol has not received
any stimulus funds either.
And to answer your second question, last year, in fiscal
year 2008, we awarded 19.5 percent of our contracts to small
businesses. And this year through September 2nd, we have
awarded 35.7 percent of our contracts to small businesses.
Ms. Norton. Now, how about disadvantaged small businesses?
Mr. Ayers. That went from 3.2 percent last year to 4.9
percent this year.
Ms. Norton. Thank you.
Ms. Rouse?
Ms. Rouse. As a jurisdiction of the AOC, we don't----
Ms. Norton. Oh, you are included within the AOC. Of course.
Ms. Rouse. Yes, ma'am.
Ms. Norton. Now, one way to get at this subcontracting
abuse is to make greater use of the GSA schedule, a multiple
award schedule. How many of you make use of that schedule, that
GSA schedule where the small businesses are? Not all of them;
some of them are with contractors. But the GSA schedule is full
of contractors, harder to get on because you have got to do a
whole lot of show who you are and how good you are in advance.
But for that reason, you would think that a Federal agency
would particularly be interested in the GSA schedule.
So why don't we just start with Ms. Riggs on that one.
Ms. Riggs. Yes, ma'am. We use schedules quite heavily. And
we have used schedules for recovery work as well.
Ms. Norton. Of course, you use it as a GSA schedule. I am
trying to find out about small business, disadvantaged small
businesses, how often you go to--let me be clearer then--you go
to the GSA schedule as opposed to going to the subcontractor or
contractor who is able, looks, it seems to us, to camouflage a
lot of the outreach that you otherwise would require. You go
straight to that schedule; don't you get yourself a small
business more quickly? And does it work for you with the kinds
of contracts you do?
Ms. Riggs. We do use schedules quite a lot. Most heavily we
use them probably in our facility area for facility operations.
And they do work for us.
Ms. Norton. Facility area, you mean for things like----
Ms. Riggs. Maintenance and repair--I am sorry, thank you--
maintenance and repair, alterations, operations. And we do see
a mix there of large and small, and it does work very well for
us. We also use schedules heavily in the IT area, again with a
mix. We have quite a lot of small in our IT area. And our third
largest area is for professional services that we purchase.
Ms. Norton. In 30 days, could you get us that breakdown
from the schedule? What is the schedule showing us in small
businesses over a period of let's take a year, so we can
compare, in small disadvantaged businesses, in small businesses
and in small businesses themselves, the use of the schedule and
in what kind of services? I am aware, of course, that certain
kinds of services lend themselves to the schedule more than
others.
For example, Clark Construction is responsible, because he
is a general contractor, and therefore Ms. Edwards' questions,
for example, there, are more relevant. Although it is not that
he couldn't go to the schedule. He might benefit from going to
the schedule as well. But the responsibility lies with him.
For you, the responsibility could lie with whether you
decide to go straight to the schedule on some matters or to go
through a contractor. So I am interested in the use of the
schedule. And I am not complaining, although I hear complaints,
so that you don't think I simply bring you the complaints we
hear from contractors, who call all the time, the
subcontractors. I am not complaining, although I would like you
to look at what it takes to get on the schedule.
I happen to like government. Therefore I am particularly
sensitive when people complain about government, because the
people who don't like government, whose names shall go
unmentioned, often use the fact that government paperwork and
all that goes with it can be so burdensome to try to get rid of
a whole lot of what we do. So I am a huge streamline type and
am better known in chairing the EEOC for getting rid of the
backlog than for things I would rather have on my tombstone.
So I really do--I am interested, particularly in the use of
the schedule, and I am interested, and this I don't require in
30 days, but I am going to require it in 60 days, I need you
and your staff to look at whether the schedule can be
streamlined, how much it can be streamlined and yet meet the
high standards of the Federal Government.
Who else is going to speak to the stimulus? I am sorry, was
that--schedules, I am sorry.
Mr. Watley, you use schedules?
Mr. Watley. The Smithsonian uses GSA schedules. We
primarily use them for IT supplies, for office products,
janitorial supplies, but not for construction-related
requirements.
Ms. Norton. Mr. Hansen, you know, with FEMA, if you are
into quick purchasing, you ought to be going to the schedules
like it was yesterday.
Mr. Hansen. We love the GSA schedules; 19 percent of our
acquisitions are off schedule. But keep in mind that doesn't
relinquish us of our responsibilities for competition. We
actually do competitions on the schedule.
Ms. Norton. You know everybody on the schedule has already
competed.
Mr. Hansen. You can still do competitions with the members
on the schedule to get the best price.
Ms. Norton. Of course. But that doesn't take a lot of time.
Mr. Hansen. That does not take a lot of time. They have
done a lot of the work up front for us.
Ms. Norton. So, in Katrina, how often--what percentage of
the contracts came off the schedule?
Mr. Hansen. Can I have my 60 days to respond to that,
ma'am?
Ms. Norton. You will probably need for that.
Mr. Hansen. Yes, ma'am.
Ms. Norton. Also for what was the one in Houston?
Mr. Hansen. Ike and Gustav?
Ms. Norton. I need to know the use of the schedules. Get me
those two hurricanes. But if you simply want to do it by year,
and I understand the Katrina problem, I think I would rather
have it by year, just like I am asking people to give me, go
back to the quarter in 1 year, go to the quarter in this year.
Mr. Hansen. Yes, ma'am.
Ms. Norton. Schedules and who else?
Mr. Mosier, you have a high percentage. I cannot believe
you don't use the schedules.
Mr. Mosier. We do. We don't have a huge volume of schedule
buys. Our funding of course is solely for the maintenance.
Ms. Norton. Is what?
Mr. Mosier. Is solely for the maintenance and upkeep of the
facility. So all of our purchases are related to that.
Ms. Norton. But you talked about some renovation you were
doing.
Mr. Mosier. In very, very rare cases, we might do
contracted services through the GSA schedule. But we primarily
use it for supplies.
Ms. Norton. What is an open contract?
Mr. Mosier. An open contract is I suppose just my way of
saying an active contract. It is sort of a blanket purchase
agreement or vehicle with a small business that I can continue
to tap into.
Ms. Norton. Schedules, Mr. Ayers?
Mr. Ayers. We make extensive use of the GSA schedules. We
find them to be excellent vendors, as well as it is a
streamlined acquisition method that saves us time and effort.
Ms. Norton. So you do make use of the schedules?
Mr. Ayers. Absolutely.
Ms. Norton. As opposed to going through the contract route?
Mr. Ayers. Yes.
Ms. Norton. How much? Get me that information over a
quarter, please.
Mr. Ayers. Yes, ma'am.
Ms. Norton. Ms. Rouse, how about you?
Ms. Rouse. Madam Chair, we do use GSA schedules for some of
our--we are talking about the gift shop items. But I will have
to get back to you with what percentage that is.
Ms. Norton. Thank you. Quarter to quarter over a year. I am
just trying to get a sense.
Now, I want to ask you something that I have just seen
happen, and I was pleased to see it happen, and I want to know
how you go about deciding the amount. GSA is to be commended
for setting a very important example when it did the
preliminary work clearing the land and the like, and I want to
know whether it happened off the schedule or how you did it. It
was able--I should preface this by saying the more complicated
the work in a society that has denied opportunities for
minorities and women, the more likely it is that you will see
fewer at the very top like contractor. And you will see more in
lower reaches of the work. And GSA must understand that,
because when it contracted over the past year, according to our
figures, for the work, 100 percent of it went to--this is
without any hearing or any demand by this Member or any other
Member--went to minority--sorry, disadvantaged businesses, and
40 percent to businesses in the District of Columbia.
More recently, GSA, for the next stage, I think a $450
million contract, set aside 5 percent for I don't know if it is
small businesses or small disadvantaged businesses. So I want
you to break it down for me, how did you decide--and I want
everybody to listen--how did you decide so that you were able
to get those numbers in small disadvantaged businesses in the
beginning, and what are you doing with this $5 million? And how
did you even get to $5 million? Because certainly the Committee
didn't tell you that that was the number. We wouldn't have
known how to tell you what the number was.
Yes.
Ms. Echols. If I am not mistaken, I believe you are talking
about Nastos Construction, who did some work out there at the--
--
Ms. Norton. We know that they got the disadvantaged
business in the District of Columbia.
Ms. Echols. Right.
Ms. Norton. That was reported to us. Go ahead.
Ms. Echols. Some of the projects that we did solicit, we
did use some of the schedules, some of the IDIQs.
Ms. Norton. Were they on the schedule?
Ms. Echols. Nastos, no. That is a construction firm. Nastos
was not on the GSA schedule. That was an 8(a) procurement.
Ms. Norton. I see.
Ms. Echols. Yes.
Ms. Norton. So how did you go about finding, and the 40
percent in the district and others went to other places, that--
did you advertised this for small businesses or for small
disadvantaged businesses? How does it work? Did they have to
compete among themselves? How does it work?
Ms. Echols. Pulling firms off of the FAS schedule and then
inviting them to submit a proposal to GSA depending upon what
project we are working on.
Ms. Norton. I hope everyone heard that. Inviting them to
participate. Others will come forward on their own.
Ms. Echols. And if they hear about it, they are, too,
invited to participate.
Ms. Norton. So you don't exclude others.
Ms. Echols. Yes.
Ms. Norton. What was the last thing you said?
Ms. Echols. As long as they are scheduled. If it is a
scheduled requirement, then they must be a schedule holder
under that particular----
Ms. Norton. How did you get to the $5 million? Tell me
about $5 million. You or Ms. Riggs. We read that $5 million of
the $450 million I think for this first tranche was set aside
for you tell me what, for small business competition? Would you
elaborate?
Ms. Echols. I believe you may be talking about the
demolition contract that is out there now?
Ms. Norton. I think that is probably----
Ms. Echols. Right. That was a competitive 8(a) requirement.
And what we did, that was at FedBizOpps, and the requirement
was that you must be certified through SBA as an 8(a) firm to
participate.
Ms. Norton. All right. Now, this is legal and
constitutional. They are making 8(a) contracts compete within
the 8(a) category for small business where they have determined
that there is an available pool. This is one way, particularly
where you know there is an available pool, where those pools
historically have not been used; it is a way.
How many of you use 8(a) contracting in that way? Because
that is where we get some of the biggest complaints is from
8(a) contractors. How many of you use 8(a) contractors? Would
you describe, beginning with Ms. Riggs, your use of 8(a)
contractors? I now know--and how did you get to $5 million? Was
that based on what you know about the available pool, for
example, of people who can do that work within the 8(a)
contract pool of contractors?
Ms. Riggs. I am looking at examples of things that we have
purchased from 8(a) contractors last year. Our largest category
of work was in maintenance and repair of office buildings.
Behind that was construction. And behind that custodial. There
is quite a list here, but those are probably our largest
categories where we saw dollars going to 8(a) companies.
Ms. Norton. Now, could I know from the rest of you, do you
take some of your stimulus money or other money and say, this
money is for 8(a) contractors? And if so, what percentage?
Mr. Hansen, Mr. Watley, et cetera. Mr. Hansen? You of
course, you would have to be dealing, not with your grants, but
with your other funds that you use. Go ahead.
Mr. Hansen. Yes, there are a couple of different techniques
that you can use to identify 8(a) contractors. One of the
easiest ways is to put a request for information out on
FedBizOpps, giving it 30 days. If you find out that you have
8(a)s out there that can compete, they will inform you through
that process. So that is one technique. We also have a program
where, if a contract is already 8(a), we are going to keep it
8(a) because they have already demonstrated they can do the
work. We have a policy where we award sole source contracts to
8(a)s up to $3.5 million. But when we have a procurement in
excess of $3.5 million, we compete them amongst the 8(a)s.
Ms. Norton. Would you get us the information over the
quarters from 1 year to another how much of that has taken
place using your funds? I am interested in the 8(a) so that
when somebody calls me I can look down, and I can say, well,
FEMA last year awarded--which means they set aside for 8(a)
competition--awarded X percent of 8(a)s. So while you may have
had difficulty, contractor X, it may or may not be a problem
with the agency they then are calling me to complain about.
Mr. Watley, 8(a) contracts.
Mr. Watley. For our Recovery Act dollars, we looked at the
opportunities available, but we did not assign a dollar amount
that said X amount of the $25 million----
Ms. Norton. Were those 8(a) contracts?
Mr. Watley. Pardon?
Ms. Norton. Are we talking about 8(a) contracts now?
Mr. Watley. The 8(a) contracts that we awarded; we did
award that $9.5 million.
Ms. Norton. If you are saying to the 8(a) contractors, here
is $9 million----
Mr. Watley. Correct.
Ms. Norton. --you surely don't pull that out of the air.
Mr. Watley. Correct.
Ms. Norton. How did you get to that number?
Mr. Watley. That number came out of the amount that we
obligated. We did obligate $9.5 million.
Ms. Norton. What I am trying to find out, is that just
catch as catch can? So you were able to get those impressive
numbers without having a specific goal?
Mr. Watley. Correct. And so what we did do, though, was we
looked at the amount that we had, and we do have IDIQ contracts
that were previously awarded to 8(a) vendors. And we said, of
the money that we would receive, what dollars and what projects
can we award to these 8(a) vendors? And so that was the
approach we did rather than identifying a specific amount of
money. We looked at the projects, and we looked at the vendors
available, and we made the award of those projects.
Ms. Norton. So based on your past history, you know where
to go. Yeah, you know, you are not going to find 8(a)
contractors in a number of different categories. You are going
to find them in other categories. So you are going to have to
knowledgeably do outreach.
Mr. Mosier?
Mr. Mosier. We are fairly active with 8(a) contracts.
Ms. Norton. Just get me those figures then. I know you may
not have--and Mr. Ayers? Those figures are very important,
because you see, I would be particularly embarrassed, you are a
legislative branch agency, to hear from constituents in the
region that our own legislative branch had difficulty.
Mr. Ayers. The 8(a) program is really a Small Business
Administration program. So, to date, we have not made efforts
to particularly work or direct work to 8(a) programs. But I
think, with our new relationship and agreement that we signed
last month with the Small Business Administration, maybe that
is a goal we can develop and push for in the future.
Ms. Norton. You ought to be commended on understanding that
though technically, and of course technically we could take
steps, technically because there are three branches of
government, you are the legislative branch of government; the
Federal agencies cannot oversee you in the sense that we can.
That law does not automatically apply to you. But to your
credit, you have, to the best of your ability, complied, and
you now have a MOU.
Mr. Ayers, I had great problems, you were not the Architect
then, when we did this massive buildout. It was just horrific,
where we spent all that money. I don't even want to know,
because you had so many complaints. We were in the minority.
And it was very difficult to deal with that. We are not going
to have that again. And if you are not using the 8(a) program
the way these agencies are, you are not going to have a lot of
success. We want the use of multiple ways. I am after my
minority businesses to get on the GSA schedule. The minority
contractor--or sorry, he was a small business; he was not a
minority contractor, came to me on the electrical. He did the
right thing. I am after them to go after the contractors.
Contractors sometimes come with some small businesses.
They are supposed to get points, Ms. Riggs, but of course
if nobody looks afterwards, why should they care as long as
they get their funds? You see me going into such great detail
because we will never be spending this kind of money again, I
just can't imagine, for decades of the kind we are spending
with your agency. Others have smaller amounts. So it is going
to be important to know.
Mr. Ayers, would you kindly submit within 30 days a copy of
the MOU you have recently signed with the Small Business
Administration?
Mr. Ayers. Yes, ma'am, happy to.
Ms. Norton. And I compliment you for doing that.
Mr. Ayers. Thank you.
Ms. Norton. You indicated that you did use small business
set-asides--or you are going to begin, that is part of it--
between $5,000 and $100,000. Is that right?
Mr. Ayers. That is correct.
Ms. Norton. That is the first time you have done that.
Mr. Ayers. That is correct.
Ms. Norton. Well, I compliment you for that. I think it is
scandalous that the agencies have been doing that and that our
own legislative branch--that is why we are going to be doing
the oversight. There is not really any way for you to know
unless the authorizing or the Appropriations Committee does it.
I will be looking, Mr. Ayers, to see how your
subcontracting goals coincide with those of the SBA. What about
the vendor database that you and perhaps Ms. Rouse use?
Mr. Ayers. We have an extensive database. When we began
focusing on this program, the first thing we did was to send a
letter out to all of our known vendors asking them to self-
identify whether they were a small business, large business,
disadvantaged. We have got that information now, and we loaded
it into our vendor database and our financial management
system. And certainly several times a week we meet with new
vendors.
Obviously, as you know, we have been to your fair both in
2008 and 2009. We have been to three fairs this year. And we
get information from small business vendors and load that into
our vendor database.
Ms. Norton. It looks like, Mr. Ayers, that you are in more
of a start-up phase, and I don't mean to say you have not been
doing anything, than the other agencies. And therefore, we will
be particularly interested in the MOU and how you are going to
carry them out. And of course, the GSA experience is so
extensive that I would invite you to collaborate with them to
save some--to get to some short cuts. And I would like to ask
Ms. Rouse, and I understand much of her work comes under the
Architect of the Capitol, but I wonder if you set internal
goals for small business programs of your own? For example, the
Government Printing Office, does that come under your purview?
Ms. Rouse. What we are trying to do, thanks to the new
relationship with the SBA, is use the SBA and GPO as our sort
of avenue to find new vendors. Our real interest is trying to
work with our procurement staff and SBA to do our first vendor
fair at some point between now and the springtime, which will
allow us to actually hopefully attract more vendors who want to
create or already have products that would be of interest to
people in our gift shops. So we think we have some new
opportunities. And I think the more people know that we are
doing it the more vendors we will get.
Ms. Norton. Well, you are very visible. And of course and
again, I speak to Mr. Ayers and Ms. Rouse particularly since
the embarrassment would be to Members of Congress if complaints
were to come in your area. It would mean we weren't tending to
our own store.
We are going to let you go.
I am going to say to Mr. Hansen that I am particularly
interested in how you spend during a disaster. Let me tell you
the complaint I get as--I have the primary jurisdiction over
FEMA. I am also on Homeland Security. They actually have a much
smaller part of the jurisdiction. This is what we hear. Here we
have some of the only things left standing in this area are us
small businesses, but, they complain, without any way for me to
respond, but small businesses here, there, and particularly the
bigger contractors are getting all the business. So they
really--here I am giving you their complaint. I am not
verifying it, but the complaint goes that if they really wanted
to help us, they would give the business to the small business
person who is up and running and can do it. That is the
complaint about FEMA.
Mr. Hansen. Madam Chairwoman, you will be happy to hear
that FEMA has adopted a program called the Local Business
Transition Team that we actually deployed this last year to
Gustav and Ike. And it is the job of that team to help
transition work from the larger corporations to the smaller
corporations. It is also the job of that team----
Ms. Norton. This question went to the smaller corporations
in the disaster area who happen to be up and running but see
contracts going here, there, and yonder, but not to the area
where the money would flow back into the jurisdiction that has
been hit.
Mr. Hansen. That is exactly the intent of this team is then
to reach out to the community, to reach out to those small
local disadvantaged businesses to teach them how to work in the
government, to get them enrolled in the central contractor
registry, to help them get DUNS numbers, to show them how they
can go on FedBizOpps to see where the opportunities might
exist. And in areas that are really devastated, we actually
have bid boards, and we teach the local contractors how to go
to the bid boards to compete for those contracts. So this Local
Business Transition Team is really a good initiative that I
think really gets to the crux of what you are talking about.
Ms. Norton. You are setting that up now?
Mr. Hansen. We did in Gustav and Ike, and it has been a
promising practice we are going to do in the future.
Ms. Norton. This is excellent. This is excellent.
Mr. Hansen, could you get to us how that is now working by
numbers?
Mr. Hansen. Yes, ma'am.
Ms. Norton. We don't know how to translate anything but
numbers here. But I very much appreciate it. That is precisely
what would be necessary.
First of all, many of the folks will be down just like the
residents are down. So this is difficult. To set up something
special for it is very important.
I am going to have one question for Ms. Riggs before I give
all of you a very important charge.
The question for Ms. Riggs is, since the DHS development,
which is only now, it can't even be a third of the money you
are going to be spending, but it is currently underway, where
we would expect small business opportunities to be unusually
plentiful, have you goals or how will you do goals for this
development? You are going to be going on--I would be surprised
if you are not going on for almost a decade when all is said
and done before the first people land there and say, we now,
we, 14,000 Federal employees, are there. How are you going to
manage small business opportunities for so large a project in
terms of goals for the development?
Ms. Riggs. Well, first, let me voice appreciation for our
CO. We are quite fortunate to have a CO who is very aggressive
on that project towards small business. And as you can see from
her past performance, she has looked for those projects that
can be severed from the larger----
Ms. Norton. Now, I have nothing but praise for Ms. Echols.
But what I am afraid of is a--what is the best way to put
this?--a step by step notion as opposed to you know exactly
what you are going to do there. You are going to be doing
building from the ground up. In fact, there is no kind of
construction work you are not going to be doing, including
reuse, where small contracts will be abundant in the extreme.
You are reusing maybe 60 percent of the buildings there.
Somebody, if you want to be successful, long before that work
begins, is going to have to begin to map out this.
Ms. Echols is an implementer, because I have seen her do
her work. Somebody, before you get anywhere close to the next
contract, has got to be looking at reuse. I am going to insist
that GSA do reuse and construction at the same time. What are
you waiting for? We shouldn't be going step by step. We used to
not have anything to do with building from the ground up. So I
am going to be seeing whether or not GSA can walk and chew gum
at the same time. Therefore, I ask about your overall planning
for the small business contracting for this project.
Ms. Riggs. We will see quite a lot of work go to small
businesses through subcontracting. But we will also continue to
see work go to small businesses as primes----
Ms. Norton. Ms. Riggs, I know that. See, in testimony
terms, that is known as a truism. Is there a plan? Is anybody
working on planning for the opportunities that will be
available so that contractors and, for that matter,
subcontractors will be briefed well in advance of what is going
to be required as they tool up to compete for the next one of
the many contracts that are going to come out of GSA?
Ms. Riggs. Yes, ma'am. That team is----
Ms. Norton. Let me ask you before Congress goes out of
session to get me a sense of how you would plan to do small
business contracting, considering the opportunities that are
going to be available for reuse and for construction. And
bearing in mind that, since this is a mammoth contract, the big
boys are who are going to benefit most. And, well, they should.
They have the necessary expertise. They are putting out much in
order to be able to accomplish within the time frames we give
them.
But we are as intent on meeting the small business and
small disadvantaged business goals as we are on the rest. And
they are all tied into this. You are not going to go to the GSA
table for all of these people. And I don't ever want to see
another Clark Dynalectric complaint in the years that this
thing is going to be built. Never want to see it. Indeed, I
know of nothing you can do after it has occurred. This presages
my next question. Is there anything you can do? Is there any
sanction that you know of or have used if you gave a
subcontract or small business contract and you found that in
fact they were not using disadvantaged contractors, they were
not fulfilling, or they were simply not fulfilling what you
asked them to do? What do you do then?
Well, you know what? I want to make it unnecessary to
answer that question. Because my answer to it is, it is all
over then, and we all lose. And I know that there are some
counting on it being all over then. Therefore, the most
important mission I could leave you with is tracking. Catch the
abuse or the failure before it comes home. You are holding the
money, friends. Is there any way to withhold money if a
contractor fails to meet his goals in subcontracting that you
know of? What is it, Ms. Echols?
Ms. Echols. We actually do a hold-back procedure.
Ms. Norton. Say that again.
Ms. Echols. We actually do a hold-back procedure.
Ms. Norton. Everybody spell those words, hold-back
procedure. Because we don't want to have to call out names the
way we did here, call in contractors. Contractors are doing
whatever they are doing because the Federal Government has not
been tracking, has not been helping. Somebody has a great big
contract; he is going to do what we say to. I am not worried
about the contractor. So the failure lies with us. And I am
trying not to be responsible. And I think you have to inform
your small business contractors that you are going to be held
accountable before the Subcommittee. You certainly will be held
accountable on an annual basis.
And GSA, who is the largest amount, will be held
accountable more often than that because we have hearings often
with GSA. And I am prepared to have hearings if we find lapses
of which we have not found today. We found much more than good-
faith efforts today. We knew that from the SBA figures and how
well we were doing. And the administration takes this very
seriously.
I have had discussions with the Justice Department, which
means to proceed, not in this area, where we are talking about
affirmative work, but in areas where we find people in
violation of the law, where you may need the Justice Department
to back us up. I want to thank all of you for your testimony
today. It is very, very helpful.
Please remember the time frames we have set. And please be
in touch with staff, because we are here not simply to do
oversight but to be helpful to all of you.
And I would like to call the final panel, panel two. This
is a very important panel, because agencies come forward simply
to tell us what they mean to do and what they believe they have
done. And they testify truthfully and in good faith. But we
need to put that together with how that experience works on the
ground, and therefore, we are welcoming the next witnesses,
asking them to quickly be seated, and we will hear their
testimony. We are going to go left-right here.
TESTIMONY OF ROSALIND STYLES STEPHENWOOF, PRESIDENT AND CEO,
CAPITOL CITY ASSOCIATES, INC.; JOEL ZINGESER, ASSOCIATED
GENERAL CONTRACTORS OF AMERICA; CATHERINE GIORDANO, PRESIDENT/
CEO, KNOWLEDGE INFORMATION SOLUTIONS, INC.; AND RAY AMIRIAN,
NASTOS CONSTRUCTION COMPANY, DISTRICT OF COLUMBIA SMALL
BUSINESS WINNER, 2009
Ms. Norton. And we are going to proceed quickly, beginning
with Rosalind Stephenwoof, President and CEO, Capitol City
Associates.
Ms. Stephenwoof. Good afternoon, Congresswoman Norton. I am
excited, to say the least, to be here to be able to testify
again before your Committee to talk about the small
disadvantaged businesses and your goals for meeting, for
assisting us in competing in the Federal marketplace.
Again, I am Rosalind Styles Stephenwoof, and I am President
and CEO of Capitol City Associates, Incorporated, an African-
American, woman-owned small and disadvantaged business that is
located in the esteemed Anacostia neighborhood of Washington,
DC.
Capitol City was established solely for the purpose of
assisting Federal and local entities, major corporations and
private developers to maximize the participation of local
developers and businesses within communities to participate in
the revitalization of their neighborhoods.
Capitol City has worked with communities in Washington, DC,
and now has extended its work in Maryland and northern
Virginia, working to negotiate relationships with owners of
development projects and establishing partnerships with
resident organizations so that the inclusion of local
businesses is inherent in the design and construction of
projects.
Capitol City also works to develop capacity-building skill-
training programs, such as the pre-apprenticeship,
apprenticeship, administrative office, property management,
communications systems operations training that help people to
not only effectively compete for employment during the
construction of projects, but also as employees during the
operation of the facilities post-construction.
Most of the partnerships implemented written agreements
which included a process for monitoring and enforcement.
Capitol City is a public-private expert, having successfully
assisted the government of the District of Columbia to change
the laws governing the participation of local, small, and
disadvantaged business enterprises on city-funded projects from
a goal to a requirement. And we continue to monitor compliance
on Federal, local, and private development initiatives to
ensure the full participation of the small, disadvantaged
business community in construction-related projects.
Ms. Stephenwoof. I offer my congratulations and support to
you, Congresswoman Norton, for spearheading this initiative on
the Federal level and working to ensure that local residents
and businesses are able to participate in the construction
marketplace on projects under your purview. I have witnessed
firsthand the instrumental role you have played to include the
United States Recovery Act dollars in GSA's redevelopment of
the St. Elizabeth's West Campus in Southeast Washington. An
unprecedented requirement has been included in the solicitation
for construction management and the general contractor teams to
establish and maintain a plan for preapprenticeship and
apprenticeship training programs to be incorporated in their
construction plan.
This brings me to my review of the General Services
Administration and its support of small business and
entrepreneur participation in this historic development
initiative. St. Elizabeth's West Campus, as you know, sits in
one of the most highly distressed neighborhoods in the country.
The state of the economy recently reported that the current
recession has lasted longer than any recession since the Great
Depression, that the unemployment rate is the highest it has
been in 26 years, and that unemployment in the construction
industry is at the highest unemployment rate of any industrial
section.
In comparison, the residents of the Ward 8 community
surrounding this development project have lived with these
distressed economic standards for generations. It would be a
great disservice for our community if the first recipients of
the economic recovery possible from this project provided by
the United States does not benefit the residents and local
businesses impacted by this multibillion-dollar development
initiative.
Over the past 5 years, GSA has facilitated dialogue with
the Ward 8 community to gain input and garner support in
development of the St. Elizabeth West Campus, but I think GSA
can do more to expand its public engagement efforts. In
engaging in deeper outreach, they can create smaller work
groups, advisory committees and community engagement venues
designed to advise residents and local businesses of employment
training and business opportunities. They can initiate
alternative marketing tools for distribution in communities
that are more sensitive to the neighborhood and its
constituents.
Providing technical support in partnership with the Small
Business Administration, they can provide one-on-one technical
to assist small local businesses to achieve Federal
certification; conduct assessments of current businesses and
provide a roadmap to become competitive in the construction
marketplace; and provide financial counseling for businesses
and avenues for assistance with bonding, start-up costs,
personnel and other business expenses.
The third area is to provide employment and training
opportunities: Create partnerships with established local
support service programs and training providers to recruit
residents for employment. Utilize specialized resident advocacy
agencies and organization, such as ex-offender, public housing
and human service programs, who are currently subsidized by
Federal programs to refer local residents and assist with
ongoing counseling services throughout their employment.
The next step to successfully implement these programs and
services is accountability. GSA should include a strong
monitoring and compliance component. Developers, general
contractors and prime contractors have historically maintained
as their bottom line having a project come in "on time and
under budget." The inclusion of alternative recruitment,
training and employment programs and services in their opinion
has a negative impact on their bottom line.
GSA and all Federal small and disadvantaged business
participation should be a strong requirement, not a goal. All
contracts utilizing Federal funds should include strong
enforcement language that does not only state possible
penalties for noncompliance, but should outline the process for
the enforcement of penalties by the withholding of funds and
payment of fines. Goals and requirements can only be stated by
financial retribution to ensure compliance.
Lastly, I wish to add that since 2005, I have served as the
president of the National Association of Minority Contractors,
Washington, D.C., Metropolitan Area Chapter. Wearing that hat,
I would like to address our organization's concerns regarding
the possible implementation of a project labor agreement on any
Federal construction project, and especially I am referring to
the project at the West Campus.
Over the past 40 years, NAMC has served as an advocate for
minority contractors throughout this country. Designed to
address the needs and concerns of minority contractors and
create parity in the construction industry, NAMC has
aggressively pursued equity in contracting for small minority
and disadvantaged businesses. Our local chapter also includes
women-owned, HUBZone and veteran-owned businesses.
In the Washington metropolitan area, which includes the
Federal enclave, we have several significant construction
projects planned or under way. Because of the state of the
national economy, construction firms and their employees are
saturating our area to compete in the construction marketplace.
Due to the paucity of minority contractors in the construction
industry, our members cannot compete with the established
unionized labor force through project labor agreements. If any
of these highly competitive fellow contract projects fall under
PLAs, an alarming number of minorities and female workers and
minority contractors who are living and working in Washington,
D.C., and the surrounding area will be denied access to a vital
opportunity for work.
NAMC Washington would like to continue our dialogue with
your Committee regarding the implementation of a PLA. We can
provide you with statistical data from the U.S. Department of
Labor, which outlines the status of journeyman employees by
race and gender within each construction trade, which will
validate the significant disparity in the construction trade by
race and gender.
We are committed to work with this Committee to craft a
process for the local minority and women-owned businesses are
at the forefront of the redevelopment of our cities and our
neighborhoods.
Capitol City Associates and the National Association of
Minority Contractors, Washington, D.C., Metropolitan Area
Chapter, stands ready to assist your Committee to increase the
participation of small and minority businesses doing business
with their Federal Government.
I thank you for your time.
Ms. Norton. Thank you very much, Ms. Stephenwoof.
Next, Joel Zingeser, Associated General Contractors of
America. Mr. Zingeser.
Mr. Zingeser. Thank you, Ms. Norton, and it is a pleasure
to be here and an honor. My name is Joel Zingeser, of Grunley
Construction, where I lead the firm's strategic planning,
business development and sustainable design and construction
efforts.
For over 50 years our firm has specialized in renovations,
restorations and modernization of large-scale government and
commercial buildings, including office, laboratory and
educational facilities. In addition, we construct new
facilities and additions to existing buildings for both public-
and private-sector clients.
On behalf of the Associated General Contractors of America,
we strongly support full and open competition for the many
contracts necessary to construct improvements to real property.
This includes competition among general contractors, specialty
contractors, suppliers and service providers. Over the years it
has been established that such competition energizes and
improves the construction industry to the benefit of the
industry and the Nation as a whole.
As the Committee considers the changing Federal procurement
landscape, AGC offers the following points for consideration.
Regarding contracting reform issues, AGC supports procurement
reform to improve delivery of Federal construction services.
Reform of the Federal procurement process should recognize
construction's unique melding of industry sectors, while
ensuring the government is using the most cost-effective method
of procurement.
AGC is working to foster a business climate that enhances
opportunities for all businesses. Construction is an intensely
competitive industry, and we believe that competition penalizes
any firm that resorts to discrimination. To succeed,
construction firms have to focus on price, quality and
reliability.
Our members recognize the benefits that the 8(a) program
and the Disadvantaged Business Enterprise programs have to
contractors who qualify for these programs. We also have
growing concerns about the need for Federal decisionmakers to
address the challenges small businesses that do not qualify for
special preferences are also facing in today's harsh economic
conditions. We believe that current Federal rules need to be
updated to generate more collaboration, mentoring and
assistance no matter who is the business owner.
AGC would like to discuss issues surrounding a wide range
of concerns and recommendations we have for improving the
Federal market.
At this point I would like to refer the Subcommittee to my
submitted testimony. Topics include AGC's positions on contract
bundling, the HUBZone Program, and Alaskan Native contracting.
I would also like to highlight a few other points.
Subcontracting goal achievement. Current SBA rules require
small business set-asides and establish small business goals to
be met by large businesses to assure that significant portions
of Federal procurement dollars flow to small business firms,
but the rules for keeping track and measuring the actual flow
of dollars to small businesses do not take into account the
actual amounts that flow down below the first-tier level of
subcontracting. Within the construction industry, the bulk of
work is performed by subcontractors who in turn hire second-
tier and third-tier firms to perform elements of the project.
Under the current system, if an other than small business is
included as a first-tier subcontractor, the prime contractor is
not asked to report further dollars that are going to small
businesses below the first-tier subcontractor. This is because
the contracting agency is not allowed to take credit for those
dollars towards its goals. Allowing prime contractors to report
small business subcontracting at all tiers would demonstrate
true small business participation on a Federal contract and
would show more accurately how the construction industry
supports and is dependent upon small businesses.
The shift to Electronic Subcontracting Reporting System,
the ESRS, by the Federal Government provides the opportunity to
correct this problem. The system has the capability or can be
made to have the capability to track and report small business
subcontractors on multiple tiers. Yet current rules do not
encourage the prime contractors and their subcontractors to
account for total small business participation at all tiers.
AGC recommends Congress direct a change to the system through
legislation to potentially help all parties track the dollars
flowing to all small businesses.
The Federal Acquisition Workforce. Recruitment, retention
and training of the government workforce should be a high
priority for both government and industry. As you can already
see from the concerns about contracting bundling, which I
submitted in the testimony, an understaffed Federal Acquisition
Workforce is suffering from the pressures of an already
challenging procurement environment. The shrinking acquisition
workforce is an ongoing problem and will exacerbate as the
number of procurements continues to grow.
About one Federal acquisition professional in eight already
is eligible to retire, and that will rise to more than half the
workforce by 2016. The average retirement eligibility for
contracting professionals will increase from 29 percent in
fiscal year 2011 to 50 percent in fiscal year 2016.
We fear that the Federal Government workforce challenges
may only get worse in the coming years. In order for the
government to meet its many missions, it will have to do a
better job of recruiting, hiring and training new employees.
Given that the government's purchase of good and services is at
an all-time high, it is essential that the government
acquisition positions be fully staffed. This problem needs to
be addressed in the near term to avoid the negative ripple
effects that a strained workforce can have on all facets of
contracting.
Agency consistency. As a matter of policy, AGC recommends
that agencies with large regional offices continue to work to
promote the implementation of uniform agency policies that will
provide greater consistency in the construction process. Many
of our members have repeatedly found wide variances in regional
operations, contract administration and administrative
practices. Such can produce serious administrative and
communication problems, and can discourage contractors from
continuing to work in the Federal market. We are pleased that
the General Services Administration has worked very hard to
ensure consistent communication and consistency between
regional offices over the past several years, and hope that
trend continues into the future.
Project labor agreements. At the outset AGC wishes to
explain its overall position on PLAs. AGC neither supports nor
opposes PLAs per se. What AGC strongly opposes is government-
mandated PLAs on any publicly funded construction project. AGC
is committed to free and open competition in all public
construction markets and believes that publicly financed
contracts should be awarded without regard to the labor
relations policy of the government contractor. AGC believes
that neither a public owner nor its representative should
mandate the use of a project labor agreement that would compel
any firm to change its labor policy or practice in order to
compete for or to perform work on a publicly financed project.
AGC further believes that the proper parties to determine
whether to enter into a PLA and to negotiate the terms of a PLA
are the employers that employ workers covered by the agreement
and the labor organization representing the employer/employee
relationship--I am sorry, and the workers covered by the
agreement since those are the parties that form the basis for
the employer/employee relationship, have a vested interest in
forging a fair and stable employment relationship, and are
authorized to enter into such an agreement under the National
Labor Relations Act.
AGC has submitted comments on the July 14th, 2009, proposed
rule that would implement Executive Order 13502 to determine
the effect this proposed rule will have on Federal procurement
policy and the cost of doing business with the Federal
Government. We would be pleased to share a copy of our comments
with the Committee.
That really concludes my formal comments. I am pleased to
answer any questions to the Chair.
Ms. Norton. Thank you, Mr. Zingeser.
Next is Catherine Giordano, who is president of and CEO of
Knowledge Information Solutions, Inc. Ms. Giordano.
Ms. Giordano. Good afternoon, Chair Holmes Norton. I am the
CEO of Knowledge Information Solutions, Inc., located in
Virginia Beach, Virginia. We are an information technology
value-added network integrator with a full range of products
and services to create, manage and secure networks. We are an
8(a) women-owned firm.
I am appearing here today on behalf of Women Impacting
Public Policy, a national bipartisan public policy organization
representing well over a half million women and minorities in
business, including 49 associations that partner with us. Thank
you for holding this hearing and for inviting me to testify.
Let me first mention I had the opportunity to testify on
the very same topic last year, March of 2008, and I am pleased
to give you an update on these small business contracting
issues that are so important to women-owned businesses and WIPP
members.
The most pressing issue for women-owned businesses in the
procurement arena is the failure of the SBA to implement a
women's procurement program. As this Subcommittee knows, Public
Law 106554, which was passed in 2000, established a Women's
Procurement Program because Federal agencies were not meeting
their 5 percent women-owned contractual goals. In fact, the
government has never met the 5 percent goal for women. The
highest number that it has ever achieved is 3.4 percent. For 7
long years the Women's Procurement Program suffered from
inaction, and in 2007 and 2008, the SBA proposed a program that
was unacceptable to the women's business community and,
frankly, was considered an insult by women business owners.
There were two major flaws in the proposed program. One,
the SBA chose the narrowest method of data analysis by the Rand
Corporation and identified only four NAICS codes that would be
subject to restricted competition.
Two, an agency was required to perform an internal audit of
its past contracting actions to show it is rectifying past
discriminatory contracting practices before any contract could
have qualified for a set-aside. We believe this would have set
forth a new legal standard which would have been damaging not
only to this program, but potentially every women business
enterprise program in the country.
Thankfully with the influence of many Members of the House
and Senate, including the Chair of this Subcommittee, the SBA-
proposed program was not implemented. But we have reason to be
more optimistic this year. The new SBA Administrator Karen
Mills is now working to propose a new program and a
simultaneous withdrawal of the previous program. The SBA hopes
to have a program in place by the end of the year, which would
give women-owned businesses a real chance to compete for
stimulus dollars.
We have urged the SBA to take another look at the Rand
Corporation disparity study and expand the eligible industries
to more than the narrow definition proposed in the past. In
fact, the Rand Corporation study suggests that up to 87 percent
of the industry categories could be eligible for the program if
the SBA chose to use that interpretation. WIPP is working
closely with the SBA to ensure that the Women's Procurement
Program will serve to assist the Federal Government in finally
meeting its women-owned goals.
The Federal Government's ability to meet small business
goals is making progress; however, it is far from impressive.
The 2008 numbers show that the percentage of contracting to
small businesses has dropped to 21.5 percent. The women-owned
goal number has remained at 3.4. However, the number of
agencies that met the women-owned contractual goal increased
from 10 to 14 agencies from 2006 to 2008.
I wish I had good news with respect to subcontracting and
bundling, but the challenges in these two areas continue to
plague the small business community. WIPP continues to believe
that if you list us, use us. Small businesses spend thousands
of dollars in staff resources to be part of the subcontracting
plan on a prime contractors bid. We believe prime contractors
should utilize small businesses unless they no longer meet the
requirements. There should be penalties assessed for violating
the subcontracting plans. With respect to the contract
bundling, to our knowledge there had been no new studies since
OMB's 2002 report, which states for every $100 awarded on a
bundled contract, there is a $33 decrease to small business.
A new concern for small business is insourcing. While we
certainly understand the policy as it relates to the practice
of awarding large sole-source contracts to major corporations,
the unintended consequence for small business contractors is
they are losing opportunities in the subcontracting front and
losing their employees to the government.
We believe the Federal Government should make a deeper
commitment to contracting directly with the small businesses.
We certainly do not believe the administration intended
government agencies to poach small business employees who are
working at their sites, but we worry about the consequences of
this policy. WIPP urges the Committee to take a closer look at
this issue.
In conclusion, it is not impossible for small women-owned
business to be successful in Federal contracting. I am an
example of that success. But our success does not rest solely
on the quality of our products and services. Federal
acquisition policy largely dictates if and when we will be
successful. The Congress and the Federal agencies must work
together to ensure that the policies they enact and the
paperwork they create do not shut out the ability of the women-
owned businesses to succeed in the Federal marketplace.
I thank you for your time.
Ms. Norton. Thank you very much, Ms. Giordano.
Ray Amirian, Nastos Construction Company. And
congratulations, Mr. Amirian, on being the District of Columbia
Small Business of the Year 2009. You may proceed.
Mr. Amirian. Thank you. Thank you, Madam Chair, for
inviting me to participate in today's hearing. My name is Ray
Amirian, I am vice president for operations at Nastos
Construction, Incorporated. We are a registered disadvantaged
small minority business located in the District of Columbia.
This year marks our 16 years in business. We have made steady
growth as a company from the very beginning in 1993. Much of
that progress has been due to the large number of construction
projects that have been made available by the government to
such companies as ours, and the considerable help for small
business that has been available from the Small Business
Administration and numerous other Federal and State agencies.
The District government has been especially helpful. The
government set-aside program for small minority and
disadvantaged business, specifically the 8(a) program, has been
especially helpful, and we have made every effort to work
within those guidelines to the best of our ability.
The Federal Government has been an especially rich source
of funding as many of its buildings are aging and in need of
remodeling, or in some cases more dramatic reconstruction.
In the process of working on many of these projects over
the years, Nastos has become specialized in the repair and
remodeling of historic structures. These have included numerous
buildings on the St. Elizabeth campus, including the 140-year
old brick wall surrounding it; and most recently the 70-year
old D.C. National Guard Armory on which we are currently
replacing all mortar that has accumulated over the years and
replacing it with mortar that exactly matches the original
mortar with which it was built.
Due to the recent downturn in the economy, whereas we
earlier bid against four to five local companies for government
jobs, we now sometimes find ourselves bidding against as many
as 20 companies from as far away as Ohio Valley when local
projects become available. Nonetheless, Nastos remains strong
and competitive during the present downturn, and we attribute
most of it to the thoughtfulness and special programs made
available by the Federal and the State government.
On behalf of Nastos Construction, I wish to thank you and
Members of the Committee for having me here today.
Ms. Norton. Thank you very much, Mr. Amirian.
Let me go to my first question, which is for you. You talk
about and expressed an appreciation for the quantity of
contracts that have been available through GSA. What type of
work have you done for GSA?
Mr. Amirian. In the last 8 years, under the 8(a) program,
we have done numerous projects that include the design and
build of the plaza at Health and Human Services, Department of
Labor, and National Nuclear Regulatory Commission headquartered
in Bethesda. We have done office renovations for GSA
headquarter buildings, and roof replacement at Department of
Labor, and on average every year we have done between 2- to $4
million worth of renovation projects under 8(a) program.
Ms. Norton. So all of this has been 8(a) work?
Mr. Amirian. Yes, ma'am.
Ms. Norton. That $4 million was what percentage of your
work, for example, annually?
Mr. Amirian. That is $4 million annually, but GSA
represents almost 40 percent of our volume.
Ms. Norton. And you are located right here, so you are
alert to the opportunities available, and you clearly have
taken advantage of them.
Mr. Amirian. Yes, ma'am.
Ms. Norton. Are you--and indeed this is for all of you. Are
you, Mr. Amirian, and do any of you know of firms that are
benefiting from the stimulus funding, small business firms or
small minority business firms? Mr. Amirian, have you?
Mr. Amirian. No, I don't.
Ms. Norton. Not yet.
Mr. Amirian. Not yet.
Ms. Norton. Mr. Zingeser, surely somebody. Mr. Singer has
already received some of the stimulus funding. Do you know of
any through the association?
Mr. Zingeser. Well, I can speak for Grunley Construction.
We have been the recipient of three projects that were funded
with ARRA money. These projects were the continuation of phases
or options for continuation of work that was awarded under
prior competitive bids. The three projects are the Mary Switzer
Building, which phase 2 is funded with ARRA funds, at $43
million approximately; the Hoover joint venture Department of
Commerce building, that is a joint venture with Gilbane
Construction, the total is about 158 million; and the
Department of the Interior's headquarters building, phase 5,
approximately $34 million. So there is a total in terms of
Grunley's portion of the joint venture of about $156 million
worth of work that is again being funded under ARRA funds.
All of those contracts have small business plans and
programs, subcontracts and goals to be met. And as I say, they
are in the process of proceeding. Those awards were made at the
end of June, the ARRA funds, roughly.
Ms. Norton. Mr. Zingeser, we are going to give you time to
do this, but I would like you within 6 months of today to
report how those funds in turn have been distributed to
subcontractors, contractors beneath yourselves, and to
disadvantaged business contractors.
Mr. Zingeser. Will you let me report second and third tier?
Ms. Norton. Yes.
Mr. Zingeser. Okay.
Ms. Norton. In fact I am going to ask you--I was befuddled
by that part of your testimony. I am interested, this whole
hearing is about so-called second and third tier in one sense.
Could you give me your sense of why the second and third
tier contractors are not--"not allowed," according to your
testimony on page 3, for subcontracting goal reporting? So it
would be like only you?
Mr. Zingeser. The way the--I don't work for an agency.
Ms. Norton. No, I understand. Surely they must have said
something to you, like you said to me, can I report. You must
have said that to them, and what did they give you as the
reason?
Mr. Zingeser. Here is the general understanding that I
have, which I would suggest is probably the understanding that
the industry has. An agency has small business goals within the
contracts that they award. You are required when you compete
for this work to submit either with your submission or
immediately after a small business plan. That plan outlines
what percentage of the subcontracts are going to be awarded to
small business, and then, within that, what percentages will
flow down to the other special categories.
Ms. Norton. Tier 2 and 3?
Mr. Zingeser. No, no, to the subcontractors. I am talking
strictly now the subcontracts.
Ms. Norton. Only subs.
Mr. Zingeser. The subcontractors, okay.
Then the process begins, the work begins, and reports are
due. The reports that are due come from us to the agency. They
used to be forms 294 and 295, I believe were the names, and now
there is the ESRS system for doing it, electronic. Very, very
high potential to get good information an get it quickly.
What we are asked to report is at the subcontractor level
only whether those are small businesses or not or other special
categories. We are not asked to report about what happens below
that. And I will talk about that in a minute. When we report--
the reason we are only asked to report, and this is my
supposition, is because the agency does not get credit with the
Small Business Administration towards the goals----
Ms. Norton. Because?
Mr. Zingeser. --at any level except the first tier.
Ms. Norton. Because?
Mr. Zingeser. Because either the law says it, the rules say
it, there is policy. I don't know. I will leave that up to
other----
Ms. Norton. Is it a paperwork problem? Do they think there
will be too much paperwork going down the line? But you say a
lot of this would be captured easily.
Mr. Zingeser. If that was the case, it would not be hard to
get that information.
Ms. Norton. We could capture this pretty easily now?
Mr. Zingeser. I think so.
Ms. Norton. We are certainly going to find out.
Mr. Zingeser. Okay. The reason this is so important is
because the goals of the small business program and all the
subsets are to get money flowing to small businesses. This is
what we want to do. These are the social-economic-political
goals.
Ms. Norton. And many of these subcontractors are not small
businesses, right?
Mr. Zingeser. Well, here is the point on that. Let us take
one of these $100 million renovation projects. The buildings
exist, so where is the money going? What kinds of things are
happening in those buildings? An awful lot is happening in the
mechanical, in the electrical areas of upgrading and
modernizing the building, building the performance levels up in
term of energy reduction and so forth. Those companies that can
do the 30 million or 40 million out of that 100- are not small
businesses. They don't have the bonding capacity or the means
to do it. So there is a large business that will often have
that contract. But if you look, it won't take you long to see
that they in turn are subcontracting to a second-tier and a
third-tier level, and so that 30- or $40 million is absolutely
flowing to small businesses, but no one is getting the credit
for it politically or otherwise.
Ms. Norton. Yeah, that is what my Dynalectric example, I
think, was all about. They said, you know, 50 million, zap;
that all goes to me and one other. Now, that might be efficient
in one sense, and the last thing we are going to do is reduce
the efficiency, but, hey, licensed contractors? I bet there are
a lot of very efficient licensed, sub sub subs, however you
want to characterize them out there, who can do it.
So I get your point, and we are going to find out why they
are given no credit, because it seems to me that runs counter
to what the law is asking them to do. This is to get to small
businesses. If you can't get down to them and get credit for
them, then you are going to do what Dynalectric did, stop at
the first tier.
Mr. Zingeser. I would like to just make sure that my words
are clear that this is not an agency problem, this is a
systemic problem.
Ms. Norton. No, it is a problem that flows from the way SBA
asks the reporting to take place.
Mr. Zingeser. Correct.
Ms. Norton. We are not blaming the agencies, we are not
even blaming SBA, because guess what? I think the Congress is
the ultimate culprit in all of this. We are just trying to get
a report on how it occurs, and unless we get it and then hear
their explanation, and they may have a good one that we haven't
heard, then we won't be able to do anything about it or to at
least try.
Now, I wanted--I think this may be gone, but Ms. Giordano,
we love having panels with broad representation. If one reads
closely, part of your testimony would appear to contrast with
Mr. Zingeser's testimony, because he expressed concerns about
SBA's requirement that agencies show past discriminatory
practices before any contractor could qualify under the program
set-aside for minorities and women.
Now, of course, 8(a) contracts would be such contracts, and
we know that they are legal and constitutional. And I don't--I
want to know if that is your view that is still the case,
because I do want to note that I recall--I recall very
distinctly the part of your testimony that described--I agree
with you it was an insult, particularly to women-owned and
small businesses. I don't even think minorities were required
to do this. Women were picked out for this. I can only call it
discrimination. And women across the board here in the Congress
were mortified and as insulted as you were where they implored
a contract chapter to somehow, if anything, reduce your
eligibility. And we thought it was a joke when we read that
they had identified for competition only--now, this is women-
owned businesses, everybody--cabinet making, engraving, other
motor vehicle dealers, and national security and international
affairs. It almost looks like they say, well, where have women
most been discriminated against, and therefore we will have the
fewest number able to compete.
Ms. Giordano, with the new administration I believe that
that has been withdrawn; has it not?
Ms. Giordano. To my knowledge, it is being looked at. I
believe they are not utilizing those four categories. I believe
it has been withdrawn. What they could be looking at, however,
is the value of the Rand study showing that 87 percent of the
qualifying categories of NAICS' codes could indeed be
considered qualified.
Ms. Norton. Among those that one would choose, then, you
could go to as many as 87 percent?
Ms. Giordano. You could--well, they left it up to the SBA
to make the decision how narrowly or broadly they chose----
Ms. Norton. That is still under consideration.
Ms. Giordano. My understanding, that it is still under
consideration; however, it is not actually being implemented as
previously stated based on testimony.
Ms. Norton. The categories--it seems to me that if you
propose a rule, you are not supposed to do more harm than good.
It seems to me that that is what the last administration did.
It was laughable, except it made you want to cry. Why bother if
you are going to make it worse? And we will be tracking this
with this large amount of funds flowing at least through the
GSA and some of the other agencies you have seen.
I hope--whose testimony--Ms. Giordano, did you have any
problem with this notion about past discrimination; that is the
reason you have an 8(a) program?
Ms. Giordano. Well, the way it was designed by the previous
administration was first you had to prove before you could even
consider placing it in a set-aside environment, which does
happen with 8(a)s to some degree because they go out for
sources sought, and if they come up with more than three, they
know they have the capabilities in the marketplace to perform.
Ms. Norton. What has to adjust that program, the women's
part of that program? You have suggested that you have to set
up--have SBA set up a women's procurement program. Do you
believe that is the only way to straighten this out, or are
there other ways to do so? Because this was operating before
the administration put up this barrier, wasn't it?
Ms. Giordano. The category of set-aside is not capable of
being accomplished under the current program. I look in the
mirror, I designate myself a women-owned business, a women-
owned small business, but I am not entitled to any of the
categories of----
Ms. Norton. And what is the reason for that, Ms. Giordano?
Ms. Giordano. I am not sure I understand the reason the SBA
chose to eliminate women-owned small businesses.
Ms. Norton. Did they ever have women-owned small businesses
as a category?
Ms. Giordano. Self-professed. There is no procurement
program currently in place for women-owned.
Ms. Norton. The reason you have an 8(a) program is because
we have had centuries of discrimination against people of
color, and that pushing and pushing and pushing.
Ms. Giordano. Yes, ma'am, I am Hispanic, and I am 8(a)-
certified woman-owned business.
Ms. Norton. So you understand that.
Ms. Giordano. I understand the 8(a) process.
Ms. Norton. I know there were horrific abuses at one time
found in women-owned contracting with--for that matter
minority-owned. If there are abuses, you deal with the abuses,
you don't deal with the whole program.
Ms. Giordano. Yes, ma'am--I am sorry.
Ms. Norton. We will be very, very vigilant. If they don't
want--have a similar program, then they are going to have to
have some way to make sure women-owned businesses are not put
in this category or continuing not to meet those very small
goals that have been set for women-owned businesses. Women are
half the population. Many are not disadvantaged in the sense
minorities are. Their, quote, disadvantage has been
particularly horrific because they have been well educated and
yet not been able to get the same jobs, and yet not been able
to get the same businesses.
That is curable. In fact, it should be more curable since
they come out of the same pool of people that White businesses
generally do. It should have been more easily curable. And yet
minority businesses, because of the historic discrimination,
because they pushed and pushed, it looks like they do better in
small business contracting. That is amazing, you know. Blacks
are 12 percent of the population; women are 50 percent.
I would bet, given the advantages and education and station
in life women have, you might expect more women across the
board in various ethnic groups than minorities. In fact, it is
the other way around. I am not trying to use any group to make
sure any other group equals them. That won't happen. That is a
very false way to go about it. But this is shameful for women,
and I keep getting the statistics not getting any better, and
so I am going to be especially vigilant on that.
Ms. Stephenwoof, you say on page 5--no, I am sorry. You
say--your mention of St. E's got my attention. You want to
expand public engagement. Well, I have looked very closely at
what GSA had been doing because it has been right under my very
nose, and I have to tell you, they have got people who do
nothing, nothing but engage the public, nothing.
They had a small business education forum it must have been
5 years ago. It was way before I got the money out. They are in
the community every other day. You have got right at the table
an 8(a) business. They have set aside 5 million for the next
tranche. You mentioned things like alternative market tools.
So I need--given the fact that given GSA has been doing
better than most, I need specifics, because we are in a
position to make sure that GSA experiments, tries new things.
We are not going to suffer 1 ounce of inefficiency on these
projects. No, sir, not with Eleanor the only one up there able
to go to the appropriators and say, give me some money. I have
to make sure that it all happens. If you say there are some
alternative market tools to be used, I need to know what those
are. And I don't--and you say--here it is, page 3--specialized
resident advocate agency and organization. Well, they have set
aside employees who perform this function.
So I need--I am not one to let people spend money to be
spending it. I want to spend it on contracts, so I need to know
what it is more in specific terms that you think that GSA ought
to be doing.
Ms. Stephenwoof. Thank you for those questions.
Let me say in very layman's terms GSA has done a phenomenal
job. As I said in my testimony, that has been unprecedented for
any Federal agency within a community. And you are right. As I
participate in this, in public engagement for the past--it has
been 5 years exactly that they have had these community forums.
What we are trying to do, what I am referring to, is how to get
the businesses to the table. The difference between--and also--
--
Ms. Norton. Are they brain dead? I mean, here is a billion
dollars out there.
Ms. Stephenwoof. No, that is true. Everybody is asking.
What I was talking about is having the small work groups,
because most of the businesses in the community say, I don't
know how to compete against the big boys.
Ms. Norton. Well, just a moment. We--Mr. Amirian wants to
comment on this, too. We brought Ms. Echols to the table, who
described how after 2 days of intensive work, you become 8(a).
Mr. Amirian is an 8(a) contractor. Well, how do you want to
speak to that, Mr. Amirian, before we go back to Ms.
Stephenwoof?
Mr. Amirian. What we would like to see, Madam Chair, is GSA
not to bundle. For example, St. Elizabeth, there are 45
buildings that----
Ms. Norton. What did they bundle? Because they testified--
--
Mr. Amirian. Grouping them together. There are 45 buildings
that needs to be renovated. And we see the trend that may be
advertised together.
Ms. Norton. You mean 450 million?
Mr. Amirian. No, 45 buildings on campus at St. Elizabeth
that have to be renovated. They are historical buildings. They
cannot be demo'd. We would like to see it broken into packages
so a small contractor----
Ms. Stephenwoof. Exactly.
Ms. Norton. Wait a minute. You have a sense that all the
buildings will be bundled?
Mr. Amirian. Everything I have seen, it is all a billion
dollars, $3-1/2 billion projects, nothing has been--I haven't
see any jobs advertised as small----
Ms. Norton. They have not advertised yet for the reuse
part, so you are talking about the reuse of the buildings, all
that work, that is where your ripest opportunity----
Mr. Amirian. Yes.
Ms. Norton. As far as I can tell it, I can't--also my
recollection, please correct me if I am wrong, is that they
said that they would not and do not engage in bundling. Do you
say that they do?
Mr. Amirian. No, I haven't seen any specific projects
coming out or advertisements. So we just want to make sure
before packages are put together, they are bidding for them,
that breaking into a smaller size.
Ms. Norton. I certainly can't imagine that they would be in
their right minds to bundle all of those buildings up when
those--that is the most remarkable set of small business
opportunities on the face of the USA, Earth today, I think. So
thank you for that. That will help us to be proactive.
Ms. Stephenwoof, will you resume your----
Ms. Stephenwoof. Again, what I would like to be able to
reiterate is that the GSA has done a good job of putting the
product on the market, but it will be up to the general
contractor to work with the prime contractor and, as he said,
to be able to solicit and to break those packages up into small
pieces so that the smaller businesses can participate.
I was also at the certification program that they had at
the Martin Luther King Library, where they were helping to
certify the small businesses. What I am talking about is to do
a lot more of that within the communities also, because a lot
of businesses that----
Ms. Norton. Well, they are continuing to do that throughout
this project that is going to last for 10 years or so, besides
which they have now such a rich number of 8(a) contractors,
they won't want for contractors.
Ms. Stephenwoof. Every business is not going to be able to
have the capacity of 8(a), and all the jobs are not 8(a)
requirement.
There is also the disadvantaged business certification.
There is small business certification. So those kinds of
programs which can be done in conjunction with the Small
Business Administration can be done within communities.
Ms. Norton. There are two more programs you would like to
see workshops on; is that right?
Ms. Stephenwoof. Exactly.
Ms. Norton. And one is--let me hear that, please.
Ms. Stephenwoof. The Disadvantaged Business Certification
Program.
Ms. Norton. And the second one is?
Ms. Stephenwoof. The whole certification as a small
business or a HUBZone business, because Anacostia is--well, I
understand the District as a whole, but Anacostia is a HUBZone
area. The business owners within the community have not been
educated about how to become certified as HUBZone, so they
can't compete.
Ms. Norton. Those are very good suggestions. We were so
pleased with their 8(a) workshops. We will approach them. In
fact, those--if you want to continue to work and to work on
other and perhaps even larger contracts than your first
contracts, you certainly have got to graduate.
Ms. Stephenwoof. You have to graduate to the 8(a) program.
And so a lot of businesses that are within the communities,
that is the level that they have to start with. They are not
ready for the 8(a) level in order to compete.
Ms. Norton. What is it that they are ready for?
Ms. Stephenwoof. They can compete in the disadvantaged
business community and the HUBZone community. Of course, self-
certification as a small business enterprise.
Ms. Norton. We also will ask GSA about contracts, and,
remember, this is a huge Federal contract.
Ms. Stephenwoof. Exactly.
Ms. Norton. Only so much learning is going to be done on
this project.
Ms. Stephenwoof. But it gives us enough time.
Ms. Norton. But I am going to ask them about HUBZone and
disadvantaged projects.
While I am on HUBZone, I am going to ask Mr. Zingeser,
would you summarize your recommendation on HUBZone? We have had
a lot of HUBZone problems in this region, so much so that my
good friend, the Chair of the Subcommittee, was about to
abolish the whole thing. And then we got a new administration,
which I believe is working and has done all kinds of reform of
HUBZone. Could you speak to your concerns?
Mr. Zingeser. The AGC has looked at HUBZone and has made
recommendations on the program. The problem that----
Ms. Norton. Now, let me just say, we were horrified that--
let us go to my region. People within my region were using
HUBZone, coming in, and there wasn't a minority in sight once
they got certified. So when you mess up that way, then the roof
falls in on the program.
Of course, a lot of us went to the administration and went
to the SBA and went to the Small Business Committee Chair and
said, don't throw the baby out with the bath water.
And, Mr. Zingeser, I am aware, I was embarrassed by what
the IGs were finding. I could not in good faith say, keep this
program up, unless it was like turned on its head, virtually
started all over again. But I would like to hear your
experience and your suggestions.
Mr. Zingeser. Well, again, the issues--the objectives of
the program make sense; the increased employment opportunities,
investment and economic development, and low-income or high-
unemployment areas that meet the Federal definition of an
historically underutilized business zone. Without getting into
it a whole lot more, there are some things that jump out.
Number one, the way the program works, and this speaks to
the point that was just made, if you are in a HUBZone in East
Sheboygan, you are in a HUBZone, and you can come and compete
against the same people that are in the HUBZone where the
project is. You don't have to be in the HUBZone where the
project is. You can be in a HUBZone anyplace and compete. So--
--
Ms. Norton. Wait a minute. Wasn't that because they wanted
to bring--yeah, you have people already competing in these
areas where there is not a lot of work. This brings employment,
and if you were employing people, wasn't the point that if you
bring somebody who may not be in the area and may have
business, and that person begins to hire people who would
otherwise not be employed, that is a win-win, because you can't
expect people who are already doing business in a HUBZone,
because these zones are per se, by definition, zones where
there is not lots of contracting and not lots of employment as
well.
So, I mean, if you are not going to have somebody else come
in and say, we will do business, and in return for doing
business here, we will hire this many employees, how do you
break through if the only people you are depending upon are the
people already in the HUBZone which are themselves in the same
barrel as the residents in the HUBZone?
Mr. Zingeser. It starts with the notion that, first of all,
you must be a certified HUBZone business. And then, once you
are, you are free as a HUBZone business to go do business and
get all of the benefits of that no matter where the project is.
So if there is----
Ms. Norton. Within the HUBZone you mean?
Mr. Zingeser. No. No. To go the other way, let's assume
there is a HUBZone certified here in the District of Columbia,
and the project is New York State, and it is set aside as a
HUBZone preference. The company here can go do the project in
New York State.
Well, the same is true here. If there is a project in
Anacostia, and a HUBZone wants to compete and get the HUBZone
preference and they are in Ohio, they can come and be treated
the same as the local firm. Now, that, in my mind, I am a very
simple person, doesn't make sense. So that is the definition of
how the program works. It seems to me----
Ms. Norton. So you are saying it is the illusion of
reciprocity there?
Mr. Zingeser. Yeah, I guess the idea that you want to
nationally improve HUBZone, the economics in HUBZones, so it
doesn't matter where the project is. But in construction, it is
a local thing. It really ought to be held for people----
Ms. Norton. I see what you are saying.
Mr. Zingeser. So that is a simple idea that----
Ms. Norton. Not only that, I am very interested in, and
again, I will be working with the Subcommittee, I wanted to
elaborate your concern. I am not prepared to answer it, because
I can see the concern.
Mr. Zingeser. That is one. The other thing that sort of
jumps out is the 10 percent preference. Now, in the
construction industry, 10 percent is a lot of money. That is an
extraordinary preference. And that essentially means that
everybody else is out of the competition, because if you are
not----
Ms. Norton. Let me tell you why it is meant that. Why it is
meant that, I believe, based on the, abuse is not the word for
it, the fraud I have seen is because they were taking the
preference without doing anything within the communities. This
wasn't abuse. This was straight out fraud. It was in this
region. It was so bad that they were having these all over the
United States. I am sure the work is still going on since the
new administration then was charged with straightening this out
or it goes.
So by the time we have probably our next GSA hearing, I
will want to know more, and I ask the staff to bear this in
mind, about the progress the administration is doing, that
means the SBA, who really was at fault on this, just as they
were at fault on the women's program, how far they have gotten
in straightening out a program that collapsed of its own
weight.
When the Committee Chair of the Small Business Committee--
this is a Puerto Rican woman--was so outraged, the Chair of the
Committee, that she wanted to abolish the program, I know there
is a problem in that program. She comes from a part of Brooklyn
which is rich in small businesses, so she has a vested interest
in small businesses.
So I am not prepared--because I don't know what is at
work--but I certainly appreciate your alerting me, your
testimony, both of you----
Mr. Zingeser. Let me be clear, because from AGC's point of
view, 91 percent of the construction companies are small
businesses. I mean, 91 percent, according to the AGC's
statistics, so----
Ms. Norton. Look, your point, let me make sure I understand
it, your point that this reciprocity when it comes to
construction, at least with small businesses, is laughable. You
are not like a national construction company.
Mr. Zingeser. My point would be for the construction
industry, if there is such a thing as a HUBZone program, which
by the way, if it were abolished in its present form would be a
good thing to start over and do it different than it is----
Ms. Norton. They may be doing that.
Mr. Zingeser. Okay. But in its present form related to
construction, the jobs and the dollars don't go to the local
HUBZone companies necessarily.
Number two, the 10 percent preference is out of--it is
extraordinary. It is too high in a competitive world. That is a
simple statement. Then there are some other points which we can
submit if you want.
Ms. Norton. 10 percent is--those numbers, you will never
see those numbers--you remember when people were getting 10
percent of the market? Everybody should scrub 10 percent from
their category. We are going to be in a much different economy.
That is why I don't even want people to be waiting for the
economy to come back. It is going to be very different. It is
not going to have anything to do with whether we stimulated it
or not. It is just that there has been a sea change. And so
those numbers, even in that economy, and I know enough about
construction to know what that does. I don't know what the
effect was, whether the effect was that they got all the
contracts. And it looks like you were doing pretty well; your
company was doing pretty well.
Mr. Zingeser. Again, not all government contracts have
HUBZone preferences. But where they do have a preference----
Ms. Norton. I see.
Mr. Zingeser. --you have to think very seriously about
whether you have a chance at all if you are not a HUBZone. Now,
that doesn't mean there shouldn't be a HUBZone program with
some set-asides, just like we have 8(a) and other things.
Ms. Norton. Exactly.
Mr. Zingeser. These things do have a place.
Ms. Norton. And in fact, if she looked at, the Small
Business Chair looked at 8(a) and said, you know, they found a
way to do it. And so one of the things she wanted to do was to
say, wipe out HUBZones; go to 8(a) entirely. Because of the
reluctance to simply wipe out a program based on fraud, they
are now rethinking the program. And staff will report to me on
how far they have gotten. The notion of any disadvantage to our
companies doing business within the region right now, and all
these funds unprecedented are flowing, would be potentially
unacceptable. We have all worked together, and minority- and
women-owned companies in particular have worked together.
Ms. Giordano, I recall, for example, the problems I had
when we were in the minority when we weren't sure that
disadvantaged programs, particularly in areas like the
authorization, where there is perhaps the largest amount of
money in transportation infrastructure, how closely women and
minorities worked together. We have been very pleased with how
contractors have worked with GSA, even given the strictures
that Congress for small, women-owned and minority-owned
business had placed on them.
I am former chair of the Equal Employment Opportunity
Commission. I did some of my best work with business, because
these programs don't work if in fact business feels it is at a
disadvantage for doing what the government thinks is the right
thing to do to equal the playing field and not to put people
ahead of it. That is probably one of the first things I did
when I came to the EEOC was to initiate a negotiation so that
not every complaint was there for 2 years. Most of them, by the
end of 2 years, weren't any good anyway. They had all fallen
away.
And so we took complaints when you first got them, see if
we could work out something. Sometimes, as a cost of doing
business, an employer would say, it is not worth my time and
would do so. Some employers would decide to remain in. We
realized that the employer might indeed believe there was no
discrimination. At the same time, we would go aside with the
minority or the women and indicate what in fact would have to
be shown, that the burden lies on the plaintiff.
And so some of the best experiences, this may seem very
strange to say, that I had as Chair of the Equal Employment
Opportunity Commission was working with the business community
so that we worked together and so that we weren't bringing
suits left and right. We brought suits, for example, on the
basis of worst first so that somebody who--government can't sue
everybody--so somebody trying his level best didn't find
because he was in sight of some investigator, he got a suit,
where his competitor, who wasn't doing as well, hadn't yet been
gotten to. We are trying to make sure that these programs
reflect that kind of rationality as well when it comes to
business. At the same time that we do all we do, we can,
especially in the climate of the Great Recession, to bring
equality so far as firms are able to show in their work to
small business and small disadvantaged business contracting.
I can't thank each of you enough for remaining so long with
us. And I assure you that your testimony has been of immense
value to us. This hearing is adjourned.
[Whereupon, at 5:02 p.m., the Subcommittee was adjourned.]
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