[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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