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



 
                      FULL COMMITTEE HEARING ON
                  SMALL BUSINESS PARTICIPATION IN THE
                    FEDERAL PROCUREMENT MARKETPLACE

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

                                HEARING

                               before the


                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                             March 24, 2010

                               __________

                               [GRAPHIC] [TIFF OMITTED] TONGRESS.#13
                               

            Small Business Committee Document Number 111-061
Available via the GPO Website: http://www.access.gpo.gov/congress/house
?



                  U.S. GOVERNMENT PRINTING OFFICE
55-594                    WASHINGTON : 2010
-----------------------------------------------------------------------
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092104 Mail: Stop IDCC, Washington, DC 20402ï¿½090001

                   HOUSE COMMITTEE ON SMALL BUSINESS

                NYDIA M. VELAZQUEZ, New York, Chairwoman

                          DENNIS MOORE, Kansas

                      HEATH SHULER, North Carolina

                     KATHY DAHLKEMPER, Pennsylvania

                         KURT SCHRADER, Oregon

                        ANN KIRKPATRICK, Arizona

                          GLENN NYE, Virginia

                         MICHAEL MICHAUD, Maine

                         MELISSA BEAN, Illinois

                         DAN LIPINSKI, Illinois

                      JASON ALTMIRE, Pennsylvania

                        YVETTE CLARKE, New York

                        BRAD ELLSWORTH, Indiana

                        JOE SESTAK, Pennsylvania

                         BOBBY BRIGHT, Alabama

                      DEBORAH HALVORSON, Illinois

                  SAM GRAVES, Missouri, Ranking Member

                      ROSCOE G. BARTLETT, Maryland

                         W. TODD AKIN, Missouri

                            STEVE KING, Iowa

                     LYNN A. WESTMORELAND, Georgia

                          LOUIE GOHMERT, Texas

                         MARY FALLIN, Oklahoma

                         VERN BUCHANAN, Florida

                      BLAINE LUETKEMEYER, Missouri

                         AARON SCHOCK, Illinois

                      GLENN THOMPSON, Pennsylvania

                         MIKE COFFMAN, Colorado

                  Michael Day, Majority Staff Director

                 Adam Minehardt, Deputy Staff Director

                      Tim Slattery, Chief Counsel

                  Karen Haas, Minority Staff Director

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

                                  (ii)

  
?

                         STANDING SUBCOMMITTEES

                                 ______

               Subcommittee on Contracting and Technology

                     GLENN NYE, Virginia, Chairman


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

                                 ______

                    Subcommittee on Finance and Tax

                    KURT SCHRADER, Oregon, Chairman


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

                                 ______

              Subcommittee on Investigations and Oversight

                 JASON ALTMIRE, Pennsylvania, Chairman


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

                                 (iii)

  
?

               Subcommittee on Regulations and Healthcare

               KATHY DAHLKEMPER, Pennsylvania, Chairwoman


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

                                 ______

     Subcommittee on Rural Development, Entrepreneurship and Trade

                 HEATH SHULER, North Carolina, Chairman


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

                                  (iv)

  
?

                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page

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

                               WITNESSES

Ms. Hillmer, Linda, President & CEO, CorpComm, Inc., 
  Fredericksburg, VA.............................................     3
Mr. Brown, Justin, Legislative Associate, Veterans of Foreign 
  Wars...........................................................     5
Mr. Sprole III, Robert, President & CEO, Therm, Inc., Ithaca, NY, 
  On behalf of Aerospace Industries Association..................     6
Mr. Denlinger, Stephen, President & CEO, Latin American 
  Management Association.........................................     8
Ms. Gentile, Bobbie, President, Q-Mark, Inc., Kettering, OH, On 
  behalf of National Association of Manufacturers and 
  Representatives................................................    10
Mr. Woods, John, Woods Peacock Engineering Consultants, 
  Alexandria, VA, On behalf of American Council of Engineering 
  Companies......................................................    12

                                APPENDIX


Prepared Statements:
Velazquez, Hon. Nydia M..........................................    23
Graves, Hon. Sam.................................................    25
Ms. Hillmer, Linda, President & CEO, CorpComm, Inc., 
  Fredericksburg, VA.............................................    28
Mr. Brown, Justin, Legislative Associate, Veterans of Foreign 
  Wars...........................................................    34
Mr. Sprole III, Robert, President & CEO, Therm, Inc., Ithaca, NY, 
  On behalf of Aerospace Industries Association..................    42
Mr. Denlinger, Stephen, President & CEO, Latin American 
  Management Association.........................................    46
Ms. Gentile, Bobbie, President, Q-Mark, Inc., Kettering, OH, On 
  behalf of National Association of Manufacturers and 
  Representatives................................................   142
Mr. Woods, John, Woods Peacock Engineering Consultants, 
  Alexandria, VA, On behalf of American Council of Engineering 
  Companies......................................................   146

Statements for the Record:
Government Withholding Relief Coalition..........................   155
"Increasing the Capacity of the Nation's Small and Disadvantaged 
  Businesses," Thomas Boston and Linje Boston, EuQuant Company, 
  Commissioned by the Congressional Black Caucus Foundation, 
  October 16, 2007...............................................   158
"Race, Sex and Business Enterprise - Evidence from the State of 
  Maryland," Jon Wainwright, et. al., NERA Economic Consultants 
  Group, March 2006..............................................   220
"Availability of Financing to Small Firms Using the Survey of 
  Small Business Finances," SBA Office of Advocacy, Karlyn 
  Mitchell and Douglas Pence, May 2005...........................   243
"Testimony Concerning the Challenges Faced by Disadvantaged 
  Business Enterprises in the Transportation Sector," Jon S. 
  Wainwright, Vice President, NERA Economic Consulting, Austin, 
  Texas, Before the Committee on Transportation and 
  Infrastructure, United States House of Representatives, March 
  26, 2009.......................................................   316
RELM Wireless Corporation........................................   359

                                  (v)

  


                       FULL COMMITTEE HEARING ON
                  SMALL BUSINESS PARTICIPATION IN THE
                    FEDERAL PROCUREMENT MARKETPLACE

                              ----------                              


                       Wednesday, March 24, 2010

                     U.S. House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 1:00 p.m., in Room 
2360 Rayburn House Office Building, Hon. Nydia Velazquez 
[chairman of the Committee] presiding.
    Present: Representatives Velazquez, Dahlkemper, Clarke, 
Graves, Buchanan and Luetkemeyer.
    Chairwoman Velazquez. Good afternoon.
    This hearing is now called to order.
    Whether we are talking about the credit crunch or the small 
business regulatory burden, there's no question that the last 
few years has been challenging for entrepreneurs. According to 
a recent survey, however, their greatest stumbling block isn't 
a lack of capital or an excess of a red tape--it is a shortage 
of customers. With consumer spending sluggish and new clients 
in short supply, the federal marketplace has become an 
increasingly attractive option. In the last decade, it has more 
than doubled in size--outpacing by virtually all other markets 
and reaching $528 billion in 2009.
    Given its remarkable growth, you would think this sector 
would be an oasis of small business opportunity. In reality, 
it's more of a mirage. While it is true that the U.S. 
Government is the single largest buyer of goods and services, 
the fact of the matter is that it has purchased very little 
from small firms. Small companies represent 99 percent of 
American businesses, and yet they account for than a quarter of 
federal contracts. When you factor in overseas contracts, the 
market share shrinks into the teens.
    In today's hearing, we will examine the state of small 
business procurement. In doing so, we will look for ways to 
improve the process for entrepreneurs, and ensure they have the 
tools they need to win contracts and create jobs.
    In 2009, federal agencies missed their small business goals 
by 2 percent. Procurement officers will tell you that number is 
negligible, and no big deal. But while a two percent shortfall 
may not sound like a lot, it ultimately cost entrepreneurs $10 
billion in missed opportunity. Or, to put it another way, it 
cost American $10 billion in lost job creation. Small 
contractors, like all other firms, create roughly 70 percent of 
all new jobs. So when their ability to win contracts is 
compromised, employment number are too.
    SBA's contracting programs should be a critical tool for 
small firms. However, many of these initiatives are outdated, 
and have fallen into disrepair. In some cases, the agency has 
failed to implement altogether. Recent reports from the IG and 
GAO suggest significant room for improvement. Perhaps most 
notably, investigators have uncovered hundreds of billions of 
dollars in fraud within both the HUBZone and Service Disabled 
Veterans programs. As a Committee, we have held several 
hearings on that issue, and are working to root out waste, 
fraud and abuse at SBA.
    But the Committee's concerns are not limited to SBA 
programs alone. Overall, procurement has become increasingly 
complex for small companies. Misguided efforts to streamline 
the process have contributed to a surge in contract bundling 
and a culture of cutting corners. Yes, these changes have made 
things simpler for agencies and easier for procurement 
officer--but at what cost to our economy? Every one percent 
increasing the small business contract share generates 100,000 
new jobs. With unemployment at 9.7 we should not be looking for 
ways to make the process easier for bureaucrats--we should be 
looking for ways to make it easier for entrepreneurs to find 
work. After all, they are the ones out there creating jobs.
    We are always talking about the need for diversification in 
business models. The recession has made that particularly 
important, especially for small firms. For these businesses, 
government contracts put another option on the table. By 
restoring integrity to the federal marketplace, we can ensure 
entrepreneurs have an opportunity to win new customers in a new 
market. This is key, because while our economy is showing 
promise, the recovery remains fragile. Before we can really 
turn a corner, we will need to see significant job growth--the 
kind that can only come from small businesses.
    With that, I would like to thank all our witnesses for 
being here today. I know that you are quite busy trying to get 
contracts in the federal marketplace. So I want to thank you 
for being here.
    I now yield to Ranking Member Graves for his opening 
statement.
    Mr. Graves. Thank you, Madam Chair, for holding this 
hearing on the role small businesses play in the government 
contracting process.
    And I also want to thank all of our witnesses for being 
here today.
    Each year the government dedicates nearly half a trillion 
dollars to the purchase of goods through federal contracts. 
Because this is a significant amount of federal dollars, we owe 
it to the taxpayer to make sure that we are using them wisely 
and efficiently.
    Government contracting offers a unique opportunity to 
invest in small businesses while also stimulating our economy. 
Small businesses play a central role in our economy and job 
growth, creating 7 out of every 10 private sector jobs in 
recent years. With unemployment still hovering around 10 
percent, it is more important than ever to invest in small 
businesses that support our communities and provide 
opportunities for our families.
    While several important provisions have been built into the 
federal procurement system in an effort to ensure small 
businesses receive a fair share of government contracts and 
opportunities, these provisions are not being properly 
enforced. Programs are abused and significant portions of 
contracting dollars are not properly allocated. As members of 
the House Small Business Committee we must make it a top 
priority to fix these problems, not only to make sure taxpayer 
dollars have maximum impact, but also for the sake of our 
economy.
    To start, we should reduce the flawed practice of contract 
bundling which occurs when the government consolidates smaller 
contracts into very large contracts for the sake of 
convenience. This process can virtually shut small businesses 
out of the contracting opportunities because they simply lack 
the capacity or resource to fulfill the requirements of a 
bundled contract.
    Additionally, we must work to strengthen the enforcement 
mechanisms built into the federal contracting system. Managers 
and senior executive personnel should be held accountable for 
not reaching out or not reaching outlying small business goals 
or for failing to properly enforce subcontracting plans. All 
federal agencies need to make this a priority, which may 
require reallocation of resources in order to ensue that no one 
is able to gain an unfair advantage of the contracting process.
    In coordination with limiting contract bundling and 
strengthening enforcement mechanisms, we should also increase 
the percentage of federal contracting funds that are set aside 
for small businesses. This is an easy step that would provide 
smaller firms with more opportunities to do business with the 
government and expand their operations and work force. By 
addressing these problems, we can help small businesses compete 
in a national marketplace, we can foster job growth in our 
communities and we can ensure that we will stretch the 
taxpayer's dollar even further.
    Again, I would like to thank the Chairwoman for holding 
this important hearing. I will look forward to hearing 
testimonies from our witnesses.
    Chairwoman Velazquez. Thank you.
    And it is my pleasure to welcome the first witness, Ms. 
Linda Hillmer. She is the President and CEO of CorpComm located 
in Fredericksburg, Virginia.
    CorpComm is a small HUBZone certified woman owned business 
that offers a full range of communications and media related to 
the Federal Government.
    Welcome.

  STATEMENT OF LINDA HILLMER, PRESIDENT & CEO, CORPCOMM, INC.

    Ms. Hillmer. Madam Chair, Ranking Member Graves, members of 
the Committee, thank you for the opportunity to testify today.
    My name is Linda Hillmer, and I am the founder, owner, 
President and CEO of CorpComm, a small professional services 
contractor to the Federal Government, specializing in digital 
media production and strategic communications.
    I started the company in 2001 after having served in the 
Federal Government myself, including about 10 years in the 
procurement and acquisition arenas and marketing and 
communications. Let me just say that I absolutely love my job. 
I love supporting the United States Government and I love 
creating an environment where people can come to work and be 
creative, have fun, grow in their career and make a difference. 
I would not trade it for the world, which is why I am here 
today. I want to make sure that the government gets the 
benefits of working with companies like mine, companies that 
have a culture that drives innovation, ownership and hard work.
    My testimony today will address three issues and make five 
recommendations.
    The three issues are: The federal acquisition workforce; 
contract bundling, and; subcontracting to large primes.
    As the acquisition workforce is rebuilt, there needs to be 
a deliberate effort to put policies in place that resolve small 
business issues. For example, the small business contracting 
responsibility is usually one of many given to a contracting 
officer or a specialist. It is an other duties as assigned type 
of job with limited time and training. And to top it off, these 
specialists often report to managers who are not held 
accountable for small business achievement and enforcement.
    So how do we solve this problem? First, we establish a 
dedicated core of small business specialists with defined 
responsibilities and authorities.
    Second, we put accountability where it belongs: On senior 
executives. I applaud the recent bills put forth by the House 
addressing small business issues, especially the tying of goal 
accomplishment to senior executive pay bonuses. Please 
remember, though, that the SESs in charge of small business do 
not work in a vacuum. All senior executives in an agency, 
especially the senior procurement executive, need to have 
accountability and responsibility for meeting small business 
goals.
    Now let us talk about bundling. By bundling or 
consolidating requirements in contracts, the government is 
trying to reduce its workload and hold large primes responsible 
for small business goals. The use of bundled or consolidated 
contracts appears to be growing and work being performed by 
small businesses is rolling into these vehicles in the name of 
contract management efficiencies. We simply should not rely on 
large prime contractors to manage the government's small 
business program.
    A part of the solution is to require incentives, 
transparency and accountability in how large businesses 
subcontract with small businesses over the entire life of the 
government contract.
    Another part of the solution is to strengthen the criteria 
and approval authorities necessary to even consider bundling. 
Small businesses such as mine do not have visibility into 
planning for bundled or consolidated requirements even when I'm 
the prime contractor performing the work that may be bundled.
    Greater transparency will also help address the issues with 
subcontracting. Subcontracting to large primes is often the 
easiest way for small businesses to begin getting government 
experience. It is how I got my first government contract. The 
problem comes when large businesses use small businesses to 
meet goals to win the initial award and then after award, the 
large businesses either never allow the small businesses to 
work or they initially award them work but then slowly ease 
them out. We can solve this problem by requiring large primes 
to be transparent and accountable in their small business 
practices over the execution of the life of the contract.
    In conclusion if the government institutes these 
recommendations, American's small businesses such as mine will 
answer the call to create many meaningful jobs and provide 
innovative products and services to the Federal Government.
    I look forward to continuing to work with members of 
Congress to strengthen small business participation in our 
government. Thank you for the opportunity to testify today.
    [The statement of Ms. Hillmer is included in the appendix.]
    Chairwoman Velazquez. Thank you.
    Our next witness is Mr. Justin Brown. He's the Legislative 
Associate of the Veterans of Foreign Wars. The VFW is the 
nation's oldest major veterans group with more than 1.7 million 
veterans who have served our nation overseas.
    Mr. Brown is also a veteran of the United States Navy, 
serving one deployment in support of Operation Southern Watch 
and two deployments in support of Operation Iraqi Freedom.
    Mr. Brown, welcome, and thank you for your service.

 STATEMENT OF JUSTIN BROWN, LEGISLATIVE ASSOCIATE, VETERANS OF 
                          FOREIGN WARS

    Mr. Brown. Thank you, Chairwoman.
    Madam Chairwoman, Ranking Member Graves and members of this 
Committee on behalf of the 2.1 million members of the Veterans 
of Foreign Wars and our auxiliaries, I would like to thank this 
Committee for the opportunity to testify and for your efforts 
to expand small business opportunities for veterans. The issues 
under consideration today are of great importance to our 
members and to the entire veteran population.
    During this economic recession the number of unemployed 
veterans has increased to 1,124,000 as of February. The 
unemployment rate of our youngest veterans has reached a 
staggering 21 percent, and there are more unemployed OEF/OIF 
veterans than there are service members in Iraq and 
Afghanistan. During these tough economic times, that have 
proven tumultuous for America's newest veterans, the prospect 
of starting a business is particularly appealing. Veterans, if 
given the opportunity, will succeed in small business because 
they understand the concept of hard work, can adapt quickly to 
changing times, and are goal oriented. However, for a veteran 
interested in entrepreneurship, the reality is quality 
resources are scarce, disjointed and available to few.
    In order for veterans to succeed in the federal procurement 
marketplace we need training: as there is a lack of 
geographically viable options for veterans, we need access to 
capital as there has been less than 153 loans distributed under 
the Patriot Express Loan program, we need compliance with 
existing laws and statutes as a host of federal agencies that 
after more than a decade continually, and willfully, fail to 
abide by their public mandates.
    And we need agencies that work together and for veterans.
    We must do more, and we ask that Congress continue to hold 
these agencies accountable with rigorous oversight.
    In 2008, the Federal Government was roughly halfway to 
providing 3 percent of all federal contracts to small disabled 
veteran owned small businesses. In 2009, preliminary numbers 
suggest 2 percent of all federal contracts went to them.
    The Department of Defense barely surpassed 1 percent of 
contracts for small disabled veteran owned small businesses in 
2008. The fact that the largest federal agency continues to 
fail its former service members that were disabled in service 
to it is absolutely unequivocally unacceptable. It is shameful 
that the Department of Defense has so egregiously failed their 
own population for more than a decade.
    The VFW calls on all federal agencies to absolutely reach 
their 3 percent goal in fiscal year 2010. Preliminarily, the 
American Recovery Reinvestment Act is proving that the 3 
percent goal can be met. Our understanding is that 4 percent of 
Recovery dollars have gone to small disabled veteran owned 
small businesses. With the unshakable will of Congress, and 
this Administration, there should be no reason for the 3 
percent mandate to be unmet for the 11th consecutive year.
    As America's largest group of combat veterans, we thank you 
for allowing the Veterans of Foreign Wars to present its 
opinion on this very important matter.
    We also thank you, Madam Chairwoman, this Committee and 
your staff for your rigor in passing legislation that will make 
these long overdue, much needed changes for America's veterans. 
Entrepreneurship if encouraged is a win/win for everyone, 
including the government and America's taxpayers.
    Madam Chairwoman, this concludes my testimony and I will be 
pleased to respond to any questions you or the members of this 
Committee may have.
    Thank you.
    [The statement of Mr. Brown is included in the appendix.]
    Chairwoman Velazquez. Our next witness is Mr. Robert Sprole 
the Third, who is the President and Chief Executive Officer of 
Therm located in Ithaca, New York. Therm, Inc. has provided 
solutions to the needs of many customers for over six decades.
    Mr. Sprole is testifying on behalf of Aerospace Industries 
Association.
    Welcome

STATEMENT OF ROBERT SPROLE, III, PRESIDENT AND CEO THERM, INC. 
         ON BEHALF OF AEROSPACE INDUSTRIES ASSOCIATION.

    Mr. Sprole. Madam Chairwoman Velazquez, Ranking Member 
Graves, members of the Committee, thank you for giving me the 
opportunity to meet with you today to discuss federal 
contracting issues and their impact on small business.
    My name is Bob Sprole. I am the President and Chief 
Executive Officer of Therm, Incorporate, a manufacturer of jet 
engine turbine air foils. I am also a member of the Aerospace 
Industries Association which represents almost 300 aerospace 
and defense companies. Members of the association are large 
original equipment manufacturers as well as small suppliers. 
Many of our member firms are small businesses.
    In the aerospace business small companies contribute about 
70 percent of all manufactured items. One of the major 
customers for the aerospace sector if the Federal Government, 
specifically the Department of Defense. Companies such as ours 
have found three major challenges in doing business with the 
Federal Government.
    The first challenge is that it is difficult to get started 
doing federal contracting. Getting started usually requires 
someone to guide a small business through the qualification 
process. The use of consultants or attorneys can be 
prohibitively expensive. More assistance in helping small 
businesses through this process would enable more competition 
for both businesses and the government.
    Similarly, challenges posed by the export control system 
discourage many small businesses from seeking to complete 
globally. Modernizing the current export control system could 
help small business increase competitiveness and add jobs while 
still protecting our national security and foreign policy 
interests.
    Even after qualifying, a business will need to make unique 
structural changes to satisfy government requirements. For 
example, many government requirements require a noncommercial 
cost accounting or CAS compliant accounting system even for 
common commercial items. Other kind of traps require earned 
value management systems. Unless a small business can earn 
several contracts, this investment will have limited return and 
serves as a deterrence.
    If entry can be achieved, the second challenge is trying to 
operate in the unique government environment. Government 
contracting rules are designed for large businesses, not small 
ones. Creating an overhead structure to meet reporting and 
compliance requirements post-award, you know results in small 
businesses having noncompetitive cost structures. For most 
small companies people have to wear many hats. Therefore, 
responding to government requirements often means neglecting 
other duties for an extended period of time. Let me point to 
four examples of this problem.
    Federal contracts, particularly those with the Department 
of Defense, are subject to audit by the Defense Contract Audit 
Agency or the DCAA. These audit requirements strain small 
businesses because we do not have the ability to create a 
separate compliance staff. If DCAA finds inefficiency, like the 
failure to provide data in a reasonable time, the contracting 
officer can remove the ability for automated payments and 
require manually billing or even payment withhold. Manual 
billing and payment withholds significantly impact cash flow, 
the life blood of any business.
    DoD has recently proposed a new procurement rule that will 
make this problem worse. If a deficiency is found in a business 
system, DoD proposes to automatically withhold 10 percent of 
each payment on all contracts using that system. Depending on 
how many systems are found deficient and how serious the 
contracting officer believes the deficiency to be, the withhold 
could be as high as 100 percent.
    Since our existing remedies for addressing business system 
deficiencies, Congress should direct the DoD not implement this 
new rule and if existing remedies are not effective, DoD should 
hold a public hearing to determine a better way forward.
    Requirements that might be difficult for large businesses 
can be fatal for small ones. For example, the Tax Increase 
Prevention and Reconciliation Act of 2005 mandates that 
federal, state and local governments withhold 3 percent of 
nearly all their contract payments. It is said to become 
effective on January 1, 2012. While this 3 percent withhold is 
levied against governments that we pass on to contractors along 
with the cost of administration of the program, the DoD 
estimates this cost to be $17 billion annually for that agency 
alone. Congress should repeal this tax withhold requirement and 
support the Administration's proposals to focus on tax 
delinquencies.
    The Federal Government tries to contract with commercial 
companies, but the government's version of a commercial 
contract describe in FAR Part 12 requires noncommercial 
clauses. The number of federal unique clauses that can be 
imposed in FAR Part 12, prime contract for example, has grown 
to about 50 provisions. Not all of these provisions are 
required to be flowed down to subcontractors, but when the 
provisions are imposed on subcontractors this flow down 
diminishes the ability of primes to access small businesses 
that sell commercial products and cannot afford to comply with 
these clauses. And given the number of these clauses, 
commercial small businesses have even fewer opportunities to be 
prime contractors. Eliminating flow down of these clauses will 
help small businesses compete.
    Companies need a fair return on investments in order to 
continue to do business and grow. However, there is continuing 
pressure on returns for companies doing business with the 
government. For example, for the fiscal year 2008 National 
Defense Authorization Act restricts the use of commercial 
contracting procedures for commercial services by authorizing a 
contracting officer to request information regarding the basis 
for the price or cost. This congressional direction should be 
revised to mandate the use of price analysis rather than cost 
and pricing data for small businesses.
    The third and final challenge is simply staying in business 
with the government. Large prime contractors establish small 
business contracting plans. The members of AIA who are prime 
contractors take the requirement of developing small businesses 
seriously--
    Chairwoman Velazquez. Time has expired. And you will have 
more time during the question and answer period.
    Mr. Sprole. All right. Thank you. I will be happy to take 
your questions, Madam Chairman.
    [The statement of Mr. Sprole is included in the appendix.]
    Chairwoman Velazquez. Our next witness is Mr. Stephen 
Denlinger.
    He is the President and CEO of the Latin American 
Management Association. LAMA has been an advocate for the 
Hispanic minority and small business community since 1972.

    STATEMENT OF STEPHEN DENLINGER, PRESIDENT AND CEO LATIN 
                AMERICAN MANAGEMENT ASSOCIATION

    Mr. Denlinger. Thank you, Congresswoman Velazquez. It's a 
pleasure to be here today. Thank you, Ranking Member Graves and 
other members of the Committee.
    Just a quick note. I'm not going to be talking about 
modernization of the 8(a) program today. We have testified on 
that before and have provided the Committee with numerous 
position papers on those issues. We appreciate your work on 
8(a) modernization. I will say in passing that LAMA and USHCC 
support parity among all the socioeconomic procurement 
programs. None of them should receive priority over the other. 
It's time to let the contracting officers do their job and make 
sure that they meet all the goals in the socioeconomic 
programs.
    As I ponder where we go from here, and I think back about 
our almost 40 year history and our initial meetings with 
companies like Lockheed Martin and FMC and IBM where minority 
contracting was almost nonexistent. Over that 40 year period 
virtually all the federal agencies have established robust 
small and minority business programs, as have major prime 
contractors. I am not suggesting for a moment that they are all 
in perfect shape, but in the main the goals are being met. So 
the question is where does we go from here? If we're succeeding 
in general, is there any justification for continuing these 
programs?
    In a word, the answer is yes. Disparity studies across the 
United States indicate that, when MBE programs are in effect, 
MBE contracting takes place. When MBE programs are not effect, 
little or no MBE contracting takes place. So we recommend the 
reenactment of the SDB program and that the Congress hold 
hearings to amass the evidence necessary to prove widespread 
discrimination that would serve as a foundation of evidence to 
prevent further court cases like Rothe from dismantling the SDB 
and 8(a) programs.
    Moving on, I am concerned about missed goals on the part of 
the agencies, Congresswoman, as you have over the years. And as 
I think about that and think about the usefulness of PEA, price 
evaluation adjustment, our recommendation is that we utilize 
PEA not just for the SDB program, but for all socioeconomic 
programs and small businesses programs across the board any 
time a federal agency is failing to meet its small business 
goal. The Air Force, for example, failed to meet its goal in FY 
'09 by a wide margin, achieving 16 percent instead of 23 
percent. Air Force, DoD, Education, USAID are examples of 
agencies wherein the PEA should be used to make sure that they 
meet their goals.
    We believe it's time to substantially increase the small 
business goal in federal contracting. There's no reason for 
large business to receive three-quarters of the federal 
procurement dollar. There's ample evidence that this is timely. 
Many agencies routinely exceed their 23 percent goal by wide 
margins, including HUD, USDA, DOC, State Department, Homeland 
Security, Interior, DOT and so forth.
    We also see that many large or small businesses are 
successfully performing contracts through the Small Business 
Set Aside program in the range of $50 million, $100 million, 
$400 million and even a billion dollar contracts. The $400 
million contract is with the Air Force Western Range in 
California. The billion dollar contract is with NASA. Those 
small businesses are performing contracts of that nature quite 
successfully.
    In addition, the socioeconomic programs eat up about 20 
percent of the 23 percent goal, when you include the 8(a) 
portion. So we need to expand the small business goal. We 
recommend that the small business goal be increased from 23 to 
40 percent.
    In the subcontracting arena, as you well know, we continue 
to have problems of prime contractors not meeting their goals 
and engaging in bait and switch tactics, as Ms. Hillmer has 
referred to. The missing ingredient in those subcontracting 
programs is what? A contract. If there's a contract between the 
SDB and the prime contractor, contracting will take place. 
There is a self-enforcing aspect to this approach because we do 
not need a government bureaucracy, we do not need penalties to 
ensure enforcement. When the prime contractor fails to abide by 
the terms of the contract, the small business can simply go to 
court and seek redress.
    Eligibility fraud is rampant in HUBZone and SDVOSB 
programs, as your Committee and other studies have proven and 
demonstrated. We need simplified and cost effective ways to 
reduce the cost of enforcement. And we recommend something we 
call the REI, Recorded Eligibility Statement. A REI is a simple 
procedure wherein SBA would put on record under oath any and 
all businesses that are self-certified for these programs. We 
think that that would literally overnight eliminate a lot of 
this fraud because it's one thing for a business owner to tell 
a contracting officer yes they qualify; it's quite another to 
go on record, under oath, stating that that individual meets 
all the eligibility criteria.
    At the end of my written testimony you'll find a suggested 
REI that gives you the types of questions that could be asked 
of that individual, the business owner, under oath. That could 
take place remotely at any Kinkos in any location anywhere in 
the country. SBA staff would not have to travel anywhere and, 
nor would the company owner have to travel either.
    Chairwoman Velazquez. Mr. Denlinger?
    Mr. Denlinger. Yes.
    Chairwoman Velazquez. Time has expired.
    Mr. Denlinger. All right. Thank you so much.
    [The statement of Mr. Denlinger is included in the 
appendix.]
    Chairwoman Velazquez. Our next witness is Ms. Bobbie 
Gentile. She is the President of Q-Mark, locating in Kettering, 
Ohio. Q-Mark, Inc. was founded in 1990 as a manufacturer's 
representative to companies that produce electronic components.
    Ms. Gentile is testifying on behalf of the National 
Association of Manufacturers and Representatives which seeks to 
inform and educate its members on key issues effecting the 
federal procurement marketplace.
    Welcome

  STATEMENT OF BOBBIE GENTILE, PRESIDENT, Q-MARK, INC. AND ON 
      BEHALF OF NATIONAL ASSOCIATION OF MANUFACTURERS AND 
                        REPRESENTATIVES.

    Ms. Gentile. Good afternoon, Chairwoman Velazquez and 
members of the Committee. On behalf of myself and the staff of 
Q-Mark and Innovative Supply Source I would like to thank you 
for granting me the opportunity to speak with you today 
regarding the affect that contract bundling and other DoD 
contracting practices will have on small businesses.
    I am the President of the National Association of 
Manufacturers and Representative, and I have been hearing from 
small businesses nationwide concerned about contract bundling.
    For years small businesses have been valuable partners to 
the federal procurement system. Now we find ourselves in the 
position of being displaced, due to contract bundling.
    Since I last testified, I opened Innovative Supply Source 
in order to team with the prime contractors that won the 
bundles.
    On the Tobyhanna Initiative, we teamed with the winning 
contractor and ISS was asked to participate in the Mentor-
Protege program, which we did. Once we teamed with this 
company, we found that they were under investigation by the 
government and facing possible debarment and were not allowed 
to supply parts to DLA.
    My question is how could this happen that large prime 
contractors were awarded a bundle order while under 
investigation? I now need to find someone within the government 
to help dissolve my Mentor-Protege relationship with this 
contractor, as I do not wish my company's reputation to be 
jeopardized.
    In our teaming process on the Tobyhanna Initiative, the 
prime contractor did not understand how to purchase the proper 
product. They called to inquire if parts manufactured in 1978 
were acceptable for use. Only after entering into this teaming 
agreement did we discover that these contractors were not 
experienced enough to procure electronic products properly to 
support the war fighter.
    We have also experienced unethical practices by large prime 
contractors involved in bundling. ISS was contacted by one of 
the government's largest prime contractors who stated that if I 
dissolve my relationship with NAMR, and make no waves or not 
testify against building, they would allow ISS to team with 
them. But if I continued to protect small business, they would 
not consider teaming with my company.
    Recently, NAMR was involved in challenging a bundle under 
the time Maritime Initiative, which was eventually canceled in 
February of this year. Now we find the initiative is being 
issued in smaller segments, though they still constitute 
bundled actions.
    The procurement center representative at Defense Supply 
Center Columbus forwarded an appeal package on the original 
Maritime Initiative to SBA. The SBA negotiated an agreement 
with DLA regarding this initiative. Thus, that negotiation was 
not made public, however the initiative went forward with a new 
acquisition strategy.
    The ability to participate in the federal procurement 
processes is going to be eliminated with contract bundling. 
Items will be purchased behind closed doors, industry will lose 
the opportunity to bid on items the government is purchasing. 
There will be no fair and open competition. It will destroy the 
industrial base, create higher prices, cause longer delivery 
times and reduce military readiness.
    Fair and open competition must be maintained. It is crucial 
to saving taxpayers' money and maintaining readiness as I can 
attest on behalf of one NAMR member. This company, which 
specializing in designing and manufacturing spare parts for the 
military, has been able to save the Federal Government and in 
turn the taxpayers, millions of dollars by being able to see 
items the government is buying. This company saves the 
government money by manufacturing replacement for spare parts 
that the OEM or prime contractors manufacture and sell the 
government at inflated prices.
    Under current contracting regulations all interested 
companies can bid on any item the government is buying. If the 
items are bundled, companies lose the opportunity, the 
government will spend millions of dollars more. And in 
addition, the government will spend millions more in mark-ups 
on these items as they pass through multiple layers of 
distribution.
    And now there is talk about the Federal Government 
implementing the so called ``High Road'' contracting rules. The 
Administration is considering requiring that federal contracts 
go to businesses that pay high wages and provide benefits; a 
policy clearly meant to help labor unions and large 
corporations.
    Contract bundling has all but eliminated fair competition 
for contracts. If the Administration adds their ``High Road'' 
contracting rule, the role of small business in government 
contracting will further be diminished and costs will increase.
    Bundled contracts will drive companies out of business, put 
the government into sole source situations, and result in 
higher prices.
    As President of NAMR, Q-Mark, and ISS, and a member of 
NFIB, I urge you to pass legislation to stop contract bundling, 
ensure ``High Road'' contracting rules not be implemented.
    And thank you very much for taking the time to hear our 
testimony today.
    [The statement of Ms. Gentile is included in the appendix.]
    Chairwoman Velazquez. Thank you.
    Our next witness, Mr. John Woods. He's the co-founder of 
Woods Peacock Engineering Consultants based on Alexandria, 
Virginia.
    Woods Peacock Engineering Consultants provides structural 
engineering and product management services. Mr. Woods is 
testifying on behalf of the American Council of Engineering 
Companies which was founded in 1909 and has more than 5,300 
firms throughout the country.
    Welcome

STATEMENT OF JOHN WOODS, WOODS PEACOCK ENGINEERING CONSULTANTS 
  AND ON BEHALF OF AMERICAN COUNCIL OF ENGINEERING COMPANIES.

    Mr. Woods. Madam Chair, and Ranking Member Graves and 
members of the Committee, I appreciate the opportunity to 
testify before you today about small business participation and 
the federal procurement marketplace and specifically about the 
unique nature of architectural engineering or A/E services 
procurements. In addition, I will address the composition of 
the engineering industries, why small specialized firms like my 
own compose the majority of this industry, how we view federal 
government polices and individual recommendations to enhance 
the results to our firms and us, the taxpayers.
    My name is John Woods, and I am a founder and principal of 
Woods Peacock Engineer Consultants, a ten year old consulting 
engineering firm located in Alexandria, Virginia. We are a 
small service disabled veteran owned firm with 16 employees, 
three of whom we have hired this past year.
    All of the members of our staff are committed to providing 
our clients structural sound designs for various sized 
architectural building projects as well as work in the anti-
terrorism force protection at home and around the world. 
Additional bio information is available in my written comments.
    My firm is an active member of the American Council of 
Engineering Companies, the voice of America's engineering 
industry. Of the almost 6,000 member firms employing more than 
a half million engineers, architects, land surveyors and other 
professionals and responsible for more than $500 billion of 
private and public works, almost 70 percent of these firms are 
small businesses with less than 30 employees, many with less 
than ten.
    My 40 years of experience includes private and public 
sector projects, both domestic and international. I will 
discuss the issues of my participation of my firm in several 
current projects in a moment.
    Architectural and engineering firms provide services in a 
number of technical separate or combinations of disciplines, 
such as architecture, mechanical, electrical, civil structural, 
et cetera. States require state issued professional licenses 
for the individuals responsible for this technical or designed 
related work.
    In the Commonwealth of Virginia, 67 percent of the 
ownership of privately held professional services firms 
providing services must be held by individuals licenses in the 
Commonwealth in their respective disciplines as well as for the 
requirement for the firm to be licensed to provide these 
services.
    The code of ethics for licensed professionals to retain our 
licenses require us to perform work only for which we are 
qualified based on the education and experience. This is true 
in all states.
    Because of the state licensed majority ownership 
requirements in most states, privately held architectural and 
engineering firms are often localized, small and specialized. 
Since the work is performed by individuals, the quality of 
services offers is independent of size.
    For the federal project and in many state and local 
projects the public user and taxpayer is the benefactor because 
architects, engineers are selected for work based on being the 
most qualified for the particular project or series of tasks 
and then a fee negotiated as codified by the Brooks Act, Public 
Law 92-582 for federal work.
    To its credit, Congress created the Small Business 
Competitive Demonstration Program 20 years ago with the goal of 
enabling federal agencies to facilitate greater participation 
opportunities for small businesses. By unrestricting 
competition for A/E services the program recognizes the 
composition of the industry, qualification emphasis and the 
need for agency to carefully plan contracts that small firms 
can perform.
    Let me share several of my firm's experiences winning and 
doing work. The good news is that on one of the three recently 
awarded GSA A/E contracts using the Brooks Act selection for 
the new Main Department of Homeland Security Headquarters and 
the supporting facility on the St. Elizabeth's campus in 
Southeast Washington, we are one of several small firms 
included on the winning design team.
    The construction contract for the adaptive reuse and 
restoration portion of the project has been estimated at nearly 
$300 million. The bad news is as a disabled veteran owned firm 
and a desire to reach agency goals by the contracting 
personnel, it was asked if our firm might be the structural 
engineer of record with two larger structural firms with whom 
we are collaborating contracted to us and us to the prime 
contractor. This is unsatisfactory because not only are we not 
qualified to accept the level of responsibility or risk for the 
project size, we cannot obtain the professional liability 
insurance needed.
    Furthermore, the total structural engineering fees would 
exceed the normal level of annual fees and push us above the 
small business standard of 4.5 million.
    We would also pay in Virginia a gross receipts tax.
    With the approval of all the concerned parties we have now 
negotiated an appropriate scope of work for a fair and 
reasonable fee for a firm of our size.
    Several years ago at an industry--
    Chairwoman Velazquez. Mr. Woods, time has expired. You will 
have an opportunity in the question and answer period.
    Mr. Woods. Thank you, ma'am.
    [The statement of Mr. Woods is included in the appendix.]
    Chairwoman Velazquez. I would like to ask all the witnesses 
do you believe that the 23 percent small business contracting 
goal should be raised? Ms. Hillmer?
    Ms. Hillmer. I say go ahead and raise it, but let us look 
at is a goal sufficient or should it be a requirement? Because 
by just having a goal, they strive to reach the goal but if 
they do not reach the goal, nothing happens to them.
    Chairwoman Velazquez. Mr. Brown?
    Mr. Brown. Thank you for the question, Madam Chairwoman.
    I would concur with Ms. HIllner in the sense that it has 
been ten years since Public Law 106-50 was passed for small 
disabled veteran owned small businesses. And we're only 2 
percent there. So I think if it was raised, we could 
potentially look at expanding small business opportunities for 
veteran owned businesses. But we would like to get to 3 percent 
first.
    Thank you.
    Chairwoman Velazquez. Mr. Sprole?
    Mr. Sprole. Thank you, Madam Chairwoman.
    I do not think there should be a goal at all because too 
often goals become ceilings. I think it is much better that the 
government work to unwind the maze of laws and regulations that 
make it so difficult for small businesses to compete on a level 
playing field and open up opportunity for businesses to earn 
the government contracts on their own.
    Chairwoman Velazquez. Mr. Denlinger?
    Mr. Denlinger. Yes. As I explained in my testimony, we 
believe the goal should be substantially increased. There is no 
reason for the large businesses to receive three-quarters of 
the federal contracting dollar, especially when small 
businesses have demonstrated the ability to perform larger, 
more significant contracts.
    Thank you.
    Ms. Gentile. Yes, I believe the goals should be increased. 
However, I believe that we need to strive for more efforts to 
enforce the goal as the Department of Defense continues to get 
away with not reaching the goal and displaying our businesses.
    Chairwoman Velazquez. Thank you.
    Mr. Woods?
    Mr. Woods. In our industry we would prefer that the 
contracting goals be based on dollars, not percentage of what 
is subcontracted out. Because what often happens is the 
contract may be worth $10 million, but they only subcontract 
out a $100,000 to all of the small firms. There is really 
nothing there. But if we did it on the basis of dollars, much 
like the Metropolitan Washington Airport Authority, I think the 
goal might become meaningless.
    Chairwoman Velazquez. Thank you.
    Based on the testimony that we heard today, it is clear 
that contract bundling continues to be a major obstacle for 
small firms. So I asked for any of the members of the panel if 
you could make one suggestion for addressing contract bundling, 
what would it be?
    Ms. Gentile?
    Ms. Gentile. I believe that there needs to be something 
written into the Defense Authorization Bill to totally displace 
contract bundling. It has not worked. When you team with people 
it does not work. The rules are not enforced by it. And they 
continually get away with renaming it so that it does not 
become a bundle.
    Chairwoman Velazquez. Mr. Woods?
    Mr. Woods. We would prefer that rather than bundling, that 
we increase the number and the training of procurement 
professionals in the government. Because part of the reason 
that bundling occurs is that they don't have sufficient 
resources or the time to write all of the contracts that would 
be necessary if they did not bundle.
    Chairwoman Velazquez. Mr. Denlinger?
    Mr. Denlinger. Despite all the Committee's good efforts 
with respect to controlling bundling, it really has not 
happened yet. Bundling continues at a pace. We do not have the 
ability to control it. If bundling is going to continue to take 
place, one of the things that we can do is require agencies 
that are bundling large contracts to set aside for competition 
among small businesses, 23 percent of each bundled contract. In 
other words every large bundled contract would have a small 
business prime contractor component that would ensure small 
business involvement.
    Chairwoman Velazquez. Mr. Sprole?
    Mr. Sprole. If bundling is something that is likely to 
continue, I think the way that it has gone about should be 
changed so that it is viewed from a much higher level with an 
intent of focusing on the impact on the industrial base for any 
contracts that are selected for bundling. And if there's not a 
valid reason for doing so, is to not put random contracts 
together in such that it freezes small companies out of the 
market.
    Chairwoman Velazquez. We also heard a lot of issues with 
subcontracting goals. Mr. Woods, can you elaborate on why this 
is such a problem for firms such as yours?
    Mr. Woods. Well, as a small firm, quite frankly, we do not 
care in our industry whether we are prime or the subcontractor. 
What we are looking for is a fair and reasonable amount of the 
work and an opportunity to perform.
    Chairwoman Velazquez. Okay. Some of you have raised the 
issue of the 3 percent withholding requirement. And I just 
would like to hear each one of you to just give me yes or no 
answer.
    I would like to ask you if you think that this requirement 
should be repealed before it goes into effect?
    Mr. Woods?
    Mr. Woods. Absolutely.
    Ms. Gentile. Yes.
    Mr. Denlinger. Yes.
    Mr. Sprole. Yes, Madam Chairwoman.
    Mr. Brown. Yes.
    Ms. Hillmer. Yes. And I would like to enter for the 
record--
    Chairwoman Velazquez. Yes.
    Ms. Hillmer. --a letter from the Government Withholding 
Relief Coalition about this issue.
    Chairwoman Velazquez. Okay. Without objection, so ordered.
    [The attachment to Ms. Hillmer statement fellows:]
    Chairwoman Velazquez. Mr. Sprole, for a small company 
breaking into the GSA schedule can be a daunting experience. 
What sort of assistance should be available to small firms to 
be listed on the schedule?
    Mr. Sprole. GSA should have dedicated assistant teams 
available to help small businesses through the process to 
become familiar with the requirements to work with the Federal 
Government and to expedite and to facilitate the development of 
small business contracting.
    Chairwoman Velazquez. Okay. Mr. Brown, currently GSA 
schedule are sent from the small business provision of the 
Federal Acquisition Regulation. Should small businesses set 
asides be explicitly applied to GSA federal supply schedule 
programs?
    Mr. Brown. I think if they're capable of carrying out the 
work and carrying out the contract, I do not see a problem with 
it.
    One of the things I would be hesitant about in regards to 
the federal supply schedule is that we also do not want to 
become completely reliant on the federal supply schedules to 
meet our goals. What happens, and I think we are starting to 
see some of that with the VA, is that they are concentrating on 
their goals through the federal supply schedule and the folks 
in small businesses who may not operate with goods that are on 
the federal supply schedule are cut out of other contracts.
    Chairwoman Velazquez. Do any of the other witnesses have 
any opinion on this matter? Mr. Woods?
    Mr. Woods. The federal supply schedule does not apply to 
the architectural engineer field at all. We are selected on a 
qualifications-based method.
    Chairwoman Velazquez. And with that, I recognize the 
Ranking Member.
    Mr. Graves. Thank you, Madam Chairman.
    To each of your extents and if you do not have any idea, 
you do not have to comment, but to the extent that you know in 
terms of bundling do you know of cases where it has cost the 
Federal Government more money or the taxpayers more money as a 
result of that bundled contract over time? Go ahead.
    Ms. Gentile. The best thing I can tell you is that we know 
for a fact when you start with the pricing schedules, it goes 
between five to seven layers of mark-up by the time it goes to 
the government. We could sell it to the Federal Government 
direct, I will use an example for $25. But by the time it gets 
purchased by, and the experience we have with Initiative Supply 
Source, I would buy it from somebody who would sell it for $25. 
I will mark it up. Then I will in turn have to sell it to a 
company who is the procurement agency for the bundled award. 
They will mark it up. Who in turn sells it to the winner of the 
bundle, who marks it up. Who in turn sells it to DLA, who in 
turn will sell it to the Army.
    I cannot see how that can possibly save money for the 
Federal Government.
    Mr. Graves. Right.
    Mr. Woods?
    Mr. Woods. There are certain agencies typically quasi, such 
as the Federal Reserve that will bundle services under a 
facilities management contract and make that contractor 
responsible for hiring the architects and engineers rather than 
selecting us under a qualification based procedure And we feel 
that that happens because they do not have the necessary 
expertise or the time to go through all of the contracting that 
might be required.
    Mr. Graves. Anyone else?
    Thanks, Madam Chair.
    Chairwoman Velazquez. Ms. Clarke?
    Ms. Clarke. Thank you, Madam Chair and Ranking Member 
Graves for holding this really vitally important hearing.
    And I would also like to thank the assembled witnesses for 
sharing your perspectives with us on how we can improve the 
procurement environment for the engines of our economy, 
America's small businesses.
    My question is for anyone who can answer on the panel. 
Recently the Court of Federal Claims held the Small Business 
Act requires opportunities to be set aside for HUBZone firms 
over firms that participate in other small business development 
programs. I think Congress must act to address the outcome of 
this case, which could likely be a chilling impact on 
procurement opportunities for non-HUBZone firms.
    I think it is important for Congress to make its intent 
clear that each of the specialized procurement programs at SBA 
must be on equal footing.
    What would be appropriate to address this parity issue, 
number one? And two, how quickly do you think this issue needs 
to be addressed and in your opinion is it important to act 
right away or can this wait
    Mr. Brown. Well, Congresswoman, I would be happy to address 
your question, and thanks for it.
    Obviously this decision by GAO last year is very concerning 
to small disabled veteran and small businesses as it would put 
HUBZone above small disabled veteran owned small businesses in 
those situations where a contracting officer may be looking at 
giving it to this one, or this one. So in that sense, we would 
hope that Congress would act immediately to address this issue.
    Ms. Hillmer. We are a HUBZone firm. And I actually believe 
that parity ought to be across the board. By putting one 
program above another program, no matter what program it is, 
8(a), HUBZone, service disabled, I think we are creating an 
atmosphere where small businesses are fighting against each 
other for small pieces of the pie instead of putting them 
altogether and growing the pie in general.
    Mr. Denlinger. Yes. LAMA and U.S. Hispanic Chamber of 
Commerce support that position entirely. It is time for there 
to be parity across all socioeconomic procurement programs, and 
that should be done as soon as possible.
    Thank you.
    Mr. Woods. We would not want to see a preference for any 
small business group. In fact, one of our complaints is that 
contracting officers try to meet all of their goals on every 
single contract. And we recognize as business people that in 
certain geographical locations, that's really not possible. But 
as long as they make an honest effort and demonstrate that, we 
do not have any problem with division.
    Ms. Clarke. There is an ongoing challenge being faced by 
small business subcontractor which re-enforces barriers to 
freer access to the federal procurement space. Subcontractors 
are being listed by prime contractors to secure federal 
contracts, only to be cast aside once the contract has been 
awarded. Something has to be don to ensure that subcontractors, 
typically smaller firms, are treated fairly by the prime 
contractors, typically larger firms. And I understand that was 
part of the testimony heard here today.
    Have you found this to be a significant issue? If so, may I 
draw your and my colleagues attention to H.R. 4134. The 
Subcontractor Fairness Act of 2009. It's a bill that I co-
authored with William Lacy Clay to hold prime contractors 
accountable for subcontracting proposals that they submit as 
part of the federal contract bid in the civilian or defense 
contacts.
    Can you give me your feedback?
    Mr. Denlinger. Yes. We salute you for that bill. We 
supported it right here in our testimony. It is the foundation 
for what we think is needed in the subcontracting arena. The 
key piece that has been missing for all of these decades has 
been a contract between the SDB and the prime. And we would 
simply add to your bill a provision that, along with 
identifying the subcontractors, the scope of work and the 
dollar value, the terms of the subcontract agreement be part of 
the legislation as well. Otherwise the primes subcontract with 
you for a while and then move you out.
    Ms. Clarke. Thank you, Madam Chair. I yield back the 
balance of my time.
    Chairwoman Velazquez. Thank you.
    Mr. Luetkemeyer?
    Mr. Luetkemeyer. Thank you, Madam Chairwoman.
    Mr. Sprole, I am just kind of curious in your particular 
area of aerospace are you competing against any foreign 
companies that come in and bid on these aerospace contracts for 
small business now?
    Mr. Sprole. Yes. You know, the companies you know that we 
compete against are based in various parts of the world on 
defense articles and we have won and lost various contracts 
against companies in Israel and other countries.
    Mr. Luetkemeyer. What percentage of the contracts do you 
believe that are small business contracts are given to 
companies that are foreign-based or foreign owned, or whatever?
    Mr. Sprole. I would not be able to venture a guess on that. 
But we could try to get--
    Mr. Luetkemeyer. Significant or just a few here or there?
    Mr. Sprole. I think it is significant if you look at the 
entire amount that would be eligible for small companies to bid 
on this.
    Mr. Luetkemeyer. Do you buy parts from any foreign 
entities?
    Mr. Sprole. No.
    Mr. Luetkemeyer. Ms. Gentile?
    Ms. Gentile. We do not want to cross in our contract 
bundling because of DoD, we do not want to cross a lot of 
foreign companies. Some of the NATO we do buy parts 
periodically from some of the NATO countries.
    Mr. Luetkemeyer. Yes.
    Ms. Gentile. I am sure that the bulk of what we do and what 
we run across and what we see bundled are basically American 
made product.
    Mr. Luetkemeyer. Ms. Hillmer? No. Do not have any 
experience with that?
    Ms. Hillmer. No, I do not.
    Mr. Luetkemeyer. Okay. Mr. Brown?
    Mr. Brown. Congressman, all of our veterans are American 
made, so--
    Mr. Luetkemeyer. I am talking about competing, when you bid 
for something that whatever the item is that you are bidding 
for or the contractor bidding for, how much competition do you 
see from foreign entities?
    Mr. Brown. Between our veteran-owned small businesses I 
would not be able to venture a guess into their competition.
    Mr. Luetkemeyer. Well, thank you for your service, sir. 
Appreciate your efforts and all your sacrifices for our 
country.
    Okay. I am just kind of curious as well with enforcement. I 
sit on another Committee, Oversight and Government Reform, and 
the other day we were talking in that Committee about the 
problem with a lot of the contractors who, for one reason or 
another, have violations of one kind or another and the lack of 
enforcement by the government on these people when we find them 
to be in violation of whatever. It could be they themselves 
have felony records, it could be the contract itself were not 
performed up to standards, and yet, they are given another 
contract.
    Have you seen that in your businesses? How much activity do 
you see along that line, a competition of people who have those 
kinds of problems, where there is not enforcement action taken 
to take them out of the picture? And again, you have to compete 
against that type of company over and over again. Have you seen 
any of that? At all, any of you?
    Ms. Gentile. I think we see in the contract bundling arena 
that some of the large contractors continue to get fined by the 
Federal Government, they continue to be in violation of what 
some of the regulations are, they continue to intimidate the 
small businesses in numerous cases, but they continue to win 
the bundles. And nothing seems to be enforced by it.
    Mr. Luetkemeyer. Who is the enforcer in your situation? Who 
should be the enforcement in that?
    Ms. Gentile. I believe it should be the Defense Logistics 
Agency because they are the ones that are mandating the bundles 
that are coming out of Defense Supply Center in Columbus, Ohio.
    Mr. Luetkemeyer. Have any of you lost a contract as a 
result of bundling by a larger contractor who sort of squeezed 
you out of the process?
    Ms. Gentile. Absolutely.
    Mr. Luetkemeyer. Anybody else? All of you have? What was 
the result of that? Did you go back and complain? Did you file 
a complaint with the proper authorities or did you go back to 
the contractor and say, hey, you are not doing things as per 
the rules and, therefore, make sure you contact me next time? 
Or what kind of action did you take? Any at all?
    Ms. Hillmer?
    Ms. Hillmer. Well, I would like to tell you about an 
experience I had with the United States Army. And they bundled 
some contracts together and a large prime contacted us and said 
``Oh, we need you on our team, HUBZone, check that box.'' And 
so we joined their team. And they won the contract along with 
several other large primes. And we have not seen a single task 
order come out because the prime collects the task orders and 
the prime decides who on the team gets them. So I do not even 
get to see any of the work that comes out. And I used to have a 
significant amount of business in the Army, and now that has 
gone way down because all of the work that I was doing is 
coming out on these task orders and the prime is taking them.
    Mr. Luetkemeyer. Did you get paid anything at all? In other 
words, just to lend your support to this, your name to this?
    Ms. Hillmer. No.
    Mr. Luetkemeyer. No? You are just --
    Chairwoman Velazquez. Would the gentlemen yield?
    Mr. Luetkemeyer. Sure.
    Chairwoman Velazquez. But you incurred a lot of expenses, 
didn't you anytime that you want to participate in any of this 
subcontracting with prime?
    Ms. Hillmer. We did incur expenses, yes.
    Mr. Luetkemeyer. I assume you had to go through the bid 
process--
    Chairwoman Velazquez. Thank you for yielding.
    Mr. Luetkemeyer. --therefore you incurred quite a bit of 
time and expense just to put your bid together.
    Ms. Hillmer. That is correct.
    Mr. Luetkemeyer. And you were not paid for that at all? So 
you are out all of this really?
    Ms. Hillmer. Plus the business that I used to have.
    Mr. Luetkemeyer. I see I am over my time.
    Thank you, Madam Chair.
    Chairwoman Velazquez. Mr. Denlinger, I have some other 
questions that I would like to ask now to the witnesses. SBA 
has proposed a rule for the 8(a) program that would adjust how 
assets, gross income and retirement segments are assessed when 
determining whether a company is economically disadvantaged. 
Are these changes enough or does Congress need to raise the net 
worth standard?
    Mr. Denlinger. Thank you.
    We have been advocating for an increase in the net worth 
standards for many years, as you know. This is actually a step 
in the right direction. We salute that.
    We would have to take a look at the extent to which that 
provision would broadly affect all applicants. Not everyone 
coming into the 8(a) program has a nice retirement fund sitting 
there. Most come in from having scrapped in the small business 
arena and do not have a lot of capital along those lines. So it 
would be helpful, but we do not think it is the complete 
answer.
    Chairwoman Velazquez. And also you gave an example in your 
testimony where you talk about a small business that sold 
itself immediately after winning a long term contract. And you 
pointed out that the contract and others like it will distort 
agency goal achievements for years to come. In your mind, what 
is the appropriate response to that kind of situation?
    Mr. Denlinger. Well, that is a real tough one. You start 
from the premise that we just cannot count a small business 
award that transforms into a large business award within the 
month from the small business award having been made, and count 
that as a small business award for the next ten years. There 
has to be a cut off at some point.
    I would not necessarily say cut it off immediately, but 
maybe because that puts the awarding agency at a great 
difficulty, we recognize that. So maybe a three year limit, or 
something like that, or a declining allocation toward small 
business. But to count that as a small business award for ten 
years is totally unacceptable.
    Chairwoman Velazquez. Mr. Brown, multiple agency awards 
such as government-wide acquisition contracts have grown 
significantly in the last decade. And while small firms have 
participated in some of these efforts, others have been closed 
out of lucrative contracts.
    In order to ensure that small firms are not overlooked, 
should Congress consider creating multiple agency award goals 
for small businesses?
    Mr. Brown. Thank you for the question, Chairwoman.
    I believe it could be helpful in trying to reach the 3 
percent goal for small disabled veteran owned small businesses. 
So I think if it marches us in that direction, if it opens up 
these contracts for small businesses, then I don't see an issue 
with it.
    Chairwoman Velazquez. Do you think that we should go even 
further than a goal and establish a multiple agency award small 
business program?
    Mr. Brown. I think that that would help with the oversight 
of trying to reach the goals that you would be trying to reach 
with that. So I think that that could be helpful as well.
    Chairwoman Velazquez. Okay. Mr. Graves, any other 
questions? Okay.
    Well, again, I want to take the opportunity to thank all of 
you for being here today. And we are going to continue studying 
the different issues as they relate to the federal contracting 
practices in the federal marketplace.
    So I ask unanimous consent to enter stories and testimonies 
into the record regarding the disparities facing small and 
disadvantaged firms. Hearing no objection, so ordered.
    In addition, I ask unanimous consent that members will have 
five days to submit a statement and supporting materials for 
the record. Without objection, so ordered.
    This hearing is now adjourned. Thank you.
    [Whereupon, at 2:18 p.m. the Subcommittee was adjourned.]

    [GRAPHIC] [TIFF OMITTED] T5594.001
    
    [GRAPHIC] [TIFF OMITTED] T5594.002
    
    [GRAPHIC] [TIFF OMITTED] T5594.003
    
    [GRAPHIC] [TIFF OMITTED] T5594.004
    
    [GRAPHIC] [TIFF OMITTED] T5594.005
    
    [GRAPHIC] [TIFF OMITTED] T5594.006
    
    [GRAPHIC] [TIFF OMITTED] T5594.007
    
    [GRAPHIC] [TIFF OMITTED] T5594.008
    
    [GRAPHIC] [TIFF OMITTED] T5594.009
    
    [GRAPHIC] [TIFF OMITTED] T5594.010
    
    [GRAPHIC] [TIFF OMITTED] T5594.011
    
    [GRAPHIC] [TIFF OMITTED] T5594.012
    
    [GRAPHIC] [TIFF OMITTED] T5594.013
    
    [GRAPHIC] [TIFF OMITTED] T5594.014
    
    [GRAPHIC] [TIFF OMITTED] T5594.015
    
    [GRAPHIC] [TIFF OMITTED] T5594.016
    
    [GRAPHIC] [TIFF OMITTED] T5594.017
    
    [GRAPHIC] [TIFF OMITTED] T5594.018
    
    [GRAPHIC] [TIFF OMITTED] T5594.019
    
    [GRAPHIC] [TIFF OMITTED] T5594.020
    
    [GRAPHIC] [TIFF OMITTED] T5594.021
    
    [GRAPHIC] [TIFF OMITTED] T5594.022
    
    [GRAPHIC] [TIFF OMITTED] T5594.023
    
    [GRAPHIC] [TIFF OMITTED] T5594.028
    
    [GRAPHIC] [TIFF OMITTED] T5594.029
    
    [GRAPHIC] [TIFF OMITTED] T5594.030
    
    [GRAPHIC] [TIFF OMITTED] T5594.031
    
    [GRAPHIC] [TIFF OMITTED] T5594.032
    
    [GRAPHIC] [TIFF OMITTED] T5594.033
    
    [GRAPHIC] [TIFF OMITTED] T5594.034
    
    [GRAPHIC] [TIFF OMITTED] T5594.035
    
    [GRAPHIC] [TIFF OMITTED] T5594.036
    
    [GRAPHIC] [TIFF OMITTED] T5594.037
    
    [GRAPHIC] [TIFF OMITTED] T5594.038
    
    [GRAPHIC] [TIFF OMITTED] T5594.039
    
    [GRAPHIC] [TIFF OMITTED] T5594.040
    
    [GRAPHIC] [TIFF OMITTED] T5594.041
    
    [GRAPHIC] [TIFF OMITTED] T5594.042
    
    [GRAPHIC] [TIFF OMITTED] T5594.043
    
    [GRAPHIC] [TIFF OMITTED] T5594.044
    
    [GRAPHIC] [TIFF OMITTED] T5594.045
    
    [GRAPHIC] [TIFF OMITTED] T5594.046
    
    [GRAPHIC] [TIFF OMITTED] T5594.047
    
    [GRAPHIC] [TIFF OMITTED] T5594.048
    
    [GRAPHIC] [TIFF OMITTED] T5594.049
    
    [GRAPHIC] [TIFF OMITTED] T5594.050
    
    [GRAPHIC] [TIFF OMITTED] T5594.051
    
    [GRAPHIC] [TIFF OMITTED] T5594.052
    
    [GRAPHIC] [TIFF OMITTED] T5594.053
    
    [GRAPHIC] [TIFF OMITTED] T5594.054
    
    [GRAPHIC] [TIFF OMITTED] T5594.055
    
    [GRAPHIC] [TIFF OMITTED] T5594.056
    
    [GRAPHIC] [TIFF OMITTED] T5594.057
    
    [GRAPHIC] [TIFF OMITTED] T5594.058
    
    [GRAPHIC] [TIFF OMITTED] T5594.059
    
    [GRAPHIC] [TIFF OMITTED] T5594.060
    
    [GRAPHIC] [TIFF OMITTED] T5594.061
    
    [GRAPHIC] [TIFF OMITTED] T5594.062
    
    [GRAPHIC] [TIFF OMITTED] T5594.063
    
    [GRAPHIC] [TIFF OMITTED] T5594.064
    
    [GRAPHIC] [TIFF OMITTED] T5594.065
    
    [GRAPHIC] [TIFF OMITTED] T5594.066
    
    [GRAPHIC] [TIFF OMITTED] T5594.067
    
    [GRAPHIC] [TIFF OMITTED] T5594.068
    
    [GRAPHIC] [TIFF OMITTED] T5594.069
    
    [GRAPHIC] [TIFF OMITTED] T5594.070
    
    [GRAPHIC] [TIFF OMITTED] T5594.071
    
    [GRAPHIC] [TIFF OMITTED] T5594.072
    
    [GRAPHIC] [TIFF OMITTED] T5594.073
    
    [GRAPHIC] [TIFF OMITTED] T5594.074
    
    [GRAPHIC] [TIFF OMITTED] T5594.075
    
    [GRAPHIC] [TIFF OMITTED] T5594.076
    
    [GRAPHIC] [TIFF OMITTED] T5594.077
    
    [GRAPHIC] [TIFF OMITTED] T5594.078
    
    [GRAPHIC] [TIFF OMITTED] T5594.079
    
    [GRAPHIC] [TIFF OMITTED] T5594.080
    
    [GRAPHIC] [TIFF OMITTED] T5594.081
    
    [GRAPHIC] [TIFF OMITTED] T5594.082
    
    [GRAPHIC] [TIFF OMITTED] T5594.083
    
    [GRAPHIC] [TIFF OMITTED] T5594.084
    
    [GRAPHIC] [TIFF OMITTED] T5594.085
    
    [GRAPHIC] [TIFF OMITTED] T5594.086
    
    [GRAPHIC] [TIFF OMITTED] T5594.087
    
    [GRAPHIC] [TIFF OMITTED] T5594.088
    
    [GRAPHIC] [TIFF OMITTED] T5594.089
    
    [GRAPHIC] [TIFF OMITTED] T5594.090
    
    [GRAPHIC] [TIFF OMITTED] T5594.091
    
    [GRAPHIC] [TIFF OMITTED] T5594.092
    
    [GRAPHIC] [TIFF OMITTED] T5594.093
    
    [GRAPHIC] [TIFF OMITTED] T5594.094
    
    [GRAPHIC] [TIFF OMITTED] T5594.095
    
    [GRAPHIC] [TIFF OMITTED] T5594.096
    
    [GRAPHIC] [TIFF OMITTED] T5594.097
    
    [GRAPHIC] [TIFF OMITTED] T5594.098
    
    [GRAPHIC] [TIFF OMITTED] T5594.099
    
    [GRAPHIC] [TIFF OMITTED] T5594.100
    
    [GRAPHIC] [TIFF OMITTED] T5594.101
    
    [GRAPHIC] [TIFF OMITTED] T5594.102
    
    [GRAPHIC] [TIFF OMITTED] T5594.103
    
    [GRAPHIC] [TIFF OMITTED] T5594.104
    
    [GRAPHIC] [TIFF OMITTED] T5594.105
    
    [GRAPHIC] [TIFF OMITTED] T5594.106
    
    [GRAPHIC] [TIFF OMITTED] T5594.107
    
    [GRAPHIC] [TIFF OMITTED] T5594.108
    
    [GRAPHIC] [TIFF OMITTED] T5594.109
    
    [GRAPHIC] [TIFF OMITTED] T5594.110
    
    [GRAPHIC] [TIFF OMITTED] T5594.111
    
    [GRAPHIC] [TIFF OMITTED] T5594.112
    
    [GRAPHIC] [TIFF OMITTED] T5594.113
    
    [GRAPHIC] [TIFF OMITTED] T5594.114
    
    [GRAPHIC] [TIFF OMITTED] T5594.115
    
    [GRAPHIC] [TIFF OMITTED] T5594.116
    
    [GRAPHIC] [TIFF OMITTED] T5594.117
    
    [GRAPHIC] [TIFF OMITTED] T5594.118
    
    [GRAPHIC] [TIFF OMITTED] T5594.119
    
    [GRAPHIC] [TIFF OMITTED] T5594.120
    
    [GRAPHIC] [TIFF OMITTED] T5594.121
    
    [GRAPHIC] [TIFF OMITTED] T5594.122
    
    [GRAPHIC] [TIFF OMITTED] T5594.123
    
    [GRAPHIC] [TIFF OMITTED] T5594.124
    
    [GRAPHIC] [TIFF OMITTED] T5594.125
    
    [GRAPHIC] [TIFF OMITTED] T5594.126
    
    [GRAPHIC] [TIFF OMITTED] T5594.127
    
    [GRAPHIC] [TIFF OMITTED] T5594.128
    
    [GRAPHIC] [TIFF OMITTED] T5594.129
    
    [GRAPHIC] [TIFF OMITTED] T5594.130
    
    [GRAPHIC] [TIFF OMITTED] T5594.131
    
    [GRAPHIC] [TIFF OMITTED] T5594.132
    
    [GRAPHIC] [TIFF OMITTED] T5594.133
    
    [GRAPHIC] [TIFF OMITTED] T5594.134
    
    [GRAPHIC] [TIFF OMITTED] T5594.135
    
    [GRAPHIC] [TIFF OMITTED] T5594.136
    
    [GRAPHIC] [TIFF OMITTED] T5594.137
    
    [GRAPHIC] [TIFF OMITTED] T5594.138
    
    [GRAPHIC] [TIFF OMITTED] T5594.139
    
    [GRAPHIC] [TIFF OMITTED] T5594.140
    
    [GRAPHIC] [TIFF OMITTED] T5594.141
    
    [GRAPHIC] [TIFF OMITTED] T5594.142
    
    [GRAPHIC] [TIFF OMITTED] T5594.143
    
    [GRAPHIC] [TIFF OMITTED] T5594.144
    
    [GRAPHIC] [TIFF OMITTED] T5594.145
    
    [GRAPHIC] [TIFF OMITTED] T5594.146
    
    [GRAPHIC] [TIFF OMITTED] T5594.147
    
    [GRAPHIC] [TIFF OMITTED] T5594.148
    
    [GRAPHIC] [TIFF OMITTED] T5594.149
    
    [GRAPHIC] [TIFF OMITTED] T5594.150
    
    [GRAPHIC] [TIFF OMITTED] T5594.151
    
    [GRAPHIC] [TIFF OMITTED] T5594.152
    
    [GRAPHIC] [TIFF OMITTED] T5594.153
    
    [GRAPHIC] [TIFF OMITTED] T5594.154
    
    [GRAPHIC] [TIFF OMITTED] T5594.155
    
    [GRAPHIC] [TIFF OMITTED] T5594.156
    
    [GRAPHIC] [TIFF OMITTED] T5594.157
    
    [GRAPHIC] [TIFF OMITTED] T5594.158
    
    [GRAPHIC] [TIFF OMITTED] T5594.159
    
    [GRAPHIC] [TIFF OMITTED] T5594.160
    
    [GRAPHIC] [TIFF OMITTED] T5594.161
    
    [GRAPHIC] [TIFF OMITTED] T5594.162
    
    [GRAPHIC] [TIFF OMITTED] T5594.163
    
    [GRAPHIC] [TIFF OMITTED] T5594.164
    
    [GRAPHIC] [TIFF OMITTED] T5594.165
    
    [GRAPHIC] [TIFF OMITTED] T5594.166
    
    [GRAPHIC] [TIFF OMITTED] T5594.167
    
    [GRAPHIC] [TIFF OMITTED] T5594.168
    
    [GRAPHIC] [TIFF OMITTED] T5594.169
    
    [GRAPHIC] [TIFF OMITTED] T5594.170
    
    [GRAPHIC] [TIFF OMITTED] T5594.171
    
    [GRAPHIC] [TIFF OMITTED] T5594.172
    
    [GRAPHIC] [TIFF OMITTED] T5594.173
    
    [GRAPHIC] [TIFF OMITTED] T5594.174
    
    [GRAPHIC] [TIFF OMITTED] T5594.175
    
    [GRAPHIC] [TIFF OMITTED] T5594.176
    
    [GRAPHIC] [TIFF OMITTED] T5594.177
    
    [GRAPHIC] [TIFF OMITTED] T5594.178
    
    [GRAPHIC] [TIFF OMITTED] T5594.179
    
    [GRAPHIC] [TIFF OMITTED] T5594.180
    
    [GRAPHIC] [TIFF OMITTED] T5594.181
    
    [GRAPHIC] [TIFF OMITTED] T5594.182
    
    [GRAPHIC] [TIFF OMITTED] T5594.183
    
    [GRAPHIC] [TIFF OMITTED] T5594.184
    
    [GRAPHIC] [TIFF OMITTED] T5594.185
    
    [GRAPHIC] [TIFF OMITTED] T5594.186
    
    [GRAPHIC] [TIFF OMITTED] T5594.187
    
    [GRAPHIC] [TIFF OMITTED] T5594.188
    
    [GRAPHIC] [TIFF OMITTED] T5594.189
    
    [GRAPHIC] [TIFF OMITTED] T5594.190
    
    [GRAPHIC] [TIFF OMITTED] T5594.191
    
    [GRAPHIC] [TIFF OMITTED] T5594.192
    
    [GRAPHIC] [TIFF OMITTED] T5594.193
    
    [GRAPHIC] [TIFF OMITTED] T5594.194
    
    [GRAPHIC] [TIFF OMITTED] T5594.195
    
    [GRAPHIC] [TIFF OMITTED] T5594.196
    
    [GRAPHIC] [TIFF OMITTED] T5594.197
    
    [GRAPHIC] [TIFF OMITTED] T5594.198
    
    [GRAPHIC] [TIFF OMITTED] T5594.199
    
    [GRAPHIC] [TIFF OMITTED] T5594.200
    
    [GRAPHIC] [TIFF OMITTED] T5594.201
    
    [GRAPHIC] [TIFF OMITTED] T5594.202
    
    [GRAPHIC] [TIFF OMITTED] T5594.203
    
    [GRAPHIC] [TIFF OMITTED] T5594.204
    
    [GRAPHIC] [TIFF OMITTED] T5594.205
    
    [GRAPHIC] [TIFF OMITTED] T5594.206
    
    [GRAPHIC] [TIFF OMITTED] T5594.207
    
    [GRAPHIC] [TIFF OMITTED] T5594.208
    
    [GRAPHIC] [TIFF OMITTED] T5594.209
    
    [GRAPHIC] [TIFF OMITTED] T5594.210
    
    [GRAPHIC] [TIFF OMITTED] T5594.211
    
    [GRAPHIC] [TIFF OMITTED] T5594.212
    
    [GRAPHIC] [TIFF OMITTED] T5594.213
    
    [GRAPHIC] [TIFF OMITTED] T5594.214
    
    [GRAPHIC] [TIFF OMITTED] T5594.215
    
    [GRAPHIC] [TIFF OMITTED] T5594.216
    
    [GRAPHIC] [TIFF OMITTED] T5594.217
    
    [GRAPHIC] [TIFF OMITTED] T5594.218
    
    [GRAPHIC] [TIFF OMITTED] T5594.219
    
    [GRAPHIC] [TIFF OMITTED] T5594.220
    
    [GRAPHIC] [TIFF OMITTED] T5594.221
    
    [GRAPHIC] [TIFF OMITTED] T5594.222
    
    [GRAPHIC] [TIFF OMITTED] T5594.223
    
    [GRAPHIC] [TIFF OMITTED] T5594.224
    
    [GRAPHIC] [TIFF OMITTED] T5594.226
    
    [GRAPHIC] [TIFF OMITTED] T5594.227
    
    [GRAPHIC] [TIFF OMITTED] T5594.228
    
    [GRAPHIC] [TIFF OMITTED] T5594.229
    
    [GRAPHIC] [TIFF OMITTED] T5594.230
    
    [GRAPHIC] [TIFF OMITTED] T5594.231
    
    [GRAPHIC] [TIFF OMITTED] T5594.232
    
    [GRAPHIC] [TIFF OMITTED] T5594.233
    
    [GRAPHIC] [TIFF OMITTED] T5594.234
    
    [GRAPHIC] [TIFF OMITTED] T5594.235
    
    [GRAPHIC] [TIFF OMITTED] T5594.236
    
    [GRAPHIC] [TIFF OMITTED] T5594.237
    
    [GRAPHIC] [TIFF OMITTED] T5594.238
    
    [GRAPHIC] [TIFF OMITTED] T5594.239
    
    [GRAPHIC] [TIFF OMITTED] T5594.240
    
    [GRAPHIC] [TIFF OMITTED] T5594.241
    
    [GRAPHIC] [TIFF OMITTED] T5594.242
    
    [GRAPHIC] [TIFF OMITTED] T5594.243
    
    [GRAPHIC] [TIFF OMITTED] T5594.244
    
    [GRAPHIC] [TIFF OMITTED] T5594.245
    
    [GRAPHIC] [TIFF OMITTED] T5594.246
    
    [GRAPHIC] [TIFF OMITTED] T5594.247
    
    [GRAPHIC] [TIFF OMITTED] T5594.248
    
    [GRAPHIC] [TIFF OMITTED] T5594.249
    
    [GRAPHIC] [TIFF OMITTED] T5594.250
    
    [GRAPHIC] [TIFF OMITTED] T5594.251
    
    [GRAPHIC] [TIFF OMITTED] T5594.252
    
    [GRAPHIC] [TIFF OMITTED] T5594.253
    
    [GRAPHIC] [TIFF OMITTED] T5594.254
    
    [GRAPHIC] [TIFF OMITTED] T5594.255
    
    [GRAPHIC] [TIFF OMITTED] T5594.256
    
    [GRAPHIC] [TIFF OMITTED] T5594.257
    
    [GRAPHIC] [TIFF OMITTED] T5594.258
    
    [GRAPHIC] [TIFF OMITTED] T5594.259
    
    [GRAPHIC] [TIFF OMITTED] T5594.260
    
    [GRAPHIC] [TIFF OMITTED] T5594.261
    
    [GRAPHIC] [TIFF OMITTED] T5594.262
    
    [GRAPHIC] [TIFF OMITTED] T5594.263
    
    [GRAPHIC] [TIFF OMITTED] T5594.264
    
    [GRAPHIC] [TIFF OMITTED] T5594.265
    
    [GRAPHIC] [TIFF OMITTED] T5594.266
    
    [GRAPHIC] [TIFF OMITTED] T5594.267
    
    [GRAPHIC] [TIFF OMITTED] T5594.268
    
    [GRAPHIC] [TIFF OMITTED] T5594.269
    
    [GRAPHIC] [TIFF OMITTED] T5594.270
    
    [GRAPHIC] [TIFF OMITTED] T5594.271
    
    [GRAPHIC] [TIFF OMITTED] T5594.272
    
    [GRAPHIC] [TIFF OMITTED] T5594.273
    
    [GRAPHIC] [TIFF OMITTED] T5594.274
    
    [GRAPHIC] [TIFF OMITTED] T5594.275
    
    [GRAPHIC] [TIFF OMITTED] T5594.276
    
    [GRAPHIC] [TIFF OMITTED] T5594.277
    
    [GRAPHIC] [TIFF OMITTED] T5594.278
    
    [GRAPHIC] [TIFF OMITTED] T5594.279
    
    [GRAPHIC] [TIFF OMITTED] T5594.280
    
    [GRAPHIC] [TIFF OMITTED] T5594.281
    
    [GRAPHIC] [TIFF OMITTED] T5594.282
    
    [GRAPHIC] [TIFF OMITTED] T5594.283
    
    [GRAPHIC] [TIFF OMITTED] T5594.284
    
    [GRAPHIC] [TIFF OMITTED] T5594.285
    
    [GRAPHIC] [TIFF OMITTED] T5594.286
    
    [GRAPHIC] [TIFF OMITTED] T5594.287
    
    [GRAPHIC] [TIFF OMITTED] T5594.288
    
    [GRAPHIC] [TIFF OMITTED] T5594.289
    
    [GRAPHIC] [TIFF OMITTED] T5594.290
    
    [GRAPHIC] [TIFF OMITTED] T5594.291
    
    [GRAPHIC] [TIFF OMITTED] T5594.292
    
    [GRAPHIC] [TIFF OMITTED] T5594.293
    
    [GRAPHIC] [TIFF OMITTED] T5594.294
    
    [GRAPHIC] [TIFF OMITTED] T5594.295
    
    [GRAPHIC] [TIFF OMITTED] T5594.296
    
    [GRAPHIC] [TIFF OMITTED] T5594.297
    
    [GRAPHIC] [TIFF OMITTED] T5594.298
    
    [GRAPHIC] [TIFF OMITTED] T5594.299
    
    [GRAPHIC] [TIFF OMITTED] T5594.300
    
    [GRAPHIC] [TIFF OMITTED] T5594.301
    
    [GRAPHIC] [TIFF OMITTED] T5594.302
    
    [GRAPHIC] [TIFF OMITTED] T5594.303
    
    [GRAPHIC] [TIFF OMITTED] T5594.304
    
    [GRAPHIC] [TIFF OMITTED] T5594.305
    
    [GRAPHIC] [TIFF OMITTED] T5594.306
    
    [GRAPHIC] [TIFF OMITTED] T5594.307
    
    [GRAPHIC] [TIFF OMITTED] T5594.308
    
    [GRAPHIC] [TIFF OMITTED] T5594.309
    
    [GRAPHIC] [TIFF OMITTED] T5594.310
    
    [GRAPHIC] [TIFF OMITTED] T5594.311
    
    [GRAPHIC] [TIFF OMITTED] T5594.312
    
    [GRAPHIC] [TIFF OMITTED] T5594.313
    
    [GRAPHIC] [TIFF OMITTED] T5594.314
    
    [GRAPHIC] [TIFF OMITTED] T5594.315
    
    [GRAPHIC] [TIFF OMITTED] T5594.316
    
    [GRAPHIC] [TIFF OMITTED] T5594.317
    
    [GRAPHIC] [TIFF OMITTED] T5594.318
    
    [GRAPHIC] [TIFF OMITTED] T5594.319
    
    [GRAPHIC] [TIFF OMITTED] T5594.320
    
    [GRAPHIC] [TIFF OMITTED] T5594.321
    
    [GRAPHIC] [TIFF OMITTED] T5594.322
    
    [GRAPHIC] [TIFF OMITTED] T5594.323
    
    [GRAPHIC] [TIFF OMITTED] T5594.324
    
    [GRAPHIC] [TIFF OMITTED] T5594.325
    
    [GRAPHIC] [TIFF OMITTED] T5594.326
    
    [GRAPHIC] [TIFF OMITTED] T5594.327
    
    [GRAPHIC] [TIFF OMITTED] T5594.328
    
    [GRAPHIC] [TIFF OMITTED] T5594.329
    
    [GRAPHIC] [TIFF OMITTED] T5594.330
    
    [GRAPHIC] [TIFF OMITTED] T5594.331
    
    [GRAPHIC] [TIFF OMITTED] T5594.332
    
    [GRAPHIC] [TIFF OMITTED] T5594.333
    
    [GRAPHIC] [TIFF OMITTED] T5594.334
    
    [GRAPHIC] [TIFF OMITTED] T5594.335
    
    [GRAPHIC] [TIFF OMITTED] T5594.336
    
    [GRAPHIC] [TIFF OMITTED] T5594.337
    
    [GRAPHIC] [TIFF OMITTED] T5594.338
    
    [GRAPHIC] [TIFF OMITTED] T5594.339
    
    [GRAPHIC] [TIFF OMITTED] T5594.340
    
    [GRAPHIC] [TIFF OMITTED] T5594.341
    
    [GRAPHIC] [TIFF OMITTED] T5594.342
    
    [GRAPHIC] [TIFF OMITTED] T5594.343
    
    [GRAPHIC] [TIFF OMITTED] T5594.344
    
                                 
