[Senate Hearing 111-1165]
[From the U.S. Government Publishing Office]
S. Hrg. 111-1165
SMALL BUSINESS CONTRACTING: ENSURING
OPPORTUNITIES FOR AMERICA'S SMALL BUSINESSES
=======================================================================
ROUNDTABLE
BEFORE THE
COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 22, 2009
__________
Printed for the Committee on Small Business and Entrepreneurship
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED ELEVENTH CONGRESS
----------
MARY L. LANDRIEU, Louisiana, Chair
OLYMPIA J. SNOWE, Maine, Ranking Member
JOHN F. KERRY, Massachusetts CHRISTOPHER S. BOND, Missouri
CARL LEVIN, Michigan DAVID VITTER, Louisiana
TOM HARKIN, Iowa JOHN THUNE, South Dakota
JOSEPH I. LIEBERMAN, Connecticut MICHAEL B. ENZI, Wyoming
MARIA CANTWELL, Washington JOHNNY ISAKSON, Georgia
EVAN BAYH, Indiana ROGER WICKER, Mississippi
MARK L. PRYOR, Arkansas JAMES E. RISCH, Idaho
BENJAMIN L. CARDIN, Maryland
JEANNE SHAHEEN, New Hampshire
KAY HAGAN, North Carolina
Donald R. Cravins, Jr., Democratic Staff Director
Wallace K. Hsueh, Republican Staff Director
C O N T E N T S
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Opening Statements
Page
Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana. 1
Witnesses
Drabkin, Dave, Senior Procurement Executive, Deputy Chief
Acquisition Officer and Deputy Associate Administrator for
Acquisition Policy, General Services Administration............ 8
Sullivan, Ann, Women Impacting Public Policy..................... 8
Hesser, Bob, Vet Force representative............................ 8
Dorfman, Margot, Chief Financial Officer, U.S. Women's Chamber of
Commerce....................................................... 8
Chvotkin, Alan, Professional Services Council.................... 8
Brubeck, Ben, Director of Labor and State Affairs, Associated
Builders and Contractors....................................... 8
Fingarson, Ashley, Director of Legislative Affairs, Associated
Builders and Contractors....................................... 8
Willis, Greg, General Counsel (Majority Staff), Committee on
Small Business and Entrepreneurship............................ 8
Hontz, Karen, Small Business Administration...................... 8
Walker, Matt, Deputy Staff Director and Counsel (Republican
Staff), Committee on Small Business and Entrepreneurship....... 8
Reece, Adam, Professional Staff Member (Republican Staff),
Committee on Small Business and Entrepreneurship............... 8
Newlan, Ron, HUBZone Council..................................... 8
Oliver, Linda, Acting Director, Office of Small Business
Programs, U.S. Department of Defense........................... 8
Jordan, Joe, Associate Administrator, Government Contracting and
Business Development, U.S. Small Business Administration....... 9
Robinson-Berry, Joan, Co-Chair, TRIAD............................ 9
Ferrera, David, Vice President, Government Relations, U.S.
Hispanic Chamber of Commerce................................... 9
Zepeda, Sam, Vistas Construction................................. 9
Appendix Material Submitted
Brubeck, Ben
Testiminy.................................................... 8
Prepared statement........................................... 41
Chvotkin, Alan
Testiminy.................................................... 8
Dorfman, Margot
Testiminy.................................................... 8
Drabkin, Dave
Testiminy.................................................... 8
Ferrera, David
Testimony.................................................... 9
Fingarson, Ashley
Testimony.................................................... 8
Hesser, Bob
Testiminy.................................................... 8
Prepared statement........................................... 90
Hontz, Karen
Testimony.................................................... 8
Jordan, Joe
Testimony.................................................... 9
Landrieu, Hon. Mary L.
Opening statement............................................ 1
Prepared statement........................................... 3
Newlan, Ron
Testimony.................................................... 8
Oliver, Linda
Testimony.................................................... 8
Reece, Adam,
Testimony.................................................... 8
Robinson-Berry, Joan
Testimony.................................................... 9
Snowe, Hon. Olympia J.
Prepared statement........................................... 38
Sullivan, Ann
Testiminy.................................................... 8
Walker, Matt
Testimony.................................................... 8
Willis, Greg
Testimony.................................................... 8
Zepeda, Sam
Testimony.................................................... 9
SMALL BUSINESS CONTRACTING: ENSURING
OPPORTUNITIES FOR AMERICA'S SMALL BUSINESSES
----------
TUESDAY, SEPTEMBER 22, 2009
United States Senate,
Committee on Small Business
and Entrepreneurship,
Washington, DC.
The Committee met, pursuant to notice, at 10:12 a.m., in
room SR-485, Russell Senate Office Building, Hon. Mary L.
Landrieu (chair of the committee) presiding.
Present: Senators Landrieu and Risch.
Staff present: Greg Willis, Don Cravins, Karen Hontz, Adam
Reece, and Matt Walker.
OPENING STATEMENT OF HON. MARY L. LANDRIEU, CHAIR, AND A U.S.
SENATOR FROM LOUISIANA
Chair Landrieu. Good morning, everyone. Thank you so much
for joining us for our Small Business Committee Roundtable, the
focus of which is contracting with the Federal Government.
Please forgive us for being a few minutes later and for the
awkward set-up. This is not our normal room, but we are
grateful for whoever allowed us to use it this morning. It is
just a little different than what our staff is used to, but we
are grateful for the space since ours is under renovation.
I thank you for joining me for this roundtable, and we look
forward to hearing from all of you today who are experts on
this subject so that we can improve and expand small business
opportunities for contracting with the Federal Government,
which is the largest purchaser of services, products, and
machinery in the world. We want small businesses represented
here today to have an opportunity, a maximum opportunity, to
participate in the purchasing power of the Federal Government
for many reasons, but one of them is that the small businesses
in America are often the drivers of innovation. They are an
absolutely essential component of a vibrant economy, creating
high-paying jobs, new prospects for women and minorities,
innovation, technology, and cutting-edge products. These are,
in fact, challenging times. We have all been struggling through
them, and more than 80 percent of the jobs lost since November
coming from small and medium-sized businesses.
This Committee has been focused on many important issues
the last couple of months since I have come into the
chairmanship, working closely with my very able Ranking Member,
Senator Snowe. We have focused on health care issues, we have
focused on access to capital. Today we want to focus on
contracting with the Federal Government.
Let me just make a few brief opening remarks, and then I am
going to ask everyone to introduce themselves and then turn
some of the questions over to the staff, both Greg Willis and
Don Cravins and the minority staff, for questioning.
In these particular areas that I mentioned, Government can
be very helpful. Today we want to explore how the Federal
Government has or has not been hopeful. We want to explore
increased contracting opportunities, and we want to review the
goals that are set by the Federal Government. Generally, at 23
percent of expenditures, those goals have not been met in the
last year; however, the volume of contracting work has
increased, which is good, but the percentages have slipped. We
are going to review those in just a minute.
President Obama has pledged to improve these numbers. It is
a goal that his Administration supports, and one that we
support as well.
Let me go over just a few things that are probably obvious
to those here, but small businesses have trouble gaining access
to contracts because, unfortunately, there is a maze of
complicated laws and regulations that make it difficult. Some
of the barriers include contract bundling, standard sizes with
loopholes for big businesses, lack of protection for
subcontractors, difficult-to-navigate General Services
Administration schedules at times.
When Federal agencies bundle contracts, it limits a small
business' ability to bid, reduces competition, and,
unfortunately, leaves the taxpayer to pick up the tab for
increased costs over time. We will review some of the other
barriers as we move forward today.
Let me also mention I have heard from a number of small
businesses that they have waited months to get paid after
completing their work. That can be very difficult for
businesses that are on tight credit lines and budget
restraints. So please be free to make some of those suggestions
as well.
And finally, as we prepare to reauthorize the contracting
provisions of the Small Business Act and create legislation to
strengthen contracting opportunities, I look forward to
learning how to fix these problems and moving forward.
I also would really prompt your feedback, ladies and
gentlemen, on the stimulus package, the extra spending that has
been given to almost every agency at the Federal level and to
the states as well. Is your business or those that you
represent experiencing an uptick in contracting because of
that? Or is that money available or that expenditure available?
I would like to learn more about that today.
Basically that is our charge for this morning. I would like
to ask each of you, starting with Ann, our representative from
GSA, to start by introducing yourself. We will go around the
room, and then we will start with some questions and comments
to lead this discussion. So, please.
[The prepared statement of Chair Landrieu follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Drabkin. Thank you, Senator. I am Dave Drabkin. I am
the senior procurement executive, the Deputy Chief Acquisition
Officer and the Deputy Associate Administrator for Acquisition
Policy at the General Services Administration.
Chair Landrieu. Thank you, Dave, and your nameplate is
coming. I am sorry we did not have it ready for you.
Mr. Drabkin. That is okay. I prefer to remain anonymous.
[Laughter.]
Chair Landrieu. That is okay. You can run, but you cannot
hide. So we are going to get you a nameplate.
Go ahead, Ann.
Ms. Sullivan. I am Ann Sullivan. I represent Women
Impacting Public Policy in Washington, as well as many other
small businesses.
Chair Landrieu. Thank you.
Mr. Hesser.
Mr. Hesser. Bob Hesser. I am a small business owner, but I
am representing the vet force.
Chair Landrieu. Wonderful. Push the button.
Ms. Dorfman. Margot Dorfman, CEO with the U.S. Women's
Chamber of Commerce.
Chair Landrieu. Thank you, Margot.
Mr. Chvotkin. Alan Chvotkin, Professional Services Council,
a trade association representing firms that provide
professional and technical services to the Federal Government.
Mr. Brubeck. Ben Brubeck, Director of Labor and State
Affairs with Associated Builders and Contractors. We are a
construction trade association.
Ms. Fingarson. Ashley Fingarson, Director of Legislative
Affairs, Associated Builders and Contractors.
Mr. Willis. Greg Willis, Procurement Counsel for the Senate
Committee on Small Business and Entrepreneurship.
Ms. Hontz. Karen Hontz. I do contracting for Senator Snowe
on the Small Business Committee.
Mr. Walker. I am Matt Walker. I am the Deputy Republican
Staff Director for the Small Business Committee, and I just
want to thank the Chair and also explain that Senator Snowe
would have liked to have been here today. Unfortunately, this
conflicts with the Finance Committee's markup of the health
care bill, so, of course, she had to be there for that. She
wanted to send her regrets for not being able to make it and
thank everyone for participating today.
Chair Landrieu. And considering there are over 500
amendments pending, I think she would prefer to be there to
wade through that challenge.
[Laughter.]
Mr. Reece. Adam Reece. I am contracting staff for Senator
Snowe.
Mr. Newlan. Ron Newlan, HUBZone Council, the only national
trade association focused on the HUBZone program.
Ms. Oliver. I am Linda Oliver. I am the Acting Director for
the Office of Small Business Programs for the Department of
Defense.
Mr. Jordan. I am Joe Jordan. I am the Associate
Administrator for Government Contracting and Business
Development at the Small Business Administration.
Ms. Robinson-Berry. I am Joan Robinson-Berry. I am the Co-
Chair of TRIAD. That is an organization, a sponsoring
organization of the aerospace industry that includes primes and
small businesses.
Mr. Ferrera. David Ferrera, Vice President for----
Chair Landrieu. You need to turn your microphone on and
speak into the microphone if you would.
Mr. Ferrera. David Ferrera, Vice President for Government
Relations at the U.S. Hispanic Chamber of Commerce.
Mr. Zepeda. Good morning. I am Sam Zepeda, Owner of Vistas
Construction, a small minority-owned business.
Chair Landrieu. Thank you all so much, and let me also
recognize back here against the wall Don Cravins, who is the
staff Director of the Small Business Committee. We are happy to
have Don's leadership. Thank you, Don, for helping us organize
this.
Let me open it up with some initial comments and questions.
The way we have normally done this, Greg, is people put their
cards up like this, if you want to answer a question or
comment, and I will call on you.
Let me just begin with the questions here. We want this to
be very informal, and we have got some follow-up questions from
the staff. In your opinions that any of you that would like to
offer, are any of you experiencing in your realm of
responsibility the stimulus funding or the impacts coming for
stimulus funding, either from agencies that have more
opportunities to contract with small businesses particularly,
for companies that you all are representing that are attempting
to bid on some of these contracts, whether it is being
successful or not? Are you feeling any immediate impacts that
you would like to share?
Robert, we will start with you. And, please, you have got
to turn your microphone on and speak closely into it. I know it
is a little awkward, and I am sorry.
Mr. Hesser. No problem.
Chair Landrieu. Again, we are in a different room.
Mr. Hesser. Senator, I sent you a letter about 2 weeks ago
on this subject, maybe 3 weeks ago, and the ARRA--I guess the
title is--it is the stimulus bill. Throughout the stimulus
bill, 457 pages, you can find ``8(a)'' once and you can find
``small business'' once. They are both in the same sentence,
and they are in one little sub-paragraph, and it is only under
the broadband. So the only thing that the Secretary of Commerce
is responsible for considering--they must only consider it;
they do not have to do anything, just if they consider it.
There is no small business in the stimulus program, no
direction, nothing about anybody. Just one thing, and one thing
on 8(a).
We recently went through the broadband first part of
grants, and one of the problems with a small business, if you
have any kind of complaint or you think you were shortchanged
or whatever it might be, there is no way you can do anything
about it because the grants are not under the procurement, they
are not under FAR.
However, the 2300 bill and many other bills have always put
in there grants, but the actual legislation is not there to
require the Government to give an opportunity when there is a
complaint or something might be going wrong. And we did have
some problems with this one, the broadband. But the point is no
small business in 457 pages for $29-some billion.
Chair Landrieu. Okay. Mr. Brubeck.
Mr. Brubeck. Yes, I work for ABC, Associated Builders and
Contractors. We are a construction trade association. We have a
variety of Federal contractors that received contracts from the
stimulus bill.
I will reiterate that they are large businesses. We have
heard from many small businesses who have not had any
opportunity to participate on the construction projects.
We are finding that a lot of the projects under the
stimulus bill are being bid very competitively. The private
market right now for construction is very weak. There has been
quite a bit of job loss. About a million jobs in the last 12
months have been lost to the industry.
The stimulus was a welcome investment of cash into public
infrastructure, but it has been very competitive, and there is
certainly not enough work to go around.
Chair Landrieu. Your organization represents large and
small businesses?
Mr. Brubeck. Large and small, subcontractors, general
contractors, materials suppliers, and the construction
industry.
Chair Landrieu. Okay. Ms. Dorfman.
Ms. Dorfman. Thank you, and thank you very much for the
invitation to be here today. We represent women-owned firms. We
have over 500,000 members, but we represent all small
businesses.
We have heard from our constituents that they are not able
to access the Recovery Act contracts, just as Mr. Brubeck
mentioned. Additionally, we noted that there was a report that
was floated out--a press release, actually--last month when
Congress was out, from the SBA talking about isn't it wonderful
$93 billion in contracting dollars went to small businesses for
year ending 2008. When we took a deeper look, what we found was
women-owned firms lost $12 billion of opportunities, and small
businesses overall lost $30 billion.
I suspect that what we will see with year ending 2009 is
even higher because of the increase of dollar coming out from
the Federal spending.
Chair Landrieu. Margot, what you are saying--and I think
this is very important, Ms. Dorfman--is that while the overall
number went up from $83 billion, I think, to $93 billion, the
percentages went down. So you are calculating that loss of
opportunity between what would have been had we hit those
higher percentages, the numbers that you just gave us?
Ms. Dorfman. The Federal spending actually has increased
overall, but they did not meet their goals. So that is part of
it.
Chair Landrieu. Correct, so it is a lost opportunity
between----
Ms. Dorfman. So there are lost opportunities----
Chair Landrieu [continuing]. What the percentage would have
been?
Ms. Dorfman. Exactly. Additionally, some of the
opportunities that the SBA has taken off the table for small
businesses--for instance, contracting dollars overseas--that
type of spending is not included in the dollars that should be
included.
Chair Landrieu. Okay. Does anyone--go ahead, yes.
Mr. Drabkin. Senator, first of all, I would like to make
sure that the Senator is aware that GSA is the only agency,
according to the SBA, who met and exceeded all of its goals
last year. We are also one of the agencies that has one of the
larger construction programs under the stimulus package, and we
are working very well so far at achieving our goals in fiscal
year 2009 with the stimulus package.
The only area that we experienced where small business was
unable to play was in the $300-plus million for new cars,
because new cars are purchased from large companies, and small
businesses could not play there.
I would like to observe also that some of the larger
projects in the construction arena are difficult to reach small
businesses through because of other issues associated with, for
example, their ability to get a Miller Act bond at the dollar
level required to do the work. But we are making up for those
where those instances occur by increasing subcontracting goals
for those prime contractors and ensuring that those prime
contractors meet those subcontracting goals under their prime
contracts.
Chair Landrieu. Thank you very much for offering that. I
would only suggest--and I do not have the numbers; maybe some
of the staff do--that the stimulus funding that went for the
Cash for Clunkers program, which is part of an extension of the
stimulus, was very helpful to the dealers, and many of those
dealers are small businesses. It did not just go to the large
companies, but the dealers on the ground, and I think we could
agree there are many small businesses that were dealers. I
heard very positive feedback, at least from the dealers in
Louisiana. I am not sure what other people have heard, but it
was extremely popular in our state.
Whether it was effective to meet environmental goals, I am
not sure, but it was an effective stimulus.
Mr. Drabkin. Yes, ma'am. I am talking about a different
piece of money. GSA was given a little over $300 million
specifically to purchase new cars for the Federal fleet.
Chair Landrieu. Oh, I am sorry. Okay.
Mr. Drabkin. Those cars have been purchased. They were
obviously purchased from a large business. In fact, you will
find on Federal recovery.gov our list of those cars. I believe
there are 16,000 entries which track each individual car so
that we can demonstrate that the car purchased was actually
more efficient than the car it replaced.
But my only purpose of reporting that to you is that the
only area in GSA's funding where we could not reach directly to
small businesses was for the cars, because there are no small
businesses who manufacture cars, and we buy those cars directly
from manufacturers.
Chair Landrieu. Thank you very much for meeting your goals
and for the efforts that GSA is making, and we will come back
to that.
Does anybody else want to comment about any stimulus issues
before we move on to the next set of issues? Go ahead, Mr.
Zepeda.
Mr. Zepeda. Yes, well, we believe that the recovery money
is very welcome into the industry, especially in today's
economic environment.
I do believe that there are a lot of hurdles through the
contracting activity that they are having to overcome, such as
the spending with small businesses. They are bundling more of
the contracts. It kind of restricts the access to capital and
bonding, restricts us rather than kind of helps us in many
ways. But if they were to focus more with the SBA in
conjunction of obtaining bonding capacity, I think it would
kind of help be able to level out the playing field a little
bit for us and kind of work hand in hand together to get access
to those opportunities.
Chair Landrieu. Thank you.
Mr. Ferrera, and then I will call on you, Mr. Jordan.
Mr. Ferrera. With the membership of the Hispanic business
community representing both large and small, the feedback we
have gotten from the ground is relatively positive, businesses
saying they are engaging, that they are putting in requests for
proposals and responding to them.
At the same time, though, one of the primary needs of many
of the chambers we represent is to try to track the data, how
are the States actually contracting these dollars since a lot
of the dollars are being handed out at the local level and the
State level. How is the data being tracked? And a lot of the
Recovery.gov data is very macro, a 30,000-foot view. And one of
the items that we would love to see is for that taxpayer
ability to review the small business components of these
contracting activities.
In some cases, like the Department of Transportation, they
have actually threatened, for instance, the State of California
to withhold portions of their transportation funds unless they
revived some of their small business contracting 8(a) programs.
But we do not know if that is the case for a lot of different
States, and we do not know how consistent those efforts are
being done throughout the Federal Government.
Chair Landrieu. Okay. Mr. Jordan, and then Mr. Newlan.
Mr. Jordan. Thank you. First, I just wanted to briefly
touch upon some of the data that I do have, which is regarding
the Federal contract dollars. There has been about $13 billion
in Federal Recovery and Reinvestment Act dollars, contracts
that have gone out thus far, and about $3 billion of that has
gone to small businesses. So when you talk about the goals that
several people have mentioned, that is running at 23.5 percent,
so above the 23-percent goal.
In terms of the subprograms or the socioeconomic groups,
the HUBZone program, as Mr. Newlan knows, is currently running
at 6.1 percent of stimulus contracts, so $811 million in
HUBZone contracts have gone out through the Recovery Act; $1.3
billion in contracts have gone to small disadvantaged
businesses, so that is 10.6 percent, more than double their 5-
percent statutory goal. Service-disabled veterans are at $490
million, so 3.7 percent. And as Ms. Dorfman and I are aware,
the women-owned small businesses, because there is not yet--and
I believe we will touch on this later, not yet a set-aside
program that contracting officers can utilize for women-owned
small businesses, they are the one group that is currently
below their statutory 5-percent goal, but they are at 3.6
percent with $481 million of Recovery Act contracts.
So as Mr. Ferrera pointed out, the State portion is still
something that we are trying to get the numbers around, but at
the Federal level I am cautiously optimistic that we are in the
right place in terms of driving these contracts to small
businesses. And I just want to briefly touch upon, well, what
are we doing proactively to ensure that that continues
throughout the duration of the Recovery Act, and that is where
I point to the President and Vice President had talked about
the Stakeholder Outreach Initiative. This is an effort to
really drive contracts to small businesses and businesses owned
by women, minorities, veterans, people living in impoverished
rural or urban areas, to ensure that we both help agencies
identify qualified small businesses quickly, given the rapid
period over which these funds are being disbursed, and help
build capacity and awareness in the small business community.
Some of the examples of things incorporated into the
Stakeholder Outreach Initiative are all Federal agencies are
tasked with participating and hosting of outreach events. In
aggregate, that will be over 200 in the 90 days since we began
this at the beginning of August.
The SBA has recently posted on sba.gov a ``How to win
Recovery Act Federal contracts'' training. It is a 30-minute,
self-directed, totally free training that we are now pushing
out to small businesses to make sure that they are aware of
this resource and can quickly get up to speed.
As Mr. Brubeck said, with some challenges in the commercial
buying base in many economic sectors, the Government can often
step in, since it is the largest procurer of goods and services
in the world, and we want to make sure that small businesses
who may not have sold to the Government before are capable.
So I just wanted to point out a few of those things and
make sure that since we have this opportunity with all these
representatives of great groups, so you can take some of this
information back. And, conversely, I am always welcome to
discuss more offline.
Chair Landrieu. Thank you, Mr. Jordan, and thank you for
your emphasis and your effort, and maybe some of the panelists
will have questions directly to you, which would be appropriate
as we move forward.
Mr. Newlan, let me get you.
Mr. Newlan. Thank you, Madam Chair.
Joe just reported the quantifiable data, more than 6
percent. I have inferential data. We ran our national
conference a week and a half ago here in D.C. where we bring in
HUBZone firms from all over the Nation, and we had a couple of
dozen report to us: ``We would love to come, but we are too
busy staying home writing orders, bidding jobs and writing
orders,'' including some from Louisiana. And that is the good
news.
Chair Landrieu. Good. A little extra to Louisiana.
[Laughter.]
And Maine. That is the idea.
Mr. Newlan. Sort of the bad news is about one-third of the
land mass of Louisiana is today qualified a HUBZone. That has
got good and bad aspects to it since any firm in those would
probably qualify.
But it looks like HUBZone first at least are out there
getting more than their 3-percent share and doing well, writing
orders, bidding jobs.
Chair Landrieu. That is good to know.
Go ahead, Ann. Ann Sullivan.
Ms. Sullivan. WIPP launched a real effort to try to educate
all of our members on how to avail themselves of stimulus
money, and, it is a very detailed briefing. And what we have
found is that mostly if you have not been a contractor, it is
really hard to find money. But if you are a successful
contractor already, a number of our members are having great
success because they are already in the system. And since the
Government is using existing contracts to put that stimulus
money through, they are having a great deal of success.
So it really varies, I think, by experience of the
contractor and by how the money is flowing.
Chair Landrieu. Let me ask this to press down a little bit.
I was reviewing this with my staff in terms of the reporting
mechanisms for the numbers and percentages of contracts that go
to small businesses.
I am hearing some feedback from small businesses in my
state. At a reception for the Jefferson Parish Chamber
recently, it came up with some of my small businesses that
said, ``Senator, we are part of larger contracts. Our larger
contractors contact us to include us as part of their bid. The
problem is we never really see any of the funding through the
contract, but we think that our participation in the bidding of
that contract is getting counted towards goals achieved.''
Is that your experience? If it is, could you comment about
it? Could you give some feedback? Ms. Dorfman?
Ms. Dorfman. That is a very common complaint with our
members. They are asked to provide information like they are
going to be included in the contract award. They spend a lot of
money doing that, preparing for the bid, only to find
afterwards they never hear from the contractor again. And I
agree. I think the subcontracting plan should also include
enforcement of using the small businesses, not just saying you
have to get information included in the plan.
Chair Landrieu. Mr. Ferrera.
Mr. Ferrera. Our perspective is that a large number of
Federal contractors do not generally comply with P.L. 95-507,
which requires them to include small and minority businesses in
their subcontracting programs. And, generally, when a large
contractor puts together its bid, gets a lot of bids from small
and minority-owned businesses, which they need in order to be
able to compete it, but then generally there is no mechanism in
place that requires them to use these SDBs once they actually
receive the award, and they end up recompeting them afterwards.
So it becomes almost a bit of a bait-and-switch sometimes, and
there is nothing to stop them from then creating a subdivision
within their own private contracting company to carry out what
those SDBs or small or minority companies would have done.
Chair Landrieu. Mr. Zepeda.
Mr. Zepeda. Yes, from my own experiences, the process is a
best-value process that requires a percentage of small and
minority goals to be included in the proposal when it is
submitted. And it looks good when the proposal is evaluated,
but there is no mechanism in place, such as liquidated damages,
that after award it could be followed or tracked that, in fact,
they are using those goals that they submitted at the time of
bid. And, unfortunately, you know, submitting a proposal does
take resources from our company where we could be allocating
them elsewhere, and it becomes a problem for us.
Chair Landrieu. Thank you. I would like to hear from David
at GSA about this, and then I am going to ask the SBA to
comment about this particular complaint and what might we do
about it.
Mr. Drabkin. Senator, you may be aware that I guess now a
little over 2 years ago, we put online a new database called
``ESRS.'' ESRS is a database which requires prime contractors
to report their actual subcontracting performance.
In the past, the subcontracting performance was reported in
paper to the various contracting officers. You probably know we
have about 2,600, give or take 20 or 30, contracting offices
spread around the world. We do about 11 million contracts each
year, which means that is 11 million separate contract files
into which these reports were being put. And by now, going
online and having prime contractors report their actual
performance under their subcontracting plans, we are beginning
to gather data that we can use to determine whether or not
prime contractors are living up to their commitments in the
contract to achieve a certain level of subcontracting with
small businesses.
I would observe that the Federal Government avoids--we have
historically avoided--since before the passage of the Armed
Services Procurement Act of 1947, we have avoided becoming
involved in the relationship between prime contractors and
subcontracts. That is referred to as ``privity.'' The
Government does not want to be in a direct relationship with a
subcontractor. So who a prime contractor negotiates with up
front to submit their bid to the Government is less important
to us as the purchaser of goods or services than their actual
performance after they have received subcontracting--after they
have received their prime contract award.
In fact, one might argue that the whole process of having
prime contractors what we call ``sub up'' before they submit a
proposal actually gives the Government a sub-optimal proposal,
and that it might be better if we did not allow them to sub up
before they submit a proposal so that after they have won the
contract, they can go out and put together the best
subcontracting team instead of a subcontracting team that might
have the best in one category, but not the best in another. It
would serve both the taxpayer and the small businesses better.
But having said all of those things, I believe you will
find that as ESRS matures--and we are working on its maturation
right now; you will hear from Mr. Jordan on what they are doing
at SBA--we should have better and better, more discrete data on
what is actually being done under prime contracts, and we will
be able to better and better enforce prime contractors'
responsibilities to meet their subcontracting goals because
that data will be transparent and readily available not only to
the agency's senior procurement executives responsible for
managing that, but also to your staff and other people in the
oversight community.
Chair Landrieu. Thank you for those comments, and I can
appreciate it. I might want to just respectfully argue that it
might be in the Federal Government's interest not to get
between contractors, large and small; but most certainly, if
the Federal Government is going to require, if we are going to
require, that a certain amount of our goods and services go to
small business, then we have a vested interest in finding out
if that requirement is being met.
So how we do that, whether you say we are getting between
contractors or not, or some sort of reporting mechanism,
because otherwise it becomes--I do not know--work with no
meaning. If you are requiring a certain amount of money that we
are spending to go out to small businesses, but then you accept
on face value the contracts from larger contractors saying, oh,
yes, 20 percent of our work is going to small businesses, but
then you never check.
I think that is what we are trying to get to, but I
appreciate your comments there.
Mr. Drabkin. Yes, ma'am. If you do not mind, just to make
sure we are clear, ESRS allows us to check. When I said we do
not get between the prime contractors and their subcontractors,
that is to say, whatever relationships they have and how they
establish those relationships are between those two
individuals. But the prime owes us a duty of meeting those
subcontracting goals. ESRS is designed to help us make sure
that they do what they promised to do, which is clearly our
responsibility to execute.
Chair Landrieu. Thank you for clarifying that.
Mr. Chvotkin.
Mr. Chvotkin. Thank you, Senator. Mr. Drabkin is a good
friend, and he is right on the philosophy, but the fact is that
the Government is heavily involved in the relationship. There
are many of the rules you talked about earlier, but the rules
that apply--and the Government evaluates contractors'
purchasing system methodologies, they question some of the
make-buy decisions that companies make. They look for the
extent of competition in the subcontractor arena, and so there
is a lot of activities.
The reporting, as you said, contractors have been reporting
on performance, and those are monitored by both the small
business offices as well as contracting officers. More can be
done. ESRS is one way because it provides an electronic method
for matching up prime contracts and subcontract awards, and
more can be done in the enforcement side. We agree with that.
Your first question was: Is the Government reporting on
taking credit for work that is not being done? And I do not
think that is the case because they should be reporting on
awards made and not simply that a company has proposed a set of
small businesses. So if they are reporting simply on proposals,
you ought to double-check with the agencies, but I think they
are only reporting on actual awards made.
Chair Landrieu. Let us hear from DOD on that and also from
Small Business, and then we will get back to others. Ms.
Oliver.
Ms. Oliver. I am not sure which way to scoot.
[Laughter.]
Mr. Newlan. Come towards HUBZone.
Ms. Oliver. At risk of getting too technical about all
this, I am afraid we are having some talking past each other,
and I do not want that to happen, especially with this group,
most of whom I know, who have such great influence over so many
different small businesses.
There is a great deal of confusion about what is in a small
business plan and what is in a contract. If it is in a
contract, it is probably going to get enforced. If it is not in
the contract but, rather, in the small business plan--this has
been my experience--the chances of enforcement seriously
diminish, and part of the reason is small business
performance--it did actually from my standpoint--whatever the
small business requirements are in the contract, that is the
best place for them to be. And that is in part because when the
contracting--whoever the contracting officer is that receives--
rather, it is the procuring contracting officer or the
administrating contracting officer. Small business should not
be off to the side. It should be just part of the regular
review and enforcement. And if it is in the contract, that is
the natural way for it to go.
There was a mention earlier about enforcement, liquidated
damages. We might as well just be realistic about this. In
order to get liquidated damages, which I do not know if it has
ever happened. David, has anybody ever gotten liquidated
damages?
Mr. Drabkin. Linda, actually there are quite a few
contracts--not a majority, but particularly large contracts--
where failure to meet the subcontracting goals has resulted in
liquidated damages. And, in fact, when I was in the Department
of Defense, we had a number of those types of contracts. It is
not a preferred method because once you get into liquidated
damages, your ability to work with a prime contractor becomes
adversarial, and they begin building their claims files, which
is normal in any kind of relationship.
What we prefer is incentives that are managed well, and,
unfortunately, Senator, as you know, you have heard about how
incentives have not been managed well. But when I was on the
Pentagon renovation, we managed our incentives on small
business participation every month, and they either performed
and they got an incentive, or they did not perform and we took
that incentive away.
When managed well, it works great, but when you manage 11
million contracts across the Government, with only 27,000,
28,000 people to manage those contracts, your ability to manage
incentives on each and every contract on a quarterly or even
semi-annual basis, it is very difficult
Ms. Oliver. I agree with everything----
Chair Landrieu. Go ahead and finish, and then I am going to
get to Ms. Berry. Go ahead.
Ms. Oliver. I agree with everything that you have said,
David, except the difficulty of proving liquidated damages.
You----
Chair Landrieu. Can you all hear in the back? Okay. Could
you speak--I am sorry. You just have to lean up to the
microphone.
Ms. Oliver. I will try to yell.
What I want us to stay focused on is what works the best,
just as a practical matter, and that is having the part of the
contract--David is very knowledgeable. I just never--although I
spent most of my life worrying about Government contracts, I
have never seen liquidated damages work. It is too hard to
prove, and it becomes--there are a lot of reasons. But
liquidated damages are a product of having something be in the
subcontracting plan, not in the contract. If you do not
perform--if it is in the contract and you do not perform----
Chair Landrieu. Correct. Being in the contract, there is an
enforcement mechanism that is easily understood.
Ms. Oliver. Exactly.
Chair Landrieu. So that is very good, and thank you for
clarifying that.
Ms. Robinson-Berry.
Ms. Robinson-Berry. Yes, I represent a lot of--can you
hear?
Chair Landrieu. Yours is not--okay, try it now.
Ms. Robinson-Berry. I am representing a lot of the primes,
and I think there is a lack of communication. Folks assume that
after you win a contract the construct of that contract is the
same. You come in with a great RFP and you win that contract,
and by the time it is awarded, it is a totally different plan.
And we do not always effectively communicate that change in
that contracting scope. And so some small businesses believe
that they were bamboozled. But, again, it is phased over a
longer period or they slow it down or they change the content.
So I think that that is what we can work on to make sure that
we communicate effectively to all the small businesses of the
actual award.
The second point is that we also--our members do get
evaluated every year. There is very, very rigorous audits--we
call them 640 audits--every year on our performance, and we get
a report card. And if that report card is not good, it affects
our performance. And when you are going after new activities,
they ask for your past performance. And when you are competing,
when you look at the past performance and all of the technical
requirements are there, I know that a lot of our contracting
officers look at that past performance and then we are
impacted.
And, again, many of our contracts, also our small business
goals are tied to the contract, and if we do not perform in all
areas, it affects our award fee. So I think that a lot of that
information on our report card and the actual winner of the
contracts is not always communicated clearly. So I just wanted
to go on record that that does, in fact, happen.
Chair Landrieu. Mr. Hesser has had his banner up for a
while, and then Mr. Newlan, and then we are going to move on to
another issue or two.
Mr. Hesser. I want to make two comments. My first one was
with Mr. Jordan. The vet forces found many--questioned several
of the statistics that come out, and we seem to be right most
of the time, because how was all these funds that you said for
8(a)s, for SDBs, for women-owned, how was each one of those
awarded? And that is a big question, because when--the very
first time in 1998 or 1999 through 2001 to 2002, service-
disabled veterans--what was being counted was they were finding
an 8(a) who was also a service-disabled veteran. They were
awarding it as an 8(a) contract. But then they would count
service-disabled veterans and 8(a)s. A fact. We have testified
about four or five times in front of the House or Senate about
this subject.
Now what they do is they have the same ability, but if it
is easier to give an 8(a) contract, which it always is, they
will give an 8(a) contract, and if you are also a service-
disabled veteran, you have got it made because they really want
you. And they will give you two counts.
Some people say, well, they do not count it twice. Well,
they do, in fact, count it twice in a roundabout way. Sometimes
they do only report it once. For instance, if the service-
disabled veteran goal is not doing very well, they will count
it over on this side. But what is important that the vet force
is very, very serious about, we do not want a contract awarded
as a service-disabled veteran--I am sorry, as an 8(a). We want
it as a service-disabled veteran because the law protects the
8(a), the law protects service-disabled vet, the law protects
HUBZone, et cetera. That is what it should be and only be that.
That is number one.
Number two, accounts have not been brought up here about
the subcontracting contracting is--frequently, an 8(a) will get
a contract, and they will share that with a large business. Or
they will do it all by themselves. But as time goes by, the
original seven people that they had in 3 years is about 21
people. So the contracting officer follows the ``once an 8(a),
always an 8(a)'' rule. But the point in the law, as I
understand it--and we have had this kind of researched out. The
point in time when the award was made, that is what the SBA
Small Business Act protected. They protected the competition
for them to win seven, only seven. Now, in 3 years, when it
grows up to 21, they should only award the seven as an 8(a) and
break the other one, the other 14 back out. Or take the whole
contract and put it out either women-owned, but somebody
different other than 8(a), because it keeps hanging in there
all the time. I do not know if the HUBZone runs into that. I
know I do. It is 8(a), 8(a), 8(a). I am not against the
program. I love it. I have run four 8(a) companies. So I am not
against it. I am only saying the way it is being done.
Chair Landrieu. Okay. Thank you.
Mr. Newlan. And then, Mr. Jordan, you may want to comment.
Mr. Newlan. Madam Chair, as the Nation prepares to attempt
to prevent the H1N1 flu epidemic this fall, we have an epidemic
right now in the topic you asked the question about. Small
businesses are getting the raw end of the deal by large
businesses every day nationwide, and have for 30 years, and I
speak with firsthand experience running small businesses and
large businesses.
If this Committee wanted to step in, this Committee would
be recognized for the work that it did in that area. It is a
tremendously important area to improving small business
contracting.
One quick example. As I understand it, the Federal
Government contracting officer cannot make an award to a prime
without putting some money in the contract. You cannot make an
empty, hollow award. There is usually at least $5,000 or
$50,000 put on this billion-dollar contract because it
consummates the contract. There is a transference of cash. But
the small businesses help the big business win. We do a lot of
work, we do a lot of writing, and all we get is a promise that
downstream maybe.
Perhaps the same concept could be applied where the prime
contract cannot mention in their proposal anything that they
are not prepared to pay for and put up real money to a small
business to help write the winning proposal.
That is what hurts the most. These small businesses spend
$10,000, $20,000, $50,000 of their own time and energy to help
a big business win. Big business wins, then they never talk.
But if we got paid that $50,000, it would not be quite as big a
complaint because we got paid for at least the work we did.
Chair Landrieu. Thank you, Mr. Newlan. I am glad someone on
this panel is more articulate than I have managed to be. That
was very good. Thank you very much.
Mr. Newlan. I have got 30 years' experience.
Chair Landrieu. Thank you, Mr. Newlan.
Mr. Jordan.
Mr. Jordan. I cannot promise to be articulate, but I will
address the issue.
[Laughter.]
Bait and switch, especially when it comes to subcontracting
plans, is certainly something that we are concerned about that
is frequently raised to us typically through our procurement
center representatives or in our district offices, and it is
something that we work very hard to help address. So what are
the actions that back up those words?
I think, you know, from our standpoint there are two main
arenas in which we can effect some change here, and one is
working collaboratively with the agencies, so this is both
through our effort with the various OSDBUs and other small
business people within the agencies, as well as the contracting
officers and our procurement center representatives who work
with those contracting officers and sit at those buying
activities and look over many of these contracts. And with the
larger primes, it is making sure that you have a dialogue with
groups such as TRIAD. Ms. Oliver and I just recently went down
to Fort Worth, Texas, and met with the Lockheed Martin team
working on the F-35 to talk about: Okay, as this ramps up, what
are your small business contract plans? We are going to hold
you to what you say, so do not make these empty promises, as
you put it.
That is where the second level is, almost a trust but
verify sense, using the electronic subcontract reporting system
to ensure that primes are following through on the allocations
that they have signed up to do, and with the agencies
conducting things like surveillance reviews where we can
evaluate the performance around that.
So we certainly hear it anecdotally as well, but we are
also trying to put the data against it and marshal our
resources to ensure that in a collaborative but enforceable way
we can address this issue.
Chair Landrieu. Thank you for taking those extra steps. I
am going to have to step out and turn the microphone over to
Don Cravins, the Staff Director of our Committee, and he is
going to be joined by able assistants on both the Republican
and Democratic side to continue the questions.
This record will stay open for 2 weeks after today. This
meeting will go on probably until 11:30, quarter to 12:00. So
thank you all. It has been very informative, and I am just
going to have to slip out for another engagement but the
roundtable will continue. Thank you all very, very much for
participating, and I am going to turn the questions over to Don
now. Thank you.
Mr. Cravins. All right. Thank you, Senator Landrieu.
At this time I am going to ask my colleagues, my able
colleagues from Senator Snowe's staff, to ask the next
question.
Ms. Hontz. Thank you, Don.
Well, you see we have sort of skipped around. We had an
agenda, but it is hard to stay on the agenda because all these
issues somewhat intertwine. Before I begin the questioning, I
want to thank all of the panelists for showing up. I think in
the discussion already we have learned a lot, and it will be
helpful as we progress in trying to improve small business
contracting.
I want to go back to the goaling for a minute. I know there
are other things that we need to cover, such as size standards
and some of the individual programs. But I think it is
important because obviously Senator Snowe is very upset every
time she sees a report coming out that says the governmentwide
goals were not met.
The question is--well, there are lots of questions, but the
law states that it is maximum practical extent--practicable, I
guess, which is a very hard word to say, but I want to discuss
that a little bit.
For example, congratulations, GSA, on meeting all your
goals. Unfortunately, DOD, which is 75 percent of the buy, is
not quite in that situation--not that they have not tried. I
have been working with Linda for a long time on this issue, and
I know she is passionate about it, as are her staff across the
world, really.
But, for example, now in the Recovery Act, if you look at
the statistics, I believe DOD is 56 percent and GSA is 8
percent. And, Mr. Drabkin, you said you were buying a lot of
cars, and you buy them from large manufacturers, and that was
what some of your money in the stimulus bill was. I think for
DOD it was construction, and, of course, small businesses do
well in construction.
So I am going to throw out a couple of things here: one,
the maximum practicable extent and some discussion on that; and
then related to that is this Small Business Demonstration Act,
Comp. Demonstration Act, which limits in certain fields that
small businesses seem to exceed in that they cannot have set-
asides. This has been on the books since 1988, and I am
wondering if maybe it is time to look at it and see if this is
prohibiting small businesses from getting contracts through
set-asides.
Anyone care to comment?
Mr. Drabkin. Well, a couple of points. When you look at the
stimulus money alone and you look at what GSA is required to do
with that money, there are a couple of points that become
obvious. And this is a difficulty, by the way, with small
business goaling generally. You have to look to the marketplace
to who is capable of performing the particular work that needs
to be done.
So, for example, if we are building a several-hundred-
million-dollar courthouse--we build those--finding a small
business that can get a Miller Act bond for--well, first of
all, there are not several-hundred-million-dollar Miller Act
bonds available. You cannot get them. And they have to be
bonded to do the work, and so small businesses in those
circumstances are excluded from the market that we can go to to
purchase that service. So we have to redouble our efforts in
other areas to try to make up for those goals.
This is just like when I was in DOD. There is no small
business that builds a fighter aircraft or an aircraft carrier
or, for that matter, a tank. And so when you get to large
construction projects--and GSA's dollars were almost $6 billion
total--5.8, I think--5.5 for building and construction, $300
million or so for cars. Cars cannot be bought from small
businesses for that entire $300 million--there was nothing we
could do to reach out to small business as part of that $300
million.
Of the 5.8, you are correct that our recent report shows
that overall of the 1.3 that we have obligated in accordance
with our goals for obligating ARRA money, only 8 percent so far
has gone to small businesses. When you look at the projects
that were awarded, you will observe that where they could go to
small businesses, they did. Where they could not because of the
size of the project or inability for the people to compete, in
accordance with the rules that Congress has set up, they did
not go to small businesses.
If you look at our subcontracting goals in those projects,
you will notice that they are very aggressive; in many cases 50
percent of the project is laid out. And unlike other agencies,
we in GSA--and this is not to make negative remarks about other
agencies, but we manage aggressively the performance of the
subcontracting goals by our prime contractors to make sure that
they meet them.
But this is a general observation about small business
goaling altogether, and it is one which you did not ask, but
you opened the door. As you look at the marketplace today, what
you have to evaluate is where are small businesses that can
perform in accordance with the rules that we have set for small
business performance. And I think you will find that the market
has changed dramatically, and so finding a small business that
can deliver a small business-manufactured IT product is awfully
hard to do because nobody manufactures IT products in the
United States at all. And we buy a lot of IT.
And you have a rule--remember, we have a rule--that says
that small business, to be a small business for goaling
purposes, has to either manufacture the product itself or sell
the product of another small business. Now, I know SBA was
considering changing that rule, but that is still the rule.
In the services world, you have the same rule. A small
business to be counted for goaling purposes as a small business
has to offer the services, at least 50 percent of the services
as a small business. And so I guess my point is what we have
never done, as far as I know, is do a complete market analysis
of where it is appropriate--where there are small businesses
available to do the work, who can follow the rules that have
been set by Congress in the statute, and then set our goals
based upon those numbers, as opposed to trying to take a
salami-cut approach to the total number of dollars we spent.
And, believe me, I am committed and everybody in GSA is
committed to small businesses. We want to do business with
small businesses. As you know, we are the only ones, the only
agency with a small business GWAC for 8(a)s, which we are
recompeting. We are the only one with a service-disabled-
veteran-owned small business GWAC. We are the only ones with a
HUBZone small business GWAC. We are the only who created a GWAC
just for small businesses in Alliant. We are committed to small
businesses. But we have a difficulty achieving those goals when
they are spread across an entire marketplace where small
businesses cannot compete.
Ms. Hontz. Okay. Thank you very much for those comments.
Mr. Willis. Can I follow up really briefly?
Ms. Hontz. Yes.
Mr. Willis. What I am hearing is because it is difficult we
should abrogate our responsibility to do it.
Mr. Drabkin. That is not what you are hearing. What I am
talking about----
Mr. Willis. That was the long answer.
Mr. Drabkin [continuing]. Is impossibility. That is not the
answer I gave you, sir. The answer I gave you was----
Mr. Willis. You are saying it is impossible for small
business----
Mr. Drabkin [continuing]. If there is no small business
capable of doing the work, then having a goal in that
particular part of the market makes no sense.
Mr. Willis [continuing]. Abrogate the agency's goal to meet
small business goals generally. You might have to work harder
in another area.
Mr. Drabkin. That is true.
Mr. Willis. But it does not relieve you of the
responsibility----
Mr. Drabkin. And I did not say it did.
Mr. Willis [continuing]. To meet the goal. I am not saying
you did.
Mr. Drabkin. Actually, you did say----
Mr. Willis. But what I am saying is if you are saying that,
that is a wrong assertion. That is exactly what I heard. But if
you are telling me that that is not what you are saying, then I
will accept----
Mr. Drabkin. Not what I am saying at all.
Mr. Willis. But----
Mr. Drabkin. What I am saying is we need to do an
analysis----
Mr. Willis. Excuse me----
Mr. Drabkin [continuing]. Of the marketplace----
Mr. Willis. Excuse me. What I am telling you is the fact
that it is hard does not relieve you of the responsibility to
meet the goal.
Mr. Drabkin. And we did. And what I am telling you, sir, is
that----
Mr. Willis. Let us move on.
Mr. Drabkin [continuing]. Our obligation is----
Mr. Willis. Let us move on from there. Karen.
Ms. Hontz. Okay. Can I have DOD--and, you know, this
discussion could go on forever, but we have a lot to talk
about, so if you could keep your remarks somewhat short. Linda.
Ms. Oliver. Well, I just almost do not know where to go
there. There is so much material here.
The Senator mentioned very early on and Karen just re-
mentioned that what the law requires is maximum practicable
opportunity. And that is what is reflected in the Federal
Acquisition Regulation. And that is what we need to keep our
eye on, and one way we have tried to keep our eye on that is to
begin to do exactly what David Drabkin just said we should be
doing, which is to do more and more analysis.
Now, we are nowhere near the stage that you are speaking
of, David. We are working on it all the time, and we are
getting better. If we understand our data well enough, it seems
to me like we should be able to--I am sure you do not want a
big technical explanation of why I think this, but we should be
able to say--in my office, for example, we should be able to
say, Department of the Navy, you are buying this, there are
other parts--and you are not buying much of it from small
businesses. We can look at the data and see that there are--I
do not know, Justice Department is buying from small
businesses. You need to focus.
That is where we need to go with the data. But it is always
maximum practicable opportunity. I am here to tell you, the
Army does not get by with 23 percent because of what they buy.
And David is correct. You know, no small businesses make
fighter planes or combat ships or all sorts of systems, and
Greg is right, that is what David did say. That means we have
to focus on the other thing. But David has the key, and it is
really where we are trying to go, is to keep on the maximum
practicable opportunity so that we find what is possible,
because it does not help any for me to say, NAVAIR, why aren't
you buying more jets from small business? They cannot get
there.
Ms. Hontz. Do you want to comment?
Mr. Willis. I think what we are saying is do whatever you
need to do internally to meet your goals. We are not going to
micromanage how you manage your work flow. But the goal is what
it is. And I think it sounds like you are stepping back from
wanting to meet that goal because it is difficult. The goal----
Ms. Oliver. I am sorry. It comes across that way. And,
actually, this is not--I think you are probably right that I
sound--because I am somebody who tends to see problems. I agree
that it probably sounds like I am stepping back. I am not, not
intending to. I think Margot and Bob and I have all had this
discussion at one time or another. We are not stepping back.
But if we do not look at the problem, if we do not try to
analyze where the possibilities are, if we use our limited
resources to beat up parts of the Department of Defense who
cannot do otherwise, it is just--it does not help anything.
Mr. Willis. I do not want to step on Karen's----
[Laughter.]
Ms. Hontz. That is all right. Joan.
Ms. Robinson-Berry. Yes, I agree with both Linda and David
that it is a real challenge from our industry--this one does
not work. Sorry. We are all sharing one.
Mr. Jordan. That is all right. I am good at sharing.
Ms. Robinson-Berry. I agree with both Linda Oliver and
David. It is a challenge, especially in a high-tech arena. But
I agree with you. We cannot stop. We have got to find creative
ways to expand the pool of qualified technical small
businesses, and we really, really embrace the SBIR program that
is designed to help small business go after high-technology
fields. But we do not have the--the pool is not there. We have
done the analysis, and industry and a lot of our partners have.
But it goes to your point. We have got to find a way.
And I believe if we try to integrate some of the very
successful SBA and other programs like SBIR--that is, small
innovative research projects--as well as mentor-protege, and
align them with universities, maybe one day we can have a car
manufacturer or have more of our small businesses in technology
so that we can take advantage of that. But it takes a more
integrated effort where small businesses have to understand the
technology road map for DOD and be willing to make the
investment in those areas. In that comes the challenge. When
you have a personal net worth of $750,000 for small
disadvantaged businesses, how practical is it going to be for
them to be able to compete in the high-tech arena?
But both sides are right. We need to do more. We never
need--we cannot give up. But we have to be realistic about the
real art of the possible.
Ms. Hontz. I know others have had their signs up, but in
the interest--and I remind you that you can always submit for
the record up to 2 weeks. If you do not mind, I will turn it
back over to Greg, and maybe in the course of the next
questioning, you can get in what you wanted to say.
Greg.
Mr. Willis. Thanks, Karen.
I am going to try to move a little quickly now. We are kind
of running out of time, and we have a number of topics that we
need to cover quickly.
The first thing I wanted to kind of ask the participants
here--and I especially want to hear from the small businesses
and those who represent small businesses. There is this
challenge with bundling, and we have spoken a little bit about
that, but I want to talk a little bit about what we can do in
terms of policy to make it easier for small businesses to get
at larger procurements, i.e., teaming, joint ventures. What
structurally prohibits small businesses from doing joint
ventures, from teaming? And what can we do to kind of change
that environment?
Mr. Hesser. I can comment on the joint ventures. That
happened a lot during the vets' GWAC and veterans trying to get
joint ventures. 8(a)s and HUBZones--I know 8(a)s--you may
correct me. I think HUBZone also has to have SBA's approval for
a joint venture. I know that 8(a)s do. On service-disabled
veterans, we do not have to have that, and that is a very good
thing. And I was part of the discussions of getting the law
together to do that. So that is one thing. Joint ventures
should be between two companies. They have a responsibility.
They report to the Government. They say, ``We can do this. Here
is our joint venture.'' They can do it. If it is a HUBZone, it
is 51 percent or whoever--whatever it has to be, they are the
ones responsible for making that response to the government,
say, ``We did that.'' They raise their hand--or whatever they
do, they sign it and say that is it. It used to be that way
years ago. You do not put so much requirements on that small
business just to win the award. That is one thing I know I have
run into. That was just joint venture.
Mr. Willis. David.
Mr. Ferrera. It is funny you should bring up the question
of joint ventures since we have been approached by--many of our
companies that we represent have been approached by folks from
a particular State trying to get into joint ventures, but never
mind that gets us into an entirely different issue.
Now, one of the things that we would propose, actually,
outside of the joint venture issue, is the expanded use of two
plus two could be very useful towards--getting towards the
issue of breaking--forcing procurement officers to start
redirecting a lot of contracts that could be used by--that
could be awarded. It is already in the law. And if there is any
way that we can find ways to expand the enforcement and the use
of two plus two, that would be very useful. That is about the
one comment there.
Also, to say that Chairwoman Velasquez and several folks in
the other chamber, of course, you know, not to say that they
would ever draft anything a little better, but I think a lot of
inspiration can be taken from the contracting reform bill and
the contract debundling provisions that they wrote into the
bill that they passed.
Mr. Willis. Mr. Zepeda.
Mr. Zepeda. Yes, first of all, I think that as I climb the
ladder from getting from one year's revenue to the next year's
revenue, I think we always run into the challenge of the
capacity both with bonding and capital, and they are always
very restrictive of what we can and cannot do. We have options
such as partnerships, mentor-proteges and others that we
mentioned here.
I think that probably the one solution that we could think
of would be a partnership maybe with the SBA as well as a large
company that kind of becomes the mentor in between and the
large company that would facilitate or alleviate the bonding
headache on the overall project requirement or a portion of the
requirement. I think that in itself would be a big restriction
that you would overcome.
I think others that we probably would be dealing with is
the past performance. Every contracting officer has at his
disposal discretionary issues of past performance. If you have
not done it before, there is no past performance that you could
offer to an agency. So it is climbing the ladder type attitude
that how do we get to the next level if you have--or go to
Lockheed or go to one of the larger companies, more than likely
they are not going to want to allocate resources for a smaller
project. The mentor-protege gives you that or affords you that
opportunity. But if we look at the historical statistics of the
mentor-protege, it has not been very successful, and it does
continue to be a hassle for all of us in trying to go to the
next project.
Thank you.
Mr. Willis. Ms. Dorfman.
Ms. Dorfman. I have a statistic here. The top 100
contractors were awarded about 60 percent of all Federal
spending in 2008; 200,000 contractors were remaining in the
rest of that portion. I think bundling is a big issue. I am not
sure that just having teaming will work. I know that in some
instances it is a very good tool. We encourage, especially with
the women's program not there, we encourage our members to try
and team to access these contracts. But I think that we have a
much bigger issue on hand.
One of the thoughts I had was if you take a look at the
Department of Defense, with the large contracts, the other
thing that we are seeing is the majority of contracts are
centered in four States--Virginia, Texas, California, and
Maryland--which says to me that these contracts, while there
are bases all over the place, there are less and less contracts
going to the local community because they are getting bundled
in.
So I think there are some areas where we can take a look
and identify where we can pull some of the contracts apart, and
with that I say we need to put more money into the SBA and get
the PCRs in place to handle the situation.
Mr. Willis. I think we need to move briefly on because we
need to----
Ms. Hontz. Okay.
Mr. Willis. It is a similar topic, but we have heard a
number of different opinions about the relative size standards
that are currently in place. We have over the last two
Congresses heard SBA comment about how they are going to update
those size standards at some point. And so, first of all, I
want to hear whether or not size standards need to be
increased, decreased, what the opinion is, and also whether or
not SBA intends to update those size standards in my lifetime.
[Laughter.]
Mr. Jordan. How long are you going to live, Greg?
Mr. Willis. Beyond tomorrow, with the Lord's help.
[Laughter.]
Ann.
Ms. Sullivan. I would just like to point out that while I
think everybody kind of thinks that the size standards need to
be updated, the consequences to small business are just
enormous, because small businesses are basing their next 5
years on the current size standards. So every time this issue
comes up before WIPP members, it is with great trepidation that
they think about an update in the standards just simply because
it could completely change their business plan. So I would just
say that if you are going to do that, you need some kind of
phase-in. You would need some kind of way to accommodate the
change. That is what they struggle with.
Mr. Willis. Alan.
Mr. Chvotkin. The current size standards are out of date.
They need to be updated. They are woefully undersized--pardon
that expression--for the Federal procurement marketplace. So
there are actually two other things that need to be done. My
own view and the Professional Services Council, the
recommendation is that we go back to a separate size standard
for Federal procurement. The size standards are actually
suppressed when you look at--because of the standard used to
establish them, which is where 95 percent of the businesses are
in the economy as a whole, that the requirements that the
Senator talked about, some of the statutory requirements, the
unique burdens, says that the SBA ought to take a look at what
it takes to do business in the Federal procurement marketplace,
which is different than what it takes to be a small business in
the regular marketplace.
Secondly, the size standards are based on the NAICS codes,
which are really a manufacturing base. The preponderance of
Federal spending over time is on services, and while we cannot
change the NAICS codes--it would take a papal dispensation to
do that--we ought to take a look at whether there are other
measures that can be used to help the Federal procurement
agencies particularly when they are trying to acquire services.
That is where the marketplace has been in the last 5 or 6
years. It is clearly where the marketplace is going in the next
5 to 6 years. And we see a lot of effort at trying to squeeze
procurement opportunities into the existing NAICS code
standards, which really are manufacturing--in many cases are
manufacturing or an antiquated basis for describing the work
that is actually being done today.
Mr. Willis. Mr. Jordan.
Mr. Jordan. Sure. You know, one of the biggest challenges I
face is that when people ask me, okay, so what is a small
business, the answer takes about 10 minutes.
The confusion around size standards is something that we
certainly feel, and there is also--it is not as cut and dried,
as Ann said. Even increasing a size standard can have a
negative impact on a certain sector of small businesses, so as
often as I hear the size standards need to be raised so that we
can effectively grow and hire and create jobs, I frequently
hear from businesses just starting, if you raise them, you are
creating even within this protected environment an unfair
competitive situation where we cannot possibly ever grow, and
all you are doing is perpetuating the exact same set of ``small
businesses,'' without really letting them graduate and then
letting us climb the ladder as well. So there are certainly
many sides to this issue, and I hear them all quite frequently.
But to your point about what are we doing about it, we are
conducting a comprehensive size review, so looking at all the
different standards. We have recently gotten, with the
Department of Defense's help, a whole bunch of data from GSA
that we can use to analyze historical trends, which industries
are growing, as was mentioned, utilizing the North American
Industry Classification System, for both manufactured goods and
services, to look at where those standards should be, and we
have a methodology that we have been using--that we have been
applying to this review, and w hope to have both that
methodology and the first few industries to which that
methodology was applied in a size standard review out for
public comment in the near future, sometime between tomorrow
and the end of Greg's long life.
[Laughter.]
Mr. Cravins. Seriously, Joe, when? I mean----
Mr. Jordan. I cannot promise a time, but they are in an
internal review right now, and we really do hope to have them
out in the near future, both the methodology and then the first
few size standards, so that we can receive the many public
comments that we would anticipate, incorporate--or make any
changes based on those comments that, you know, are deemed
appropriate, and then resubmit them for final clearance and
publish them. Then that will set the tone for the process that
we will undergo as we review all of the various industries for
both manufactured products and services, not just manufactured
goods.
Mr. Willis. This is the challenge that we have, and Don
brought it home with what he asked. We have been promised these
updates for--I have been on the Committee 3 years. We have been
promised them for the 3 years, and I have been told that we
have been promised them since before then. And people are
anxious because they are managing up or down their work flow.
That is probably the last thing we need right now in this
economy, is people managing down their opportunities.
Mr. Jordan. Sure. And I would just say that since this
administration has been in, it has only been a short period of
time, and while, you know, you have had to deal with many
frustrations on many issues for quite some time, several of
these issues did not crop up overnight. Some of the problems
and concerns are not brand-new.
However, in a short period of time, I am proud of the
progress that we have made against things like conducting the
size standards review. We are working on--I know it is an
agenda item for later, but working on the women's procurement
rule that I know is a concern of this Committee and has been
for some time. Mr. Newlan and the HUBZone folks are well aware
of the progress we have tried to make in addressing that
program.
And so I do fully anticipate being held accountable for
delivering the actual results, not just the promises, but I
would encourage you to look at what we have done thus far.
Mr. Willis. Well, that is a good segue to the women's
procurement rule. Obviously--what are we on? Year 9, give or
take, of waiting for implementation of the women's procurement
program. And we had some challenges last Congress that we
hopefully worked through to get to this point. So I want to
hear from those who represent women-owned businesses, owners,
about where we are, where we should be going forward. So we
will start with Margot and then Ann.
Ms. Dorfman. Thank you. Again, obviously it is needed. A
statistic: a $300 billion increase in Federal spending since
2001, but the increase for women-owned firms was only $6.5
billion. We have been consistently losing about $6 billion
annually until 2008 where it jumped up to $12 billion. I
suspect that in 2009, which is coming up in a few days, we will
see that increase even further because of the recovery money
that has been put into the economy.
I have heard a lot of folks say, well, an answer would be
to get more women-owned firms registered in CCR. There are
currently 75,000 registered in CCR. Only 26,000 of them have
contracts. I have heard from numerous women-owned firms that
there is no point for them to register because they do not have
access to these contracts until the women's program has been
implemented. We are seeing that that--this is like the number
one thing that needs to be done. July 24th was our last status
hearing with the court, and the SBA and the U.S. Women's
Chamber filed a motion to stay so that we could hopefully work
through this process. And there is work in the background and I
keep--I am anxious, too. When will it happen?
Thank you.
Mr. Willis. Ann.
Ms. Sullivan. We believe that it is absolutely critical
that this is put in place by the end of the year. And I know
that is ambitious, but I know that your General Counsel is very
ambitious, so--because of the stimulus dollars. Without that
program, you know, we are just going to keep on losing many
more opportunities than otherwise we would.
We need the program in place. We know that is ambitious. We
will help you in any way when it comes to maybe shortening the
review periods to get it into place. I think we have waited
long enough, so, you know, I do not think there is a lot more
that people have to add to your bank of knowledge to be able to
put it in place.
One of the things that WIPP did was, when we saw that there
were only 55,000 women registered in the CCR, when the RAND
study came out, I mean, the first no-brainer was, well, you
better increase people registering on CCR. And as Margot said,
there are now 75,000.
We did a major push with American Express--it is called
``Give Me Five''--where we have a very ambitious program to get
every woman we basically meet registered on the CCR so that
they will be counted in your statistics.
We urge the SBA to take the interpretation from the RAND
study, since that is the study that you have right now, to
include industries up to 87 percent rather than the four little
industries that the last administration put in place.
And we appreciate the support of this administration to put
this program into place. The President is on record as saying
that. So we look forward to an expeditious program.
Mr. Willis. Joe.
Mr. Jordan. Yes, absolutely. As Margot and Ann know, we are
working quite hard on this. There were some challenges
presented by the fact that the RAND study was conducted in the
past, and we are working through a number of those, and the
various legal challenges, as Ms. Sullivan alluded to, our
General Counsel has been leading this effort because this is
absolutely a top priority to the Administrator to get a rule
out there quickly.
You know, I hear all the time--I am a metrics person, and
as I am quoting various statistics, I always have to put the
little asterisk in there, well, but the women-owned small
business number, you know, there is not a lot that contracting
officers can do about it because there is no tool in place. And
they say, Oh, well, what are you doing about that?
So we hope to have--we have made a lot of progress in the
last few months, and we hope to have, again, something out
there, you know, quite quickly.
Mr. Willis. With that, Karen.
Ms. Hontz. I am going to turn it over to Matt.
Mr. Walker. Let me just add to that that Senator Snowe as
well is very interested and concerned with having the women's
contracting program up and in place, and it is a high priority
for her.
I would like to shift briefly to the HUBZone program. The
HUBZone program, of course, is a critical program. It helps
individuals in economically distressed communities. There were
some GAO reports--in fact, there were three of them of late
that were critical of the program, found problems with fraud,
the monitoring system that was in place at the SBA and others.
And, unfortunately, there are those who would try to destroy
the program or use that against the program to try to do
something detrimental to it. And we are strong proponents--by
``we,'' I mean Senator Snowe as well as other Republicans on
the Committee--of trying to support this program. She thinks
that it is a critical program that does a lot of great work,
and that none of the programs are immune to problems. There
have certainly been problems with each individual program, and
that the proper measure to take place is to try to fix the
programs that continue to do great things.
We were fortunate enough to recently speak with Mr. Jordan
about some of the efforts that the SBA has been taking to
address those issues. To the credit of both Administrator Mills
and to him, they have taken great, incredible steps to try to
address those problems. But I think that it is important that
others hear this as well so that they can be aware that there
are a lot of things that are being done to try to address those
issues, particularly his reference to a 100-fold increase in
the monitoring that has been done. But I will let you just
briefly speak about that, if you can, just so that others in
this room can hear about the benefits of everything you guys
have been doing.
Mr. Jordan. Absolutely. Thank you.
The Administrator, the agency, and myself, we take our need
to execute and oversee the HUBZone program effectively and
efficiently incredibly seriously. We are well aware of the GAO
and some of the IG reports around the difficulties that have
been found in the program, and so we have taken some quick
action to both improve the sort of up-front certification
processes and also assess and clean the current pool of
certified firms to ensure that we eliminate all small business
contracting programs of fraud, waste, abuse, or mismanagement.
Now, the problems did not crop up overnight, and they will
not be fixed overnight, but I feel we have made a lot of
progress, and there are a few tangible things that I would just
briefly highlight.
On the certification front, we have engaged some external
experts to help us with the business process reengineering, so
we are currently operating a very strict level of certification
review, and we want to figure out what is the best level that
we can effectively and efficiently certify firms, so ensure
that no fraudulent firms get in but also do so in a timely
manner so that firms that want to pursue the certification and
avail themselves of some great HUBZone set-aside opportunities
are able to do so.
Then in terms of evaluating the firms who are currently in
the program, while we are doing a number of things, leveraging
technology in our databases, we did understand the GAO's point
about conducting actual site visits. And when Acting
Administrator Hairston had testified in March in front of the
House Small Business Committee, he was asked, ``How many sites
visits have you conducted in the first 6 months of the fiscal
year?'' And his answer, unfortunately, was seven. And so
Administrator Mills has built on what Acting Administrator
Hairston set up to conduct quite a few site visits to verify
eligibility of HUBZone firms, and so in the less than 6 months
since that testimony, we have conducted over 800 site visits,
and these are comprised of typically verifying the principal
office location and the fact that 35 percent of the employees
reside in the HUBZone.
And so we are very proud of--as you said, it is over a 100-
fold increase in the number of sites visits that we have
conducted; also in the fact that we are still not taking our
eye off the ball and encouraging contracting officers to
utilize this program to drive contracts to small business
owners in historically underutilized business zones. I would
point again to the Recovery Act statistics where while the
HUBZone program has a 3-percent statutory goal, it is currently
at 6.1 percent, so it is certainly a focus to make sure that
the program is run effectively from a certification and
eligibility standpoint, but also effectively from a serving the
people for which it was set up standpoint.
Mr. Walker. Okay. Thank you very much for that.
The other question I wanted to shift over to the service-
disabled-veteran realm as well. Maybe first, did you want to
say anything in addition to that about the HUBZone program, Mr.
Newlan?
Mr. Newlan. I never want to pass up the opportunity.
[Laughter.]
We fully support everything that the SBA is doing. We
clearly do not want any other HUBZone firms headquartered in a
Starbucks. We have got to stop that. You know, we are reporting
to the SBA any incidences that we know about.
But consider, as the House is, throwing the program out, it
is like throwing the baby out with the bath water. It is the
only program designed to bring jobs where America needs them
the most. The most recent census report shows more Americans
living in poverty this year than last, and it is one in eight.
One in eight Americans right now live below the poverty level.
And the HUBZone program is the only program we are going to
talk about today in this forum that is designed to help that
situation.
So we appreciate Senator Snowe's strong support for the
program. We hope we have Senator Landrieu's strong support for
the program. And I know we have strong support from other
members of this Committee.
Thank you.
Mr. Walker. Great, thank you.
Like I said, I would like to briefly, in the interest of
time, quickly shift over to the service-disabled-veteran
program, the women's program, and the HUBZone program, too, in
other aspect, and that is in terms of parity for the programs.
As we know, there was an issue--most people are familiar
with it--where there was a question as to whether or not each
program should be put on equal footing when awarding contracts
or whether one contracting program had a preference over
others. That is something that Senator Snowe strongly cared
about making sure that there was true parity, and that in her
definition, true parity is giving every program equal
opportunity to compete. Chair Landrieu as well cared very
deeply about this, and they worked together to ensure that the
DOD authorization bill included a provision to make that very
clear. So we appreciate Chair Landrieu and her staff's work on
that as well to make sure that happens, and we are hoping that
that gets retained in conference.
But as another side of that, another aspect of it, as I
said, Senator Snowe believes that true parity requires an equal
opportunity for all the programs to compete, and as part of
that provision that she included in an amendment would called
for the creation of a mentor-protege program modeled after the
8(a) program for service-disabled veterans, HUBZones, women-
owned firms. And I just wanted to get some feedback from those
on why that would be beneficial and what the benefits are to
making sure that true parity should include mentor-protege,
because if the programs are going to be on an equal footing,
they should truly be on an equal footing, in our opinion.
Anyone who would like to response?
Ms. Sullivan. Well, I would like to say that, absolutely,
please do. It is so much common sense, it is almost
embarrassing to have to say that you have to do it.
Why would you have different mechanisms in different
programs that are all designed to help the small, disadvantaged
business community? To not give it parity and not give the same
mechanisms for every program seems to me to defy logic.
Mr. Walker. Mr. Newlan.
Mr. Newlan. We certainly support mentor-protege, and thank
you for sponsoring that amendment. We do hope it gets passed.
Anything we can do to encourage. We support parity, even though
we happen to find ourselves right now today probably at the top
of the heap. That is not a position we have worked for or asked
for, but it is certainly one GAO protest decisions have thrust
upon us. But we support parity.
We ask you to keep in mind that even after that bill, if it
does become law, we will not be in parity with the 8(a) and
certainly with the ANC sole-source rules and the 8(a) sole-
source rules dramatically different than what the service-
disabled vets have, what we have, and probably what the women
will have, I think the next thing we will have to look at is
should there be a change in the sole-source rules for the up-
and-coming women's program, the service-disabled vet, and the
HUBZone program.
Thank you.
Mr. Walker. Would you like to comment, Ms. Robinson-Berry.
Ms. Robinson-Berry. Yes. I think that it is very important
that we do have parity, because right now a lot of the programs
and the socioeconomic categories are in competition. We have
some--especially in the small disadvantaged businesses, some
are grandfathered for life, like the Native American and the
ANCs, where others are not. And then we have emerging new
socioeconomic categories that come up and some that people just
make up on certain RFPs. And so I think it is really important
that we have standards in that area.
To address the mentor-protege issue, I think mentor-protege
is a good program. As a matter of fact, many of our industry
partners have graduated, and more small disadvantaged
businesses, into large business because of the successful
mentor-protege. But there are funding limitations and so forth.
But having a mentor-protege program aligned by itself I do not
think works. You need to align it with the other initiatives.
You have the historical black college and minority institute
initiative. You have the SBIR program. You have the mentor-
protege program and others that are all separate. And I think
the best model would be to look at how we can integrate those
various programs together so we can benefit and grow our small
businesses more rapidly.
If we are going after high-tech companies, we align the
innovative research projects with a mentor-protege opportunity,
align it with a university so we are fixing the pipeline for
the future, but we are also pushing our small business
community in the same alignment with our technology road map.
Mr. Walker. Certainly, it is important to have synergy and
to foster coordination and leverage, and I think that is
something that we should do as well.
Mr. Hesser.
Mr. Hesser. I agree.
[Laughter.]
Mr. Walker. Well put.
Mr. Hesser. The vet force does, in fact, agree. Recently,
last month, we presented to the congressional roundtable at the
House, and we had a report to the Nation entitled ``Breakdown:
National Security Crisis in a Small Business World.'' What we
were first doing was writing a paper on veterans back from the
beginning of the country as to how it has gone, and then we got
involved with small business, and all of a sudden, we found
that we wanted our report to be only on small business. And I
hope you get an opportunity to see it. There are some out on
the table. But it is also on vet-force.org. That paper is on
there, and any small business, I think, should read it because
it has been presented everywhere around the House, the Senate,
and the executive branch, and wherever we could get it.
It basically says we are in trouble because--Ron Newlan
said it. We are in crisis right now, true crisis of small
business. That was our concern about the ARRA brought up, no
small business in there. And I do not care what your figures
say, I would like to have a separate meeting about what money
is really going where. And I know $4.2 billion that just went
right out the window, no small business.
We are very concerned from the service-disabled-veteran
side about the slowness for the veteran resource centers. We
are talking about the women-owned program. They have got
centers all over the place. We have none--well, we have three.
I am sorry. I think we may have gone up to four now. We are up
to four now. Wow. I mean, why are the veterans not getting
veteran resource centers? That is something that does not make
sense to me.
The other thing is I will refer to S. 2300, but it has been
put in other bills about verification, certification of all the
things, 8(a), women-owned, everybody, about how they have to be
verified and everything else.
I think there has to be a separate powwow between several
agencies and organizations looking at what has happened to the
Center for Veteran Enterprise. The Center for Veteran
Enterprise picked up this thing of verifying service-disabled
veterans. They now have 2,000 who have been verified, and there
are 13,000 total. So they have another 11,000 to go. In about 5
years they will make it, because they have the staff that they
have. All the contracting, they are working hard to do this.
This is not a slight against CVE. They are working, but it is
an example that if you put that same thing in there for 8(a)s,
the same thing for all the others, women-owned, everything, it
is just going to tie things up again, because someone had a
brilliant idea at CVE of giving a logo and letting people use
this logo and having a pin. You go to a show now, and you go
along the booths, and you will see this one has a logo, this
one doesn't, oh, the other two do not--it automatically put a
fence around all the service-disabled veterans who have not had
their turn yet to be verified. This is a very serious problem.
We brought this up over and over and over at CVE.
They are working on it now, trying to figure out what they
are going to do. We now have 2,000 companies out there with a
logo saying they are verified, a real pretty logo, and they put
it everywhere, on their letterhead and everything. There are
people who did not have the verification. It looks like they
are less than they are. In fact, they have changed the wording
on what they are.
So the veteran enterprise resource centers we have talked
about, the certification, of course, there are all the other
ones, but I guess the last thing I would like to say about
veterans, I have heard the figure from 94 percent to 98
percent, saying that 98 percent of those employed Americans are
employed by small businesses. I want to emphasize over and
over. How can you increase employment, which the stimulus bill
is supposed to be doing, when you keep giving all the money to
big business? They do not hire anybody. They usually fire them.
Or they work with a small business and get them up there where
they have got to maintain $2 million, $3 million support, and
then they let go of them, and they are out there by themselves.
What are they going to do now?
This is happening all over the place. I do not know all the
answers. I do not think any of us have all the answers. But I
do think we need to look real close at those other points.
Mr. Walker. Yes, I just want to quickly, before turning it
over to Don, thank you for that as well as just give notice to
Jim Wilfong. Jim Wilfong is from Maine, a veteran, who
contributed to that report and did a phenomenal job, and he is
a close friend to the Senator as well as the Committee.
I also just want to mention that this Committee could not
agree with you more about the veteran centers. We worked
together on a bipartisan basis to pass a bill that would take
the funding for the Office of Veterans Business Development for
a traditional level of $750,000 up to multiple million dollars.
We worked together and passed that bill out of Committee
unanimously.
So we agree completely. We are on your side. We agree with
it, and thank you for your time.
Mr. Hesser. We know that. Thank you.
Mr. Walker. Thank you. That is all.
Mr. Cravins. All right. First of all, let me just on behalf
of the Chair and on behalf of the Ranking Member and our staffs
thank all of you for participating in the roundtable today.
Again, we hope this is just the beginning. We have had a
relationship with many of you for many, many years, and we hope
that we can continue that.
Just to give you a heads up of what we are going to be
doing in the future, we are going to have a hearing on October
1st where we will look into the Recovery Act and look at the
provisions of the Recovery Act as they relate to small
businesses to make sure that our small businesses do have
access to capital and that they are participating in the
procurement opportunities in the Recovery Act. Senator Landrieu
and Senator Snowe will have a full Committee hearing on October
1st.
Also, both of our staffs are working very hard to craft
legislation that will hopefully fix some of the issues that we
talked about here today, so we would love to continue having
input from your respective agencies and organizations.
And as Senator Landrieu said, the record will be open for 2
weeks, so if you have more information that you would like to
submit for the record, we would appreciate it.
Thank you all very much, and thank you to those of you in
the audience for participating.
[Whereupon, at 11:56 a.m., the Committee was adjourned.]
APPENDIX MATERIAL SUBMITTED
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