[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

                              ----------                              

                           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:]


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    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.]





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