[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]











   SERVING SMALL BUSINESSES: EXAMINING THE EFFECTIVENESS OF HUBZONE 
                                REFORMS

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

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                           SEPTEMBER 13, 2017

                               __________

              
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            Small Business Committee Document Number 115-035
              Available via the GPO Website: www.fdsys.gov
              
              
              
              
              
              
              
              
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        TRENT KELLY, Mississippi
                             ROD BLUM, Iowa
                         JAMES COMER, Kentucky
                 JENNIFFER GONZALEZ-COLON, Puerto Rico
                          DON BACON, Nebraska
                    BRIAN FITZPATRICK, Pennsylvania
                         ROGER MARSHALL, Kansas
                      RALPH NORMAN, South Carolina
               NYDIA VELAZQUEZ, New York, Ranking Member
                       DWIGHT EVANS, Pennsylvania
                       STEPHANIE MURPHY, Florida
                        AL LAWSON, JR., Florida
                         YVETTE CLARK, New York
                          JUDY CHU, California
                       ALMA ADAMS, North Carolina
                      ADRIANO ESPAILLAT, New York
                        BRAD SCHNEIDER, Illinois
                                 VACANT

               Kevin Fitzpatrick, Majority Staff Director
      Jan Oliver, Majority Deputy Staff Director and Chief Counsel
                     Adam Minehardt, Staff Director
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Steve Chabot................................................     1
Hon. Nydia Velazquez.............................................     1

                               WITNESSES

Ms. Shirley Bailey, Co-Owner-Executive Vice President and Chief 
  Operating Officer, GCC Technologies, LLC, Oakland, MD, 
  testifying on behalf of the HUBZone Contractors National 
  Council........................................................     5
Mr. Robert A. Schuerger, II, Principal and Attorney at Law, Law 
  Offices of Robert A. Schuerger Co., LPA, Columbus, OH..........     6
Mr. Dennis DuFour, President, TDEC, Oakland, MD..................     8
Mr. Carlos Melendez, Chief Operating Officer and Co-Founder, 
  Wovenware, San Juan, P.R.......................................     9

                                APPENDIX

Prepared Statements:
    Ms. Shirley Bailey, Co-Owner-Executive Vice President and 
      Chief Operating Officer, GCC Technologies, LLC, Oakland, 
      MD, testifying on behalf of the HUBZone Contractors 
      National Council...........................................    24
    Mr. Robert A. Schuerger, II, Principal and Attorney at Law, 
      Law Offices of Robert A. Schuerger Co., LPA, Columbus, OH..    32
    Mr. Dennis DuFour, President, TDEC, Oakland, MD..............    35
    Mr. Carlos Melendez, Chief Operating Officer and Co-Founder, 
      Wovenware, San Juan, P.R...................................    40
Questions and Answers for the Record:
    Question from Representative Radewagen to Ms. Shirley Bailey.    48
    Question from Representative Radewagen to Mr. Carlos Melendez    49
Additional Material for the Record:
    None.
    
 
   SERVING SMALL BUSINESSES: EXAMINING THE EFFECTIVENESS OF HUBZONE 
                                REFORMS

                              ----------                              


                     WEDNESDAY, SEPTEMBER 13, 2017

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 11:00 a.m., in Room 
2360, Rayburn House Office Building, Hon. Steve Chabot 
[chairman of the Committee] presiding.
    Present: Representatives Chabot, Luetkemeyer, Kelly, Blum, 
Comer, Bacon, Fitzpatrick, Marshall, Norman, Velazquez, Evans, 
Clarke, Adams, and Schneider.
    Chairman CHABOT. Good morning. The Committee will come to 
order.
    We are here today to talk about H.R. 3294, the HUBZone 
Unification and Business Stability Act of 2017. This bipartisan 
bill implements important reforms of the Small Business 
Administration's Historically Underutilized Business Zone 
Program, more commonly known as the HUBZone Program. The 
program's core mission is to bring economic hope, independence, 
jobs, and businesses to depressed areas marked by high 
unemployment and poverty. This is accomplished through the use 
of Federal contracting preferences.
    H.R. 3294 helps the program achieve its mission objectives 
by providing legislative solutions to the challenges and 
weaknesses identified by small businesses and government 
watchdogs. Measures proposed in this bill would create more 
opportunities for our rural communities by potentially 
expanding the number of rural areas qualified for HUBZone area 
designation. Certified firms operating within economically 
distressed rural and urban communities would benefit from the 
consistency this bill would bring to the ever-changing HUBZone 
area designations. These measures would encourage small 
businesses currently deterred by these issues to now seek their 
HUBZone certification, which would promote greater competition 
within the Federal contracting landscape. The bill would also 
create an extra layer of protection for areas devastated by 
natural disasters or catastrophic events by potentially 
prolonging the area's HUBZone designation. This is intended to 
promote revitalization and economic growth within those unique 
areas.
    This change is particularly relevant in light of what our 
neighbors in Texas and Louisiana and Florida have faced 
following Hurricanes Harvey and Irma.
    Ms. VELAZQUEZ. Puerto Rico, too.
    Chairman CHABOT. Yes, and in Puerto Rico as well, and in 
many of the islands in the Caribbean.
    Additionally, the bill would strengthen performance 
assessment and fraud prevention measures recommended by the 
Government Accountability Office, GAO. This includes mandating 
the collection of critical performance measures and requiring 
the SBA to verify recertification information. These are among 
a few of the provisions in the bill intended to benefit 
HUBZones, small businesses, and the communities in which they 
operate.
    I have always said that this Committee is a rare place 
where bipartisanship is the norm and crafting good policy for 
the betterment of small businesses knows no party lines. This 
has truly been a bipartisan effort to begin fixing the core 
issues facing the HUBZone Program. And I would like to 
especially thank our ranking member, Ms. Velazquez, for leading 
this important piece of legislation, and I hope that this is a 
positive first towards reforming the HUBZone Program.
    I look forward to hearing from our witnesses here this 
morning. We have a very distinguished panel, all of whom are 
HUBZone small business owners themselves.
    We want to thank all of you for being here today, and I 
would now like to yield to the ranking member, Ms. Velazquez, 
for her opening statement.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman, and I, too, echo 
your comments. We enjoy a very good working relationship. We 
know our responsibility in this Committee is to work on behalf 
of small businesses and that is what we do. And in that spirit, 
we craft bipartisan legislation, and when we do that we have a 
better product and we are all very proud of it.
    Each year, the federal government procures more than $400 
billion in goods and services from businesses around the 
country through government contracts. The Historically 
Underutilized Business Zone Program, or HUBZone Program, was 
created in 1997 to provide federal assistance to firms located 
in economically distressed areas. By lowering barriers to entry 
into the federal marketplace for these firms, the HUBZone 
Program has fostered competition while helping rebuild 
communities. Businesses in HUBZones play a large and vital role 
in our nation's economy because they create jobs for those 
residing both inside and outside of these economically 
distressed areas.
    However, since its implementation, the HUBZone Program has 
not reached its full potential. From ensuring that only 
certified businesses enter the program, to being able to 
present evidence that the program is meetings its mission, SBA 
has largely failed in the basic operation of this program. This 
Committee has heard from the GAO on a number of occasions, each 
time they report on the program's problems. Most disappointing 
to me was the poor oversight that allowed GAO investigators to 
get fake businesses certified even though they did not meet 
eligibility requirements. In most instances, those 
certifications could have been verified by SBA simply asking 
for additional information on the location of the business.
    While GAO's most recent report shows that there have been 
improvements in the certification process, these changes are 
not enough to ensure that businesses are adhering to the 
program's requirements. This shows a clear need for 
legislation. That is why I introduced H.R. 3294, the HUBZone 
Uniformity and Business Stability Act of 2017, or HUBS Act, 
along with Chairman Chabot. This bill will help ensure that 
small firms in underutilized business areas have fair and equal 
access to the federal marketplace. Many areas will likely lose 
status this year because of changing data, crippling many rural 
economies.
    H.R. 3294 will forestall this change in many affected 
areas. The HUBS Act will establish a 5-year cycle for 
determining the geographic boundaries of HUBZones, creating 
greater certainty for companies. It will also change the 
calculations for how certain geographic areas qualify for the 
program, potentially adding as many as 1,000 rural and nonurban 
counties. This alone has the potential to help more businesses 
avail themselves of the HUBZone initiative benefits. Most 
importantly, the legislation includes new performance metrics 
to ensure the data collected by the SBA will allow us to 
measure the program's success and economic impact.
    I look forward to hearing from our witnesses today about 
how the proposed legislation can improve the HUBZone Program 
and provide sufficient oversight for initial certification, 
recertification, and business development to ensure new 
businesses enter the program. Nearly 90 percent of the HUBZone 
areas still do not have a business participating in the area. 
This low participation rate has resulted in the failure to meet 
the 3 percent prime and 3 percent subcontracting goals.
    The dollars and actions awarded through these programs have 
continually decreased since fiscal year 2008. Only 82,000 
actions worth $6.8 billion, negative 1.67 percent of prime 
contracting dollars, were awarded to HUBZone firms in fiscal 
year 2016. It is my hope that this Committee can work together 
to reverse this trend.
    I want to take this opportunity to thank all the witnesses 
who are going to be offering their insights on making the 
program more effective and helping economically challenged 
areas.
    Thank you, Mr. Chairman. And I yield back.
    Chairman CHABOT. Thank you very much. The gentlelady yields 
back.
    And if Committee members have opening statements, we would 
ask that they be submitted for the record.
    Without objection, so ordered.
    And I will take this time now to explain our timing limits 
here and the lighting system which will assist you in keeping 
to the time limits. It is pretty simple. You get 5 minutes and 
then we will have 5 minutes each of us to ask questions. And 
there is a lighting system that will help you a bit. The green 
light will stay on for 4 minutes. The yellow light will come on 
to let you know you have a minute to wrap up. And then the red 
light will come on and we would ask you to, you know, try to 
stick within that if at all possible. We will let you go over a 
little bit, but not too much. So try to stay within that if at 
all possible.
    I would now like to introduce our panel here. The first 
witness will be Shirley Bailey. Ms. Bailey appeared before the 
Subcommittee on Contracting and Workforce earlier this year, 
and we welcome you back here today. Ms. Bailey is testifying 
today in her capacity as a board chair of the HUBZone 
Contractors National Council. Ms. Bailey has been deeply 
involved in the HUBZone Program for many years, both in her 
service as a HUBZone Council board member and in her personal 
experience as a small business owner. Ms. Bailey is the co-
owner, executive vice president, and chief operating officer of 
GCC Technologies, a successful HUBZone-certified small business 
located in Garrett County, Maryland. We are looking forward to 
hearing your testimony here this morning. Welcome.
    Our second witness is Robert Schuerger. Mr. Schuerger is 
the founder and lead attorney for a successful HUBZone-
certified law firm based in Columbus, Ohio, with an office in 
Wilmington, Ohio.
    Why not Cincinnati, too? My goodness.
    In addition to serving various public sector clients, 
including local governments, hospitals, and universities, Mr. 
Schuerger's firm also works with the United States Department 
of Education. His firm was recently awarded a prime contract 
with the United States Department of Justice, in large part due 
to his HUBZone certification. We thank you for being here and 
we look forward to your testimony, as well.
    And our third witness is Mr. Dennis DuFour. Mr. DuFour 
joined The Data Entry Company, or TDEC, 20 years ago after a 
career in the insurance industry and is the third generation 
within his family to serve as president of the company. TDEC is 
a HUBZone-certified small business providing labor-intensive 
services to the public and private sectors, such as document 
management and call center assistance. Under Mr. DuFour's 
leadership, the company tripled its revenues and expanded its 
growth in the Federal sector to include over a dozen Federal 
clients. Some of these clients include the Department of 
Homeland Security, Department of Labor, Department of Justice, 
and Department of Defense. And we also welcome and thank you 
for your testimony.
    And I would now like to yield to the ranking member to 
introduce our fourth witness.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman.
    It is my pleasure to introduce Mr. Carlos Melendez, the COO 
and cofounder of Wovenware, an 8(a) and HUBZone-certified small 
business located in San Juan, Puerto Rico. Since 2003, 
Wovenware has been developing custom software solutions for 
enterprises in the telecommunications, healthcare, and 
distribution industries. Today, Wovenware has more than 90 
employees in Puerto Rico that are mostly engineers, computer 
scientists, and data scientists. Wovenware has been part of 
Inc.'s 5,000 list of the fastest-growing private companies in 
the U.S. three times, and 60 percent of its revenue comes from 
customers located outside Puerto Rico. Mr. Melendez has a 
bachelor's degree in electrical engineering and a juris doctor, 
both from the University of Puerto Rico. Mr. Melendez is also 
the vice chairman of the board of ConPRmetidos, a nonprofit 
organization that connects people to faster commitment with 
personal, social, and economic development of Puerto Rican 
communities wherever they are. Thank you, and welcome.
    Chairman CHABOT. Thank you very much. We welcome all the 
witnesses here, and Ms. Bailey, you are recognized for 5 
minutes.

STATEMENTS OF SHIRLEY BAILEY, CO-OWNER-EXECUTIVE VICE PRESIDENT 
 AND CHIEF OPERATING OFFICER, GCC TECHNOLOGIES, LLC; ROBERT A. 
 SCHUERGER, II, PRINCIPAL AND ATTORNEY AT LAW, LAW OFFICES OF 
 ROBERT A. SCHUERGER CO., LPA; DENNIS DUFOUR, PRESIDENT, TDEC; 
   CARLOS MELENDEZ, CHIEF OPERATING OFFICER AND CO-FOUNDER, 
                           WOVENWARE

                  STATEMENT OF SHIRLEY BAILEY

    Ms. BAILEY. Thank you. Good morning, Chair Chabot, Ranking 
Member Velazquez, and members of the Committee. My name is 
Shirley Bailey, president and board chair of the HUBZone 
Contractors National Council. I appreciate the opportunity to 
testify before you today.
    The council's membership includes HUBZone-certified small 
businesses, other small businesses, prime contractors, and 
other organizations interested in the HUBZone Program. In 
addition, the HUBZone Council is an advocate as it relates to 
procurement and entrepreneurial policy and continues to seek 
needed modernization of the program. To that end, the Council 
fully supports H.R. 3294, the HUBZone Uniformity and Business 
Stability Act of 2017.
    During the Subcommittee on Contracting and Workforce's 
March 2 HUBZone hearing titled ``Learning from History: Ideas 
to strengthen and modernize the HUBZone Program,'' the 
council's testimony revolved around the lack of business 
certainty, constantly changing area designations, and lack of 
performance metrics. I am pleased to see that the Committee has 
taken steps to address these issues and others in H.R. 3294.
    The first important reform in H.R. 3294 that I would like 
to discuss is the transition from the annual ACS designation 
updates to a 5-year cycle beginning in 2020. Freezing 
designation changes with the exception of disaster area and 
BRAC declarations will provide businesses operating in HUBZones 
the stability and certainty that they need to make the 
necessary investments in their communities without worrying 
that they will lose their HUBZone designation the following 
year.
    The second major reform included in section 3 of the bill 
eliminates the qualifier nonmetropolitan from State median 
income when determining area eligibility. Currently, a 
nonmetropolitan county must have a median income below 80 
percent of the State's nonmetropolitan median income to qualify 
for HUBZone designation. Of our Nation's 1,984 nonmetropolitan 
counties, only 207 currently qualify for HUBZone designation 
under this income formula. However, 89 percent of all of our 
nonmetropolitan counties in the U.S. have median incomes less 
than 80 percent of their State median incomes. We believe that 
this change will go a long way toward creating jobs in rural 
America and assist in bridging the income gaps by providing 
opportunities and economic development in our Nation's most 
distressed areas.
    I would like to give you a few State examples of the number 
of additional nonmetropolitan areas qualified as HUBZone areas 
as a result of the income calculation reform in this bill. 
There will be 6 counties in Ohio; 13 counties in New York; 39 
counties in Missouri, including Montgomery County in Missouri's 
Third Congressional District; 20 counties in Kentucky, 
including 9 counties in Kentucky's First Congressional 
District; 28 counties in Kansas, including 13 counties in 
Kansas's First Congressional District; 6 counties in 
Mississippi, including Calhoun, Choctaw, and Oktibbeha, sorry 
about that, in Mississippi's First Congressional District; 21 
counties in Florida, including Putnam County in Florida's 
Seventh Congressional District; 5 counties in South Carolina, 
including Cherokee County in South Carolina's Fifth 
Congressional District; 11 counties in Iowa, including Floyd, 
Monona, Webster, and Wright counties in Iowa's Fourth 
Congressional District.
    Another critical reform pertains to qualified disaster 
areas. In light of recent Hurricanes Harvey and Irma, H.R. 3294 
includes a timely provision that empowers the SBA administrator 
to extend the HUBZone designation of a qualified disaster area 
that has not fully recovered. As we know from past national 
disasters, recovery can take months, and sometimes even years, 
before communities are made whole again. Our hearts go out to 
the victims of these historic storms, and it will take all of 
us to help these areas truly recover. We believe the extended 
HUBZone designation can play an important role in recovery 
efforts.
    As I stated in March, many areas are going to lose their 
HUBZone status by the beginning of 2018. Our members need 
Congress to act this year to avoid a major disruption in the 
program. As this bill suggests, the HUBZone Program cannot 
succeed with eligibility constantly in flux. Any delay will 
result in substantial loss of HUBZone firms. Not only is this 
difficult for small HUBZone companies, it is also a setback for 
the HUBZone qualified areas that need the business income and 
job generation this program encourages.
    As a point of personal privilege, I would like to 
acknowledge Vivian Ling of Chair Chabot's staff and Helena 
Locke on Ranking Member Velazquez's staff for their hard work 
in collaboration with the council in drafting this important 
reform legislation.
    Again, I would like to thank you for allowing the council 
to testify at this very important hearing, and I look forward 
to answering any questions. Thank you.
    Chairman CHABOT. Thank you very much. Our staff loves those 
shout outs, so thank you very much. They do not get enough, so 
we appreciate their hard work.
    Mr. Schuerger, you are recognized for 5 minutes.

               STATEMENT OF ROBERT SCHUERGER, II

    Mr. SCHUERGER. Thank you. Good morning, Chairman Chabot, 
Ranking Member Velazquez, and members of the Committee. My name 
is Robert Schuerger, and I am the founder and lead attorney for 
the Law Offices of Robert A. Schuerger. Founded in 2008, we 
have been a HUBZone-certified law firm since August 2016. I am 
also a member of the HUBZone Council. Thank you for giving me 
the opportunity to testify today.
    Chairman Chabot, it gives me great pride to know that the 
Committee is led by a fellow Buckeye. Thank you.
    Schuerger Law's principal office is based in a HUBZone in 
urban downtown Columbus, Ohio. We also maintain an office and 
11 employees in Wilmington, in rural Clinton County, Ohio. 
Since our founding, Schuerger Law has grown to 52 employees. 
This job increase is directly attributable to our HUBZone 
status as it has allowed us to become a Federal subcontractor 
to the Department of Education and a prime contractor for the 
Department of Justice.
    The Clinton County office was uniquely qualified to be our 
satellite office as DHL had just moved out of the regional 
airport, leaving thousands without jobs. We have stepped in and 
taken over a space in the airport with a target to grow the 
business through our Federal procurement to at least 40 jobs.
    I am pleased the Committee has undertaken the task of 
changing a program badly in need of change. In my view, H.R. 
3294, the HUBZone Uniformity and Business Stability Act of 
2017, provides much needed stability to companies like mine. 
Clinton County, home of Wilmington, will lose its HUBZone 
designation in 2018. I certainly favor the approach in H.R. 
3294 which freezes the current HUBZone eligibility maps until 
2020. It would provide us with the transition time our firm 
needs while we decide how to keep our valued employees and find 
a new office. Transitioning from the annual ACS to a 5-year 
process will enable our firm to find that location and make the 
capital investments necessary to continue bringing economic 
development to the hard-working people of Ohio.
    The HUBZone online tool, that requires the SBA to ``clearly 
and conspicuously provide access to the data used by the 
administrator to determine whether or not an area is a 
qualified area in the year in which the online tool was 
prepared'' is also a significant requirement.
    It will assist HUBZone firms that maintain offices in 
multiple locations, like Schuerger Law. This tool, updated 
every 5 years, would ensure HUBZone firms have the latest 
information on HUBZone eligible areas. This bill also ensures 
that the SBA administrator removes redesignated areas that are 
no longer qualified, which has been a problem in the past with 
many companies who have undergone the extensive certification 
process only to find the HUBZone qualified area lost its 
designation.
    Another provision of the bill, including subsection 
31(d)(6) provides a firm who loses certification 30 days to 
submit documentation to the SBA to reestablish eligibility. 
Since the certification process is time-consuming, this is a 
commonsense approach to the process. We believe it will 
incentivize HUBZone participation. Firms that may be hesitant 
to become HUBZone certified have clear recourse should they 
feel that their certification was unjustly revoked.
    I would note that the Federal Government has never met its 
goal of contracting 3 percent of its contracts to HUBZone 
companies. I would urge the Committee to keep up its oversight 
of Federal agencies and encourage them to contract with HUBZone 
firms. It is certainly important to Clinton County, Ohio, and 
many other areas in this country. Adoption of this legislation 
is critical to the success of the program, and time is of the 
essence. We really need action this year to ensure that firms 
like mine can continue to work in the program.
    In closing, I want to emphasize that the HUBZone Program is 
an important economic development program. Incentivizing 
companies to locate in depressed areas is a good policy 
approach. However, changes must be made to the program, such as 
those in H.R. 3294.
    Thank you for the attention you have brought to this 
critical issue, and for all of your work supporting our 
Nation's small businesses and those in Ohio. I look forward to 
answering any questions.
    Chairman CHABOT. Thank you very much.
    Mr. DuFour, you are recognized for 5 minutes.

                   STATEMENT OF DENNIS DUFOUR

    Mr. DUFOUR. Chairman Chabot, Ranking Member Velazquez, and 
members of the Committee, my name is Dennis DuFour and I am the 
president of The Data Entry Company, TDEC. I appreciate this 
opportunity.
    TDEC was started in 1958 by my grandfather, who was an 
insurance agent. He sold a group hospitalization policy to the 
National Active and Retired Federal Employee Association and 
needed a way to process applications, so he started TDEC to 
open mail, enter application data onto punch cards, and deposit 
checks. Shortly thereafter, my dad went to work for TDEC, 
adding customers like the National Geographic Society, Citibank 
Credit Cards, and the Republican National Committee. A 
stressful time was had when the FBI decided to investigate a 
break-in in the Watergate and wanted to see the data we had 
collected. That investigation ultimately ended in the 
resignation of Richard Nixon.
    Today, 59 years later, my brother and I run TDEC, focusing 
on similar services as the founding, including data entry. We 
have 300 employees and do not take lightly the fact that we run 
a third-generation business, which statistically only survives 
12 percent of the time.
    In March of 2002, I applied for HUBZone certification. The 
program analyst assigned to our application was Mariana Pardo, 
who I note is now the director of the HUBZone Program. After a 
thorough examination of our application, we were welcomed into 
the program shortly thereafter. We began to market this 
valuable certification to the Federal Government and to large 
prime contractors. Five years later, we won our first prime 
contract with the National Oceanic and Atmospheric 
Administration, providing administrative support services to 
the Northwest and Alaska Fisheries Science Centers. We were re-
awarded this contract in 2012. We continue to serve for this 
valuable customer today.
    For 15 years, we have continuously maintained our HUBZone 
certification through examinations, recertifications, and even 
a protest. We are proud to report that 47 percent of our 
employees live in HUBZones, which is significantly higher than 
the 35 percent requirement of the program. We achieve this 
because we continually seek to hire, attract, and retain 
employees in underserved, economically distressed areas.
    In 2018, 4 months from now, Garrett County, where my and 11 
other businesses are located, will no longer be a HUBZone. I 
was wondering if this was an isolated event, so my team and I 
researched and found that there are 15 other counties similar 
to Garrett that will lose their HUBZone certification in 
January. We also found another 71 counties will lose their 
certification in July of 2018.
    Knowing that I was not alone, I started a campaign to reach 
out to HUBZones. I called this ``Save our HUBZone.'' And I 
asked a very simple question to other HUBZone firms like TDEC, 
``How will losing your HUBZone status affect your business?'' I 
received many replies. Here are a few.
    From Detroit, ``HUBZone communities need HUBZone companies. 
No one better understands the community than those who are in 
it. Take away the lifeline of the community and the community 
itself will wither.''
    Atlanta, ``I am looking to hire students that come from a 
community that needs assistance, public assistance. We are 
providing jobs because of our HUBZone certification.''
    Hamilton County, Ohio; Cincinnati, Ohio, ``HUBZone firms 
are vital to creating jobs and employment opportunities for the 
citizens who reside in HUBZones, most of whom are not highly 
skilled, but are hardworking, dedicated, and want to learn.''
    So my message is simple: We need stability. Stability will 
be achieved by freezing the HUBZone map until 2020 and then 
adjusting it every 5 years thereafter. Remember, it took us 5 
years to get our first prime contract.
    In the coming weeks, we need to decide whether we stay in 
our current location in Garrett County or move. If we move, 
many people will lose their jobs, coupled with the fact that we 
have been in Garrett County for over 50 years. Frankly, it is 
difficult, costly, and a distraction to move a business. So I 
ask you to act immediately on H.R. 3294 and give HUBZone 
communities stability. It is the most important economic issue 
facing rural American today.
    Again, I appreciate this opportunity, and I am available to 
answer any questions.
    Chairman CHABOT. Thank you very much.
    Mr. Melendez, you are recognized for 5 minutes.

                  STATEMENT OF CARLOS MELENDEZ

    Mr. MELENDEZ. Thank you. Good morning, Chairman Chabot, 
Ranking Member Velazquez, members of the House Small Business 
Committee. Thank you for the opportunity to speak today as the 
Committee examines the effectiveness of HUBZone reform.
    My name is Carlos Melendez, and I am the cofounder and 
chief operating officer of Wovenware, an 8(a) and HUBZone-
certified business located in San Juan, Puerto Rico.
    As you all know, Puerto Rico was seriously affected by 
Hurricane Irma 1 week ago today. Most of the island has been 
without power and water at different points, but as you can 
attest from my presence here today, we are resilient and do not 
let these types of setbacks stand in our way of achieving 
economic development for our U.S. territory.
    Since 2003, my company, Wovenware, has been developing 
custom software solutions for enterprises in industries such as 
telecommunications, healthcare, and distribution.
    It took us 3 months to organize and fill the application 
for the HUBZone Program and 3 additional months to get 
certified. We are grateful for the help provided by our local 
PTAC, the Puerto Rico Federal Contracting Center, before and 
during the process.
    Here at Wovenware, we have recently been highly focused on 
developing smart and predictive software solutions that use 
artificial intelligence, predominantly Deep Learning, to help 
companies derive greater insights from their data and automate 
key functions. This deep expertise has allowed Wovenware to 
enter the Federal market and conduct AI-related projects for 
the National Geospatial Intelligence Agency. Today, Wovenware 
employs more than 90 people, most of whom are software 
engineers, computer, and data scientists.
    Despite the fact that Wovenware has been part of the Inc. 
5000 list of the fastest-growing companies for 3 years, and 
that 60 percent of our revenue comes from customers outside our 
physical island boundaries, it is only recently that we were 
given the opportunity to work with the Federal Government as a 
subcontractor on a DigitalGlobe NGA contract. We need more out-
of-the-box thinkers like DigitalGlobe's executives Rob Torres 
and Tony Frazier, who gave us the opportunity to win this 
Federal contract.
    ``Lead with quality, not certification,'' was the 
recommendations Mr. Robb N. Wong, associate administrator of 
the SBA, gave companies like ours during a previous hearing of 
this Committee. A fair recommendation, but one in my opinion 
that underestimates the difficulty of getting your first 
Federal contract, despite years of high-quality, referenceable 
private business experience, especially in an economically 
depressed area like Puerto Rico.
    It has taken Wovenware almost 4 years and significant 
investments to get our first Federal contract. I hope the 
proposed new performance metrics outlined in the HUBS Act put a 
spotlight on this problem and help SBA develop initiatives to 
stimulate the opportunities that originally inspire hope for 
HUBZone companies.
    While we are pleased to have received HUBZone certification 
late last year, there is much more that can be done to ensure 
that it accomplishes its original goal, to give small 
businesses in underserved areas a chance to succeed. It is our 
hope that a reformed HUBZone Program lowers the barrier of 
entry for Federal contracts for companies like ours.
    While currently one-third of Federal contracts are filled 
right here in Washington, D.C., and the remainder elsewhere in 
the U.S. States, Wovenware's success serves to prove that there 
is enormous untapped potential for making Puerto Rico and other 
HUBZone areas the next frontier for outsourced Federal 
projects.
    Three key amendments on the HUBZone reform bill have the 
potential to generate this environment. These amendments are 
the new performance metrics, new 5-year time model, and grace 
period. The new performance metrics will highlight the use, and 
not use, of the program by Federal agencies and how effective, 
or ineffective, the program is in helping businesses sell to 
the Federal Government.
    The 5-year time model that will allow the SBA to 
recalculate HUBZone areas in 5-year increments and the grace 
period for firms dropping below the 35 percent threshold for 
employees from a HUBZone will provide Federal agencies 
certainty into the number of HUBZone companies available for 
their contracting opportunities. It is my hope that this 
certainty will translate into additional HUBZone-only 
opportunities and will thus increase the use of the HUBZone 
Program to the point where the 3 percent contracting mandate be 
achieved.
    Revising the provisions of the HUBZone Program so that it 
remains true to its original intentions, to jumpstart 
opportunities for small businesses to succeed, would empower 
small businesses not only in Puerto Rico but across the country 
with a path to revitalized growth.
    The spirit of innovation, entrepreneurship, and 
inspiration, combined with a steadfast perseverance, that 
Hurricane Irma proved so well, is alive and well in Puerto 
Rico. A reinvigorated HUBZone Program would be just the right 
spark, not only for Puerto Rico, but for small businesses 
everywhere to ignite hope, confidence, and ultimately growth 
that will stimulate healthy economies across the country. Thank 
you.
    Chairman CHABOT. Thank you very much.
    And I will now recognize myself to begin the questioning 
for 5 minutes.
    Mr. DuFour, I think I am going to start with you. I had, 
quite frankly, kind of a boring technical question I was going 
to ask you. Then you talked about Nixon and Watergate. Tell us 
about that. How was your company involved in that? That has got 
to be interesting?
    Mr. DUFOUR. So, the Republican National Committee, back in 
the day when they solicited donations, they would solicit 
donation checks and basically a remittance slip. And our firm 
would enter the donation information--name, address, other 
information that needed to be filed with the Federal Election 
Commission--and deposit the check for the RNC.
    And so one summer we were on vacation and my dad got a call 
from the office. And the office said, ``Mr. DuFour,'' who he is 
here today, ``The FBI is in the lobby and they want to see the 
data that we have collected for the RNC.'' And he said, ``I 
will be right there.''
    Well, it was an 8-hour drive and he got right there. And he 
said to the FBI, ``Well, this is not public information. I do 
not think I can share this with you.'' And they retorted, 
``Then we are going to shut down your business.'' And he said, 
``Here is the data.''
    So ultimately, that did lead to extend the investigation, 
and unfortunately, the resignation of our sitting president.
    Chairman CHABOT. Thank you very much.
    Now I will get to my boring questions and things of that 
nature.
    Ms. Bailey, I am going to start out with the boring 
questions with you. You have highlighted that this bill may 
extend the number of rural areas qualified for HUBZone 
designation. Could you describe some of the challenges that 
your firm and other rural firms encounter that may differ from 
those located in urban areas? And how will this legislation 
help to alleviate those issues?
    Ms. BAILEY. Okay, definitely. Many of the rural areas, one 
of the major issues that they have is, one, they do not have 
the population density. People tend to be spread out. They are 
not around a central major industry such as the Federal 
Government. They tend to be further around 50, you know, 
further past 50 miles from those distance, so you have larger 
commute type things. They do not have the access to the 
infrastructure in a lot of the cases. You do not have strong 
connections with broadband, those types of areas, where we need 
the encouragement of additional companies coming into these 
areas to make it feasible and more cost-effective for agencies 
to come in and put the infrastructure in place. So you are 
looking at these types of areas where you are dependent upon 
these companies, and the HUBZone Program, if we can get 
companies to relocate and help with the economic development of 
these rural areas, then we are going to be able to add the 
infrastructure and the training and the capacity for these 
employees and have other opportunities that may be in the areas 
that these individuals are actually locating.
    A lot of rural areas are not interested in relocating to 
the cities for employment. They have to travel long distances 
to do that, and although I am not saying that they do not, 
because a lot of them do it out of necessity, but from a family 
standpoint and from them being able to keep their unit 
together, and for us to be able to encourage our children to 
stay in their hometowns, to go to college, come back to their 
hometowns and invest in their hometowns, the HUBZone Program is 
a great way to do that and to help with the economic 
development in these areas.
    Chairman CHABOT. Thank you very much.
    Mr. Schuerger, one of the reasons the Federal Government 
has not met its 3 percent HUBZone small business goal is 
because there is some belief, I think, among some that among 
the agencies that the HUBZone small businesses are limited to a 
certain type of work, like janitorial services, for example. 
Could you talk about your experiences, kind of overcoming such 
obstacles? And do you have any suggestions on how to reverse 
that type of thinking?
    Mr. SCHUERGER. Yes. Thank you for the question.
    In our situation, it was a unique opportunity because we do 
a lot of inbound/outbound call center work, collections work, 
and we were able to team up with Franklin County and their res 
care operation, and actually, they helped us recruit potential 
employees for the firm that we would then bring in, train, and 
then a number of them would become full-time employees for the 
law firm. So I think the goal is to, with this bill, allowing 
other types of companies to pursue HUBZone opportunities by 
increasing the geographic region of that will, in essence, help 
more different types of companies to go after the HUBZone 
status.
    Chairman CHABOT. Thank you very much.
    I apologize, Mr. Melendez, I have run out of time. So I now 
recognize the ranking member for 5 minutes.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman.
    Mr. Melendez, the federal government has yet to meet the 3 
percent prime contracting goal or the 3 percent subcontracting 
goal for the HUBZone Program. Furthermore, only 25 percent of 
dollars awarded to HUBZone firms come from a HUBZone contract. 
What do you recommend Congress do to spare agency use of the 
sole source and set-aside authority given to them through the 
HUBZone Program?
    Mr. MELENDEZ. Yes. My first recommendation is that the 
performance metrics will help a lot to shine a spotlight on 
that problem. I think first of all it is going to be a data 
problem, getting the information out there. Then it is going to 
be how the SBA and Congress can help show that information in a 
useful way that tells a story of how HUBZones are really not 
being used. That should pressure agencies to take a hard look 
into what they are doing and think outside the box and just 
bring more opportunities for sole source and HUBZone-only 
contracts because they will see that there are companies that 
can actually provide those services.
    Ms. VELAZQUEZ. Thank you.
    Ms. Bailey, as we discussed before, program participation 
dropped immensely following the release of the 2010 census 
data, and the program now also incorporates the ACS data that 
updates every year causing more uncertainty. Furthermore, 
nearly 90 percent of HUBZones do not have a single certified 
firm. How will the proposed 5-year cycle impact HUBZone Program 
participation from a business owner perspective?
    Ms. BAILEY. Definitely, it is going to give us more 
certainty because knowing that you have 5 years and the 
requirement to have the available data there will give the 
business owner the opportunity to be able to assess areas that 
if he has to move, where he could go to and have more 
information. It is going to allow companies to consider when 
they are coming into the HUBZone Program how much time they 
have. And also, in addition, even if they do come within that 
5-year period and the area does get redesignated, they still 
have the 3 years, which will give them that period of time to 
make these decisions. The 5-year is going to provide people who 
are entering into long-term leases. A lot of our leases are 5-
year terms. Contracts are 5-year terms. So that will give us 
the ability to make those decisions on doing that.
    Ms. VELAZQUEZ. Thank you.
    Mr. Schuerger, would you like to comment on the same 
question?
    Mr. SCHUERGER. I would, yes, echo Shirley's sentiments that 
the 5-year, you know, someone like myself, it is a critical 
part because you invest in infrastructure. You invest in job 
training. You create jobs in areas that, you know, that jobs 
need to be created. And then, you know, 6 months later, or a 
year later as is current, the rug gets pulled out from under 
you. So I believe strongly in this bill that that 5-year window 
will then allow more companies to pursue the HUBZone status to 
create those jobs knowing that there is stability within the 
program.
    Ms. VELAZQUEZ. Thank you.
    And Mr. Schuerger, I would like you to comment on the 
following question. SBA does not currently send individual 
notices to businesses to notify them of changes affecting their 
HUBZone eligibility. SBA has stated that it is a business 
owner's duty to keep up to date. How realistic is it for small 
firms to be aware of every change potentially affecting their 
status?
    Mr. SCHUERGER. I think it is very tough, particularly when, 
you know, I mean, obviously, it is our responsibility as 
companies to try to stay up to date, but it is also the SBA's 
responsibility to make sure that timely information is produced 
in order to stay up to date and not when you check something 
changes after you have checked and then all of a sudden they 
say it is your responsibility. That is what, you know, those 
are the types of issues that make the program tough and 
probably allows people to believe that they, you know, it is 
not worth them participating in.
    Ms. VELAZQUEZ. Mr. DuFour?
    Mr. DUFOUR. I better turn that on.
    It is incumbent upon the small business to stay on top of 
regulation. It would be an added benefit if it was more 
proactively coming from the SBA, yes.
    Ms. VELAZQUEZ. We are going to make it more proactive. But, 
yeah.
    Mr. DUFOUR. Brilliant.
    Ms. VELAZQUEZ. So my question is does the legislative 
requirement that SBA refresh the HUBZone map every 5 years and/
or any time there is a base closure and qualified disaster help 
fix this notification problem?
    Chairman CHABOT. The gentlelady's time is expired, but you 
can answer the question, whoever----
    Ms. VELAZQUEZ. Mr. Schuerger.
    Chairman CHABOT. Mr. Schuerger?
    Mr. SCHUERGER. Yes, absolutely.
    Ms. VELAZQUEZ. Thank you. Thank you.
    Chairman CHABOT. Thank you very much. The gentlelady's time 
is expired.
    The gentleman from Missouri, Mr. Luetkemeyer, who is vice 
chairman of this Committee, is recognized for 5 minutes.
    Mr. LUETKEMEYER. Thank you, Mr. Chairman. And I would be 
remiss if I would not mention my predecessor of my being here 
in Congress is here this morning, and I want to mention Kenny 
Hulshof is in the audience. And he left some really big shoes 
to fill, and the only way I am coming close is I do have big 
feet. So, welcome, Kenny.
    Thank you all for being here this morning. It is an 
interesting conversation we are having on the HUBZones here. 
And you know, my first question, obviously, we have got 19,000 
census tracks, 828 counties, 108 base closures, 593 qualified 
Indian lands covered by HUBZones, and only 6,000 certified 
small businesses. Why are we having difficulty getting 
businesses in the program I guess is the first question?
    Ms. BAILEY. Can I take part of that?
    Mr. LUETKEMEYER. Yeah, fire away.
    Ms. BAILEY. One of the major problems is the lack of 
HUBZone set-asides. When we have the contracting vehicles 
there, it is going to encourage more firms to participate in 
the program. So, you know, over the years, we are not making 
anywhere near. We are actually going down in meeting the 3 
percent goal. And you find that when we start to meet that 3 
percent goal, more and more firms will enter the program. They 
do not see that this investment in this program is going to pay 
off if there is no set-aside programs.
    Mr. LUETKEMEYER. Okay. So do you see the program actually 
enticing businesses into the zone or are you just picking up 
businesses that are already in the zone itself?
    Ms. BAILEY. No, I think it is enticing businesses into the 
zones.
    Mr. LUETKEMEYER. Do you have some numbers on that?
    Ms. BAILEY. No, I do not have anything in particular, but 
we can use us for an example. The reason that we are in Garrett 
County is because it was a HUBZone. We looked. We are actually 
out of Frederick County to begin with. We moved to Allegheny; 
it lost its designation. And when we were looking to move to 
another HUBZone, that was one of the major factors we were 
looking at. And Garrett County is why we moved to Garrett 
County. Go ahead.
    Mr. LUETKEMEYER. Because in my mind what would look like a 
pretty small number of businesses that are actually qualified 
for HUBZone, is there enough competition for contracts set away 
so that we actually have a good competitive bid from somebody 
in that zone? Or is it single source? And maybe we are 
overpaying for services.
    Ms. BAILEY. Well, at one point there were over 13,000 
HUBZone firms until the census came and a lot of them were 
removed from the program because of the changes in the census 
data. And we believe that at that point in time there was 
definitely two or more in every NAICS code. Right now we have 
roughly 6,000 firms, which is pretty equivalent to some of the 
other set-aside programs as well. So, you know, I think that by 
encouraging more contracting, HUBZone contracting, we can 
encourage more firms to get in there. Yes.
    Mr. LUETKEMEYER. Okay. Let us take that a step farther. So 
if you wind up with more businesses coming into the HUBZone, is 
that going to hurt existing businesses that are HUBZone with 
more competition?
    Ms. BAILEY. Well, competition is good. So, it will 
encourage more HUBZones to be competing in different areas, 
more diverse markets. We believe that we can open up the number 
of market areas that the HUBZones are participating in. One of 
the fallacies right now is that still a lot of people believe 
it is more in construction and janitorial and those types of 
things, but our largest business sector that is growing is the 
IT services, so.
    Mr. LUETKEMEYER. Well, the reason for my first question 
with regard to the lack of competition, if they are not--if our 
contracts are vectored with those folks, there is not enough 
competition, then competition will drive those prices down and 
be impactful.
    Ms. BAILEY. Well, you know, I still think that even with 
the 6,000 firms and the number of HUBZone set-asides that we 
have, we still have a considerable amount of competition 
throughout the HUBZone Program at this point.
    Mr. LUETKEMEYER. Very good.
    In the bill, it extends the time period for which a 
qualified disaster area is considered as such and proposes to 
modify the definition of base closure area by aligning it with 
the definitions of qualified census track and qualified 
metropolitan area. Are there other areas that we could 
designate similar to a disaster area or base closure area that 
we could add to this list that you are aware of? I guess my 
question is, are we complete with the way we are designating 
this? Are there other problem areas that we could see that 
could help by expanding the definition of a HUBZone that would 
be helpful?
    Ms. BAILEY. At this point, I do not have any answer to that 
at this point. I have not thought about that.
    Mr. LUETKEMEYER. Rest of the panel got any ideas? 
Questions? Are we spot on with what we are doing here?
    Mr. DUFOUR. I think you are spot on. I think that 3294 
really clarifies the BRAC, it clarifies the disaster location, 
and it incentivizes companies to go into those locations. I 
think you nailed it.
    Mr. LUETKEMEYER. Okay, perfect. My time is expired. Thank 
you, Mr. Chairman.
    Chairman CHABOT. The gentleman's time has expired.
    The gentleman from Pennsylvania, Mr. Evans, who is the 
ranking member of the Subcommittee on Economic Growth, Tax, and 
Capital Access, is recognized for 5 minutes.
    Mr. EVANS. Thank you, Mr. Chairman.
    Ms. Bailey, how important is the certainty that H.R. 3294 
attempts to legislate to the types of businesses which your 
council is composed of?
    Ms. BAILEY. As far as from the certainty standpoint, it is 
from the investment. These HUBZone firms are going in. They are 
investing in buildings that need renovation. They are going in 
and investing their financial assets in hiring and training 
HUBZone employees. One of the additional costs when you hire, a 
lot of the HUBZone employees do not have the required 
skillsets. So this encourages these firms to go in and develop 
training programs, to hire individuals in those areas, and 
provide them with the skillsets. But you are investing in long-
term leases. You are helping the economic development of those 
areas by renovating buildings. We actually bought a building 
from the county and renovated that building. And so those 
investments, you need that amount of time in order to start to 
recover that and to be able to get your business off the 
ground.
    Mr. EVANS. Can you give an example of the types of 
businesses?
    Ms. BAILEY. We are actually a professional services 
business, IT businesses. We went into Garrett County where 
right now there was only one other HUBZone firm at the time we 
went in there. We now have 11 businesses. There are several 
different, a variety. We have some IT businesses. We have 
professional services businesses. Higher skill level businesses 
are coming into the area as a result of the HUBZone Program.
    Mr. EVANS. Mr. Melendez, I read your testimony and share 
your frustration at the challenges in getting Federal 
contracts. I have no question, but simply applaud your patience 
and your resolve in making it here under extremely trying 
circumstances. So just talk a little bit about, this is your 
chance to, if you had to say something to us, specifically ways 
that we can really assist you.
    Mr. MELENDEZ. Yes, for us it has been a long journey, like 
I said in the testimony. It has been 4 years, almost 4 years in 
the making of us trying continuously, coming here to D.C., 
establishing contacts. Like I said in my testimony, I think a 
third of the contracts are competed here in the D.C. area, and 
I will tell you that probably 85 or 90 percent of them have to 
start or at least at some point start here. So it does take 
considerable time and investment for companies like ours to 
come here and establish those contacts. Make sure that all 
private experience is taken into consideration when a 
contracting officer is gambling with an opportunity with us. 
Like I said in my statement, we can have 10 years of private 
experience, but for the contracting officer I have nothing. So 
getting that message out is important.
    There are companies like ours that are HUBZone companies 
that have serious and good experience and letting them know 
that it is really not a gamble to give them their first chance. 
It is just kind of the wedge into starting your Federal 
contracting process. I think that help will be greatly 
appreciate.
    Mr. EVANS. I thank you, too, for all you have tried to do.
    Mr. MELENDEZ. Thank you.
    Mr. EVANS. Thank you, Mr. Chairman.
    Chairman CHABOT. The gentleman yields back. Thank you.
    The gentleman from Kentucky, Mr. Comer, is recognized for 5 
minutes.
    Mr. COMER. Thank you, Mr. Chairman. And let me begin by 
saying the HUBZone Program is very important to small business 
and economic development in my congressional district in 
Kentucky. I have 13 of my 35 counties, as you mentioned. One of 
the challenges that we have in rural America is trying to 
sustain our best and brightest people in those areas, and I 
think this is part of the solution. HUBZones, economic freedom 
zones. We have to incentivize businesses to want to stay or 
want to relocate into the rural areas.
    So my first question is to Ms. Bailey. In your testimony, 
you described the impact that H.R. 3294 might have on rural 
small businesses. From the perspective of the HUBZone Council, 
can you tell us how H.R. 3294 might benefit those firms that 
are located in urban areas?
    Ms. BAILEY. Definitely. The one major impact for those in 
urban areas is going to be the freezing of the maps. That will 
enable them in those areas to be able to have more certainty, 
because the urban areas, the numbers probably change quicker. 
You know, the map probably changes, you know, quicker than the 
rural areas do. But it is a census area consideration and I 
think that by freezing that for 5 years will give a lot more 
certainty to those firms as well and be able to encourage more 
firms to move into those areas as well.
    Mr. COMER. One of the complaints I would hear when I was a 
member of the Kentucky General Assembly from the legislators 
representing the urban areas is that, you know, they are 
subsidizing the rural areas with the fact that the rural areas 
do not have an adequate tax base, and I think that it is 
important to note that this can help urban areas in many ways 
and that being one way. So I appreciate that.
    I also have to highlight a HUBZone contractor in my 
district, Geo Consultants in Kevil, Kentucky, which is in 
Ballard County. They specialize in environmental and disaster 
cleanups. They are going to be very busy in the coming weeks 
and months to take care of trying to fix those areas in the 
aftermath of the hurricanes, but this is a program I strongly 
support.
    I appreciate you all's testimony here today and we look 
forward to working with you in the future.
    Thank you, Mr. Chairman. I yield back.
    Chairman CHABOT. Thank you very much. The gentleman yields 
back.
    The gentleman from South Carolina, Mr. Norman, is 
recognized for 5 minutes.
    Mr. NORMAN. Thank you so much. Thank you all for taking 
your time to come testify.
    I guess this is for any of you. I am a developer. I have 
been in private business for a lot longer than I have been in 
politics; fraud and abuse, inflated contracts. Mr. Luetkemeyer 
mentioned competitive bids. Does this bill have safeguards that 
prevent fraud and abuse and the system from being abused, in 
your opinion?
    Ms. BAILEY. Well, I think that the inclusion of putting in 
some performance metrics and a little bit more information will 
provide that assurance against fraud and abuse, also. And not 
only that, from the HUBZone Council perspective, we do a lot of 
our own policing as well to make sure through the education and 
the training and the constant reassurance that we have with 
even our members and outside, that we help police in those 
areas to ensure that the fraud and abuse does not come into 
this program. So I think that by including more stringent 
performance metrics and information reporting, I think that we 
can control that throughout the industry.
    Mr. NORMAN. Give me an example of a metric that you think 
would have teeth.
    Ms. BAILEY. I think that one metric that might have teeth 
is a reporting of, let us just say, as new contract awards come 
up, stronger program exams from the SBA's perspective to ensure 
that they are checking those who are winning these contracts. 
The recertification program, restrengthening the 
recertification of the SBA to ensure that firms are compliant 
and continuing to be compliant. And I think that those are the 
major ways to help to ensure that we are continuing to reduce 
the fraud, waste, and abuse in the program.
    Mr. NORMAN. Anybody else?
    Mr. SCHUERGER. Yes. I think one of the key areas this bill, 
you know, focuses on, you know, the payroll snapshot for the 
business, because at any point in time the HUBZone or the SBA 
can come in and request your existing payroll, which then, 
obviously, if you are not following or even close to the 
guidelines of the HUBZone Program then you would be violating 
the program and kicked out. So I think strengthening that 
ability will definitely help alleviate some of the fraud and 
abuse you talk about.
    Mr. NORMAN. Has that happened, the checks and balances that 
you talk about?
    Mr. SCHUERGER. I think that is part of what the bill is 
beginning to empower the SBA to do now.
    Mr. NORMAN. Okay.
    Mr. SCHUERGER. Is to allow them to begin to do that more 
aggressively, whereas before I think there was more 
lackadaisical oversight of that; hence, the opportunity now to 
strengthen it.
    Mr. DUFOUR. Let me just add that the Federal Acquisition 
Regulations also has a provision to protest. So when a HUBZone 
set-aside procurement, if an award goes to a HUBZone firm and 
another HUBZone firm says I do not think they are a HUBZone, 
there is a process that is followed. It escalates to the SBA 
and it is incumbent upon the SBA to basically do a complete 
examination. They are going to ask you if the business is still 
in a HUBZone and they will verify it. They are going to want to 
see that you have 35 percent of your employees living in a 
HUBZone, and they will verify it. And then finally, they are 
going to want to know that the ownership is 51 percent U.S. 
citizen, and they verify that.
    I have been through that protest process. It works. I have 
also been on the opposite where I have protested and the award 
was retracted from a firm that was actually not a HUBZone. So I 
think there are good checks and balances, not just in this 
bill, but in the FAR.
    Mr. MELENDEZ. I would add that reporting that includes 
comparative analysis between the other SBA programs and the 
whole Federal contracting as a whole will actually help to 
provide those checks and balances and give a spotlight to those 
possible fraud and abuse cases particularly.
    Mr. NORMAN. Well, you all are in the trenches and as we 
move forward, as you see things that can be added, whether it 
gets amendments in this bill or not, it would be great to let 
your thoughts be known in proving this.
    Thank you, Mr. Chairman. I yield back.
    Chairman CHABOT. Thank you. The gentleman yields back.
    Ms. Adams, would you want to go now or do you want to--we 
will come back to you after one or--I do not know. Your feet 
are on the ground. Are you good?
    Ms. ADAMS. They are good.
    Chairman CHABOT. Okay. The gentlelady from North Carolina, 
Ms. Adams, who is the ranking member of the Subcommittee on 
Investigations, Oversight, and Regulation, is recognized for 5 
minutes.
    Ms. ADAMS. Thank you, Mr. Chairman. I had a major overlap 
this morning. And I want to thank all of the witnesses for 
being here today and taking the time to share. Thank you for 
your testimony.
    Mr.--is that Schuerger?
    Mr. SCHUERGER. Yes.
    Ms. ADAMS. Okay. All right. In your testimony you stated 
that the HUBZone certification process was at times challenging 
due to long wait periods, analysis, analyst changes, and an 
understaffed HUBZone office. Through your recertification 
experience, have you found these problems to be rectified? And 
if you have not, how can we ensure that the process is 
efficient and impervious to fraud?
    Mr. SCHUERGER. Thank you for the question. I believe my 
circumstance was unique in being a law firm because what took 
place was in being a law firm, there are lawyers in my law firm 
that are agents for other companies. So what happened during my 
certification process is that there was an assumption that we 
had 20 companies under our ownership when that was not the 
case, but as a law firm you exist as an agent for other 
entities. So clarifying that confusion with the HUBZone 
analyst, what happened was we got handed off to another HUBZone 
analyst who then re-explained. So the lack of consistency with 
the analyst that you have and then the lack of an ability to 
request the same analyst when you resubmit the information, 
when it goes to a new analyst, it is a whole, you know, the 
process starts all over again.
    So in my specific example, I think it has been rectified 
from when I first applied back, you know, and then got 
certified in 2016 to where it is now is, you know, through the 
council we have been able to raise some of those issues with 
the current HUBZone director. And I think Ms. Pardo has taken a 
look and I think hence the strengthening of here in this 
current House bill that is being presented I think will help 
that.
    Ms. ADAMS. Okay.
    Mr. Melendez, in your experience, do small businesses incur 
some additional costs when they are located in and employee 
workers who reside in economically distressed areas such as 
costs to recruit and train workers?
    Mr. MELENDEZ. I think there are costs associated to that. I 
think there would be other costs if you were in a highly 
populated or highly competitive urban area, so I think those 
actually in the long run will balance themselves out. There are 
definitely a lot of different challenges for being in an 
underdeveloped and rural area, like you clearly explained. 
Hiring takes a lot more time, so actually, the grace period and 
being able to at least add a little bit more time to that would 
be greatly beneficial to the bill, I think. But apart from 
that, and the training, I think, like I say, it will balance. 
It does balance a little bit out.
    Ms. ADAMS. Okay. Thank you.
    SBA is still in the process of streamlining certifications 
through certifysba.gov and perfecting this process. How can 
Congress ensure that the HUBZone process changes for the better 
once it is incorporated into this new website? That is a 
question for anyone who would like to answer it.
    Ms. BAILEY. Well, I think one of the major things is 
integrating the application process, the maps, and the 
recertification process all into this certify.gov, and to be 
able to incorporate the requirement for performance metrics. On 
behalf of the HUBZone, I can tell you that most of the HUBZone 
firms would be happy to provide data if there was an easy way 
to do that. And if they could incorporate that within the 
system where we could go in and provide periodic information, 
this would be a greatly desirable improvement in the overall 
HUBZone Program.
    Ms. ADAMS. Okay. Does anyone else want to quick answer? 
Okay, all right. Thank you very much.
    And Mr. Chair, I will yield back.
    Chairman CHABOT. Thank you very much. The gentlelady yields 
back.
    The gentleman from Pennsylvania, Mr. Fitzpatrick, is 
recognized for 5 minutes.
    Mr. FITZPATRICK. Thank you, Mr. Chairman. Thank you all for 
giving us your time today.
    I think it is safe to say that in a Nation with 20.1 
trillion in debt that growing our economy is far and away the 
most significant challenge facing this Congress and this 
country. I have no doubt that programs like this help in that 
regard, infusing cash into economically distressed areas.
    My question is regarding this statute in particular. 
Clearly, in addition to Federal incentives, you have State 
enterprise zones. You have county economic opportunity zones. 
You also have municipal incentives. In your experience, in the 
implementation of these programs, how seamless is the 
integration in these various programs to hitting the target, 
the intended target of making sure that we maximize employment 
opportunities for people in these areas?
    Mr. SCHUERGER. It is not really a seamless process. You 
know, the municipality and the county and the State each have 
their own organizations and entities by which they answer up 
to, and then to try to integrate that into the HUBZone Program. 
One of the things that we have had success with has been 
working, like in Clinton County with the Wilmington Port 
Authority with the airport. They have been supportive locally 
in giving us incentives on top of the HUBZone status in order 
to employ there in that economic distressed area. So that is an 
example of what you talked about, sort of a seamless working 
relationship between the local entities, not exactly hand-in-
hand, but all of those enticements help in creating the jobs in 
an economically distressed area.
    Mr. FITZPATRICK. So when you say it is not seamless, are we 
essentially dealing with a patchwork of programs that are 
affecting different types of people, different entities, 
different zones in the community?
    Mr. SCHUERGER. I would say yes. Through my experience, that 
would be correct.
    Mr. FITZPATRICK. Is there anything in this legislation on a 
Federal level we can do to increase that integration? Because I 
would think that if we designate a certain area, that that is 
an area in need, then why not pull together all the resources? 
Because these are all taxpayer dollars, just on different 
levels, hitting the intended target in unison to expand 
economic growth.
    Ms. BAILEY. I think that is a great idea. And not only that 
is that also what we need to be doing is through the education 
and the encouragement of these areas that this is one of the 
toolkits for them to use for their economic development and the 
workforce training. Now, we do see that in a lot of the rural 
areas, and SBA has been working on trying to put a toolkit 
together that they took around on their HUBZone Destination 
Tours to each one of these areas. So I think that we see that 
happening. We see that those areas that are in need, they are 
trying to work together, and it is a consolidated team as part 
of their economic development. But it is an important thing 
through the HUBZone, through the HUBZone Program, to encourage 
that you are working with economic development groups. You are 
working with the educational groups. You are working with your 
workforce development groups to make this program successful.
    Mr. FITZPATRICK. So is that an amendment you think would be 
a good idea for this statute?
    Ms. BAILEY. Well, I think it would be a great idea if we 
could figure out a way to do that. Yes.
    Mr. FITZPATRICK. I yield back, Mr. Chairman.
    Chairman CHABOT. Thank you. The gentleman yields back.
    And I will now recognize myself for just a couple minutes 
to kind of wrap up here.
    Two questions. First, for you, Mr. Melendez, since I did 
not get around to you the first time. Obviously, Puerto Rico 
and, you know, some of our Southern States, Florida in 
particular, Georgia to some extent, Louisiana, and especially 
Texas, have been hit with major hurricanes of late. Could you 
tell us as a practical matter, my understanding is Puerto Rico, 
most of it, although not all of it, I think is a HUBZone, what 
positive or practical impact of being a HUBZone should it have 
in the rebuilding effort down in Puerto Rico, for example?
    Mr. MELENDEZ. I think it is a great opportunity. I think a 
lot of the relief work, a lot of the reconstruction of these 
areas, I think HUBZone companies as a whole should be used and 
should be given priority for this. It will definitely help the 
underlying communities because I believe a lot, at least in the 
case of Puerto Rico and the Virgin Islands, it will not only 
impact the work on the destruction that happened, but those 
were already economically depressed areas. So helping, having 
companies from the same HUBZone areas being able to do the 
work, to reinvigorate and to reconstruct the destructed area I 
think will have a great impact. So if there is some way that 
the reconstruction contracts can be given, some kind of 
HUBZone, or at least priority to HUBZone companies, it will, 
again, it will definitely help.
    Chairman CHABOT. Thank you very much.
    And my final question, Ms. Bailey, is kind of a follow-up 
to Mr. Norman's question. He was, and I think appropriately so, 
talking about making sure that we have as little as possible 
fraud and abuse in the program where the government, let us 
face it, we are never going to eliminate this kind of stuff as 
much as we want to try, but we need to reduce it as much as 
possible and hopefully eliminate it. And it is my understanding 
that in this legislation and in the original legislation there 
are some safeguards in that, some additional things like 
reporting requirements and things that the SBA should be able 
to oversee.
    So on the one hand, we want to do those things. On the 
other hand, the SBA sort of has a reputation of being a very 
paperwork-intensive organization that can make it difficult for 
people to take advantage of the loan programs that are 
available out there. So there needs to be a balance between 
making sure that we are eliminating that fraud and abuse, while 
at the same time we are not just hitting people over the head 
with paperwork all the time.
    So would you want to maybe just touch on that balance and 
let me know what you think about what I just said?
    Ms. BAILEY. I think the balance is definitely required. But 
I think that by looking at this and automating a lot of these 
types of requirements where it does not take a considerable 
amount of time for us to go in as we are doing our 
recertification, to fill in key data points and performance 
metric information, and that SBA then begins accumulating and 
using that information and targeting high-risk types of areas 
so that if you have contractors and you are measuring awards 
that are coming out and you evaluate those contractors as these 
awards are happening, then you can start mitigating any fraud, 
waste, and abuse at the point in time that this is actually 
occurring. So by having us report, you know, maybe as part of 
the system the performance metrics here as if you are proposing 
on HUBZone set-asides or you are awarded a HUBZone set-aside, 
you know, requirement to report that automatically. I mean, you 
know, electronically, not by paper and all of that, in a 
mechanism where they can measure the risk and assessment of 
these awards.
    Chairman CHABOT. Thank you very much.
    And in closing, I would just note that I think our panel 
here has been very helpful in all the Committee's members 
understanding the HUBZone Program better, and realizing that it 
can be an effective program in combating poverty and increasing 
economic independence and job creation, although we will 
continue to monitor it and try to make improvements where we 
can in a bipartisan manner. And I want to again thank Ms. 
Velazquez for her hard work and staffs on both sides for this.
    I would ask unanimous consent that members have 5 
legislative days to submit statements and supporting materials 
for the record.
    Without objection, so ordered.
    And if there is no further business to come before the 
Committee, we are adjourned. Thank you very much.
    [Whereupon, at 12:15 p.m., the Committee was adjourned.]
    
    
    
    
    
    
    
                            A P P E N D I X




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                          Written Testimony of


                        Robert A. Schuerger, II


                     Prinicipal and Attorney at Law
              Law Offices of Robert A. Schuerger Co., LPA
                              Columbus, OH


                               Before the


                   House Committee on Small Business


  ``Serving Small Businesses: Examining the Effectiveness of HUBZone 
                               Reforms''


                           September 13, 2017

    Good morning Chairman Chabot, Ranking Member Velazquez, and 
Members of the Committee. My name is Robert Schuerger and I am 
the founder and lead attorney for the Law Offices of Robert A. 
Schuerger Co., LPA. Founded in 2008, we have been a HUBZone-
certified law firm since August 2016. I am also a member of the 
HUBZone Council. Thank you for giving me the opportunity to 
testify today. Chair Chabot, it gives me great pride to know 
that the Committee is led by a fellow Buckeye.

    Schuerger Law's principal office is based in a HUBZone area 
that is in urban downtown Columbus, Ohio. We also maintain an 
office and 11 employees, in Wilmington, in rural Clinton 
County, Ohio. Since our founding in 2008, Schuerger Law has 
grown to 52 employees, growth we attribute directly to our 
success in the HUBZone program. Our clients include public 
sector entities such as local governments, hospitals and 
universities. As a result of our HUBZone certification, we have 
hired 23 employees and are a subcontractor for the Department 
of Education. We were recently awarded a prime contract with 
the Department of Justice.

    We learned about the HUBZone program when we were looking 
at federal contract opportunities. We had just purchased a 
building in 2014 in downtown Columbus that was in the HUBZone 
area. We then went through the certification process which at 
times was challenging due to long wait periods, analysts 
changing on the file and an understaffed HUBZone office. 
Director Pardo was instrumental in rectifying those delays and 
a year later we were HUBZone certified and eager to begin 
pursuing the new opportunities the certification afforded the 
business.

    Since certification we have grown from a firm of 29 
employees to 52 employees. This job increase is directly 
attributable to our HUBZone status as it allowed us to become a 
federal subcontractor to the Department of Education and a 
prime contractor to the Department of Justice. The Clinton 
County office was uniquely qualified to be our satellite office 
as DHL had just moved out of the Regional Airport leaving 
thousands without jobs. We have stepped in and taken over a 
space in the airport with the target to grow the business 
through our federal procurement to at least 40 jobs.

    I am please the Committee has undertaken the task of 
changing a program badly in need of change. In my view, H.R. 
3294, ``The HUBZone Uniformity and Business Stability Act of 
2017'' provides much needed stability to companies like mine. 
Clinton County, home of Washington, will lose its HUBZone 
designation in 2018. I certainly favor the approach in H.R. 
3294 which freezes the current HUBZone eligibility maps until 
2020. It would provide us with the transition time our firm 
needs while we decide how to keep our valued employees and 
finding a new office. Transitioning from the annual ACS to a 5-
year process, will enable our firm to find that location and 
make the capital investments necessary to continue bringing 
economic development to the hard-working people of Ohio.

    The HUBZone online tool, that requires the SBA to ``clearly 
and conspicuously provide access to the data used by the 
Administrator to determine whether or not an area is a 
qualified area in the year in which the online tool was 
prepared'' is also a significant requirement.

    It will assist HUBZone firms that maintain offices in 
multiple locations, like Schuerger Law. This tool, updated 
every 5 years, would ensure HUBZone firms have the latest 
information on HUBZone eligible areas. This bill also ensures 
that the SBA Administrator removes redesignated areas that are 
no longer qualified, which has been a problem in the past with 
many companies who have undergone the extensive certification 
process only to find the HUBZone qualified area lost its 
designation.

    Another provision of the bill, including Subsection 
31(d)(6) provides a firm who loses certification, 30 days to 
submit documentation to the SBA to reestablish eligibility. 
Since the certification process is time consuming, this is a 
common-sense approach to the process. We believe it will 
incentivize HUBZone participation. Firms that may be hesitant 
to become HUBZone-certified have clear recourse should they 
feel that their certification was unjustly revoked.

    I would note that the federal government has never met its 
goal of contracting 3% of its contracts to HUBZone companies. I 
would urge the Committee to keep up its oversight of federal 
agencies and encourage them to contract with HUBZone firms. It 
is certainly important to Clinton County, Ohio and many other 
areas in this country. Adoption of this legislation is critical 
to the success of the program and time is of the essence. We 
really need action this year to ensure that firms like mine can 
continue work in the program.

    In closing, I want to emphasize that the HUBZone program is 
an important economic development program. Incentivizing 
companies to locate in depressed areas is a good policy 
approach. However, change must be made to the program, such as 
those in H.R. 3294.

    Thank you for the attention you have brought to this 
critical issue, and for all of your work supporting our 
nation's small businesses and those in Ohio. I look forward to 
answering any questions.

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    Chairman Chabot, Ranking Member Velazquez and members of 
the United States House of Representatives Committee on Small 
Business:

    My name is Dennis DuFour and I am the President of The Data 
Entry Company (TDEC). I appreciate the opportunity to testify 
at today's hearing titled ``Serving Small Businesses: Examining 
the Effectiveness of HUBZone Reforms.''

    I want to discuss three things with you today. First, I am 
going to give you a brief history of our business and what we 
do. Then I am going to discuss how we leveraged the valuable 
HUBZone certification to create jobs in underserved parts of 
the U.S. And, finally, I am going to explain why the HUBZone 
program reform must happen now and in particular the need for 
area stability. This is an urgent matter.

    About TDEC: TDEC was started in 1958 by Ray DuFour, my 
grandfather, who was an insurance agent. His first customer was 
the National Active and Retired Federal Employee Association 
(NARFE) who had purchased a group hospitalization policy and 
Ray needed a way to process each member's insurance 
application. So he started TDEC to receive and open mail, enter 
applicant data onto keypunch cards and prepare checks for bank 
deposit. There weren't computers in the late '50s and '60s like 
we see today. Data was entered on a keypunch card and the cards 
where fed into machines to create data tapes.

    A couple of years later my father, Mo DuFour, went to work 
for the company and rapidly expanded our customer base. He 
added customers like the National Geographic Society, Citibank 
Credit Cards and the Republican National Committee (RNC) to 
name a few. I vaguely remember in the early `70s my father 
racing back from our summer vacation because someone broke into 
the Democratic National Committee Headquarters at the Watergate 
Hotel and the FBI wanted to see the data we had collected for 
the RNC. This investigation led to the first resignation of a 
sitting United States President.

    Today, in our 59th business year, my brother John and I 
lead TDEC and we focus on serving Federal, State and commercial 
customers with their labor intensive functions including, as 
our name states, data entry services. We have 300 employees 
that provide services at our location in Maryland, Ohio and 
Virginia as well as at government offices from Alaska to 
Florida and in 21 others states in between. My brother and I 
don't take lightly the fact that we operate this business. 
Statistically only 12% of businesses survive into the 3rd 
generation.

    Leveraging the HUBZone Program: In March of 2002, I applied 
to the Small Business Administration (SBA) for HUBZone 
certification for TDEC. The program analyst at the SBA assigned 
to our application was Mariana Pardo, who I note is now the 
Director of the HUBZone Program. After a thorough examination 
of our application including our ownership, our business size 
and the percentage of then 51 employees we have that live in 
HUBZones--we were welcomed into the program in November 2002.

    We immediately began to leverage this valuable 
certification by marketing our new status to the Federal 
Government and to large prime contractors. That led to winning 
two sub-contracts to large prime contractors and to our first 
HUBZone set-aside prime contract with the National Oceanic and 
Atmospheric Administration in 2007. On that contract we 
provided Administrative Support Services to the Northwest and 
Alaska Fisheries Science Centers in the State of Washington and 
the State of Alaska. We were re-awarded a competitive contract 
to provide similar services to NOAA in 2012 and continue to 
serve this important customer today.

    For 15 years we have continuously maintained our HUBZone 
certification through scheduled and un-scheduled program 
examinations, re-certifications and HUBZone protests. We are 
proud to report that 47% of our now 300 employees live in 
HUBZones--well above the 35% program requirement. We achieve 
this high percentage of HUBZone employees because we 
continually seek to attract, retain and train well qualified 
employees in under-served areas and it is working!

    Urgent HUBZone Re-designation Reform: In January 2018, just 
4 months from now, Garrett County, Maryland, where TDEC's 
principle office is, will no longer be a HUBZone. There are 
another 11 businesses in Garrett County that are faced with 
this same re-designation problem. In late 2016, I wondered if 
this was isolated to Garrett County so my team and I researched 
which other counties in the United States had a similar 
imminent issue. We found that there are 15 other non-
metropolitan counties that will be re-designated in January 
2018 and then 71 more similar counties in July 2018. This is a 
total of 86 counties in 2018 spanning 25 States.

    The more we dug into the data we found it gets more-dire. 
Our research found that 4,700 jobs are at risk at 245 companies 
in these under-served economically disadvantaged communities.

    Knowing that TDEC was not alone in this timely matter, I 
began a campaign to reach out to fellow HUBZone firms to 
solicit their support and feedback. This campaign called ``Save 
Our HUBZone'' reaches over 4,000 HUBZone firms across the 
United States. And this group is not shy to raise their voices. 
Here are a few of the hundreds of responses I received to a 
simple question: ``How will re-designation affect your 
business?''

    This is a critical issue to our remaining in this town and 
county in Pennsylvania. Without it, we will be forced to lay 
people off locally and relocate to another town and probably 
another state to continue to do business.

    Lake County, California is a poor rural northern California 
County with many small businesses, many whom are HUBZone 
businesses. This gives our small company and other small 
businesses an opportunity to obtain Federal work.

    HUBZone communities need the support of HUBZone companies. 
No one better understands the community than those who are 
there in it. Take away the lifeline of the community and the 
community itself will wither. Maintaining HUBZone designation 
maintains life within the community. Save a community by 
keeping HUBZone designation as is. - Detroit, Michigan

    Our small business is a HUBZone qualified small business 
and this status helps us get federal projects as a small 
business. Without this status we will not qualify as a small 
business set-aside anymore and therefore will lose out on some 
of the contracts geared for small businesses. This will put us 
back in the running with all the large competition and will 
directly impact our company and employees. Matanuska-Susitna 
Borough/Alaska

    I support H.R. 3294 because the reforms proposed will 
continue to provide needed opportunity in economically-
struggling areas of our country. I am looking to hire students 
from Atlanta Tech College. These students come from a community 
of public assistance and various other ailments because of 
their socio-economical situations. We are providing jobs, 
because of the HUBZone certification. It's an honor and a 
privileged and I support H.R. 3294!! - Atlanta, Georgia

    HUBZone Small Businesses are vital to the need of creating 
jobs and employment opportunities for the Citizens who reside 
in the HUBZone areas. Most are not high skilled individuals but 
are hard working, dedicated and apt to learning new skills. 
Loss of HUBZone status can totally shut the doors of the 
HUBZone Small Business and put thousand/millions of people out 
of work. - Hamilton County, Ohio

    So my message to you echoes what we have heard from my 
fellow HUBZone firms. We need you to give HUBZone firms 
stability by extending the re-designation period as you have in 
HR 3294. This bill, which was introduced by both the Ranking 
Member and the Chairman, if enacted now, will freeze the 
HUBZone map until 2020 and then only be changed every 5 years. 
This will give communities and their businesses time to build 
resources to compete in a post HUBZone environment. Remember it 
took us 5 years of marketing our services in order to get a 
prime contract.

    While I am excited and encouraged by all the enhancements 
to the HUBZone Program made in HR 3294 I am most interested in 
the urgent need to save HUBZone communities by freezing the 
HUBZone map until 2020.

    Just like you face tough decisions in your job so do I. I 
need to decide in the next month whether to lose our HUBZone 
status and stay in our current location or to move our business 
to another HUBZone. This decision has been weighing on me for 
some time because we have loyal long term employees that will 
be affected. If we move, our people may lose their jobs and 
there really aren't any other viable jobs for them in Garrett 
County. Coupled with that is the fact that we have been in 
business in Garrett at the very same location for over 50 
years. It is difficult and costly to move a business and is a 
distraction to the businesses purpose. We also have a ton of 
history in our Oakland, MD office. I remember as a little boy 
trying to use the key punch card machines to punch holes in 
keypunch cards. Let's just say that I was terrible at it.

    So I ask you to act immediately on HR 3294 and give HUBZone 
communities certainty. I speak for the thousands of HUBZone 
workers whose jobs are at stake. There is no more important 
economic development issue impacting rural communities in 
America! I am available to answer any questions you have and 
again, I appreciate the opportunity to speak with you today.



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