[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]




 
                   HELPING SMALL BUSINESSES COMPETE: 
                  CHALLENGES AND OPPORTUNITIES IN THE 
                    FEDERAL PROCUREMENT MARKETPLACE

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

                                HEARING

                               before the

             SUBCOMMITTEE ON CONTRACTING AND INFRASTRUCTURE

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                             JULY 16, 2019

                               __________

  
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
 
  
                               

            Small Business Committee Document Number 116-034
             Available via the GPO Website: www.govinfo.gov
             
             
             
                            ______

             U.S. GOVERNMENT PUBLISHING OFFICE 
 37-029               WASHINGTON : 2019           
             
             
             
             
                   HOUSE COMMITTEE ON SMALL BUSINESS

                 NYDIA VELAZQUEZ, New York, Chairwoman
                         ABBY FINKENAUER, Iowa
                          JARED GOLDEN, Maine
                          ANDY KIM, New Jersey
                          JASON CROW, Colorado
                         SHARICE DAVIDS, Kansas
                          JUDY CHU, California
                           MARC VEASEY, Texas
                       DWIGHT EVANS, Pennsylvania
                        BRAD SCHNEIDER, Illinois
                      ADRIANO ESPAILLAT, New York
                       ANTONIO DELGADO, New York
                     CHRISSY HOULAHAN, Pennsylvania
                         ANGIE CRAIG, Minnesota
                   STEVE CHABOT, Ohio, Ranking Member
   AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member
                        TRENT KELLY, Mississippi
                          TROY BALDERSON, Ohio
                          KEVIN HERN, Oklahoma
                        JIM HAGEDORN, Minnesota
                        PETE STAUBER, Minnesota
                        TIM BURCHETT, Tennessee
                          ROSS SPANO, Florida
                        JOHN JOYCE, Pennsylvania

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

                           OPENING STATEMENTS

                                                                   Page
Hon. Jared Golden................................................     1
Hon. Pete Stauber................................................     2

                               WITNESSES

Ms. Belinda Guadarrama, Founder & CEO, GC Micro, Petaluma, CA, 
  testifying on behalf of GovEvolve..............................     5
Mr. Bruce Lansdowne, President & CEO, Trinity Technology 
  Partners, Greenbelt, MD, testifying on behalf of the Montgomery 
  County Chamber of Commerce.....................................     7
Mr. Thomas J. DePace, CTS, C.O.O. & Sr. Engineering Manager, 
  Advance Sound Company, Farmingdale, NY, testifying on behalf of 
  NECA...........................................................     8
Ms. Dorothy Ann Callahan, Principal, D. Callahan, LLC, Olney, MD.    10

                                APPENDIX

Prepared Statements:
    Ms. Belinda Guadarrama, Founder & CEO, GC Micro, Petaluma, 
      CA, testifying on behalf of GovEvolve......................    21
    Mr. Bruce Lansdowne, President & CEO, Trinity Technology 
      Partners, Greenbelt, MD, testifying on behalf of the 
      Montgomery County Chamber of Commerce......................    31
    Mr. Thomas J. DePace, CTS, C.O.O. & Sr. Engineering Manager, 
      Advance Sound Company, Farmingdale, NY, testifying on 
      behalf of NECA.............................................    40
    Ms. Dorothy Ann Callahan, Principal, D. Callahan, LLC, Olney, 
      MD.........................................................    46
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    EA Engineering, Science, and Technology, Inc., PBC...........    51
    ECR - Employee-owned Contractor Roundable....................    54
    HUBZone Contractors National Council.........................    59
    WIPP--Women Impacting Public Policy..........................    74


 HELPING SMALL BUSINESSES COMPETE: CHALLENGES AND OPPORTUNITIES IN THE 
                    FEDERAL PROCUREMENT MARKETPLACE

                              ----------                              


                         TUESDAY, JULY 16, 2019

                  House of Representatives,
               Committee on Small Business,
    Subcommittee on Contracting and Infrastructure,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2360, Rayburn House Office Building. Hon. Jared Golden 
[chairman of the Subcommittee] presiding.
    Present: Representatives Golden, Veasey, Chu, Balderson, 
Hagedorn, and Stauber.
    Chairman GOLDEN. Good morning, folks. The Committee will 
come to order.
    I am going to start right off this morning by saying that I 
woke up bright and early this morning and hopped on some radio 
shows back home, and Ranking Member Pete Stauber came up as an 
example and someone said, sheesh, you know, do you enjoy 
working with any of your Republican colleagues? I said, well, 
sure, this is an easy one. Pete Stauber from Minnesota is a 
great guy. But the last time I was late to Committee he text me 
and said that I owed him a beer for like every minute I was 
late. So I would say we are even now. Oh, boy.
    So I want to thank everyone for joining us this morning, 
and I especially thank the witnesses for being here and thank 
you for your patience.
    Supporting small businesses can take on many forms form 
making sure they have affordable access to capital, something 
we talk about a lot here, to making sure our Nation has an up-
to-date infrastructure, to meeting the technology and 
transportation needs of small businesses. Another way that we 
support small businesses is to simplify and expand 
opportunities to do business with the United States Government. 
The Federal Government is the largest procurer of goods and 
services in the world, spending nearly $442 billion in fiscal 
year 2017, for example.
    Over the years, Congress has recognized the positive impact 
that Federal contracting has on increasing small business 
development and growth when it established a minimum for a 
Federal contract set-aside of 23 percent. As a subset of this 
overall goal, agencies aim to maximize participation of small 
businesses in the Federal marketplace for certain deserving 
demographics.
    The Small Business Act sets the goal of awarding 5 percent 
of all eligible prime contracting and subcontracting dollars to 
small, disadvantaged businesses and women-owned businesses, and 
3 percent for HUBZone and service-disabled veteran-owned 
businesses.
    Last year, the Federal Government awarded $120 billion. 
That is about 25 percent of all eligible prime contracting 
dollars to small businesses and met goals for the small 
disadvantaged businesses, small disabled, veteran-owned 
businesses, respectively, as well. And this is certainly a move 
in the right direction. The prime contracting goals for 
HUBZone, small businesses, and women-owned small businesses, 
however, were not met.
    While it is true that small businesses received more 
dollars this year than in years past, dollars to large 
businesses are actually increasing at a faster pace and the 
disparity is quite large. And unfortunately, a closer look at 
the numbers reveals that most of the eligible contracting 
dollars were given to just a few very large companies in the 
country, which is not an acceptable outcome. I think that this 
point is important because we all know that everywhere we go in 
the country, small businesses are the largest job creators and 
providers out there. And that is particularly true in districts 
like the Ranking Member and my own, which are very, very rural. 
So I think it is important that we stay focused on using 
taxpayer dollars, Federal contracting opportunities to the 
benefit of small businesses.
    As the Chair of the Subcommittee on Contracting and 
Infrastructure, I am committed to furthering small business 
interests and improving our small businesses contracting 
framework to ensure that small businesses around the country 
can compete and thrive, and that is precisely the purpose of 
our hearing today, to listen to some of the challenges that 
small businesses face in the Federal marketplace and potential 
solutions we can look to as policymakers to address them.
    As part of today's hearing, we will hear directly from 
small contractors about how certain section 809 proposals that 
use words like ``streamline'' and ``efficiency'' can sometimes 
be code words that could potentially eliminate most small 
business set-asides for Defense Department acquisitions. These 
recommendations would replace the longstanding 23 percent set 
aside with a miniscule 5 percent small business preference.
    The Subcommittee also wants to hear how we can improve the 
Small Business Act to remove barriers for entry, increase the 
use of subcontractors, and make sure that small firms are paid 
in a timely manner when providing quality goods and services to 
Federal Government. That is something I hear about repeatedly 
back home from people contracting with the government is 
timeliness of payment is a barrier to participation.
    With that, I want to thank all the witnesses for their 
attendance, and I look forward to your testimony. I would now 
like to yield to the Ranking Member, Mr. Stauber, for an 
opening statement.
    Mr. STAUBER. Thank you, Chairman Golden.
    You know, the Federal Government has long stood by the 
policy that government should aid, counsel, assist, and protect 
the interests of small businesses' concerns in order to 
maintain the strength and overall economy of our Nation. One of 
the primary tenets of the Small Business Act is in recognizing 
the use of small business contractors as in the interest of 
maintaining or mobilizing the Nation's full productive capacity 
in the interest of war or national defense programs. To this 
end, it is my privilege and honor to sit on this Subcommittee 
to ensure that the people's will is met and to provide a 
platform for small contractors to freely voice their issues and 
concerns.
    One of the issues that raises the most alarm bells are the 
small business contracting and subcontracting. Subcontracting 
is vitally important to the health and vitality of a small 
business, particularly those that are new to the Federal 
marketplace. Subcontracting opportunities are most often the 
first and best way for a new small business to engage with the 
Federal customer and small firms structure their entire 
business model entirely around obtaining subcontracts.
    Therefore, it is imperative that maximum effort is made to 
ensure subcontracting opportunities are plentiful and fair. 
Like the Federal Government, large contractors are required to 
develop subcontracting plans and meet goals for partnering with 
small businesses.
    Unfortunately, as we have seen previously in this 
Committee, agencies are not doing enough to ensure large primes 
are following through on meeting their subcontracting plans and 
the rules themselves surrounding subcontracting plans might be 
part of the problem.
    I look forward to hearing more about the issues surrounding 
subcontracting plans and ways we might be able to hold large 
contractors accountable.
    Another concern brought to this Committee's attention are 
some of the recommendations made by the section 809 panel, a 
group established by Congress to address issues with the way 
the Department of Defense buys what it needs. One of the 
recommendations raising red flags among the small business 
community is the proposal to replace the small business set 
aside requirement for certain contracts with a 5 percent price 
preference. The set-aside requirement is critically important 
in that it provides a protocol--correction, a protected pool in 
which small and new vendors can compete, develop, and grow, 
eventually to compete for larger acquisitions against bigger 
companies. Thus, it is important that we maintain the special 
requirement in the interest of having robust competition and 
ensuring a healthy defense industrial base.
    There are other troubling recommendations coming from the 
panel's report, such as eliminating the multiple form protest 
ability and restricting the SBA's ``once 8(a), always 8(a)'' 
rule. I hope to learn more from our witnesses about what impact 
these recommendations might have on small businesses serving in 
the defense marketplace.
    Lastly, one of the industries in which small businesses 
make up a majority is construction. The Federal Government 
depends on small construction companies. Whether they are 
primes, subcontractors, or suppliers, every government builder, 
VA hospital, and other structure important to the functioning 
of our government needs these small construction firms to 
succeed, so we need to make sure their concerns are heard and 
addressed.
    Obtaining and maintain steady cash flow is one of those 
issues particularly important to a small construction 
contractor, and I hope to learn more about this and other 
issues from our witnesses today.
    Thank you all for your testimonies and thank you, Mr. 
Chair, and I yield back.
    Chairman GOLDEN. Thank you, Mr. Stauber. The gentleman 
yields back.
    For Committee members that have opening statements that 
they prepared, they can submit those for the record.
    I would like to just take a few minutes to explain the 
timing rules for those of you testifying. You may have been 
through this before but just in case. Each witness gets 5 
minutes to testify and each member gets 5 minutes for 
questioning. There is a lighting system in front of you that 
will assist you. The green light will be on when you begin, the 
yellow light tells you you have got a minute to go, and the red 
light will come on when you are out of time. Just do your best 
to try to stay within that time limit.
    I would now like to introduce our witnesses.
    Our first witness is Ms. Belinda Guadarrama, the founder 
and CEO of GC Micro, a leading supplier of computer hardware, 
software products, and integrated systems to the defense and 
aerospace industries, Federal agencies, and Fortune 1000 
companies. She is Co-Chair of the GovEvolve advocacy 
organization and has serve as Chair of the NASA Minority 
Business Resource Advisory Committee and is a member of the 
Department of Energy Task Force on Small Business Development. 
Among her many accomplishments, she received a National 
Minority Female Entrepreneur of the Year Award from the U.S. 
Chamber of Commerce and the Latino Entrepreneur of the Year by 
the Latino Business Association. Welcome, Ms. Guadarrama.
    Our second witness is Mr. Bruce Lansdowne, the president 
and chief executive officer of Trinity Technology Partners, 
Inc., a small business that participates in the 8(a) program. 
Mr. Lansdowne is a business and program management executive 
with more than 20 years of leadership experience and has served 
as an executive advisor to the Air Force leadership. He serves 
on the board of directors for the Montgomery County Chamber of 
Commerce and Donations from the Heart, Inc., a faith-based, 
nonprofit organization developed to serve both individuals and 
families by providing assistance and resources for those in 
need. Welcome, Mr. Lansdowne.
    Our third witness today is Mr. Thomas DePace. Mr. DePace is 
the CEO and senior engineering manager of Advance Sound 
Company, a small business dedicated to audiovisual and security 
installations. In this role, he has expanded the core 
competencies of Advanced Sound Company from audiovisual systems 
to include network infrastructure, lighting control and 
automation, as well as access control and intellectual property 
security systems. In 2010, Thomas was a 30 under 30 Young 
Professionals Award recipient from the Huntington Chamber of 
Commerce, and in 2015, he was recognized as a commercial 
integrator 40 under 40 Award recipient. I got a 40 under 40 
back home in Maine as well. Welcome, Mr. DePace.
    And I would now like to go ahead and yield to our Ranking 
Member, Mr. Stauber, to introduce our final witness.
    Mr. STAUBER. Thank you, Mr. Chairman.
    And our final witness is Ms. Dorothy Callahan. She has been 
a small business advocate for the past 30 years and has 
extensive experience in acquisition, contract management, and 
supplier diversity, supporting both the private sector and our 
Federal Government. Ms. Callahan is a seasoned veteran in 
managing multiple subcontractors and partners for large and 
mid-scale procurements and has a long history working with the 
Federal acquisition regulation, defense acquisition regulation, 
SBA size standards and regulations, and a variety of other 
Federal, state, and local procurement regulations. Ms. Callahan 
worked for the National Government Services Business 
Development organization from 2011 to 2019 as the small 
business and strategic partnering director, and in that role 
she developed and enabled small business utilization strategies 
for the business development capture and program teams. She 
also worked diligently to identify small business partners for 
NGS. Prior to that, Ms. Callahan was the small business liaison 
officer for IBM's U.S. Federal Global Business Services 
Division. In her time with IBM, which spanned over 25 years, 
she was involved in contracts, administration, management, 
sourcing, strategy, subcontracts, management, and bid and 
proposal support. Ms. Callahan is an active member of many 
government and nongovernment procurement organizations, having 
attended as a guest speaker or panelist for several small 
business events. She clearly brings us a wide depth and breadth 
of experience, and I look forward to hearing your testimony. 
Ms. Callahan, welcome.
    Mr. Chair, I yield back.
    Chairman GOLDEN. And now we will go ahead and move ahead to 
our witness testimony.
    Ms. Guadarrama, you are now recognized for 5 minutes.

  STATEMENTS OF BELINDA GUADARRAMA, FOUNDER & CEO, GC MICRO; 
BRUCE LANSDOWNE, PRESIDENT & CEO, TRINITY TECHNOLOGY PARTNERS; 
   THOMAS J. DEPACE, CTS, C.O.O. & SR. ENGINEERING MANAGER, 
  ADVANCE SOUND COMPANY; DOROTHY ANN CALLAHAN, PRINCIPAL, D. 
                         CALLAHAN, LLC

                STATEMENT OF BELINDA GUADARRAMA

    Ms. GUADARRAMA. Chairman Golden, Ranking Member Stauber, 
and members of the Subcommittee, I would like to thank you for 
the opportunity to testify today. My name is Belinda 
Guadarrama, and I am the founder and CEO of GC Micro 
Corporation, a minority-woman-owned information technology 
business located in Petaluma, California.
    I am testifying on behalf of GovEvolve, a group of small 
and midsize ITVARs, firms that enhance the value of third-party 
products and play a vital role in the IT industry, providing 
software, hardware, and networking products that provide value 
beyond just order fulfillment.
    GovEvolve members represent WOSB and EDWOSBs, HUBZone 
certified, 8(a), service-disabled veterans, small and midsize 
businesses.
    I founded GC Micro in 1986, and my vision extended far 
beyond my desire for personal success. I envisioned a company 
where my staff is not just employees but they are my business 
partners. This community-minded philosophy has been the 
undercurrent of my leadership since GC Micro's founding. My 
experience in government, including as a White House Small 
Business Policy Advisor, allowed me to see firsthand the 
importance of having effective small business policies that 
promote growth and innovation in our Nation's industrial base.
    I would like to highlight some of the challenges faced by 
small and midsize companies in the Federal marketplace, as well 
as provide opportunities for change in acquisition policy for 
ITVARS, and the entire small business community at large.
    First, as this Committee is well aware, the Section 809 
Panel recommended eliminating small business set-asides in 
exchange for a 5 percent price preference at the Department of 
Defense.
    Small businesses have everything to lose with this change. 
We strongly encourage the Committee to support the more than 
51,000 small business contractors that service DOD's mission by 
preserving the contracting programs that fulfill the Nation's 
policies of ensuring a health industrial base.
    Second, as government contractors become larger, a small 
business has to decide whether to grow to compete with large 
companies, sell the business, or stay small to avoid the 
difficulties of competing in a full and open environment. While 
the Small Business Runway Extension Act made an important 
change for revenue-based size standards, we urge the Committee 
to adopt a 3-year average for employee-based NAICS codes to 
give these small businesses much-needed time to transition into 
full and open competition.
    Third, size standards play an important part in government 
contracting, defining eligibility for small business programs.
    There is not an NCIS code specific to IT resale or to ITVAR 
functions. Product provided under ITVARS are listed as a 
subindustry or exception in Footnote 18 under NAICS code 
541519. To alleviate this confusion, GovEvolve is recommending 
the creation of separate ITVAR/IT NAICS code maintaining the 
150-employee size standard.
    Fourth, as government buying continues its trend toward 
large vehicles, it is increasingly challenging for small 
businesses to win sole-source awards. GovEvolve supports H.R. 
90, which eliminates option years for sole-source contracts.
    We also urge you to consider increasing the sole-source 
threshold to 8 million and 10 million as expected to be 
proposed in the Senate. Equally important is streamlining and 
simplifying rules for awarding these contracts. We recommend 
the Committee remove the requirement that a contracting officer 
must show they do not have a reasonable expectation that offers 
would be received from two or more small business concerns.
    Fifth, the goal of the FAR Council is to assist in the 
direction and coordination of government-wide procurement 
policy and regulatory activities. But discrepancies between the 
SBA and the FAR create headaches for businesses and the 
acquisition workforce. We strongly recommend adding the SBA to 
the FAR Council to mitigate these issues and give small 
businesses a stronger voice.
    Finally, GovEvolve understands the role of subcontracting 
as an entry port for small businesses to enter the Federal 
marketplace and build past performance. GovEvolve encourages 
the Committee to look at incentives that would spur 
subcontracting plan compliance and small business utilization.
    In conclusion, ITVAR companies like mine have unique 
challenges outlined in this testimony. We urge the Committee to 
take bold steps to strengthen small business programs and fully 
integrate these programs into the government's buying 
strategies.
    Thank you for this opportunity to testify today, and I am 
happy to answer any questions.
    Chairman GOLDEN. Thank you very much, ma'am.
    And Mr. Lansdowne, you are recognized for 5 minutes.

                  STATEMENT OF BRUCE LANSDOWNE

    Mr. LANSDOWNE. Good morning, Chair Golden, Ranking Member 
Stauber, and members of the Subcommittee. My name is Bruce 
Lansdowne. I am president and CEO of Trinity Technology 
Partners. My company develops and offers information technology 
services and solutions, and we are located in Greenbelt, 
Maryland.
    I am here today to testify on behalf of the Montgomery 
County Chamber of Commerce (MCCC), of which I am a board 
member. MCCC is a 500-member organization located in Montgomery 
County that works to move the needle on policies that 
positively impact small and midsize businesses in the Federal 
marketplace. Thank you for inviting me here today on this very 
important segment of our economy.
    Trinity is a small business currently providing support to 
the Federal marketplace. However, after I started the business 
it was challenging to obtain opportunities to participate in 
the Federal space. I was fortunate enough to use a professional 
relationship that I had previously established with a large 
company in order to gain access to the Federal market as a 
subcontractor.
    We took this opportunity very seriously and as a result, we 
began to receive many accolades from the government customer. 
Despite our successes though, as subcontractor and providing 
our capabilities, it was still a 5-year journey to receive a 
prime contract with that particular agency.
    This story is not just unique to my company; it highlights 
the time and effort put in by small businesses to compete in 
the Federal space. However, I took each challenge as an 
opportunity to make things better, not just for my company but 
for the government customers and all midsize, small government 
contractors. It is with this passion for success that I joined 
the chamber's board of directors.
    The chamber has been at the forefront of finding solutions 
to tackle problems in the Federal marketspace that exist around 
subcontracting. As background, an important part of the chamber 
is GovConNet Council, which is comprised of industry 
procurement experts and practitioners. The council meets 
monthly to discuss Federal contracting issues that affect small 
and midsize firms. Large companies are also an important part 
of the chamber and membership, and they support efforts to 
assist small and midsize companies to obtain success in Federal 
contracting.
    Last year, the GovConNet Council identified an issue that 
continues to be problematic for small and prime contractors 
alike, subcontracting. The council then decided to convene four 
stakeholder roundtables with industry, including large prime 
contractors and small subcontractors and government officials 
to identify pain points in subcontracting for all sides of the 
equation. We enlisted the help of Bloomberg Government to 
identify what data exists on subcontracting, its accuracy, and 
its purpose. According to Bloomberg, prime spending on 
contracts requiring subcontracts is surging. Prime contracts 
requiring a subcontract plan now total $302 billion, which is 
54 percent of all fiscal year 2018 spending. Further, more, our 
prime contract spending on these contracts has grown 73 percent 
since fiscal year 2014, a huge uptick that indicated we are on 
the right track. Through those roundtables, the council 
identified recommendations that are a result of extensive 
discussions and consultations with members and policymakers. 
Our goal is to improve accountability and transparency in 
subcontracting for small businesses.
    The chamber makes the following recommendations:
    One, empower the Office of Small and Disadvantaged Business 
Utilization (OSDBU) to monitor and improve subcontracting 
compliance.
    Maintain and enhance data collected through the Federal 
Subcontracting Reporting System (FSRS).
    Require the SBA to report subcontracting dollars on their 
annual scorecard, not just percentages.
    Four, direct GAO to conduct a study of subcontracting 
authority, processes, systems, and the reporting of 
subcontracting performance against established goals.
    And lastly, improve utilization of small business 
subcontracting through programs through expansion of sole-
source authority.
    In conclusion, we would like to thank this Subcommittee for 
its continued efforts to improve Federal contracting access for 
small and midsize businesses. The chamber will continue to work 
with this Committee to strengthen the role of these businesses 
in the Federal marketplace.
    This concludes my testimony, and I am happy to answer any 
questions that you may have. Thank you.
    Chairman GOLDEN. Thank you very much, sir.
    Mr. DePace, you are now recognized for 5 minutes.

                 STATEMENT OF THOMAS J. DEPACE

    Mr. DEPACE. Thank you, Chairman Golden, Ranking Member 
Stauber, and members of the Subcommittee, for inviting me to 
testify today. On behalf of the National Electrical Contractors 
Association (NECA), we greatly appreciate the opportunity to 
submit a statement for the record to the Subcommittee on 
Contracting and Infrastructure. The Subcommittee should be 
commended for holding this important hearing to better 
understand the issues facing contractors in the Federal 
marketplace and the ways in which simple solutions can bring 
about great change for their small businesses.
    My name is Thomas DePace, and I am the chief operating 
officer of Advance Sound Company in Farmingdale, New York. My 
mother and father bought this company in 1988 and have worked 
for over 3 decades to transform our family-owned business into 
an industry leader. Partnering with over 80 manufacturers in 
the industry, Advance Sound Company has become a premier 
distributor and integrator of quality audiovisual equipment and 
solutions.
    After joining the company in 2007, I have worked to expand 
the core competencies of Advanced Sound for audiovisual systems 
to include network infrastructure, lighting control and 
automation, as well as access control and IP security systems. 
We have adapted our company to be ready for the ever-changing 
technology landscape.
    We at Advance Sound Company are proud members of the 
National Electrical Contractors Association (NECA), where most 
recently our work on Molloy College's Barbara H. Hagan Center 
for Nursing Excellence was recognized as a 2017 NECA Project 
Excellence Award Winner. NECA is the nationally recognized 
voice of the $171 billion electrical construction industry, 
that brings power, light, and communication technology to 
buildings and communities across the United States. Many of 
NECA's 4,000 member companies compete within the Federal 
procurement market and recognize its unique opportunities.
    Risk is inherent when competing in the Federal marketplace, 
and although the Federal marketplace is notorious for limiting 
it, that key to success is cash flow. With that said, there are 
three concepts related to cash flow that I believe this 
Committee has the ability to alter for the better.
    Two years ago, NECA contractor, Mr. Greg Long of Long 
Electric, testified before the House Small Business Committee 
describing one of the biggest issues facing our contractors: 
the prompt payment and proper administration of change orders. 
Mr. Long's commentary, along with the hard work of this 
Committee, led to the passage of the Change Order Transparency 
for Federal Contractors Act, H.R. 4754, which requires Federal 
agencies to list their practices on the payments of change 
orders and their history for doing so. While this legislation 
allowed for the protection of contractors on the front end by 
increasing awareness, the crux of the problem remained 
unaddressed, that being the need for prompt payment on these 
changes.
    Thankfully, through the leadership of Representatives 
Stauber and Veasey, this Committee has recognized the issues 
and understands that requiring partial payment for unilaterally 
requested change orders is a major step towards alleviating the 
unnecessary risks of many small construction contractors assume 
as doing the cost of business with the Federal Government. H.R. 
2344, the Small Business Payment for Performance Act is a 
common-sense solution requiring the Federal Government to 
recognize that their delayed payments have real world 
consequences for America's small businesses.
    Secondly, on construction industry contracts, the Federal 
Government has the ability to hold up to 10 percent of the 
contract price until satisfactory completion of the work. This 
process is known as retainage, and was originally intended to 
assure the prompt completion of work. While not all Federal 
contracts require the use of retainage, this practice has 
caused many subcontractors to be weary of working with the 
Federal Government. Retainage sums are often passed down 
inevitably laying upon subcontractors to cover the cost. 
Because of this, many states have either done away with 
retainage on their projects or have lowered their overall 
percentage.
    One immediate way to mitigate the degree of financial 
exposure from retainage is for the Federal Government to follow 
the states and lower the overall rate. This would put more 
liquidated funds in the pockets of America's small businesses, 
and likely decrease the overall cost of Federal construction 
projects.
    Lastly, as methods for delivering larger infrastructure 
projects continue to develop and become more complex, surety 
bonding must remain an underlining assurance for contractors. 
The Federal Government for decades has provided protections not 
only for itself but for the small businesses and their workers 
who interact with it through the use of bonding. With the 
increased use of public-private partnerships (P3s) on Federal 
property, the need to reform the 1934 Miller Act to 
unambiguously cover these types of contracts is apparent.
    In conclusion, as a contractor, who has worked on numerous 
construction projects, I am extremely encouraged by this 
Committee's efforts.
    Thank you again for this opportunity. NECA and Advance 
Sound applaud the Committee's unwavering support of small 
business.
    Chairman GOLDEN. Thank you, sir.
    And lastly, Ms. Callahan, we will recognize you for 5 
minutes.

               STATEMENT OF DOROTHY ANN CALLAHAN

    Ms. CALLAHAN. Chair Golden, Ranking Member Stauber, and 
members of the Subcommittee, my name is Dorothy Callahan, and I 
am the president of D. Callahan, LLC, as well as a member of 
the Montgomery County Chamber of Commerce's GovConNet Council. 
Thank you for inviting me to testify today.
    A little background on why I am testifying on this topic. I 
have spent my career working at large prime contractors as a 
small business program manager and strategic partnerships 
director. In these roles, I have been responsible for many 
aspects of successfully working with small businesses. This 
includes fostering strategic relationships with internal 
program deal teams and potential partners, mentoring small 
businesses for success in the public sector, and identifying 
partnerships to fill key capability gaps while ensuring 
customer and mission success, just to name a few. I have also 
worked with small businesses at trade shows and other 
conferences to promote and identify teaming partners during my 
tenure at these large firms.
    My past positions give me a unique perspective, 
understanding the needs and challenges of both prime and small 
business contractors in the Federal marketplace. Based on my 
experience, I would like to make recommendations to the 
Committee about changes that could be made to allow small 
business contractors to be more successful in the acquisition 
landscape.
    One of my many roles was to plan, organize, and coordinate 
the small business program, as well as make recommendations for 
input to the corporate strategic approach that would maximize 
corporate resources to enhance program efficiency and 
effectiveness. I also assisted our small business liaison 
office, subcontract and program directors, with the 
facilitation of small business goals and accomplishments. 
Therefore, I spent many years facilitating and managing 
subcontracting plans, which includes being an advocate for our 
teaming partners internally. This gave me unparalleled insight 
into issues with these plans faced by both primes and small 
businesses. One of the changes that I believe would improve 
subcontracting for small businesses is to require the 
identification of small businesses listed in subcontracting 
plans. If the prime wins the contract with a small business 
listed on their team, that business should be utilized. This 
change would allow contracting officers to more successfully 
evaluate a prime's progress on meeting their subcontracting 
plan goals.
    Another role I had was coordinating and managing all 
corporate activities during the Federal compliance reviews by 
supporting audits by the Defense Contract Management Agency 
(DCAA) resulting in the achievement of an ``exceptional'' 
rating for my company. An annual past performance evaluation is 
required for primes, as well as interim evaluations at least 
every 12 months throughout the entire period of performance on 
the contract. Since this annual evaluation is already required, 
I recommend it include an assessment of the prime's 
subcontracting plan. This additional component of the 
evaluation would achieve two effects: allow oversight by 
contracting officers without additional burden and provide an 
opportunity for prime contractors to discuss their progress on 
meeting subcontracting goals.
    When a prime contractor sets a subcontracting goal, they 
are required to show a ``good faith effort'' to meet it. The 
definition of this effort is ambiguous and can be interpreted 
loosely, much to the detriment of small businesses. Not all, 
but some large companies take advantage of this unspecified 
term, which leads to more of ``checking the box'' instead of 
working towards meeting the goals in their subcontracting 
plans. This broad definition does not hold primes accountable 
for utilizing small businesses. Therefore, I support the 
Committee's proposal that the good-faith standard should be 
removed and instead, primes should be assessed on a pass/fail 
basis. However, it is important that in this change, the 
``fail'' rating is explicitly defined to avoid any confusion or 
ambiguity if a prime were to receive this rating. Primes should 
also have the ability in this new system to resolve this issue 
with the contracting officer, since there are instances where 
meeting the goals is not possible.
    In my role as the central liaison with the Office of Small 
and Disadvantaged Business Utilization offices, I have seen 
their effectiveness firsthand. OSDBUs are incredible resources 
within agencies that advocate for small business contractors. 
They should be empowered to be utilized as an additional 
resource to contracting officers to assist in subcontracting 
plan compliance and remediation.
    In summary, I have dedicated my career to developing strong 
relationships with businesses in all socioeconomic categories 
to assist in strategic preparation for pursuit of opportunities 
and partnerships within the Federal market. I believe the 
meaningful policy changes outlined in this testimony will lead 
to increased utilization of small businesses in the Federal 
marketplace.
    Thank you for the opportunity to speak with you today. This 
concludes my testimony, and I am happy to answer any questions.
    Chairman GOLDEN. Thank you very much, ma'am.
    We are now going to go to member questions. With that, I 
would recognize myself for the first 5 minutes. And I am going 
to start with Ms. Guadarrama.
    You talked a little bit about 809 Panel recommendations and 
you suggested that we should look into a sense of Congress 
rejecting that panel's recommendations. As far as we know, 
there has not been a legislative effort under way to implement 
these proposals. And so what is it about the 809 Panel 
proposals that are so concerning to the small business 
community that would require the Committee to look into 
addressing this preemptively through an action on the House 
floor?
    Ms. GUADARRAMA. Well, my concern is the mere thought that 
the 809 Panel is going to be making a recommendation that could 
have such a far-reaching effect on small businesses. The SBA 
just recently came out with 6 years of hitting the small 
business goal. And if you have a program that for the last 6 
years has hit the goal, it does not make any sense to look at 
it now and say, let's see how we can change the program. If you 
look at HUBZone that is set up with a 10 percent preference, 
that goal is never reached. So you have a program in place 
where the goal is being reached, and then you have a 
recommendation from the 809 Panel saying let's move it into the 
type of program that HUBZone currently has where it is not 
being reached. It makes absolutely no sense. And if anything, I 
think it would be extremely devastating for the small business 
community who has for years now specifically been working under 
small business set-asides.
    Chairman GOLDEN. Thank you, ma'am, very much.
    You also talked about making some changes similar to what 
was done with the Runway Extension Act, and I want to point out 
that through work we did on this Subcommittee, a bill just 
yesterday passed the House floor that was sponsored by the 
Ranking Member here to try and make the SBA follow through with 
the changes of the Runway Extension Act. And I am sure we are 
going to be able to get that done. So thanks for that, Pete, 
and congrats on getting that through the house.
    You have talked about following through with changes that 
are not based upon just the receipts but rather the size of the 
employee-base standard. Could you talk a little bit about why 
you think we should look into looking at the average employees 
of the preceding years as a change that might be helpful?
    Ms. GUADARRAMA. I think for the same reason that the 
changes were made on the revenue-based side of it, I think when 
you are looking at small businesses, as they get close to the 
point where they are going to be outgrowing the small business 
size standard, for any small business the idea that they could 
have a little bit extra time to actually get ready to make that 
shift from small to other than small, a 3-year averaging would 
be very beneficial for them. It would give them a little more 
time to actually see what they needed to do, whether it is 
increasing staff, changing the business model somewhat, and a 
3-year averaging I think would be enough time for the small 
business to become more viable under full and open competition 
and at the same time it is not a long enough time period that 
it would be detrimental to the small businesses that are still 
within the program.
    Chairman GOLDEN. Thank you. So a bit of an incentive to 
grow while also protecting jobs.
    Ms. GUADARRAMA. Yes.
    Chairman GOLDEN. All right. Thank you.
    Just moving on with what time I have left, Mr. Lansdowne, I 
wanted to talk a little bit about subcontracting plans. You 
talked about putting on the scorecard for SBA, about the 
subcontracting dollars on their annual scorecard. Why do you 
think that is a meaningful change since they are already 
reporting percentages? What is it about reporting the actual 
amount of dollars that you think would be important?
    Mr. LANSDOWNE. Sure. I brought a copy of the report, 
actually, the scorecard.
    When you look at those percentages, you sometimes have 
trouble putting it in relativity as to percentages of what. And 
the chamber recommended that we show the actual dollars so it 
can be more real for the subcontractors, for the general public 
who has access to those scorecards. So it just would make it 
more clear as to really how many dollars are being spent in the 
subcontracting arena.
    Chairman GOLDEN. Okay. And very quickly just moving on, 
this is something that came up in Full Committee last week. And 
Ms. Callahan spoke about it, too. So I am going to ask this 
question and then my time will be expired. But if you would 
take your time to answer it.
    You talked about in your testimony how you worked with a 
prime contractor to be a part of their bidding process. They 
win the bid and then you do not get the opportunity to work on 
the contract itself. I think this is a big problem and I have 
heard it is one that happens frequently. So could you talk more 
about your recommendation to empower the OSDBUs to monitor 
subcontracting compliance in order to help with this issue?
    Mr. LANSDOWNE. Absolutely. When that happened to my company 
I picked up the phone and called the small business director as 
a subcontractor. It did not have a lot of weight because I was 
not a government person to talk gov to gov with the small 
business director. She mentioned that she would write policy 
and that would not help us. It was too late at that time. You 
know, it was all over with. So empowering the OSDBU to be an 
advocate for the small business to work alongside the 
contracting officer because as I have heard across with my 
colleagues, they are overburdened with work. They are trying to 
get the contracts awarded, et cetera, et cetera. So having them 
alongside to help with compliance, to help with remediation of 
activities that go on with the small subcontractors that are 
having trouble being recognized and utilized on the prime 
contracts.
    Chairman GOLDEN. Thank you for that response. I imagine you 
put some time into helping develop your portion of that bid and 
lost out on the man-hours put in.
    Mr. LANSDOWNE. It was very disappointing.
    Chairman GOLDEN. Yeah, it is disappointing. Big loss.
    I am out of time by over a minute, so I apologize for that.
    And I would go ahead and recognize the Ranking Member, Mr. 
Stauber, for 5 minutes.
    Mr. STAUBER. Thank you, Mr. Chair.
    Mr. DePace, you said something that I wrote down and it 
resonates with me being a small business owner for almost 30 
years. And it was that delayed payments have real world 
consequences for small businesses. That is a statement that 
government should understand, that we cannot allow this to be 
put on the backs of our small businesses, so thank you for 
that.
    Ms. Callahan, you have a ton of experience, and I am 
looking forward to you answering some of the questions here.
    What are some of the reasons, justified or not, that a 
prime might not use a small subcontractor they worked with in 
submitting the proposal?
    Ms. CALLAHAN. So it could be that when the award has been 
made, if something should change within that award then the 
skillsets or the capabilities that that company initially 
brought to the proposal may not now fit into that change order 
within the actual contract award.
    Mr. STAUBER. Due to like a change order?
    Ms. CALLAHAN. It could be; right. So that would be one 
reason that one would not be utilized.
    Mr. STAUBER. From your experience, is that the most common?
    Ms. CALLAHAN. Especially at an IDIQ level, and then you 
have task orders underneath it. When you build your team for an 
IDIQ, you are building it on the requirements of that 
solicitation. But then there are specific work orders, task 
orders that might come out. And not every company is going to 
fit each task order. So that could warrant----
    Mr. STAUBER. Sure. In your experience, how do primes define 
good faith?
    Ms. CALLAHAN. What I have seen is kind of how many outreach 
events have I attended, how many companies have I talked to, 
instead of really looking at what efforts have you taken to 
kind of bring that team on, maybe to mentor them, to help them 
along to build their capabilities.
    Mr. STAUBER. Mr. Lansdowne, you had talked about the 
ability to work with the prime and ultimately not getting the 
contract. Can you tell us the financial burden that put on your 
company? What was the cost for that?
    Mr. LANSDOWNE. It was a little while ago but we were 
really, truly a startup. And those dollars were very important 
to our corporation. So as a small corporation it was a couple 
million dollars impact.
    Mr. STAUBER. I cannot imagine that, having the ability to 
put forth the effort and then losing it like that.
    So I think the goal for us is we have the witnesses here. 
Your experience is valuable in how we proceed with our 
legislation. But from this member's standpoint, there is 
nothing more important than protecting and serving our small 
businesses across this Nation and giving them the opportunity 
to be awarded contracts as a prime and/or a subcontractor. And 
so the goal is to make sure that you are represented and you 
all bring a wealth of experience to us. So from our standpoint, 
I want to say thank you for your testimony. I wrote a lot of 
notes here. The whole goal is to make sure that our small 
businesses, which the four of you know are the engine of our 
economy. The engine of our economy has to be protected and you 
are going to bring that experience and help us legislate in the 
best way we can as we go forward.
    So I want to thank you all for your testimony and shared 
experiences. Thank you.
    And I yield back, Mr. Chair.
    Chairman GOLDEN. The gentleman yields back.
    And we will now recognize Congressman Troy Balderson. He is 
the Ranking Member of the Subcommittee on Innovation and 
Workforce Development.
    Mr. BALDERSON. Thank you, Mr. Chairman. And good morning to 
everyone on the panel.
    My question is for response from the whole panel, each of 
you advocated for the importance of supporting small 
businesses, and these businesses when they are working as or 
with the Federal contractor. The Federal acquisition 
regulations are the principal set of rules governing the 
government's purchasing process. The system was created to 
ensure uniform policies and procedures for acquisition. And 
addition, FAR was set in place to determine whether or not the 
prime contractor made a good-faith effort to meet its 
subcontracting goals. How would each of you alter FAR so that 
small businesses could better benefit from partnering with the 
Federal Government? From the whole panel, please.
    Ms. GUADARRAMA. If I could address that. I think both Mr. 
Lansdowne and Ms. Callahan brought up very serious concerns 
about the fact that you have small businesses that are 
initially included with subcontracting plans and in the end 
they are not actually used with it. I think the proposal that 
Ms. Callahan came up with, which was to include when you are 
looking at evaluation, whether or not they have actually hit 
the goals that are out there. Good-faith effort, I think you 
can probably have 200 different small businesses in here and we 
will all say yes, we have all had the benefit of being part of 
a good-faith effort. We have gone to the trade fairs. We have 
met with the individuals. That generally has very little to do 
with actually having an opportunity to work with the prime. So 
if something were actually in place to gauge in terms of the 
dollars that they are working with, it would make much more 
sense than simply looking at if they have made a good-faith 
effort.
    In addition to that, what Mr. Lansdowne had also spoken 
about in terms of being included initially with it, in my case, 
I was working with a contractor who was bidding at a NASA 
location. I had a very good reputation out there. They asked me 
to go out there and help them actually make the presentation 
which I did. Then once they did receive the contract they 
decided that there was another company that could probably do 
it at a lower price point than I could work with. I think that 
happens very routinely to lots of small businesses. And again, 
if there were a way to monitor the individuals that were 
actually included, the companies included on the small business 
plan originally when it is submitted, and then actually see 
what is the progress that is being made in working with those 
specific companies, it would make a huge difference.
    Ms. CALLAHAN. I would like to just add to that because the 
subcontracting plan is part of your contract, resilient 
contract. And I think often it is overlooked in the CPARs, 
which is the Contractor Performance Assessment Report. There is 
an item that asks about small business subcontracting. So if 
you really want to kind of put some teeth into this, make sure 
that looking at the subcontracting plan, I think today these 
contracting officers may not--I am not going to say they are 
not, some may be, others are not--looking at that 
subcontracting plan and its compliance to the subcontracting 
plan.
    Mr. DEPACE. I think like we have all said, you know, being 
able to work on countless projects. We have all spent thousands 
and thousands of dollars bidding on projects. Maybe my company 
does 100 projects a year and we bid on 5,000 to 6,000. Being 
named as a subcontractor from the start would be an advantage 
that would give us an opportunity to work with these things. 
Making sure that those commitments are met. We have all gone to 
various large contractors' meetings. We have been invited on 
projects and then all of a sudden somebody comes in and said I 
have done this here or I can do this here and it really limits 
our ability locally to support local labor. It limits our 
ability to continue to grow in the marketplace. And somebody is 
just taking the scope and the specification documents that we 
have pined over for a long period of time and just put a number 
to it. And it is quite disheartening sometimes.
    Mr. LANSDOWNE. And lastly, I would agree with all my 
colleagues here. Being recognized, specifically by company 
name, is very, very important. Instead of checking a box for 
8(a) or checking a box for one of the socioeconomic programs 
would be very, very helpful. One of the experiences that we had 
was after the award of the contract we were then asked for a 
best and final offer after the government award. And to your 
point, there is no way you can--what do you say? Who do you say 
it to? As a subcontractor, you do not exist pretty much in the 
eyes of the government because the actual--contractually, it is 
with the prime contractor. So to put some teeth in the act to 
list the contractor by name, back to empowering the OSDBU to be 
able to not take over the contracting officer role but 
certainly work alongside because they are overburdened. I will 
say it again. They probably applaud here to hear me say that 
today. To help them to monitor and to empower them to take 
action when these things are not being met.
    Mr. BALDERSON. Thank you all very much.
    Chairman GOLDEN. The gentleman yields back.
    And I am going to do a second round of questions. I know 
that Mr. Stauber would like to as well.
    Ms. Guadarrama, I want to ask you, you were just 
describing, let's throw out some hypothetical numbers that 
might be small but maybe people can wrap their minds around 
easily. If you as a subcontractor help in a bid and maybe said 
you can do some work for $100,000 and then the prime uses those 
figures to put out like a million dollar bid and wins the 
contract and then they turn around and go with another 
subcontractor who says they will do the work for $50,000, does 
that save taxpayers $50,000 or is that just added profit for 
the prime?
    Ms. GUADARRAMA. I think it is just added profit for the 
prime. The dollar amount that was in the contract is still in 
the contract for the full amount.
    Chairman GOLDEN. It is locked in. Yeah.
    Ms. GUADARRAMA. And if anything, the taxpayer is probably 
being shortchanged on the type of value that the original 
company that was added into the contract, the experience that 
they could bring, they are probably losing that.
    Chairman GOLDEN. Thank you. Probably a naive question. I 
just wanted to get that one on the record.
    Mr. DePace, I wanted to ask you a little bit. You were 
talking about the construction contracts and retainage. This 
sounds to me like some construction workers or even just other 
small subcontracting businesses sometimes being asked to work 
essentially for nothing and that their retainage itself is 
greater than they might actually get out of the work at the end 
of the day. Is that correct?
    Mr. DEPACE. Yeah, definitely. I mean, there are a lot of 
facets to that question. I mean, prompt payment is truly 
important, and by the time you are in the construction process 
and get a requisition through and it is approved, and if the 
Federal Government is taking 150 days to pay, by the time that 
cycles starts we are almost 6 months into the process. 
Retainage is even worse than that. Sometimes as in 
infrastructure or a preliminary contractor we could be working 
on large transportation projects where we are performing the 
work within the first 6 months of the period and substantial 
completion or satisfactory completion of the work is not done 
for 36 months. So that 5 or 10 percent is held for that 
extended period of time.
    Chairman GOLDEN. It is hard to make payment, too, probably.
    Mr. DEPACE. Yeah, I mean, it all trickles down, especially 
being union workforce, we have to pay health and benefits. We 
have a $50,000 a week salary that we need to constantly meet. 
We have manufacturers that we need to pay and, you know, we 
have net 30 terms with them. It does not matter when we get 
paid, so it causes all of us to have, you know, large general 
operating accounts. And small businesses that do not understand 
that practice while working in the Federal Government do seem 
to fail because they do not understand the cash flow 
negativity.
    Chairman GOLDEN. Well, thank you for that, for taking care 
of your workers.
    Mr. Lansdowne, I wanted to ask you a question here. You 
have made us aware that the Montgomery County Chamber of 
Commerce has a program called the Veteran Institute for 
Procurement. Can you tell us a little bit about the program and 
the benefit it provides?
    Mr. LANSDOWNE. Sure. It is a program for free. And yes, I 
say it is free. The expense for the actual participants on the 
service-disabled veteran-owned and veteran-owned small 
businesses, the only cost is the travel to and from there. 
There are three platforms by which they can get involved to get 
started, to grow, even to do business outside of the United 
States, both Federal and commercial. This offers for them the 
benefit of collaborating because in small business, you feel 
like sometimes you are on an island by yourself. So it provides 
other business owners with that venue. It helps them with 
processes, internally to strengthen those processes such as HR, 
accounting, all those kinds of things to help them move along. 
So through that program, which is a 3-day, 27-hour program 
certificate for the participants at the C-level, principal 
level, ownership level of those corporations. So it creates a 
great venue. Over 1,300 companies have graduated from the 
program, and it has caused some great results.
    Chairman GOLDEN. It sounds like a very worthy program. 
Thank you for that.
    I think I am going to go ahead and turn it over to the 
others who have questions. But I did want to note, you know, 
Mr. DePace, on the issue of prompt payment, you made some 
reference to this. I know that a couple of our Committee 
members here, including the Ranking Member, have done some good 
work on the National Defense Authorization Act that we just 
passed out of the House last week, so I am sure maybe he would 
like the opportunity to talk with you a little bit about that 
as well.
    Mr. STAUBER. Thank you, Mr. Chair.
    I am sitting here and listening to Mr. Lansdowne, you talk 
about after a prime has been awarded the contract they come to 
the small business subcontractor and ask for their last best 
offer. I cannot imagine that. To me, it does not make sense. 
And as Ms. Guadarrama talked about, they have a subcontractor 
that is awarded the bid with the prime and then they ask for 
the last best or bring another contractor in there, assuming 
they are going to be cheaper. And as you stated, ma'am, it is 
not. The contractor, the prime still gets that. And I just, 
only from looking at this situation from outside this city, it 
is outrageous. And so for me, like I said, cash flow, Mr. 
DePace, as you talked about small businesses, that is part of 
keeping them sustainable. And for the Federal Government to not 
pay you for 150 days, and sometimes even longer because you 
missed checking a box or what have you, that is outrageous.
    It is such a privilege for me to serve, to hear this 
because we need to bring this back to Main Street America. 
Fundamentally, it does not smell, does not look right for small 
businesses. And I will tell you what. For me, we know we need 
changes, and I would ask that, and the Ranking Member and I are 
going to get together on this and make some changes. And you 
know, the changes that we make do not have to take 5 or 10 
years. This needs to be as immediate as possible to sustain our 
small businesses, to make sure, Mr. DePace, that your business 
stays intact paying your employees a good wage. That is 
fundamentally important that we do that. And I am convinced 
that the Chair is with me on this and we are going to look at 
taking some of your testimony and changing it because I do not 
like to have to wait for the pace of government. Because if you 
get outside this city, the pace of government is too slow. 
Let's use it as the pace of small business, everyday men and 
women in small business. That is what I want to do with you, 
Mr. Chair, to be able to take this and make a change to benefit 
and ensure that our small businesses remain a vital part of 
contracting. Thank you.
    Chairman GOLDEN. Amen to that. I am with you.
    Rep. Balderson, did you want to ask any more questions?
    Mr. BALDERSON. Sure. Thank you, Mr. Chairman.
    Ms. Callahan, this would be directed to you.
    In your experience working with large prime contractors, do 
you think primes will support the solutions identified today, 
specifically eliminating the good-faith standard?
    Ms. CALLAHAN. I think that if they are good players in this 
they should have no issue with that. It is the bad players that 
will raise the flag, raise the issues. But I think in good 
players, not a problem.
    Mr. BALDERSON. Okay. And Mr. DePace, my question for you is 
there a reason why the Miller Act currently does not extend to 
the public-private partnership or P3s?
    Mr. DEPACE. It is just very unambiguous in terms of surety 
bonding. And just like the question you asked Ms. Callahan, 
surety bonding really is a process that allows us to have a 
lowest responsible bidder, and I think all of us here at this 
table, you know, fight the fact of something called, you know, 
lowest bidder. By ensuring that P3s are surety bonded, it would 
allow a higher level of responsibility on those processes. And 
we want to take that ambiguity out of the Miller Act.
    Mr. BALDERSON. Thank you.
    I yield back my remaining time, Mr. Chairman.
    Chairman GOLDEN. Thank you very much.
    I also wanted to ask, Ms. Callahan, you know, I think it is 
clear the Ranking Member is worked up about this. I think it is 
very unfortunate that this is happening with the issue of 
subcontractors sometimes getting cut out. This came out, like I 
said, earlier in a Full Committee hearing just last week. But 
you did kind of talk a little bit about the issue of like a 
change package coming out. What are some of the best practices 
on the front end that we might also look at, let's say, in 
terms of good contracting, you know, practice at SBA or other 
Federal agencies to try and make sure that those change 
packages do not have to occur as frequently? I mean, there must 
be a way to try and do this so there is more certainty for a 
prime so that they are not put into that position. If you do 
not have any recommendations, do not worry about it, but----
    Ms. CALLAHAN. You know, in thinking about your question, 
when you are a large prime contractor, you are building a team 
of small businesses. And it is part of your response and the 
solicitation. And having the teaming agreements to really 
articulate what you are expecting from the partner. And then 
that company should be put in your subcontracting plan. You 
identify that company and the value they are bringing to the 
team. Because they are helping you win because they are 
bringing a special skill niche to that team, filling in the 
gaps. So I think that is an area that we really become focused. 
And who are those teaming partners, looking at those 
solicitations and ensuring that there is compliance?
    Chairman GOLDEN. That is perfect. I mean, I think I just 
gave you an opportunity to talk a little bit about what the 
government can do on the front end but I think you kind of went 
right to saying it is on the prime and that we should be 
ensuring that subcontractors that work hard to be a part of the 
bid get an opportunity to be a part of the work crew. All 
right. I think we all agree on that.
    Do you have any more questions?
    Mr. STAUBER. I will just reiterate, thanks for sharing your 
expertise today and I will reiterate this, that the Ranking 
Member and I have heard loud and clear from your experience on 
what we can do, and again, the pace of government is not 
allowed with the Ranking Member here. So, the Chair and the 
Ranking Member. So I appreciate your time and your talents and 
keep up the good work.
    Chairman GOLDEN. With that I want to thank all the 
witnesses for taking time out of your schedules to be with us 
today and sharing your thoughts.
    We know here that small businesses across the country 
provide quality performance, efficiency, and are constantly 
creating new products and services. That is why American 
taxpayers benefit when the Federal Government works and does 
business with small firms.
    And I want to thank the witnesses for their testimony. Your 
suggestions are going to help us develop policies that will 
make it easier, not harder, for small businesses to get the 
contracting opportunities that we want them to, and I look 
forward to working with Congressman Stauber on that.
    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 all very much.
    [Whereupon, at 11:10 a.m., the subcommittee was adjourned.]
    
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