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


 THE ROLE OF THE SBA's 8(a) PROGRAM IN ENHANCING ECONOMIC OPPORTUNITIES

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION
                               __________

                              HEARING HELD
                           SEPTEMBER 18, 2019
                               __________

                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                               

            Small Business Committee Document Number 116-044
             Available via the GPO Website: www.govinfo.gov
             
             
                              ___________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
37-638                    WASHINGTON : 2020                
             
             
                   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. Nydia Velazquez.............................................     1
Hon. Steve Chabot................................................     2

                               WITNESSES

Mr. Ralph C. Thomas III, Executive Director Emeritus & 
  Representative of the National Association of Minority 
  Contractors (NAMC), Lawyer, Law Offices of Ralph C. Thomas III 
  PLLC, Washington, DC...........................................     5
Ms. Dottie Li, Founder and CEO, TransPacific Communications, 
  Cheverly, MD...................................................     6
Mr. Clarence McAllister, CEO, Fortis Networks, Phoenix, AZ.......     7
Ms. Rebecca Askew, CEO & General Counsel, Circuit Media LLC, 
  Denver, CO.....................................................     9

                                APPENDIX

Prepared Statements:
    Mr. Ralph C. Thomas III, Executive Director Emeritus & 
      Representative of the National Association of Minority 
      Contractors (NAMC), Lawyer, Law Offices of Ralph C. Thomas 
      III PLLC, Washington, DC...................................    25
    Ms. Dottie Li, Founder and CEO, TransPacific Communications, 
      Cheverly, MD...............................................    41
    Mr. Clarence McAllister, CEO, Fortis Networks, Phoenix, AZ...    49
    Ms. Rebecca Askew, CEO & General Counsel, Circuit Media LLC, 
      Denver, CO.................................................    52
Questions and Answers for the Record:
    Questions from Hon. Nydia Velazquez to Mr. Ralph C. Thomas 
      III and Answers from Mr. Ralph C. Thomas III...............    57
    Questions from Hon. Nydia Velazquez to Ms. Dottie Li and 
      Answers from Ms. Dottie Li.................................    60
    Questions from Hon. Nydia Velazquez to Ms. Rebecca Askew and 
      Answers from Ms. Rebecca Askew.............................    63
Additional Material for the Record:
    IEEE-USA.....................................................    65

 
 THE ROLE OF THE SBA'S 8(A) PROGRAM IN ENHANCING ECONOMIC OPPORTUNITIES

                              ----------                              


                     WEDNESDAY, SEPTEMBER 18, 2019

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The committee met, pursuant to call, at 11:31 a.m., in Room 
2360, Rayburn House Office Building. Hon. Nydia Velazquez 
[chairwoman of the Committee] presiding.
    Present: Representatives Velazquez, Finkenauer, Golden, 
Kim, Davids, Chu, Evans, Delgado, Houlahan, Craig, Chabot, 
Balderson, Hern, Stauber, Spano, and Joyce.
    Chairwoman VELAZQUEZ. Good morning. The committee will come 
to order.
    I want to thank everyone for joining us this morning, and I 
want to especially thank the witnesses for being here. Today we 
are here because of the enormous role the federal government 
plays as a customer. In fact, it purchased over $550 billion of 
goods and services last year.
    Whether it is rebuilding roads, outfitting offices with 
21st century technology, or creating cutting-edge equipment for 
our medical laboratories or armed services, small firms are 
producing the innovative and quality products the federal 
government is looking to buy.
    Which brings me to why we are here today. Those who have 
been following the committee closely know that it is a top 
priority for both the Ranking Member and myself to ensure that 
the federal government is receiving contract bids from small 
businesses and that those firms have the resources they need to 
understand the federal contracting process.
    That is why Congress created government-wide contracting 
goals which require federal agencies to award a percentage of 
contracts to historically underserved populations. Our 
committee has already held hearings on how to strengthen SBA 
initiatives to increase access to the federal marketplace for 
women and veteran-owned businesses.
    Today we will be taking an overdue examination of the Small 
Business and Capital Ownership Development Program, more 
commonly known as the ``8(a)'' program. The 8(a) program 
provides small firms owned by socially and economically 
disadvantaged individuals with increased access to the federal 
marketplace, procurement training, technical assistance, and 
the ability to be paired with a mentor. The government also has 
a goal to award 5 percent of all prime and subcontracting 
dollars to small disadvantaged businesses, including 8(a) 
certified firms.
    Its purpose is simple: to promote the development and 
competitiveness of small businesses looking to contract with 
the federal Government. Make no mistake, minority-owned 
businesses continue to be a driving force in our economy. 
According to the SBA 2018 Small Business Profile, there are 8 
million minority-owned small businesses in the United States. 
These small businesses accounted for almost 30 percent of all 
firms, contributed $1.38 trillion in revenue, and make up over 
7.2 million jobs in the United States.
    However, this progress has not been accomplished without 
hardships along the way. While some may want to minimize the 
barriers created by discrimination, that does not make it any 
less real. Throughout our nation's history, minorities have 
suffered the effects of discriminatory practices in access to 
affordable credit, housing, criminal justice, and education. 
Consequently, the path to starting and running a business for 
minority entrepreneurs has been difficult. The 8(a) program was 
designed to make it just a little easier, while also 
encouraging minority entrepreneurship and further improving the 
federal marketplace as a whole.
    Over 40 years ago, Congress determined that the opportunity 
for full participation in the federal marketplace is essential 
if we are to obtain social and economic equality and have an 
economy that works for everyone. This premise, which remains as 
true today as it was more than 40 years ago, is the reason why 
I am committed to making sure that the 8(a) program works as 
intended.
    Given how critical this program is to our nation's 
wellbeing, I am troubled by ongoing problems.
    Over the past few years, the SBA's Office of Inspector 
General identified issues that we will discuss today. For 
example, despite a rise in contract dollars to 8(a) 
participants, the number of 8(a) firms remains in decline. We 
need more 8(a) firms, not fewer. To reverse this trend, we need 
to understand why fewer owners are utilizing this program so 
this committee can ensure eligible firms have the necessary 
resources and tools to become certified and win contracts.
    Getting certified is just the beginning and is not a 
guarantee for winning an award. We need to make sure the SBA 
will aid, monitor, and support the business development needs 
of 8(a) firms for the duration of their time in the program.
    Finally, it is time we look closely at ways to modernize 
the program to bring it into the 21st century. It is my hope 
today's hearing will help us determine if things like the 
standard for net worth, which has not changed in over 30 years, 
adequately reflects the reality of our times.
    Today's hearing will give this committee an opportunity to 
discuss what can be done to best serve the 8(a) community.
    I thank all of our witnesses for their attendance and 
insights into this important topic. I now yield to the Ranking 
Member, Mr. Chabot, for his opening statement.
    Mr. CHABOT. Thank you, Madam Chairwoman, for holding this 
important hearing on a program that means so much to so many 
disadvantaged entrepreneurs across the country.
    The 8(a) program is a crucial component of the SBA's 
arsenal of small business programs. Given that it is the 
longest running and most well established business development 
program maintained by the SBA, taking the time to revisit this 
program today is certainly a worthwhile undertaking.
    The Federal Government has long recognized the policy that 
the government should aid, counsel, assist, and protect the 
interests of small business concerns. However, special 
recognition has been given to the socially and economically 
disadvantaged. The Federal Government, through the Small 
Business Act, recognizes the opportunity for full participation 
in our free enterprise system by socially and economically 
disadvantaged persons is essential to obtaining equality and 
improving the function of our national economy.
    The 8(a) program was developed with this policy goal in 
mind, creating a prospective space for these types of firms to 
grow and succeed so they may later rise to become fully, 
capable, competent, competitive, and productive members of our 
Nation's workforce.
    To further spur economic growth among this group of 
businesses, the Federal Government imposes a statutory goal of 
awarding at least 5 percent of all prime and subcontracting 
dollars to a socially and economically disadvantaged firm. 
According to the SBA, this goal was exceeded in fiscal year 
2018 with nearly $46.5 billion dollars being awarded to small, 
disadvantaged businesses.
    While these numbers seem to indicate a measure of success, 
it is important for us to take the time today to really grasp 
the human aspect of this Federal program. Applying to become an 
8(a) eligible program is not an easy task. These entrepreneurs 
must face that they have faced substantial hardship in their 
lives and careers in order to qualify for the program. In 
addition, they must continue to show demonstrated success year 
after year in order to remain in good standing. The success of 
these businesses also translates directly to broader benefits, 
whether in the form of increasing the number of jobs in the 
local area or amplifying economic activity within their 
communities.
    Given that these businesses only have 9 years to 
participate in this program, it is incumbent on us as members 
of this Committee to ensure that the program is effectively 
acting as a launch pad for sustained success.
    That is why again today's hearing is so important. Not only 
do we need to devote time to hear from our witnesses, the 
successes that this program can bring for socially and 
economically disadvantaged entrepreneurs, we also need to 
understand where improvements can be made to ensure that the 
program is operating optimally and fairly. It is in the best 
interest of our Nation's economy and the very fabric of our 
communities to ensure that this program yields high quality, 
productive, and successful small disadvantaged businesses and 
entrepreneurs.
    I want to thank you, Madam Chairwoman, for holding this 
hearing, and I yield back.
    Chairwoman VELAZQUEZ. Thank you, Mr. Chabot. The gentleman 
yields back.
    If committee members have an opening statement prepared, we 
ask that they be submitted for the record.
    I would like to just take a minute to explain the timing 
rules. Each witness gets 5 minutes to testify and each member 
gets 5 minutes for questioning. There is a lighting system to 
assist you. The green light will be on when you begin, and the 
yellow light will come on when you have 1 minute remaining. The 
red light will come on when you are out of time, and we ask 
that you stay within the timeframe to the best of your ability.
    I would now like to introduce our witnesses.
    Our first witness is Mr. Ralph C. Thomas, III, Executive 
Director Emeritus and Representative of the National 
Association of Minority Contractors. He is also a government 
contracts litigator, who focuses his practice on legal issues 
affecting small businesses in the federal contracting arena, 
including the SBA's 8(a) Business Development Program. From 
1992 to 2005, Mr. Thomas was the Associate Administrator for 
Small and Disadvantaged Business Utilization at NASA in 
Washington, D.C., where he reported directly to the head of 
NASA. He received his Juris Doctor degree from Harvard Law 
School and his Bachelor of Arts degree with honors from the 
University of California at Berkeley. Welcome, Mr. Thomas.
    Our second witness is Ms. Dottie Li, the founder and CEO of 
TransPacific Communications, an SBA 8(a) company. Prior to 
becoming CEO, Ms. Li moved from broadcast and print journalism 
to work as a corporate spokesperson and public relations 
executive. She then served at the White House handling media 
advance assignments for presidential trips and later as a 
communication chief for several large national and 
international nonprofit organizations. Just last year, Ms. Li 
was recognized as one of ``Maryland's Top 100 Women'' in 2015 
by the Daily Record. Welcome, Ms. Li.
    Our next witness today is Mr. Clarence McAllister. Mr. 
McAllister is the cofounder and CEO of Fortis Networks, a 
former 8(a) company that provides general construction 
services. He started the company in 2000 after an engineering 
career and today has 120 employees across seven states. Mr. 
McAllister has more than 30 years of experience in all facets 
of the construction industry. He holds a Master of Business 
Administration from Nova Southeastern University and both a 
Bachelor and a Master of Science in electrical engineering from 
Arizona State University. Welcome, sir.
    I yield to the Ranking Member to introduce our final 
witness.
    Mr. CHABOT. Thank you, Madam Chair.
    Our final witness today will be Ms. Rebecca Askew, founder 
and CEO of Circuit Media, LLC. Circuit Media was established in 
2002 and is dually based in both Denver and Washington, D.C. It 
is a certified 8(a) small disadvantaged business and an 
economically disadvantaged woman-owned small business, and the 
company supplies goods and services at the state and Federal 
level. Before founding Circuit Media, Ms. Askew served as 
corporate counsel for an international media technology 
company, started her own litigation law firm, and served as a 
government prosecutor. She earned her B.A. from the University 
of Iowa and J.D. from the University of Denver, Sturm College 
of Law. In addition, Ms. Askew received training in change 
management and design thinking from Harvard University. We 
thank you for your participation today, Ms. Askew.
    We look forward to hearing from all the witnesses here this 
morning, and I yield back.
    Chairwoman VELAZQUEZ. Thank you, Mr. Chabot.
    Mr. Thomas, you are recognized for 5 minutes.

STATEMENTS OF RALPH C. THOMAS III, EXECUTIVE DIRECTOR EMERITUS 
   & REPRESENTATIVE OF THE NATIONAL ASSOCIATION OF MINORITY 
CONTRACTORS (NAMC), LAWYER, LAW OFFICES OF RALPH C. THOMAS III 
PLLC; DOTTIE LI, FOUNDER AND CEO, TRANSPACIFIC COMMUNICATIONS; 
CLARENCE MCALLISTER, CEO, FORTIS NETWORKS; REBECCA ASKEW, CEO & 
               GENERAL COUNSEL, CIRCUIT MEDIA LLC

               STATEMENT OF RALPH C. THOMAS, III

    Mr. THOMAS. Good morning, Madam Chairman, and other members 
of this distinguished Committee.
    My name, as was stated, is Ralph Thomas, and I am here on 
behalf of the National Association of Minority Contractors. We 
are celebrating our 50th anniversary this year and we are the 
oldest minority construction trade association in the U.S. Our 
organization advocates on behalf of the near 100,000 minority 
construction contractors across the U.S. As was mentioned, I am 
also an attorney, who represents minority contractors in 
government contracting issues. And as was stated, I was the AA 
for the NASA Small and Disadvantaged Business Office from 1992 
to 2005. Now, our written testimony, and I will just summarize 
because you have it in front of you, but it is based, it is 
broken into five parts. One in which we express our strong 
support for the 8(a) program. Though it is sometimes flawed, it 
nevertheless provides the best vehicle for minority contractors 
to break into government contracting. And for the reasons that 
I have laid out in the written testimony, we feel that the 
Mentor-Protege Program, particularly the part that allows 
minority contractors or 8(a) contractors to obtain joint 
ventures with large contractors, it allows them to evolve to a 
higher level of government contracting.
    The second part of our testimony I have provided a short 
history of the 8(a) program for the newer members of this 
Committee.
    Third, I have given an illustration of 8(a)'s contractors' 
best successes. When I began as executive director of NAMC in 
1985, 8(a) firms were primarily used by Federal agencies to 
perform small contracts and construction, administrative 
contract support, and janitorial maintenance contracts. 
However, when I served as the head of NASA's Small Business 
Program from 1992 to 2005, I watched 8(a) contractors perform 
such a mission, critical activities as developing subsystems 
for complex spacecraft, assisting in building nonrocket-powered 
vehicles to fly at hypersonic speed, and manufacturing hardware 
or the international space station. So they were also more 
involved in more complex service-oriented contracts, such as 
space shuttle related software development, safety and mission 
assurance, systems engineering. So I proudly observed the 
continued success of some of these companies that have 
graduated from the 8(a) program and are still performing at a 
high level.
    The fourth part of my statement of my written testimony, we 
have commented to a limited degree on the last OIG report 
regarding the 8(a) program. And you can see that for yourself. 
And if you want me to elaborate I will.
    Finally, we have listed some of our concerns and 
suggestions for improvements to the program. For example, we 
are concerned about those contractors that are left behind. 
Most 8(a) contractors do not, in fact, receive contracts, you 
know, during their tenure. And we are very concerned about 
that.
    We also request that this Committee follow up on a study of 
graduated 8(a) firms. The last one done was in 1988 by the 
Senate Committee on Small Business. We are concerned that the 
contracts are getting so large that smaller 8(a) firms are 
being left out.
    This does not concern this Committee, but we are hearing 
about disparate treatment of African American and Latino women-
owned businesses and the DOT Program. We have a few concerns 
about the Protege Program, and we would also like to nail down 
the nonprocurement assistance to 8(a) contracts, financial, 
technical, and management support from the agency.
    That ends my oral testimony. And once again, thank you for 
allowing me to testify today. And I am now ready for any 
questions you might have.
    Mr. EVANS. [Presiding] Thank you, Mr. Thomas.
    Ms. Li, you are now recognized for 5 minutes.

                     STATEMENT OF DOTTIE LI

    Ms. LI. Thank you.
    Good morning, Chairwoman Velazquez, Vice Chair Evans, 
Ranking Member Chabot, and each member of this Committee. It is 
an honor to speak with you. I am also pleased to appear before 
Representative Chu, Chair of CAPAC, and along with 
Representative Kim, who I have also met.
    It is almost a full year since my company, TransPacific 
Communications, became an 8(a). It also has been almost one 
full year since TransPacific Communications has yet to receive 
an 8(a) contract. Why the delay? I believe there is a critical 
gap between the SBA 8(a) policy which is great and the 
operations. Operational movement at agency level would greatly 
enhance a new 8(a) firm, like TransPacific Communications, in 
obtaining 8(a) contracts.
    I am here today to present my perspective as a new 8(a) 
company and the challenges we face in the system. More 
importantly, I am here to offer some suggestions I believe will 
make the 8(a) program better to reduce and eliminate the gap 
between policy and operation.
    I was born and raised in China, a little girl who dreamed 
of going to America and becoming a Voice of America 
broadcaster. I struggled when I got here. The culture shock of 
finding myself in Mobile, Alabama, my accent, a combination of 
British-taught English overlaying my Chinese intonation and now 
marinated in a southern drawl.
    After finishing my graduation, I landed my very first job 
as a broadcaster at Voice of America two blocks from here. When 
I later became a corporate spokesperson, I worked hard with a 
professional coach to clear up my speech. I found my speaking 
voice, the one allowing me to sound natural and credible. This 
did not wash away my Asian identity; it added a layer of my new 
American identity to it. It was a life-changing experience. It 
also helped me discover my calling.
    Many in the Asian-American and other immigrant communities 
have the same experience that we excel academically, get good 
jobs, perform well, but many fail to achieve our full 
potential, and are unable to fully contribute in the workplace 
and in society.
    Many of the employers and managers are also frustrated. 
They see talent and drive that is hindered by poor 
communication skills and cultural barriers on both sides. I 
became certified to train others so they could transform their 
lives and careers as I did, and TransPacific Communications was 
born.
    We serve several different industries, corporations, and 
higher education, and many Federal agencies. You have a long 
list of those. But even with the support of satisfied agency 
managers, I had to find a way to grow and scale so that we 
could help more Federal workers, and 8(a) appeared to be the 
solution.
    I started looking into the 8(a) application process in late 
2017. The process is daunting and lengthy. After submitting the 
complex application, it was wait and wait and wait. Finally, an 
SBA official intervened and introduced me directly to the 
person who handled my file. It took too many more months, but 
then on September 25, 2018, we finally got the 8(a) 
certificate. I was elated and ready to go.
    An 8(a) sole source BPA contract with an agency was 
supposedly ready for me. I began planning, allocating resources 
and staff, but nothing happened. No movement.
    I would like to offer some suggestions in the hope of 
improving the process for others.
    One is to put a check-in mechanism in place that allows 
8(a) firms to move in a timely fashion. It will also hold 
agencies accountable while SBA provides oversight to avoid 8(a) 
firms being left in limbo. It is critical that operations be 
empowered in order for 8(a) firms to successfully obtain 
contracts. Coordination, collaboration, and team work among SBA 
contracting agencies and 8(a) participants must be improved. 
Strengthening the mentoring of 8(a) participants is needed 
during the contracting process between contractor and 
subcontractor and outside of any contract relationship.
    I am grateful to be in the 8(a) program. It has given us a 
good platform as we wait to experience its full potential as we 
contribute to our economy and fulfill the mission to serve 
others. I offer my full statement for the record, and I am 
happy to answer any questions.
    Thank you, Chairwoman, thank you Vice Chair, thank you 
Ranking Member and the entire Committee.
    Mr. EVANS. Thank you, Ms. Li.
    Mr. McAllister, you are now recognized for 5 minutes.

                STATEMENT OF CLARENCE MCALLISTER

    Mr. MCALLISTER. Good morning, Committee Chair, Vice Chair, 
Ranking Member. Thank you for the invitation to be here.
    My name is Clarence McAllister. We are a successful 
graduate of the 8(a) program. I am also an immigrant. I came to 
this country 30 years ago and obtained a great education, 
started a company. We did become MB certified, DB certified, 
and found that those programs were not able to allow us to grow 
the company. So the next step was Federal contracting.
    I started the business in 2000. In 2008, we applied for the 
8(a) program. It took us a year to get our application approved 
to the program. And once we got started in the program we 
realized that we did not have the expertise to do Federal 
contracting, so we had to join several networking groups, like 
the Society of American Military Engineers to become familiar 
with Federal contracting.
    Phoenix is not a large city for Federal contracting so we 
had to travel to states like California. Neighboring states, 
California and New Mexico, Texas, and visit military bases off 
the beaten path and we were very successful at it. We grew the 
company substantially, fourfold. We had two Mentor-Protege 
Programs. They have helped us substantially in growing the 
company, increasing our bonding capacity as a construction 
company, and obtained contracts that on our own we would not be 
able to qualify successfully. So the MPA program I believe 
definitely should be expanded and the SBA should perhaps serve 
as a matchmaker between 8(a) companies and potential mentors as 
well.
    We transitioned out of the 8(a) program 2 years ago when we 
graduated, and I have heard figures that 90 percent of 8(a) 
companies are out of business 2 years after graduation. So we 
are 2 years past graduation. And we started that transition 
process early on, and some of the tools, the paths that we 
utilized are, one, we applied for several IDIQs, Multiple Award 
Task Order Contracts that were 5 years in length. So by the 
time we graduated we still had 3, 4, 5 years to compete. We 
were very successful at that. So after year 9 we are still 
competing for some of those 8(a) contracts that we got awarded 
when we were 8(a).
    We are moving to the HUBZone. We believe the HUBZone is a 
great program. If you are not 8(a), I believe the HUBZone is 
the second best program. And we are moving to a neighborhood 
that needed some help. We hired employees from that 
neighborhood and we are successfully pursuing HUBZone contracts 
right now.
    The first strategy was to mentor newly 8(a)s and we have 
been successful at that. Our first contract as an 8(a) took us 
about 2 years to get. We mentored an 8(a) company and they have 
gotten their 8(a) contracts in the first year. So there is 
definitely some benefit to that.
    I submit that even though minorities have indeed entered 
the economic mainstream, the net worth or average minority 
household is only a fraction of that of white households. 
According to Forbes Magazine, the median white household owns 
86 times more wealth than its black counterpart and 68 times 
more than its Hispanic counterpart.
    Even though the 8(a) program is not a solution to America's 
inequality, I believe it is a tool to assist minorities be 
successful, hire more minorities, and upgrade our communities. 
Thus, the 8(a) program should not be eliminated. It should be 
strengthened. And I do have some recommendations for that.
    One, extend the 8(a) program beyond 9 years because it 
usually takes 5 years for an 8(a) contractor, at least in my 
field in construction, to obtain the bonding capacity 
experience to be able to qualify and compete for larger 
contracts. So 9 years is not enough.
    Federal construction contracts over $100,000 require 
bonding. Most 8(a) contractors are not able to build that 
equity in the business to be able to bond larger contracts 
unless they are into Mentor Protege, for example.
    Expedite the application process. I believe that just 
recently in the last couple years it is now online and takes 
less time but I am still hearing about 6 months, 8 months for 
approval.
    Provide legal assistance to 8(a) contractors. If you are an 
8(a) contractor and you do not know the FAR, you can get in 
trouble very easily. And it is something that most attorneys 
are not even qualified for.
    And access to capital is very important as well.
    Thank you very much for your time.
    Mr. EVANS. Thank you, Mr. McAllister.
    Ms. Askew, you are recognized for 5 minutes.

                   STATEMENT OF REBECCA ASKEW

    Ms. ASKEW. Thank you.
    Vice Chair Evans, Ranking Member Chabot, Chair Velazquez, 
and members of the Committee, I would like to thank you for the 
opportunity to testify before you today.
    My name is Rebecca Askew and I am CEO and general counsel 
of Circuit Media located in Denver, Colorado. We provide 
competitive intelligence to business and legal professionals 
through print and online media. I am also on the Leadership 
Advisory Counsel for Women Impacting Public Policy (WIPP). WIPP 
is a national, nonpartisan policy organization advocating on 
behalf of women entrepreneurs.
    I started Circuit Media, like most entrepreneurs, in my 
basement. Now my company has grown to 60 employees with offices 
in Denver and D.C. I am testifying today about a program that 
has contributed to my success, the Small Business 
Administration 8(a)'s Business Development Program.
    The 8(a) program has given my company access to Federal 
contracts that would not otherwise have occurred. However, I 
think it is important to make something clear: this program is 
a hand up, not a handout. As the SBA states, the mission of the 
program is to help provide a level playing field for small 
businesses owned by socially and economically disadvantaged 
people or entities. Now in my seventh year of the program, I 
have been strategic in ensuring that I balance contracts both 
in and out of the program. Having this balance has resulted in 
my success in the 8(a) program and creating a sustainable 
company.
    While the 8(a) program has allowed me to find a successful 
path forward, I know many companies have not had the same 
experience. One of the downfalls for any company is over 
relying on 8(a) contracts while in the program. This results in 
difficulties when it is time to transition out of the program. 
Many companies go out of business, sell, or reinvest themselves 
to stay small.
    One of the ways the Small Business Administration is trying 
to tackle this issue is through the 7(j) Management and 
Technical Assistance Program. Although this type of training is 
valuable, it would be beneficial for the SBA to consider having 
two tracks: one for businesses who are in the beginning phases 
of the program and one that is more advanced for businesses 
nearing graduation.
    Since the 8(a) business development program is only 9 
years, a solution is to make sure that other SBA socioeconomic 
set-aside programs are available for companies post-graduation.
    Proposals such as H.R. 190, which passed out of the 
Committee earlier this year, would allow other socioeconomic 
programs--women-owned, service-disabled, veteran-owned, and 
HUBZone to take advantage of increased access to sole source 
contracts.
    By making these set-aside programs similarly accessible to 
Federal agencies, graduated 8(a) companies could continue to 
effectively utilize this set-aside strategy after transition 
out of the program.
    Another challenge for 8(a) businesses is to take full 
advantage of the program during the first years of the program, 
otherwise known as the developmental stage. Government 
contracting requires a company to have significant business 
development and financial acumen. Young companies may not have 
the internal infrastructure to compete for and perform on 
government contracts. Given the length of time it takes for an 
agency to become familiar with a contractor, changing the 
criteria for acceptance into the program could help attract 
companies that can fully utilize the program at the time of 
entry.
    I have greatly appreciate the opportunities afforded to me 
through my participation in the 8(a) program and have made a 
concerted effort to extend these awards to my employees and my 
community. As a certified green company, Circuit Media has 
developed and funded campaigns educating businesses and schools 
across the country on the benefits of recycling and reduction 
in paper towel usage. In addition, we donate time, money, and 
services to the Trust for Public Lands, Leave No Trace, and 
Denver's Highline Conservancy.
    We have established an internship program for at-risk youth 
who attend Denver Public Schools and offer our employees 
tuition reimbursement and paid time off to volunteer in the 
community.
    In conclusion, the 8(a) program has been beneficial to my 
growth, and as this Committee examines the program, I would 
urge you to consider my recommendations.
    Thank you for inviting me to testify at this important 
hearing and I look forward to answering any questions. And I 
will yield my time.
    Mr. EVANS. I thank you, and we appreciate you for all the 
information you have shared with us.
    The Chairwoman has done a fantastic job in putting this 
together so I want to not mess up for her, so I want to be 
clear.
    So what I would like to do is begin by yielding myself 5 
minutes. I would like to start off with Mr. Thomas.
    Mr. Thomas, the government has the goal of awarding 5 
percent of all eligible prime contractors of socially and 
economic disadvantaged small businesses. Agencies get credit 
for 8(a) small disadvantaged businesses and non 8(a) small 
disadvantaged businesses like 8(a) guarantee.
    While this information is available through the Federal 
procurement data system from a review of the annual scorecard, 
it cannot be determined what percentage of Federal spending 
dollars 8(a) firms are receiving. Would it make sense to 
require SBA, Small Business Administration to report 8(a) 
specific data in the scorecard? If so, how would such data help 
make a better understanding of the 8(a) program?
    Mr. THOMAS. Let me say yes. The 8(a) information should 
definitely be included and added to the scorecard. First of 
all, you have to know as much as you can about what is 
happening in the 8(a) program in order to assess it, in order 
to assess its needs. I had a boss, one of the NASA 
administrators used to say if you cannot measure it, you cannot 
manage it. And so if we can gather as much information that we 
can on the 8(a) contractors and what contracting dollars they 
are getting we can have something to improve on.
    Secondly, yes, I think it should be made part of the SBA 
score because when you keep a record of anything in terms of 
numbers they tend to improve each year.
    Mr. EVANS. Thank you.
    I would like to go to Ms. Li. As an 8(a) participant, have 
you been able to receive training in areas such as marketing 
through the 7(j) program? If so, what has your experience been 
with the training? And then I am going to add a follow up so 
you can think about that. What should improvements be made in 
the training program?
    Ms. LI. Thank you, Mr. Vice Chair Evans. Pardon me. My bad.
    Thank you, Mr. Vice Chair Evans. Yes, I have received some 
training through the 7(j) program thanks to the SBA official 
who made me aware of those programs. And I took part in some 
training. They were helpful, yet I believe they would be better 
off if they were offered in person, as a group, or one-on-one. 
I believe those programs would be much better beneficial if 
they could conduct that for a group of entrepreneurs like us 
and coming to our facilities to provide those training.
    Mr. EVANS. Mr. McAllister, currently, individual-owned 8(a) 
small businesses can receive sole source wards of less than $4 
million for goods and services. The current Administrative 
Office of Government Contracting said in 2017 that increasing 
the 8(a) sole threshold is one way SBA would make a special 
gain. Do you have any thoughts on this statement whether 
Congress should, in fact, increase the 8(a) sole source 
threshold?
    Mr. MCALLISTER. Yes, I do agree that the sole source 
threshold of $4 million should be increased. If you look at, 
for example, the small business size, I believe in the last 
year all of them or the majority of them were increased. In my, 
for example, my NAICS code, 236220 for construction, it used to 
be capped at $33.5 million and it is now at $36 million for a 
small business size. So we have an increase in cost of living 
and other expenses going up and these small business 8(a) sole 
source remains at $4 million where you have the ANC companies, 
Alaska Native Corporations with $20 million sole source limits 
as well. So I do believe that for 8(a) companies, the sole 
source limits should be increased beyond $4 million.
    Mr. EVANS. Thank you. My time is now expired, and the 
Ranking Member, Mr. Chabot, is now recognized for 5 minutes.
    Mr. CHABOT. Thank you, Mr. Chairman. And Ms. Askew, I will 
begin with you.
    Given the short timeframe for participation in the program, 
9 years, what can the SBA do to ensure that these 9 years are 
the most beneficial to 8(a) participants?
    Ms. ASKEW. Thank you, Ranking Member Chabot.
    So I am in Denver and we have an amazing SBA program. They 
have really been on the ground and working with me from day 
one. I do not believe that that is the same experience that 
other 8(a) organizations have within this United States. I know 
one of my colleagues who do not even have a business 
opportunity specialist attached to them. They just call the 
phone and hopefully someone will respond and help them. So I 
think that uniformity in assistance and training right from the 
bat is very valuable, and I also believe that getting to 
understand how the SBA works, how they support you throughout 
the program I think is vitally important. You know, it took me 
months to really understand how the whole * there is quit a 
bureaucracy for lack of better words in trying to understand 
who helps you with what and how does that pan out. And I really 
believe that that would be valuable as well. Thank you.
    Mr. CHABOT. Thank you. It is great to hear that the program 
in Denver is so good. And we would hope, and I think this 
Committee, we would want to aspire to have the programs all 
across the country so everybody can benefit. And if their 
program does not meet the standards that you found, we ought to 
try to work towards that. And that is something that we can do 
in a bipartisan way I would hope.
    Mr. McAllister, I will move to you next. How long did the 
entire application process take from the first application 
submission to receiving the 8(a) certification notification?
    Mr. MCALLISTER. Well, the first notification probably took 
about 6 months. I was told that you always are going to get 
some comments. So it took me about 6 months. And then the final 
approval took about a year. And now this is 11 years ago.
    Mr. CHABOT. Okay. Thank you.
    Could you describe the application process so we can kind 
of, some of the folks who may not be familiar with it can hear 
what it is like, and are there any improvements that you would 
recommend so that others might maybe have an easier process 
than others?
    Mr. MCALLISTER. Yeah, well, again, it was all paper-based 
back then. One of the requirements was to have 2 years in 
business, which I thought is a great idea. You do not want to 
have a new startup getting into the program where they are not 
able to take full advantage of it. So 2 years was the minimum 
requirement. Beyond that, things like net worth, there were 
some minimum which I believe that they should be increased as 
well. Same with the sole source requirements. And the process 
involved basically filling out lots of paperwork and what you 
have done in the last 2 years, your experience. Where you got 
funding from. Make sure that basically you bootstrap the 
company because as an 8(a) company you are not allowed to have 
investors, outside investors. So in some instances, I know 
companies who have struggled for 2 years and really minimal 
revenues just to qualify to an 8(a) program. We applied 7 years 
in business. We were in business for 7 years, so we had a good 
track record. We had a bonding capacity. We had customers 
already in place. So by the time we got approved for the 
program we were ready to grow. But it was definitely very 
extensive. I have been told that now the program is online and 
it is taking less time. But I have not had experience with that 
in the last couple years.
    Mr. CHABOT. Excellent. Thank you very much.
    Ms. Li, do you feel the 8(a) program adequately prepared 
you to compete against larger, more established firms?
    Ms. LI. The short answer is no. I think by the time we 
received the 8(a) certificate I was not ready for a lot of 
bureaucratic items and things that are within the system. I 
believe, again, refing to my testimony, things are in the 
system that are just preventing people from moving forward. And 
so that is another reason for my recommendation to eliminate 
and reduce some of the gap between the policy and operation.
    Mr. CHABOT. Excellent. Well, we should definitely strive to 
improve the program, so all can benefit from it.
    Mr. Thomas, unfortunately, I ran out of time before I got 
my question to you. You would have been next and it would have 
been a great question.
    Mr. THOMAS. The story of my life.
    Mr. CHABOT. I yield back, Mr. Chairman.
    Mr. EVANS. I would like to thank the Ranking Member, and go 
to someone who I have watched, and she has done a fantastic job 
and she is Representative Davids from Kansas. You have 5 
minutes.
    Ms. DAVIDS. Thank you.
    Well, first, I am excited to be able to participate in this 
hearing today because the 8(a) program presents a unique and 
valuable opportunity for small businesses to compete for 
valuable Federal contracts.
    The recent decrease in participation in the program has 
been discouraging and I hope we can address some of those 
issues here today.
    The Small Business Administration did try to increase 
participation through streamlining the application process. I 
do worry though that that streamlining may have eroded some of 
the safeguards that ensure that we have proper certification 
and eligibility for the program.
    Recently, I have been more concerned about the issues that 
have come to light about eligibility requirements for Native 
American contractors participating in the 8(a) program, and 
hopefully in the future our Committee will be able to examine 
some of those issues more in-depth.
    The first thing I would like to do actually is follow up on 
the previous question that the Ranking Member was bringing up 
which is, Ms. Li, I would love to hear a little bit. You know, 
I am often concerned about the barriers to participation but 
then also once you have participation we want it to be a 
successful program. So I would love to hear a little bit more 
about when you say, no, the program did not necessarily help 
compete against the bigger firms, can you give us a couple of 
concrete examples of that? I think that those are often the 
best ways for us to be able to make good policy arguments.
    Ms. LI. I believe when a big firm, a well-known firm, I am 
not going to give any names, when they walk into an agency, 
agencies tend to respond to them better. And we may be an 
unknown entity even though we have been performing excellent 
work within the same agency, yet they tend to gravitate toward 
this big name firm. And yet, we are left behind. Left on the 
sideline. We are not being considered just for the mere fact 
that we do not have the capacity as these large firms do or 
seem to have, yet we perform such a niche service that 
addresses these agencies' problems. We solve a problem and 
these large firms cannot really compete with us. However, we 
are missing the opportunities to get into the game.
    Ms. DAVIDS. Thank you.
    And that actually I think helps with even understanding 
sometimes some of the barriers speaking of folks understanding 
and knowing about the 8(a) program. I wonder if Mr. McAllister, 
I will start with you. If you could speak to some of the 
barriers of the program. You already brought up a couple of the 
things which were, I mean, the question that brought out the 
threshold increase was insightful and then you mentioned 
bonding and also an increase in the number of years for the 
program. I would love to hear a little bit more from you about 
either barriers to the program or also once you are in the 
program what some of the improvements we could see are.
    Mr. MCALLISTER. Well, certainly, like I said, the Mentor-
Protege Program is a good program. If you cannot compete with 
the big boys you may as well join them; right? And that is what 
we have done. We never go after, I guess, a large company. It 
is a losing battle. And most large companies are looking for 
smaller companies to team up to do Mentor-Proteges with as 
well. So that is one of the things that could be done to be 
more competitive.
    I believe that a purpose of the 8(a) program is to allow 
companies when they graduate to be successful outside of the 
program, and we found that outside of the Federal programs we 
have not been given the opportunity. When we started the 
company it was difficult to compete in the commercial sector. 
We went to the Federal market to build that capacity and after 
we exited that we found that it is still challenging because we 
do not have those networks, those connections on the private 
sector to compete, so we are still challenged in that regard. 
We still continue to do that but what we have done is stay in 
the Federal market, do the HUBZone program, some of the other 
programs, but I believe that the SBA should perhaps help 8(a) 
companies do that transitioning part better so they can be 
successful and we do not have this high level of failure by 
8(a) companies after graduation.
    Ms. DAVIDS. Thank you.
    Mr. Thomas, probably I talked too long, but just I am 
curious really quickly, do you feel like the SBA supports 
organizations like yours? I mean, I am more familiar with the 
Native American Contractors Association, but do you feel like 
the SBA is supportive of these organizations so that we can 
start to branch out, so we can see them branching out once the 
8(a) program has expired?
    Mr. THOMAS. Not as much as used to. I remember years ago 
when the SBA used to give grants to organizations like ours and 
the ones you just mentioned for marketing purposes, for 
bringing people to training and things like that, but over the 
years it has decreased. And maybe in our next--oh, we still 
have time. I wanted to address----
    Ms. DAVIDS. We are 30 seconds over. Can I ask that you 
submit for the record a little bit more and then I can look at 
it?
    Mr. THOMAS. Yes. I wanted to address your question about 
Native American contractors and certifying with the 8(a) 
program, the barriers to them getting in. I have represented 
them before.
    Mr. EVANS. The time. Thank you.
    Ms. DAVIDS. Thank you. I yield back.
    Mr. EVANS. What I would like to do now is recognize the 
gentleman who is the Ranking Member of the Subcommittee on 
Contracting and Infrastructure, Representative Pete Stauber 
from Minnesota.
    Mr. STAUBER. Thank you, Mr. Chair.
    I just have a few questions. Ms. Askew, you know, I am 
particularly impressed with one of the lines in your testimony 
today, that the 8(a) is a hand up, not a handout. As a small 
business owner myself, I know how important the SBA programs 
are in helping our small businesses grow and thrive, but you 
are so right. The government is, or at least should be here to 
assist in times of need, not hold your hand cradle to grave but 
rather give every American small business owner the opportunity 
to be independently successful.
    An item that was highlighted in the 2016 OIG report was 
declining participation in the 8(a) program. Two questions. How 
do you feel we best keep the program thriving without 
encouraging people to be reliant on the government? And then 
what can we do better to market the 8(a) program as a stepping 
stone to independence?
    Ms. ASKEW. Thank you for your questions.
    I think that my colleagues here at the table have talked a 
little bit about some of the issues and the barriers in regard 
to why organizations might not choose to become part of the 
8(a) program. It is not an easy task to get into the program. 
And once you do, there is that period of time that you need to 
navigate through the information in order to get to those 
nuggets. We really consider * I consider the 8(a) program as 
just basically a fishing license. I got a fishing license and 
now I need to go out and figure out how to fish and which 
waters I should fish.
    Mr. STAUBER. And you can fish any of the 10,000 lakes in 
Minnesota.
    Ms. ASKEW. That is right. And I have, actually. So that is 
definitely, you know, a very positive thing. And I think that 
part of the things that we have seen in regards to how do you 
get to be--it is a huge morass of businesses and agencies and 
how do you get in front of those and make that impactful 
impression when you have many companies that have full-time 
business development folks in the D.C. area constantly knocking 
on everyone's doors.
    So it does, I think, to Ms. Li's point of making sure you 
differentiate yourself is definitely a way in which you can not 
only be seen by agencies but also be sustainable. And that is 
certainly the impact that you are wanting.
    Mr. STAUBER. During the application process, give us a 
sense of how you went through it and was it difficult? What 
areas can we improve on or you know, shorten that process up?
    Ms. ASKEW. Sure. So Mr. McAllister did mention that it used 
to be a paper process and it is currently more of an electronic 
process. And I think that that has improved, certainly improved 
the capabilities. It is now in plain English. So instead of, 
you know, many of the times when I was filling out my initial 
paperwork I was not even clear myself and, you know, I have an 
advanced degree what was being asked for. And I think that the 
process now has become more simplified and able. I just did my 
renewal and, you know, I could understand the questions. And it 
was linear in process so I could fill out the paperwork and 
manage those hurdles a lot easier than when I was first filling 
out the paperwork.
    Mr. STAUBER. One of the comments that we seem to get in the 
Small Business Committee is some of these applications can be 
tedious and cumbersome and really hard to navigate so it is 
nice to see that it is starting to become less intrusive on the 
small business owner so they can fill it out themselves rather 
than hire outside help which obviously can be difficult.
    Ms. Li, you talked about, I think you mentioned the 
handout, the contracts to the bigger contractors or what have 
you. So what should we be looking at in order to allow that 
small business owner to be on that same footing when the 
decisions are made?
    Ms. LI. Thank you. That is a great question.
    There should be some kind of systematic training, a long-
term training for all people who are involved. And not just the 
contracting officers but programming and project management. 
Everyone who touches contacts, those people have to be trained 
so they understand their roles and responsibilities as well as 
the functions they need to play when it comes to awarding a 
contract to a large or small. So 8(a)s should be in the 
picture, should be part of the process.
    Mr. STAUBER. Well, thank you very much.
    And Mr. Thomas, I was going to ask you a question. It was 
going to be better than the Ranking Member's but I am out of 
time. Thank you.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    Now we recognize the Chairwoman of the Subcommittee on 
Investigations, Oversight, and Regulations, Ms. Chu from 
California, for 5 minutes.
    Ms. CHU. Thank you so much.
    I am so pleased that all of the panelists are here, but in 
particular, Dottie Li. I have known her for over 2 decades and 
she is such a great leader in the community. So thank you for 
being here.
    And I would like to applaud the work that your company does 
in helping non-Native English-speaking speakers become more 
effective communicators. I believe it is so critical that we 
educate our business and Federal agencies in cultural 
competency, especially as more and more of our economy relies 
on a workforce from diverse backgrounds.
    So I would like to follow up on your story, first on the 
frustrations you had on certification and then the hurdles that 
you faced as you tried to secure a government contract through 
the 8(a) program. It is important to recognize that your 
business had already contracted with a long list of Federal 
agencies. So we know that your services have been in demand. 
But now one year into your 8(a) certification your business has 
not secured a Federal contract through the program. These 
circumstances, however, are not unique. In fact, Mr. Thomas 
noted in his testimony that many participants never receive an 
8(a) contract during their entire tenure in the program. But 
with one-time eligibility and a 9-year window to participate, 
it is important that firms can take full advantage of their 
time in the program.
    So Ms. Li, can you talk about the certification process and 
what things you would do to improve it, but also talk about how 
you would improve the process of getting a contract? You refer 
to some things about improvement such as the need for a check-
in mechanism and a need to improve the vendor outreach sessions 
and a need to strengthen the mentorship program. So first, the 
certification.
    Ms. LI. Thank you. Thank you, Representative Chu. It is 
wonderful to see you today.
    The certification process for us was long and lengthy as I 
alluded to. I was blessed to have many people who provided 
their support and expertise, and my counselor, Mr. Richard 
Peyton is here from P-TECH, Maryland P-TECH, and director 
Denise Warner is also here. She runs the P-TECH program. And 
Mr. Peyton has helped me tremendously through that process. I 
did not have to pay someone to provide the service. And as well 
as other entities, SDBC and some folks who are former SBA 
officials who provided tremendous support in that process.
    And during the waiting game I spotted Mr. Rob Wong.
    Ms. CHU. But what would you do to improve it?
    Ms. LI. What do I have to do? I would say that the online 
process right now, even though it is improved by a lot from the 
paperwork days, however, it is just too cumbersome for anyone 
to go through. There are times where the language is not clear. 
There are times that the steps are not clear. How would you 
interpret something when you do not even understand the 
language? That was the process and it was frustrating. I was 
able to eventually get through to folks who intervened to get 
to the person who needed to help us.
    Ms. CHU. and then you said in terms of getting the contract 
there are certain things that needed to be improved, like the 
vendor outreach sessions. Could you say something about that?
    Ms. LI. Absolutely. I love going to these vendor outreach 
sessions. I always have the best time meeting with different 
agencies and they have those matchmaking sessions. It is sort 
of like speed dating, not that I would know anything about it. 
And you go from agency to agency. I pitched my story. I have 
the full passion to tell them what we do and they promise you 
the world. They say come to us and we are going to work with 
you. And you send emails and just crickets, nothing afterwards.
    Ms. CHU. So how could that be improved?
    Ms. LI. I think vendor outreach sessions should be staffed 
by contracting people, programming people, not just OSDBU 
folks. I think they are great yet we need to talk to program 
people directly in order to make a difference, so they can hear 
the kind of services we offer.
    Ms. CHU. And then you talk about strengthening the 
mentorship program. Do you have a mentor?
    Ms. LI. I do not really have a mentor. I tried to reach out 
to another 8(a) firm for quite some time now at the suggestion 
of a wonderful OSDBU person. I do my outreach. I check in with 
them. I see them at different functions, yet, again, it is like 
a relationship. It may not be jelling yet I am still hoping to 
find a mentor who will show us the ropes.
    Ms. CHU. So getting that mentorship program going so you 
could actually have a mentor is really important.
    Ms. LI. That would be critical. That would be critical.
    Ms. CHU. Yes. Thank you.
    Ms. LI. Could I just add one more? As of yesterday 
afternoon we got word from this particular group that our first 
8(a) BPA contract is moving forward. So I think it is very 
interesting. Timing is everything. The day before I came to 
testify.
    Chairwoman VELAZQUEZ. Time has expired.
    Now we recognize Mr. Balderson, Ranking Member of the 
Subcommittee on Innovation and Workforce Development from Ohio 
for 5 minutes.
    Mr. BALDERSON. Thank you, Madam Chair. And thank you for 
the panelists for being here today.
    I want to kind of jump around because I have been paying 
attention. And Mr. McAllister, this was going to be directed at 
you but you talked a little bit about it with the Ranking 
Member, so the rest of the panel, if you would kind of jump in 
with this question I have. You know, Mr. McAllister talked 
about it. He did not apply for this until he was 7 years in 
business I believe was the number that you used. How about the 
rest of you? Did you jump in immediately or did you wait some 
time before you were a little bit more established?
    Ms. Askew?
    Ms. ASKEW. Yes. Thank you.
    We were several years established before we started our 
8(a) program.
    Mr. BALDERSON. Okay. How were the first couple years? You 
wanted to wait a couple years, but what did you do that you 
thought was some of the good processes that you went through to 
wait for that?
    Ms. ASKEW. Sure. We recognize that even if we had gotten a 
contract we would not have known what to do with it. We did not 
have the infrastructure necessary, the bookkeeping, all of the 
things that are required. And so we started on the commercial 
side like Mr. McAllister did and started looking for work that 
way. And that is actually how we ended up getting the chops to 
be able to support a contract once we received it.
    Mr. BALDERSON. Okay.
    And Ms. Li? Ms. Li, would you like to add anything to that?
    Ms. LI. I think the fact that we were able to make an 
imprint with Federal agencies, and at least they are aware. And 
it is just a matter of doing more work. And that seems to be 
getting really old. So I was hoping that the 8(a) program would 
give us a tremendous boost right away off the bat but again, it 
has taken a whole year, almost a full year. But I am looking 
forward to taking full advantage of the program moving forward.
    Mr. BALDERSON. Okay. Thank you.
    And how long were you in business before you made the 
decision to go with the program?
    Ms. LI. Ten years.
    Mr. BALDERSON. Ten years. Okay.
    Ms. LI. Actually, nine.
    Mr. BALDERSON. Nine? Okay.
    Ms. LI. Right now it is 10.
    Mr. BALDERSON. All right. Thank you.
    My follow up to all of you, and again, you can all just 
jump in and speak up. Beyond extending the program window which 
you all talked about, do you believe there is something else 
the SBA could do to help foster those early critical years? I 
mean, obviously, those are the most important years to get 
going, but is there something else out there the SBA could do 
to accommodate that?
    And Mr. Thomas?
    Mr. THOMAS. If I could answer.
    Mr. BALDERSON. I would love to have you answer. You were 
going to be the first one I was going to say.
    Mr. THOMAS. Yes. Yes. I think the most critical is the 
marketing. To be in the 8(a) program, it takes a firm to 
fiercely market the agencies to get contracts. They have to 
figure out where they land. You know, where they stand. What 
their status is in terms of what they have to offer. And then 
they have to see if the agency is buying that. And then they 
have to almost show the agency how they can do it, how the 
agency would benefit from using them, from using their niche. 
And this is how. And first of all, they have to show the agency 
how the agency already buys it and how it would be beneficial, 
less costly for them to use them as an 8(a) contractor. And I 
have seen many contractors market to agencies and get them to 
set aside an 8(a) contract merely from marketing.
    But you need training to do that. You need really a good 
trained, personalized training because it is not easy. 
Everybody does not know how to do it. The businesses that 
thrive in the 8(a) program have something very special and that 
is the marketing edge and then the performance after that. 
Agencies stick with 8(a) companies that they are satisfied 
with.
    Mr. BALDERSON. Okay.
    Ms. Li? Ma'am? Ms. Li?
    Ms. LI. Yes?
    Mr. BALDERSON. Did you want to follow up with anything with 
that? Or Mr. McAllister, or Ms. Askew, would you like to?
    Ms. ASKEW. Yes, absolutely.
    One of the things that have not been mentioned today are 
that the SBA has a program called the Emerging Leaders Program. 
And I think it would be wise if it was coupled with the 8(a) 
program. It was an amazing program for me. It was like a mini 
MBA. Great opportunity. I learned so much about the government 
arena, and I think coupling that with the 8(a) program 
requiring 8(a) companies would assist them in the long run.
    Mr. BALDERSON. Emerging Leaders? Is that from the SBA?
    Ms. ASKEW. It is the Emerging Leaders Program.
    Mr. BALDERSON. All right. Thank you.
    And Madam Chair, I yield back. Thank you all very much.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    Now I recognize the gentleman from Florida, Mr. Spano, for 
5 minutes.
    Mr. SPANO. Thank you, Madam Chair. I apologize. I got to 
the meeting late.
    I want to direct a couple questions to Mr. McAllister. If 
the questions were asked already I apologize in advance. One of 
the things that we did back at our Chamber of Commerce back 
home was to develop a mentorship program for young people, 
right, because we understood, especially for economically 
disadvantaged young people to try and teach them what it is 
like to hang around a small business, you know, and give them 
an idea of whether or not they want to do that someday, right, 
start their own business.
    So the challenge that we had though was that it was tough 
for us to find mentors. And I think a question just a moment 
ago, I believe it was Ms. Li about, you know, whether or not 
you have been able to find a mentor so far. So I guess my 
question is, what do you think that the SBA could do better if 
you have any suggested solutions, to encouraging mentors, more 
mentors to participate?
    Mr. MCALLISTER. Well, I think it is easier to find mentors 
in the community to mentor youth. From the SBA-MPA program, a 
Mentor-Protege is like a marriage. Or like dating. And then we 
establish a joint venture under the MPA. That is marriage. So 
there is financial risk from both sides, from the mentor and 
from the protege.
    So like Ms. Li said, it is, you know, let's go out, let's 
have dinner, let's have lunch, let's get to know each other. Do 
we match with each other? Our cultures? Because, you know, 
oftentimes with the Mentor-Protege, the mentors provide 
training to the protege staff. So it is not just sign a 
document and let's move on. There is a lot to it. So, but what 
the SBA can do is perhaps just build that speed dating 
environment or dates or sessions with large businesses, or the 
agencies can do it as well where large agencies come in with 
8(a) companies and just get to know each other. Because in our 
case it took us perhaps a year or two to find that right 
mentor. And we actually had one, the first one did not work out 
at all. They were all for getting one contract that they had 
that they were incumbent and they wanted to recompete and they 
seeked us just for that. And when that fell through, the 
Mentor-Protege went away. So it took us about a year to find 
another mentor, and we have had three mentors. Two, one at the 
8(a) and one at the HUBZone program. We take start to get to 
know each other and find the right match.
    Mr. SPANO. And if I may just ask a follow up. So relating 
to the Mentor-Protege Program, if you could say one thing that 
from your experience as a mentor and as a protege, one thing 
that you can think of that comes immediately to mind that 
really works well and one thing that you say probably needs 
work?
    Mr. MCALLISTER. Well, the training works well. You can find 
the right match, the right mentor and you have needs, say in 
accounting, marketing, payroll. They can help you with that. 
What does not work well is perhaps the red tape that is 
involved with it because you apply for the 8(a) program and 
then you have your annual 8(a) recertifications and you have to 
apply for a Mentor-Protege which oftentimes can take months as 
well. And then every year you have to recertify that Mentor-
Protege. So I think generally it is the red tape that is 
involved with both the 8(a) and the Mentor-Protege Program that 
just needs to be streamlined.
    Mr. SPANO. And you mentioned in your testimony that most 
8(a) contractors do not gain momentum in the program until 
around their fifth year. Is that a result in your opinion of 
some of the red tape that is associated with the program?
    Mr. MCALLISTER. I think it more than anything is find the 
right match in terms of customers. Here in the D.C. area, all 
the Federal agencies are here. Out West we do not have that 
plethora of agencies, so I think it is finding that right 
customer, that right agency that can give you a shot. You know, 
that first opportunity, and then be able to grow with them. In 
our case, we had to go out of our comfort zone, out of Arizona 
to go into Colorado, Texas, New Mexico, and oftentimes into 
areas where nobody else wanted to go because it was in the 
middle of nowhere. But there was a Marine base there or an Army 
base there that needed our services. And that is what it takes 
perhaps for the 8(a) companies to have that. First of all, 
somebody to tell them where to go because the phone is not 
going to ring wanting to become 8(a). Their phone is not going 
to ring. It is a fishing license and you have to go out and 
fish.
    Mr. SPANO. Thank you, sir.
    Madam Chair, I yield.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    Now I recognize myself for 5 minutes.
    I would like to follow up on Mr. Spano's question.
    Mr. Thomas and Mr. McAllister, is there anything more SBA 
should be doing to facilitate or incentivize the use of the 
Mentor-Protege aspect so that more small businesses are able to 
participate and benefit from it?
    Mr. THOMAS. One thing that I could suggest is a few years 
ago the SBA used to do these matchmaking events to match 
contracts with the contractors. Taking that to another level, 
perhaps they could have conferences where they have only the 
prime contractors who want to be mentors and proteges who are 
looking for mentors. You have them in the same room and at 
least you are not fishing for goldfish where there is only 
seabass. So I think that is something that would give it a 
push.
    Chairwoman VELAZQUEZ. Mr. McAllister, anything that will 
incentivize?
    Mr. MCALLISTER. Yeah. I think definitely setting that venue 
for that matchmaking to occur. But also the financial support 
that a protege can get. The Mentor-Protege allows a mentor to 
invest up to 40 percent into an 8(a), into its protege, and I 
believe that is a great vehicle. There is a lot of red tape 
involved in that. We try to do that and got the runaround and 
we just gave up because we have known 8(a) companies, we know 
one in particular right now where the owner is taking a second 
job because he needs to support himself. And he is being 
threatened with getting certified for the program.
    Chairwoman VELAZQUEZ. Thank you.
    Mr. MCALLISTER. So even if he gets into the Mentor-Protege 
Program, he is not able to succeed unless there is some 
financial investment from the mentor to the protege.
    Chairwoman VELAZQUEZ. Thank you.
    Mr. Thomas, the government has the goal of awarding 5 
percent of all eligible prime contracts to socially and 
economically disadvantaged small businesses. Under this goal, 
agencies get credit for all awards given to small disadvantaged 
businesses, whether they are 8(a) participants or not. Should 
Congress enact legislation to create a goal for the 8(a) 
program?
    Mr. THOMAS. Yes. I think I have answered this in part 
before. But yes, it should. It should.
    In case you did not hear that.
    Chairwoman VELAZQUEZ. Yes.
    Mr. THOMAS. Yes. The answer is yes. Because to determine 
the success of a program you want to get as much information 
about how the program is working as possible. And it only 
stands to reason to know how much business that 8(a)s are 
getting. It is not hard to gather information because they can 
get it easily.
    Chairwoman VELAZQUEZ. Do you think that this will 
incentivize agencies to contract with 8(a) firms if we increase 
the firms?
    Mr. THOMAS. Well, yes. Even if you make a goal, regardless 
of what you put in the goal, when you are measuring someone on 
a certain basis, the numbers go up because nobody likes not to 
meet a goal. So whatever that goal is, I think you will see the 
numbers go up.
    Chairwoman VELAZQUEZ. Do any other members of the panel 
want to comment on that? Ms. Li?
    Ms. LI. Before we became an 8(a), I always heard people 
would say if you were an 8(a) we would give you the contract. 
And now we are an 8(a) and they say, if you were a HUBZone, we 
would give you the contract. So you just end up chasing the 
endless loop. And so where do you actually get yourself being 
recognized as a formidable force so that people could really 
work with you?
    Chairwoman VELAZQUEZ. Okay.
    Mr. MCALLISTER. Yeah, I believe that that goal should be 
specific for 8(a) programs. That way the 8(a)s are not just 
lost in wait.
    Chairwoman VELAZQUEZ. Thank you.
    Ms. Askew?
    Ms. ASKEW. Yes, thank you.
    I would agree with Mr. McAllister. I do think that there is 
value in that and back to what Ms. Li said about educating 
cores and contracting officers so that they understand how to 
utilize the program well, I think there is a problem in that 
area as well.
    Chairwoman VELAZQUEZ. Thank you.
    There is another issue that I want to discuss with you, and 
that is that the SBA 8(a) program has a personal net worth 
limitation of less than $250,000 for initial eligibility and 
$750,000 for continued eligibility. This limitation has been in 
place since the late 1980s. The DOT also has a Disadvantaged 
Business Enterprise Program, and in 2011, increased the 
personal net worth threshold for eligibility to account for 
inflation.
    What are your thoughts on increasing the 8(a) net worth 
limitation and adjusting it for inflation?
    Mr. Thomas?
    Mr. THOMAS. Well, yes, of course. It needs to be adjusted. 
I mean, for any other program it would be adjusted. And we are 
keeping good people out because they do not want to come down. 
They do not want to adjust their business lives to come down, 
to come under $250,000 because it would not be worth it. And it 
just makes natural business sense to raise it, at least for 
inflation if not beyond that.
    Chairwoman VELAZQUEZ. Thank you.
    Any others who want to comment?
    Ms. LI. I tend to agree in principle that adjustment should 
be made for inflation. I do not have a problem with increasing 
it. However, I am a participant. I am a cross-cultural 
communication specialist. I am not an economist. So I think in 
an economic survey of some sort has to be conducted to 
determine how much to increase and when to increase.
    Chairwoman VELAZQUEZ. Thank you.
    Mr. MCALLISTER. Those limits should be increased like 
everything has increased in the last 30 years. Agreed.
    Chairwoman VELAZQUEZ. Thank you.
    Ms. Askew?
    Ms. ASKEW. Yes, thank you.
    I would say that the corresponding NAICS codes, the amount 
that awards can be have increased, so it would make sense that 
this would also be increased.
    Chairwoman VELAZQUEZ. Thank you.
    Ms. Li, the 8(a) program has a 9-year lifespan which is 
divided into two phases, an initial 4 year developmental stage 
and a final 5 year transition stage. Is this enough time for a 
small firm to fully realize their potential and win contracts 
with the government?
    Ms. LI. Thank you. Thank you, Chairwoman. That is such a 
great question. The short answer is no. Clearly, from my fellow 
panelists and our own experiences have shown that the first 4 
years are critical for you to understand, to grow, to be 
trained, to be mentored in order to fully understand the 
process. So by the time you actually understand a little bit 
more that we are in this process, 4 years are already gone.
    Chairwoman VELAZQUEZ. Thank you.
    Ms. LI. And then you have to graduate or transition out of 
the program.
    Chairwoman VELAZQUEZ. Any of the members of the panel can 
comment on this question. Do you have any suggestions on how to 
improve either the 4-year developmental stage or the 5-year 
transition stage?
    Mr. MCALLISTER. Well, I think that it probably should be 
increased over 9 years for starts because 9 years is not 
enough. So perhaps 10 years and make it 5 years developmental 
and 5 years transition or something along those lines. Just a 
little bit more time to get traction before they start that 
transitional stage.
    Chairwoman VELAZQUEZ. Thank you. Any other comments? Ms. 
Askew?
    Ms. ASKEW. Yes, thank you. I do know that we are in the 
transition stage currently and they require us to make sure 
that we have a certain blend of 8(a) and non 8(a) work at this 
point. And so it makes it hard because once you just start 
wrapping up it is time to ramp down in terms of the amount of 
8(a) work. So you have to be cognizant of your balance and that 
makes it difficult.
    Chairwoman VELAZQUEZ. Thank you.
    Let me take this opportunity to thank all of you for taking 
time out of your busy schedule to be with us today.
    The 8(a) program is the hallmark of all contracting 
programs managed by the Small Business Administration. Not only 
is it the oldest but it is the one in which the agency has the 
most expertise. Now, just as 40 years ago, the program remains 
equally important because of the impact it has on enhancing 
minority entrepreneurship and strengthening the federal 
marketplace.
    I want to thank our witnesses for offering their valuable 
insights today and I look forward to working with my colleagues 
on both sides of the aisle on ways to improve the 8(a) program.
    With that, I will 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.
    [Whereupon, at 12:51 p.m., the committee was adjourned.]
    [Mr. Clarence McAllister did not submit his responses in a 
timely manner.]
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