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


 MARKUP OF: H.R. 5078, PRISON TO PROPRIETORSHIP ACT; H.R. 5065, PRISON 
 TO PROPRIETORSHIP FOR FORMERLY INCARCERATED ACT; H.R. 5130, CAPTURING 
 ALL SMALL BUSINESSES ACT OF 2019, H.R. 5146, UNLOCKING OPPORTUNITIES 
                    FOR SMALL BUSINESSES ACT OF 2019

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION
                               __________

                              HEARING HELD
                           NOVEMBER 20, 2019
                               __________

                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                               

            Small Business Committee Document Number 116-062
             Available via the GPO Website: www.govinfo.gov
             
                              ___________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
38-351                    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
                          TROY BALDERSON, Ohio
                          KEVIN HERN, Oklahoma
                        JIM HAGEDORN, Minnesota
                        PETE STAUBER, Minnesota
                        TIM BURCHETT, Tennessee
                          ROSS SPANO, Florida
                        JOHN JOYCE, Pennsylvania
                       DAN BISHOP, North Carolina

                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

                                APPENDIX

Additional Material for the Record:
    H.R. 5078, Prison to Proprietorship Act......................    14
    H.R. 5065, Prison to Proprietorship for Formerly Incarcerated 
      Act........................................................    21
    H.R. 5130, Capturing All Small Businesses Act of 2019........    25
    H.R. 5146, Unlocking Opportunities for Small Businesses Act 
      of 2019....................................................    27
    Statement of Congressman Hakeem Jeffries.....................    31

 
 MARKUP OF: H.R. 5078, PRISON TO PROPRIETORSHIP ACT; H.R. 5065, PRISON 
 TO PROPRIETORSHIP FOR FORMERLY INCARCERATED ACT; H.R. 5130, CAPTURING 
 ALL SMALL BUSINESSES ACT OF 2019; H.R. 5146, UNLOCKING OPPORTUNITIES 
                    FOR SMALL BUSINESSES ACT OF 2019

                              ----------                              


                      WEDNESDAY, NOVEMBER 20, 2019

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The committee met, pursuant to call, at 11:34 a.m., in Room 
2360, Rayburn House Office Building. Hon. Nydia M. Velazquez 
[chairwoman of the Committee] presiding.
    Present: Representatives Velazquez, Finkenauer, Golden, 
Kim, Crow, Davids, Chu, Veasey, Evans, Schneider, Espaillat, 
Houlahan, Craig, Chabot, Hern, Hagedorn, Burchett, Spano, 
Joyce, and Bishop.
    Chairwoman VELAZQUEZ. Good morning. The Committee will 
please come to order. A quorum being present, I am pleased to 
call this morning's meeting of the Committee on Small Business 
to order.
    Without objection, the Chair is authorized to declare a 
recess at any point.
    In today's markup, we will be considering four bipartisan 
bills. Two of the bills will require SBA's resource partners to 
provide counseling and training to individuals in prison and 
post-release. The other two bills will make meaningful 
improvements to contracting programs that support small 
businesses.
    I would like to take a moment to thank the Ranking Member 
and all of the Members of the Committee for their 
bipartisanship and commitment to small business owners and 
entrepreneurs. It is not a small feat that together we have 
worked to pass 23 bipartisan bills that will make it easier for 
Americans to launch and grow their small businesses, and all of 
those bills have sailed through the House of Representatives 
with broad bipartisan support. That is a good track record, and 
I want to thank all of you.
    That is part of the reason why I am so pleased to lead this 
Committee, but the other part is that I have an opportunity to 
work on issues that can really make a difference in people's 
lives.
    Today, we have an opportunity to do just that with the two 
prison to proprietorship bills.
    We can also make it easier for small businesses to compete 
in the federal marketplace by leveling the playing field for 
small contractors on the verge of transitioning out of the 
small business definition and those hoping to build a history 
of past performance.
    With that, let's turn to the bills under consideration. As 
a result of hearings and outreach, the Committee today is 
considering four bills, which are:
    H.R. 5078, the ``Prison to Proprietorship Act,'' introduced 
by myself and co-sponsored by Ranking Member Chabot;
    H.R. 5065, the ``Prison to Proprietorship for the Formerly 
Incarcerated Act,'' introduced by Mr. Jeffries and co-sponsored 
by Mr. Burchett;
    H.R. 5130, the ``Capturing All Small Businesses Act of 
2019,'' introduced by Mr. Veasey and co-sponsored by Mr. Hern; 
and
    H.R. 5146, the ``Unlocking Opportunities for Small Business 
Act,'' introduced by Mr. Hagedorn and co-sponsored by Mr. 
Evans.
    I support each of the bills to be marked up today.
    In the interest of time, I would now like to recognize our 
Ranking Member, Mr. Chabot, for his opening statement.
    Mr. CHABOT. Thank you, Madam Chair. Thank you for holding 
this morning's markup. Again, I appreciate your and your 
staff's willingness to work with me and our staff in such a 
bipartisan manner.
    All four of these bills are led by Members of both parties, 
which has become standard practice in our Committee, whichever 
party is in the majority. We thank you for that.
    I will be brief in my opening as we will discuss each bill 
as they come up. We have two sets of bills today.
    Two of them focus on fostering entrepreneurship among the 
soon-to-be and formerly incarcerated. Last month, we held a 
hearing that featured compelling testimony about the power of 
entrepreneurship and how that power can help people who are 
looking to get their lives back on track after having been 
incarcerated. These individuals typically face higher rates of 
unemployment than any other segment of our population. 
Providing worthy candidates with an outlet for their 
entrepreneurial spirit not only helps them re-acclimate to 
society but also boosts our economy and local communities.
    The other two bills focus on a longstanding bill of our 
Committee, increasing small business access to the federal 
marketplace. Our government, the United States government, is 
the largest purchaser of goods and services anywhere in the 
world. Our job is to ensure that small businesses have ample 
opportunity to compete for those federal contracts. A vibrant 
small business presence here increases competition, increases 
quality, and lowers prices for the American taxpayer. All of 
these things are good, obviously. Both bills will make it 
easier for small firms to compete against the big guys.
    Again, thank you, Madam Chair, for holding this hearing, 
and marking up these four important bills today. I yield back.
    Chairwoman VELAZQUEZ. Thank you very much. The gentleman 
yields back.
    Before we get into the individual bills, are there any 
Members present who seek recognition for the purpose of making 
an opening statement?
    H.R. 5078
    Seeing none, we will move to consideration of H.R. 5078, 
the ``Prison to Proprietorship Act,'' introduced by myself and 
Ranking Member Chabot.
    I sincerely want to thank Ranking Member Chabot for joining 
me as the lead co-sponsor on the bill. Leading this bill with 
you sends a strong message to SBA, our resource partners, and 
the formerly incarcerated that helping guide these individuals 
onto the path of entrepreneurship is a priority. After paying 
their debt to society, former inmates return to their 
communities with hope and the goal of starting fresh. 
Unfortunately, many are locked out of the labor market. As we 
heard in our hearing last month, employers do not want to hire 
them because of the stigma associated with incarceration and 
many lack the skills needed to work in the 21st Century.
    Entrepreneurship training can help individuals overcome the 
barriers to re-entering the workforce, and for the formerly 
incarcerated, it can be the difference between successfully 
reintegrating back into the community or returning to prison. 
With approximately 180,000 individuals locked up in federal 
prisons across the country, which costs nearly $100 per day per 
inmate, it makes fiscal sense to give these folks the tools 
they need to build a meaningful life.
    H.R. 5078 requires SBA's resource partners to provide 
counseling and training to individuals in prison. Federal 
prisoners would be eligible for in-depth classroom instruction, 
combined with one-on-one mentoring and priority given for 
inmates within 18 months of release.
    SBA's resource partners, with more than 1,000 centers 
located across the country, are perfectly suited and very well 
positioned to carry out these services in federal prisons. 
Unlocking opportunities for the formerly incarcerated will 
empower and enable them to rebuild their lives, build wealth, 
and promote lasting economic growth.
    I now recognize the Ranking Member to speak on H.R. 5078.
    Mr. CHABOT. Thank you, Madam Chair.
    The Bureau of Justice Statistics discovered that almost 
half of all U.S. prisoners were without access to vocational 
training programs. There is an opportunity here that leaves 
room for the emerging field of prison to proprietorship. 
Private sector programs saw 57 percent of the businesses remain 
open, a percentage that is higher than the average rate of 
business survival. Graduates of these programs also maintain a 
7.5 percent 3-year recidivism rate, exponentially smaller than 
the national average of 50 percent.
    Our bill, H.R. 5078, the ``Prison and Proprietorship Act'' 
directs the Association of Women's Business Centers and the 
Association of Small Business Development Centers to coordinate 
reentry entrepreneurship services by providing counseling and 
training services that focus on individuals who have been 
incarcerated in a federal prison. This bill will create a 
pathway for qualified ex-offenders to be successful, 
contributing members of society.
    I want to thank you, Madam Chair, for your dedication and 
partnership on this very important piece of legislation. I am 
glad that we are able to work on this and it is bipartisan. I 
yield back.
    Chairwoman VELAZQUEZ. Thank you, Mr. Chabot.
    Are there any other Members who wish to be recognized for a 
statement on H.R. 5078?
    I am seeing none.
    I urge my colleagues to support this important legislation 
that will give federal prisoners a second chance to lead 
meaningful and productive lives after release.
    If there is no further discussion, the Committee will move 
to consideration of H.R. 5078.
    The clerk will report the title of the bill.
    The CLERK. H.R. 5078, the ``Prison to Proprietorship Act.''
    Chairwoman VELAZQUEZ. Without objection, H.R. 5078 is 
considered as read and open for amendment at any point.
    Are there any Members who wish to offer an amendment?
    Seeing none, the question is now on H.R. 5078.
    All those in favor, say aye.
    All those opposed, say no.
    In the opinion of the Chair, the ayes have it.
    H.R. 5078 is agreed to.
    The question now occurs on reporting H.R. 5078 to the 
House.
    All those in favor, say aye.
    All those opposed, say no.
    In the opinion of the Chair, the ayes have it.
    H.R. 5078 is reported favorably to the House.
    Without objection, Committee staff is authorized to correct 
punctuation, make other necessary technical corrections, and 
conforming changes.
    Without objection, Members shall also be entitled to 2 days 
to file additional supplemental, dissenting, and minority 
views.
    H.R. 5065
    Our second bill today is H.R. 5065, the ``Prison to 
Proprietorship Act for the Formerly Incarcerated,'' introduced 
by Mr. Jeffries and co-sponsored by Mr. Burchett. This bill 
complements the Prison to Proprietorship bill by requiring the 
Service Corps of Retired Executives to provide mentoring, 
workshops, and training videos for formerly incarcerated 
individuals on how to launch and grow small businesses.
    I would now like to recognize the gentleman from Illinois, 
Mr. Schneider, for an opening statement on H.R. 5065.
    Mr. SCHNEIDER. Thank you, Madam Chair.
    I want to thank you for holding the hearing earlier this 
fall that examined entrepreneurship as an opportunity for 
formerly incarcerated individuals. We heard compelling 
testimony that spoke to how we can empower the formerly 
incarcerated with the skills to start their own small 
businesses. What a powerful force that can be, both for those 
individuals, as well as their communities.
    I want to thank my colleagues, Hakeem Jefferies and Tim 
Burchett for introducing the ``Prison to Proprietorship for 
Formerly Incarcerated Act.'' I am proud to be a cosponsor of 
this bill.
    This legislation, and the legislation that we just voted 
on, the ``Prison to Proprietorship Act,'' will empower those 
leaving the federal prison system with not only the skills, but 
also the support to start their own small business.
    I have long been a fan of the SCORE program and how it 
helps burgeoning small businesses expand and grow. Mentorship 
can play a vital role in the success of entrepreneurs and 
citizens returning to society after serving time, facing unique 
challenges when trying to start their own small business.
    I know this legislation would have a positive impact in my 
own district. Our own Small Business Development Center based 
out of the College of Lake County is in the process, in 
conjunction with the local county jail, of offering 
entrepreneurship courses to a cohort of inmates.
    I am proud of the initiative our SBDC, particularly its 
director, Mitch Bienvenue, has undertaken by designing and 
offering this program. I look forward to hearing about the 
success stories of these inmates once they are returned to 
their own communities. I am excited to push this bill forward 
because I know that SCORE would provide these individuals with 
the mentorship that could be instrumental for their success.
    No one starts a successful small business on their own, and 
SCORE can be an invaluable pipeline for the help necessary to 
making the dream of running one's own small business a reality.
    Thank you again to my colleagues, Mr. Burchett and Mr. 
Jeffries for their work on this important bill.
    I would also like to ask unanimous consent to include Mr. 
Jeffries' written testimony in support of H.R. 5065 into the 
record.
    Chairwoman VELAZQUEZ. Without objection, the statement is 
entered into the record.
    Mr. SCHNEIDER. Thank you, and I yield back.
    Chairwoman VELAZQUEZ. Thank you.
    I now would like to recognize the other sponsor of the 
bill, Mr. Burchett, from Tennessee, for 5 minutes.
    Mr. BURCHETT. Thank you, Chairlady Velazquez and Ranking 
Member Chabot, for helping us work on these important bills.
    I do want to educate my friends across the aisle. It is 
Burchett, birch, like the tree, and et, like I just et 
breakfast. Can everybody say that together? Burchett? Burchett. 
Thank you. If I can get, dadgummit, if I can get Velazquez, you 
all can get Burchett. Okay?
    I want to thank you. I love saying that name, by the way, 
Chairlady. That is really cool. You have been very kind to me. 
Thank you all.
    Can we please have order? Order, please?
    I mean, I really am fired up about this bill, and I want to 
thank you all for allowing me to----
    Chairwoman VELAZQUEZ. You better hurry up. Otherwise, I am 
going to make it a partisan bill.
    Mr. BURCHETT. I got it. I got it. Are you cutting in on my 
time, Chairlady? No, I got it. Do not worry.
    Thank you, Mr. Schneider, for those kind words.
    Of course, the goal of correctional facilities should be to 
rehabilitate or to remove individuals that are dangerous to us 
from society. Learning is vital to everyone regardless of where 
they are or who they are, and for our formerly incarcerated, a 
successful reentry into society can start with continued 
learning.
    To me, providing folks an opportunity to learn how to work 
in a small business and work towards a good job is essential. 
Ultimately, I want to make sure individuals who are 
incarcerated but ready for a fresh start, a new beginning, have 
a real shot at success, not just some empty promises.
    I thank Mr. Jeffries for his leadership on this bill, on 
H.R. 5065, and I appreciate the constructive approach this 
Committee has taken to solve serious issues such as this. Thank 
you, Chairlady Velazquez, and I yield the rest of my----
    Chairwoman VELAZQUEZ. By the way, it is Velazquez.
    Mr. BURCHETT. Velazquez. Well, I had it right the first 
time but Ranking Member Chabot told me otherwise.
    Chairwoman VELAZQUEZ. Thank you. The gentleman yields back.
    Are there any other Members who wish to be recognized for a 
statement on H.R. 5065?
    The gentleman from Ohio, Mr. Chabot is now recognized.
    Mr. CHABOT. Thank you very much, Madam Chair.
    As our Committee heard in our hearing on this topic last 
month, up to 60 percent of people released from prison remain 
unemployed after a year, oftentimes seeking employment. 
Therefore, it is not surprising that about half of former 
inmates recidivate within 3 years of being released from 
prison. In other words, they have committed a crime and they 
are back behind bars. Small business ownership can provide 
steady employment, which can drastically lower the risk of 
recidivism with nonviolent offenders.
    This bill, H.R. 5065, the ``Prison to Proprietorship for 
Formerly Incarcerated Act'' directs SCORE programming and 
mentorship services to the formerly incarcerated.
    I want to thank the gentleman from Tennessee, Mr. Burchett, 
and the gentleman from New York, Mr. Jeffries, for their 
bipartisan work on this bill and I yield back.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    Are there any other Members who wish to be recognized for a 
statement on H.R. 5065?
    Mr. Spano?
    Mr. SPANO. Thank you, Chairwoman. I appreciate it. Just to 
echo what everybody else has said, it has always struck me as--
in many respects--that we have individuals who are trying to 
turn the page of their lives and start over but they have got 
that mark against them of having that criminal history. It 
makes it very, very, very difficult for them assimilate back 
into society by finding work and moving on. The ability to give 
these folks the tools that they need to make their own way when 
that relates to starting your own small business is incredibly 
exciting to me. Thank you to the Chair, and thank you to the 
Committee for this effort. I think it is a great idea.
    Chairwoman VELAZQUEZ. Thank you.
    Mr. SPANO. Thank you.
    Chairwoman VELAZQUEZ. Thank you for yielding back.
    I now recognize myself briefly.
    Nearly 95 percent of the people currently in prison will be 
released, and one of the biggest obstacles they face is 
unemployment. Entrepreneurship is the best option for many. 
While the ``Prison to Proprietorship Act'' would provide the 
in-prison training on how to launch a business, we must ensure 
that the skills learned in the program are fully utilized upon 
release. Under this bill, SCORE would be required to provide 
the formerly incarcerated individuals with mentoring tailored 
to their unique needs. The mentorship will be invaluable to 
those reentering our communities, and so I want to commend Mr. 
Jeffries and Mr. Burchett for their collaboration.
    I urge my colleagues to support the bill, which will go a 
long way in reducing recidivism, creating new jobs, and 
promoting economic growth in communities.
    If there is no further discussion, the Committee will move 
on to consideration of H.R. 5065.
    The clerk will report the title of the bill.
    The CLERK. H.R. 5065, the ``Prison to Proprietorship for 
Formerly Incarcerated Act.''
    Chairwoman VELAZQUEZ. Without objection, H.R. 5065 is 
considered as read and open for amendment at any point.
    Does anyone wish to offer an amendment?
    Seeing none, the question is now on H.R. 5065.
    All those in favor, say aye.
    All those opposed, say no.
    In the opinion of the Chair, the ayes have it.
    H.R. 5065 is agreed to.
    The question now occurs on reporting H.R. 5065 to the 
House.
    All those in favor, say aye.
    All those opposed, say no.
    In the opinion of the Chair, the ayes have it.
    H.R. 5065 is reported favorably to the House.
    Without objection, Committee staff is authorized to correct 
punctuation, make other necessary technical corrections and 
conforming changes.
    Without objection, Members shall also be entitled to 2 days 
to file additional supplemental, dissenting, and minority 
views.
    H.R. 5130
    The next bill is H.R. 5130, the ``Capturing All Small 
Businesses Act of 2019,'' introduced by Mr. Veasey and co-
sponsored by Mr. Hern, which modifies the method for 
calculating the employee-based size standard.
    I would now like to recognize the gentleman from Oklahoma, 
Mr. Hern, the cosponsor of the bill, for an opening statement.
    Mr. HERN. Thank you, Madam Chairwoman. I would like to 
thank my colleague, Representative Veasey, for his leadership 
on this important legislation, which will help provide small 
business manufacturers with greater competitive edge in the 
open marketplace.
    This bill provides parity with another important small 
business bill that this Committee passed which was signed into 
law nearly a year ago. The previous bill extended the runway 
for revenue-based small businesses, allowing them to stay 
smaller for a longer period of time. While revenue-based and 
employee-based firms differ in many respects, one thing remains 
constant--that competing in the open marketplace when a firm is 
not ready to leave the small business arena can have disastrous 
effects on a small business's growth trajectory.
    There is a reason why so many small businesses liken this 
transition to jumping off a cliff. Oftentimes, small firms 
cannot compete against the giants in their particular 
industries and eventually fail, stay small, or become acquired 
by a large company supply chain. None of these outcomes promote 
growth for small businesses, and none of these options are good 
for competition.
    Therefore, it is critical that we ensure our small 
manufacturers are capable of successfully and smoothly 
transitioning out of the small business space into the open 
marketplace without falling off of this cliff. That is exactly 
what this bill does for small manufacturers.
    By extending the measurement of a small manufacturer's 
concern size from a rolling 12-month average to a 24-month 
average, we provide these small businesses with more time to 
build their competitive edge and infrastructure so they are 
better equipped to handle a more robust competition once they 
graduate out of the small business space.
    In short, the bill is good, common sense policy aimed at 
encouraging small business growth and competition at the 
highest levels. I urge my colleagues to support H.R. 5130, and 
I yield back.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    I would like to recognize the gentleman from Texas, Mr. 
Veasey, the sponsor of the bill for an opening statement.
    Mr. VEASEY. Thank you, Madam Chair, Committee Members. I am 
excited to be leading H.R. 5130, the ``Capturing All Small 
Businesses Act of 2019,'' with Representative Hern, to protect 
small businesses against being prematurely forced out of the 
small business category due to sudden growth. This bipartisan 
legislation lengthens the calculation period used by SBA to 
determine average employee count, one of the size standards SBA 
uses to determine if businesses are small from 12 months to 24 
months. By extending SBA's calculation period for the employee-
based size standards, we promote the sound and stable growth of 
small businesses, support job creation, and strengthen our 
industrial base.
    In my home state of Texas, small businesses make up about 
99 percent of all business and employs 4.7 million Texans. As 
we have seen in this Committee, these small businesses are 
critical for a healthy, competitive, and innovative 
marketplace. However, under SBA's size standards, a small 
business experiencing sudden growth could face being 
prematurely placed out of their small business size standard. 
If this occurs, businesses may face challenges including no 
longer being able to qualify for SBA loans, contracts, and 
other assistance, and having to compete in the open market 
against much larger businesses.
    H.R. 5130 would grant small businesses additional time to 
mature and become better equipped for success in the open 
marketplace. The change in this bill also provides a period 
between small businesses subject to employee-based size 
standards and those subject to receipts-based size standards 
which were modified last year through the ``Small Business 
Runway Extension Act'' by this Committee. By amending the 
existing SBA employee-based size standards, we can provide 
protections that ensure our nation's small businesses can 
succeed in our economy.
    I am proud to offer this effort, and hope this Committee is 
able to advance this important legislation to provide much-
needed relief to small businesses all across our great country.
    Madam Chair, I yield back.
    Chairwoman VELAZQUEZ. Thank you. The gentleman yields back.
    I now recognize the Ranking Member.
    Mr. CHABOT. Thank you, Madam Chairwoman.
    I would also like to express my support for this 
legislation, which will encourage our small businesses to grow 
successfully and competitively into the mid-size marketplace. 
We have heard too many stories of small businesses successfully 
providing significant value to the federal government and 
growing at a steady pace only to hit a wall once they grow out 
of their small-sized threshold. We need to ensure that there is 
a pathway for sustained development for our nation's small 
businesses and small manufacturers, and this bill takes a step 
in the right direction.
    I want to thank the gentleman from Texas, Mr. Veasey, and 
the gentleman from Oklahoma, Mr. Hern, for their leadership on 
this issue. It is nice to see a Texan and an Oklahoman working 
together. We do not always see that, so thank you, gentleman. I 
yield back.
    Chairwoman VELAZQUEZ. The gentleman yields back. Thank you, 
Mr. Chabot.
    I will now recognize myself briefly.
    The SBA size standards represent the largest size that a 
business may be to remain classified as a small business 
concern. Size standards are important because they are used to 
determine eligibility for SBA's financial assistance and other 
federal programs, including government procurement programs 
designed to assist small contractors. The actual determination 
of what a small business is and what the small business size 
standards should be has also been a point of contention.
    Last year, we passed the ``Small Business Runway Extension 
Act,'' which modified the calculation period for the receipts-
based size standard using the average of the preceding 5 years 
instead of the preceding 3 years. The act was in response to 
the concerns of small firms that outgrew their size standard 
and lost their eligibility for small business set-asides and 
SBA programs. By modifying the receipts-based formula, we 
granted small businesses additional time to transition into the 
open marketplace.
    While this legislation was certainly a step in the right 
direction, it did not provide an equivalent change for those 
businesses subject to the employee-based size standard. 
Unfortunately, this standard was left intact even though small 
businesses experienced the same challenges and concerns that 
the ``Runway Extension Act'' tried to alleviate.
    H.R. 5130 provides a reasonable solution to this issue, and 
I want to congratulate both gentlemen for their efforts.
    If there is no further discussion, the Committee will move 
on to consideration of H.R. 5130.
    The clerk will report the title of the bill.
    The CLERK. H.R. 5130, ``Capturing All Small Businesses Act 
of 2019.''
    Chairwoman VELAZQUEZ. Without objection, H.R. 5130 is 
considered as read and open for amendment at any point.
    Does anyone wish to offer an amendment?
    Seeing none, the question is now on H.R. 5130.
    All those in favor, say aye.
    All those opposed, say no.
    In the opinion of the Chair, the ayes have it.
    H.R. 5130 is agreed to.
    The question now occurs on reporting H.R. 5130 to the 
House.
    All those in favor, say aye.
    All those opposed, say no.
    In the opinion of the Chair, the ayes have it.
    H.R. 5130 is reported favorably to the House.
    Without objection, the committee staff is authorized to 
correct punctuation, make other necessary technical corrections 
and conforming changes.
    Without objection, Members shall also be entitled to 2 days 
to file additional supplemental, dissenting, and minority 
views.
    H.R. 5146
    The final bill before us today is H.R. 5146, the 
``Unlocking Opportunities for Small Business Act of 2019,'' 
introduced by Mr. Hagedorn, and co-sponsored by Mr. Evans, 
which removes the barriers to entry for small businesses across 
the country.
    I would now like to recognize the bill's sponsor, the 
gentleman from Minnesota, Mr. Hagedorn, for an opening 
statement.
    Mr. HAGEDORN. Thank you, Chairwoman Velazquez. I appreciate 
that. Ranking Member Chabot. One of the wonderful things about 
this Committee is the bipartisan nature and the way that 
Members get together and try to improve small businesses and do 
what we can with our jurisdiction. Thank you for that.
    I would also like to thank my colleague, the gentleman from 
Pennsylvania, Mr. Evans, for his hard work and collaboration 
with me on this legislation which will, as the bill says, 
unlock opportunities for small contractors seeking to gain 
access to prime contracting opportunities with the federal 
government.
    Unfortunately, small contractors are stuck in a catch-22. 
In order to receive a prime contract, federal agencies require 
evidence showing that the contractor is capable of doing the 
work, but they will generally only accept past proof of 
experience, also known as past performance work, which is work 
done as a prime contractor with the government. You cannot get 
prime contracts if you do not have a record of past 
performance, but you cannot get past performance experience 
without winning the contracts. Winning prime contracts for many 
small businesses is the key to sustained growth and making the 
leap from subcontracting or teaming with other companies to 
prime contracting can be exceedingly challenging due to this 
dilemma.
    I have a little bit of experience with this as a 
congressional relations officer in the Treasury Department in 
my past work, and I saw how some of these contracts work. 
Basically you would go in, they would score it and determine 
who would get the contracts. I recently spoke with a friend of 
mine, Adam Roosevelt, who does a lot of subcontracting with 
DHS, just recently, and he was at one of our hearings about a 
week ago and he said it is really tough for them. They do the 
work, they are capable of it, but there is no way for the 
agencies even to score it. I think in the future, when we look 
at this, maybe we need a category in scoring that would say if 
you have done a lot of work as a subcontractor on these 
contracts that would count for something and would give them an 
opportunity to move past that so that is maybe something we can 
look at in the future.
    The assessment of a contractor's capabilities based only on 
their experience as a prime contractor does a great disservice 
to many qualified and capable small contractors, as we said, 
that have performed vital and critical work as members of joint 
ventures. The work small contractors have performed in these 
roles may have great relevance to a contracting bid. However, 
they are unable to showcase their capabilities due to the 
agency's focus on prime contracting experiences.
    I would like to submit the rest of my statement for the 
record, and I appreciate the consideration of the Members to 
vote for our bill, H.R. 5146.
    With that I yield back. Thank you.
    Chairwoman VELAZQUEZ. Without objection, so ordered.
    I would now like to recognize the bill's cosponsor, the 
gentleman from Pennsylvania and Vice Chair of the Committee, 
Mr. Evans, for an opening statement.
    Mr. EVANS. Thank you, Madam Chairwoman Velazquez and 
Ranking Member Chabot, for having this markup. Thank you, 
Congressman Hagedorn for your leadership on this bill.
    In addition to the congressman's comments, I would like to 
emphasize that this bill is especially important to minority-
owned small businesses. Minority-owned small businesses in my 
home city of Philadelphia are frequently working joint ventures 
to pool their resources to work as subcontractors to prime 
contractors who are usually majority white-owned. Consequently, 
the majority of the work Philadelphia-based small businesses 
are performing cannot be counted as past performance when 
submitting bids to federal contracts. This hurts the small 
businesses, especially their ability to bid and compete when 
contractors are prime, which also impacts the businesses' 
ability to grow, create jobs, and contribute economically to 
the community. This is especially impactful in Philadelphia 
where the poverty rate is nearly 25 percent. This bill will 
permit those small businesses to use their work in joint 
ventures or as subcontractors to count as past performance, 
which will allow the businesses to build track records that are 
necessary to bid as primes for federal contracts. Consequently, 
minority-owned small businesses will field hurdles in their 
goal to prosper and flourish.
    I invite the Members of the Committee to support the 
passage of this important bill. Thank you, and I yield back, 
Madam Chair.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    Now we recognize the Ranking Member.
    Mr. CHABOT. Thank you, Madam Chair. I would like to thank 
the gentleman from Minnesota, Mr. Hagedorn, and the gentleman 
from Pennsylvania, Mr. Evans, for their leadership on this 
legislation, which I believe will reduce significant barriers 
to small contractors in the federal marketplace.
    As we have heard from our colleagues, obtaining relevant 
past performance is critical for a small business to be 
competitive for a contract award. Unfortunately, federal 
agencies take a narrow view on what they might consider as 
relevant past performance for a prime contract opportunity. 
This limits a small business's ability to compete for contracts 
that they would otherwise be a perfect fit for which is 
detrimental both to the small business and to the government. 
In short, the important thing for a federal agency to know is 
whether a business is capable of successfully completing the 
specific task being requested. If the small business can show 
that it has successfully performed that type of work in the 
past, it should be able to use that as evidence that it can 
complete the task in the future. It is that simple.
    This bill will not only unlock prime contracting 
opportunities for small businesses but will also have the 
additional positive impact of eventually growing the industrial 
base, increasing competition, and lowering costs for the 
taxpayer.
    I urge my colleagues to support this important legislation 
and yield back.
    Chairwoman VELAZQUEZ. The gentleman yields back. Thank you.
    I will now recognize myself briefly.
    First, I would like to commend both Mr. Hagedorn and Mr. 
Evans for their collaboration on this bill and working to make 
it easier for small businesses seeking to perform as prime 
contractors. Past performance is an important factor in 
evaluating many solicitations. Knowing how a small business 
performed a contract in the past is an important indicator of a 
small business's ability to successfully perform in the future. 
H.R. 5146 addresses this issue by allowing small businesses to 
leverage past performance experience obtained as part of joint 
ventures and subcontracts, which otherwise would not be an 
option. With this legislation, we reaffirm our commitment to 
offering small businesses the tools they need to thrive. Thus, 
I urge my colleagues to support the bill.
    If there is no further discussion, the Committee----
    Mr. Spano is recognized.
    Mr. SPANO. Thank you, Madam Chair. Thank you, Ranking 
Member. My congratulations to Mr. Hagedorn and Mr. Evans. Great 
job.
    This is a bill that I think is an important piece of 
legislation that down the road we will look back to and say, 
wow, that really transformed small business owners' ability to 
be able to break into government contracting. I think it could 
be really transformative. So I fully support it. It is 
important that we make sure our tax dollars do more to build up 
main street, and I think this bill does that. I encourage my 
colleagues' support. Thank you.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    Is there any other Member who wishes to speak on this bill?
    If there is no further discussion, the Committee will move 
on to consideration of H.R. 5146.
    The clerk will report the title of the bill.
    The CLERK. H.R. 5146----
    Chairwoman VELAZQUEZ. Without objection, H.R. 5146 is 
considered as read and open for amendment at any point.
    Does anyone wish to offer an amendment?
    Seeing none, the question is now on H.R. 5146.
    All those in favor, say aye.
    All those opposed, say no.
    In the opinion of the Chair, the ayes have it.
    H.R. 5146 is agreed to.
    The question now occurs on reporting H.R. 5146 to the 
House.
    All those in favor, say aye.
    All those opposed, say no.
    In the opinion of the Chair, the ayes have it.
    H.R. 5146 is reported favorably to the House.
    Without objection, Committee staff is authorized to correct 
punctuation, make other necessary technical corrections and 
conforming changes.
    Without objection, Members shall also be entitled to 2 days 
to file additional supplemental, dissenting, and minority 
views.
    I thank all the Members for their participation today. If 
there is no further business to come before the Committee, we 
are adjourned. Thank you.
    [Whereupon, at 12:12 p.m., the committee was adjourned.]
                          
                          A P P E N D I X

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 [all]