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




 
AN OVERVIEW OF THE DYNAMIC BETWEEN THE DEFENSE PRODUCTION ACT
                      AND SMALL CONTRACTORS           

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

                                HEARING

                               before the

             SUBCOMMITTEE ON CONTRACTING AND INFRASTRUCTURE

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                             JUNE 24, 2020

                               __________

                               
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                        



            Small Business Committee Document Number 116-083
             Available via the GPO Website: www.govinfo.gov             
                                ______                       


             U.S. GOVERNMENT PUBLISHING OFFICE 
41-294                  WASHINGTON : 2021             
             
             
             
             
                   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
                         KWEISI MFUME, Maryland
                          JUDY CHU, California
                       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

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

                           OPENING STATEMENTS

                                                                   Page
Hon. Jared Golden................................................     1
Hon. Pete Stauber................................................     3

                               WITNESSES

Mr. Ian Patterson, Attorney-Senior Associate, Koprince Law, LLC, 
  Lawrence, KS...................................................     4
Mr. David Black, Attorney-Partner, Holland & Knight, LLP, Tysons, 
  VA.............................................................     7
Ms. Mary Lockhart, President & CEO, PEMDAS Technologies & 
  Innovations, Alexandria, VA, testifying as the Chair of the 
  Small Business Division for the National Defense Industrial 
  Association (NDIA).............................................     9
Ms. Traci Tapani, Co-President, Wyoming Machine, Inc., Stacy, MN.    11

                                APPENDIX

Prepared Statements:
    Mr. Ian Patterson, Attorney-Senior Associate, Koprince Law, 
      LLC, Lawrence, KS..........................................    24
    Mr. David Black, Attorney-Partner, Holland & Knight, LLP, 
      Tysons, VA.................................................    31
    Ms. Mary Lockhart, President & CEO, PEMDAS Technologies & 
      Innovations, Alexandria, VA, testifying as the Chair of the 
      Small Business Division for the National Defense Industrial 
      Association (NDIA).........................................    43
    Ms. Traci Tapani, Co-President, Wyoming Machine, Inc., Stacy, 
      MN.........................................................    45
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    None.


AN OVERVIEW OF THE DYNAMIC BETWEEN THE DEFENSE PRODUCTION ACT AND SMALL 
                              CONTRACTORS

                              ----------                              


                        WEDNESDAY, JUNE 24, 2020

                  House of Representatives,
               Committee on Small Business,
    Subcommittee on Contracting and Infrastructure,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 1:00 p.m., via 
Webex, Hon. Jared Golden [chairman of the Subcommittee] 
presiding.
    Present: Representatives Golden, Crow, Davids, Stauber, and 
Balderson.
    Chairman GOLDEN. So let's get started.
    I call this hearing to order. Without objection, the Chair 
is authorized to declare a recess at any time.
    I want to thank everyone, especially our witnesses, for 
joining us today for our Subcommittee's remote hearing. I want 
to make sure to note some important requirements.
    Let me begin by saying that standing House and Committee 
rules and practice will continue to apply during remote 
proceedings. All Members are reminded that they are expected to 
adhere to these standing rules, including decorum, when they 
are participating in any remote event.
    With that said, the technology we are utilizing requires us 
to make small modifications to ensure that the Members can 
fully participate in these proceedings.
    During the covered period as designated by the Speaker, the 
Committee will operate in accordance with H. Res. 965 and 
subsequent guidance from the Rules Committee in a manner that 
respects the rights of all Members to participate.
    House regulations require Members to be visible through a 
video connection throughout the proceeding, so please keep your 
cameras on. Also, if you have to participate in another 
proceeding, please exit this one and log back in later as soon 
as you can.
    In the event a Member encounters technical issues that 
prevent them from being recognized for their questioning, I 
will move to the next available Member of the same party, and I 
will recognize that Member at the next appropriate time slot, 
provided they have returned.
    Should a Member's time be interrupted by technical issues, 
I will recognize that Member at the next appropriate spot for 
the remainder of their time once their issues have been 
resolved.
    In the event a witness loses connectivity during testimony 
or questioning, I will preserve their time as staff work to 
address the technical issue. I may need to recess the 
proceedings to provide time for the witness to reconnect.
    And, finally, remember to remain muted until you are 
recognized to minimize background noise. Having said that, I 
will also give everyone a friendly reminder because everyone 
who has done one has probably made the mistake of beginning to 
speak, without unmuting themselves. So keep that in mind.
    In accordance with the rules established under H. Res. 965, 
staff have been advised to mute participants only in the event 
there is inadvertent background noise. Should a Member wish to 
be recognized, they must unmute themselves and seek recognition 
at the appropriate time.
    I will now give a brief opening statement.
    The Defense Production Act, or DPA, was enacted 70 years 
ago, after the outbreak of the Korean War, in an effort to spur 
industrial production to meet wartime needs. At that time, the 
Nation was ill prepared for another war following World War II. 
To bolster our country's defense infrastructure, the President 
requested authorities to mobilize our domestic industry to 
increase production of military equipment and much needed 
supplies.
    Since then, its authorities have been expanded to include a 
number of purposes, including emergency preparedness and 
response.
    With that said, our country has faced an unprecedented 
threat to the life and well-being of its citizens: The COVID-19 
pandemic.
    In response to the pandemic, and at the urging of 
congressional leaders, the President invoked the DPA on 
multiple occasions to compel companies to meet the shortfall of 
medical equipment and supplies.
    And while it has been used mostly as a tool to meet the 
skyrocketing demand for personal protective equipment and 
ventilators, one thing is clear: There are still more 
opportunities to leverage its authorities as part of a 
coordinated response to the evolving threat to our Nation.
    And with that, we must look for ways to use the DPA and its 
authorities to advance our small businesses, an opportunity 
other members of this Committee and I have previously 
highlighted for the Executive.
    Small businesses have been hit especially hard by the 
pandemic. From cash flow concerns to availability of materials, 
the economic devastation cannot be underestimated.
    In particular, DPA Title III authorities provide a series 
of economic incentives that seek to maintain, restore, and 
expand domestic industrial capabilities. The CARES Act provided 
$1 billion to carry out the responsibilities of Title III of 
the DPA, specifically to prevent, prepare, and respond to the 
COVID-19 pandemic.
    It is not only our responsibility but our duty to ensure 
that small businesses engaged in the manufacture of medical 
supplies, as well as those in the defense industrial base, have 
the maximum opportunity to participate in Title III programs.
    Access and participation in these programs will supplant 
lost revenues due to COVID-19 and guarantee the livelihood of 
small businesses.
    Moreover, recognizing the ingenuity and nimbleness of our 
small businesses, this investment will translate into 
innovation and the acquisition of much needed resources for the 
Federal Government.
    And so today's hearing will serve as an opportunity to 
examine the DPA and its main authorities, including those 
provisions in the law that establish a preference for small 
firms.
    Additionally, we hope to discuss potential legislative 
measures to strengthen the DPA for small businesses.
    Finally, we wish to hear more about the challenges that 
small businesses are facing due to COVID-19 and how leveraging 
Title III authorities could provide substantial relief.
    I look forward to hearing from our distinguished witnesses 
today about the DPA, its application to the COVID-19 relief and 
response efforts, and the dynamics between the DPA and small 
business contractors.
    Again, I want to thank the witnesses for joining us here 
today, and I now yield to the Ranking Member, Mr. Stauber, for 
his opening statement.
    Mr. STAUBER. Thank you, Chairman Golden.
    You know, the events of this year have underscored the 
fragility of our medical preparedness as a Nation. In times of 
unprecedented disasters, it is critical that we come together 
to leverage the immense power and capability of the American 
workforce to help pull our country through crisis.
    Indeed, we have already seen an aggressive ground flow of 
volunteer and voluntary activity from businesses, particularly 
small businesses leaping at the opportunity to help their 
neighbors and frontline healthcare workers during this COVID-19 
pandemic.
    And while the efforts of these businesses are commendable, 
sometimes the needs of the country are so urgent and so great 
that it becomes necessary to rapidly mobilize the full power of 
the United States industrial base to ensure supplies for our 
national defense are produced and distributed appropriately.
    This is where the Defense Production Act takes center 
stage. Invoking the DPA is not a step to take lightly. Its 
authorities upend some of the essential tenets of Federal 
contracting principles, such as full and fair competition. 
Furthermore, the authorities provided under the DPA can compel 
a company to do business with the Federal Government even if it 
does not wish to do so and impact its ability to manage its 
priorities as it sees fit.
    Once the DPA is invoked and a business is tapped, it must 
prioritize DPA ordered contracts above all others it may have 
in the queue, and it has limited choice but to comply. While 
these are significant departures from the typical Federal 
contracting framework, Congress has decided time and again, 
through dozens of reauthorizations of the DPA, that these 
drastic measures can become necessary in times of significant 
national strife, times such as now.
    When the DPA is activated, businesses tasked with DPA 
orders must reshuffle existing priorities and work with their 
suppliers and subcontractors to ensure the government's needs 
are met first and foremost. DPA orders, therefore, impact an 
entire chain of businesses, from the large prime down to the 
small subcontractor supplier.
    The role small businesses play cannot be overstated. 
Without these companies, we would not be able to produce the 
ventilators, the masks, and the essential PPE and other medical 
equipment necessary to protect healthcare workers at the levels 
needed to stifle this pandemic.
    The critical role small businesses play applies across the 
board to all DPA invocations, whether it be for military 
preparedness, natural hazard response, or domestic 
preparedness. Indeed, the DPA even contains a special 
preference for issuing contracts to small businesses under its 
authorities, directing the President to, in quotation marks, 
accord a strong preference for small business concerns which 
are subcontractors or suppliers.
    Regardless of whether the disruption caused by DPA orders 
are welcome or not, it is clear that we depend on a vast 
network of small business contractors and suppliers to generate 
the essential items needed for national defense.
    I hope through the insights of our esteemed panelists here, 
we will be able to understand how the DPA interacts with small 
businesses, learn more about what the actual operation impacts 
of the DPA on our small businesses, and understand what 
Congress can do to ensure small businesses have the opportunity 
to participate and contribute to the national defense through 
the DPA.
    Mr. Chair, I yield back.
    Chairman GOLDEN. Thank you very much, Mr. Stauber.
    So I am going to do my best to move on. I understand that 
my microphone is muffled, so I am going to quickly make the 
introductions for the first panelist, and then I will be 
calling in from my phoneline while you are making your first 
presentation. I think that is probably the easiest way to move 
forward for the time being.
    So with that, I am going to introduce our witnesses. Our 
first witness is Mr. Ian Patterson.
    Mr. Patterson is a senior associate with the law firm 
Koprince Law, LLC. He has a wide range of experience with 
Federal procurement topics and is a seasoned bid protest 
litigator. In this role he has closely followed and written 
about procurement issues related to COVID-19 pandemic.
    Mr. Patterson, I am going to go ahead and recognize you 
right now for 5 minutes while we work on my microphone issues.

STATEMENTS OF IAN PATTERSON, ATTORNEY-SENIOR ASSOCIATE KOPRINCE 
LAW, LLC, LAWRENCE, KS; DAVID BLACK, ATTORNEY-PARTNER, HOLLAND 
  & KNIGHT, LLP, TYSONS, VA; MARY LOCKHART, PRESIDENT & CEO, 
 PEMDAS TECHNOLOGIES & INNOVATIONS, ALEXANDRIA, VA, TESTIFYING 
 AS THE CHAIR OF THE SMALL BUSINESS DIVISION FOR THE NATIONAL 
  DEFENSE INDUSTRIAL ASSOCIATION (NDIA); AND TRACI TAPANI, CO-
          PRESIDENT, WYOMING MACHINE, INC., STACY, MN

                   STATEMENT OF IAN PATTERSON

    Mr. PATTERSON. Thank you, Mr. Chairman, Rank Member 
Stauber, and members of the Subcommittee.
    Thank you for the opportunity to speak to you today 
regarding the use of the Defense Production Act to combat 
COVID-19 and the inclusion of small businesses in that fight.
    As currently enacted, the Defense Production Act includes 
three titles that provide the President and his designees with 
various authorities to mobilize and augment America's 
industrial resources.
    The current Defense Production Act titles include Title I, 
Title III, and Title VII. The remaining titles have been struck 
through various renewals of the Act.
    With respect to Title I, it grants the President the 
authority to compel private businesses to accept orders and to 
prioritize those orders. This so-called prioritization 
authority is implemented through rated orders, which is a 
mechanism by which agencies can prioritize their orders ahead 
of both government procurements and that business's private 
interests as well.
    Title III, on the other hand, allows the President to 
invest in industries that are essential for national defense. 
Under Title III authority, the President may issue loans to 
businesses. He may guarantee business loans from private 
lenders, make purchase commitments, and also sponsor research 
and development efforts.
    Now, Titles I and III are designed to work together to 
address different mobilization needs.
    Title I provides immediate contracting authority to be able 
to combat instant needs based on whatever the crisis facing the 
United States is.
    Title III, on the other hand, allows the President to 
develop America's industrial resources so that, when necessary, 
they are there and available to be mobilized.
    Finally, Title VII contains a wide array of provisions that 
address a variety of topics, including jurisdiction, 
enforcement, things of that nature.
    But of particular import to this Committee, that is also 
where the small business provision is found within the Act. I 
know it has been quoted before, but I will quote it again. 
Under this section, small businesses are to be given maximum 
practicable opportunity to participate as contractors, as 
subcontractors at various tiers, and participate in all 
programs to maintain and strengthen the Nation's industrial 
base and technology base undertaken pursuant to this Act.
    Despite the desire to include these small businesses, the 
Defense Production Act does not provide any further instruction 
for how small business participation should be accomplished.
    Indeed, there are no small business contracting goals that 
are stated within the Act. There is no process for including 
small businesses in consideration for priority contracts. There 
is no cross-reference to other legislation, including the Small 
Business Act, to provide direction for how to ensure that small 
businesses are able to participate.
    Consequently, the [inaudible] Defense Production Act, small 
business initiatives are left undefined by the Act itself. And, 
indeed, in terms of regulation, they also are not well defined.
    With respect to utilization, the Department of Defense has 
regularly used the prioritization authorities under Title I. It 
anticipates, in at least 2018, that roughly 300,000 orders were 
issued using the priority initiatives under Title I.
    Title III authorities however, are used with less 
frequency. Indeed, it has been nearly three decades since any 
of the loan guarantee or loan provisions have been utilized. 
Additionally, the Department of Defense indicates it has used 
roughly 20 orders in 2018 to leverage Title I authorities. 
These have typically been used to try and invest in metallurgy 
and things of that nature.
    Despite these examples, one of the immediate challenges 
with evaluating the Defense Production Act is the absence of 
available data. As the Congressional Research Service noted, as 
recently as April of this year, quote, Public reporting and 
congressional oversight of Defense Production Act activities is 
fragmented and irregular.
    Now, this is likely due in part to the various delegations 
of authority that have been provided to agency secretaries by 
the President. As it currently stands, data, or the lack 
thereof, represents one of the greatest challenges to 
evaluating the use of small business in the Defense Production 
Act.
    Ultimately, the Defense Production Act establishes a series 
of tools to mobilize America's industrial resources, as well as 
investment and development of those resources. Unfortunately, 
however, it is very possible that small businesses are getting 
left behind.
    Without data, it is impossible to know, with any degree of 
certainty, the extent to which small businesses are or are not 
participating.
    Accordingly, I encourage this Committee to work to develop 
a better reporting system for Defense Production Act 
procurements. This will provide the data necessary to guide 
policymaking and ensure that small businesses are not being 
left behind in this fight.
    Thank you, Mr. Chairman, and I look forward to your 
questions.
    Chairman GOLDEN. Thank you.
    And how is this audio working for you all? Is this better?
    I see some heads nodding. All right. Great.
    Steve, how are you doing on time?
    Mr. STAUBER. We are good, Jared. I think we are good right 
now.
    Chairman GOLDEN. All right.
    So our second witness is Mr. David Black. He is a partner 
with the law firm of Holland & Knight, LLP, in Tysons, 
Virginia, and Co-Chair of Holland & Knight's National 
Government Contracts Group.
    Mr. Black's practice involves serving as a trusted advisor, 
problem-solver, and advocate for Federal contractors, awardees, 
and subcontractors in every stage of growth. He provides legal 
advice and representation to help his clients secure 
opportunities, enhance performance, mitigate risk, and respond 
to threats.
    Mr. Black serves contractors and awardees in a broad array 
of industries, with an emphasis on innovative technology, 
cutting edge products, professional services, healthcare, and 
research and development.
    Welcome, Mr. Black.
    Before I have you go, I am going to quickly move to our 
third witness introduction, Ms. Mary Lockhart. She is the 
founder of PEMDAS Technologies & Innovations, a woman-owned, 
service-disabled veteran-owned small business, that develops 
high technology hardware and software environmental 
intelligence products and services for the Department of 
Defense.
    Through her extensive career in the public and private 
sector, Ms. Lockhart has held vital research in leadership 
positions across multiple Federal agencies, to include the 
Department of Defense and NASA.
    In 2013, she retired from a 30-year career as a colonel in 
the United States Air Force Reserves. Ms. Lockhart has served 
as the President for Women-in-Defense Washington, DC, Chapter 
and is currently the Small Business Chair for the National 
Defense Industrial Association.
    Welcome, Ms. Lockhart.
    And I will now yield to our Ranking Member, Mr. Stauber, to 
introduce our final witness.
    Mr. STAUBER. Thank you, Chairman Golden.
    And I would like to welcome our final witness. It is a 
pleasure for me to do so. She is from my district, Ms. Traci 
Tapani.
    Ms. Tapani is the co-president of Wyoming Machine, 
Incorporated, a precision sheet metal fabrication company 
located in Stacy, Minnesota. Wyoming Machine is a woman 
business enterprise, National Council certified women-owned 
family manufacturing business, run by sisters Traci and Lori 
Tapani. Under their leadership spanning 25 years, Wyoming 
Machine has become a thriving, successful small business in a 
brutally competitive industry.
    Ms. Tapani's considerable expertise led her to serve a 3-
year term as an appointee to the Minnesota Governor's Work 
Force Development Board and a 6-year term on the Board of the 
Minnesota Chamber of Commerce. She serves as Board Chair of the 
Minnesota Initiative Foundation and is a member of the United 
States Chamber of Commerce Small Business Policy Council.
    She has won numerous accolades and awards, including in 
2014, the STEP Award for demonstrating excellence in leadership 
and manufacturing and the Minnesota National Association of 
Women Business Owners Lifetime Achievement Award.
    In addition to being a savvy small business owner and a 
public servant, Ms. Tapani actively volunteers in our local 
community focusing on issues such as workforce development and 
narrowing the skills gap and helping women gain access to 
nontraditional careers such as in manufacturing.
    Thank you for all that you do for our district and for your 
participation today, and I look forward to your testimony and I 
yield back.
    Chairman GOLDEN. Thank you, Mr. Stauber. And I have gone a 
little bit out of order. I apologize, that is unusual but I had 
to fix the audio issue there. It is the adapt and overcome 
approach. So having heard from Mr. Patterson. We are now going 
to recognize Mr. Black for 5 minutes.

                    STATEMENT OF DAVID BLACK

    Mr. BLACK. Thank you, Chairman Golden, Ranking Member 
Stauber, members of the Subcommittee.
    I think we are all doing things a little unusually these 
days, so we are all adjusting. I really appreciate the 
opportunity to be here today to help the Subcommittee 
understand and address the dynamic between the DPA and small 
business contractors.
    As Mr. Patterson said the purpose of the DPA is to mobilize 
domestic industry and the service of the National Defense and 
emergency preparedness, and there are provisions in the DPA 
that show it has long been Congress' intention to include 
domestic small businesses in that effort. But when you look at 
them, there is an underutilization of what exists and it is 
probably time for some reforms to help those pieces move 
together.
    So just to build on what Mr. Patterson did, I want to focus 
on really five provisions in the DPA that address small 
business. Under 50 USC 4518, that is where there is the strong 
preference for small businesses, for consideration of small 
businesses when making awards under Title III of the DPA.
    Under Section 4551(a), that is where there is a maximum--
agencies are supposed to give. The President is supposed to 
give maximum practicable opportunity to small businesses to 
participate as contractors and subcontractors. So, again, that 
is the one-two punch of making DPA investments in small 
business and then providing opportunities as primes and subs to 
meet the government's needs.
    Also under 4551 subsection (c), there is authority to 
include small businesses in advisory committees established 
under the DPA. Under 4551 subsection (d), agencies are supposed 
to provide information about DPA activities to small business.
    And then Congress has created the DPA Committee, which 
makes an annual report and annual policy recommendations to 
Congress. And what you see, and if you look at the current use, 
these pieces exist, but they are either not being utilized, 
they are being underutilized, the DPA committee is not, you 
know, taking--making the most of these authorities, and things 
really are not working to the extent that they could to bring 
in small businesses into DPA investment and DPA opportunities.
    When you look under this strong preference under Title III, 
as Mr. Patterson noted, there really are no procedures in place 
other than the statute about how are agencies, when they are 
considering making a Title III award, a Title III investment, 
how are they supposed to consider small business, how are they 
given the preference. There is really nothing in the books in 
terms of procedure and operation.
    There is no data currently being collected and reported to 
Congress about Title III awards. It is sort of a mishmash. You 
could probably find it through FOIA, but it is not being 
centralized and recorded, and Congress would probably benefit 
from that information for both small business awards and March 
business awards under Title III.
    Regarding the maximum practicable opportunity, this is 
where I think the whole community is missing a big opportunity. 
There is an information system called the Federal Procurement 
Data System, FPDS, that collects a tremendous amount of data 
about procurement actions, and it has dozens of fields that 
contracting specialists have to fill in to report contracting 
actions. And Congress initiated this to help determine is the 
government meeting small business goals.
    Right now there is no field for whether an order or a 
contract is priority rated, and simply adding that information 
to see when agencies are using priority rating for both large 
and small would really lift the veil and let Congress and 
agencies see how that priority rating authority is being used 
for small business.
    Currently there is authority to have a Small Business 
Advisory Committee, but in my research, I am not aware of one 
that exists. And then for the DPA Committee, the Small Business 
Administration is not currently designated as a member.
    Regarding the information provided to--by DPA activities, 
the Congress wants provided to small business and that is in 
the statute, but there is a lot of information, you know, on 
the websites of government agencies about the DPA, but nothing 
is really geared towards small business. Nothing has really 
indicated, hey, this is how we are meeting Congress' 
requirement to provide small business specific information 
about the DPA.
    So, you know, when you look at what could be done, this is 
really, I think, belt-and-suspenders fixes. This is about 
taking the existing provisions and making them work together, 
and it is, you know, just basic stuff, the basic work of the 
government of collecting better information, making that 
information accessible to agencies and Congress.
    Requiring that procedures be established so that these 
small business authorities and responsibilities are considered, 
are addressed by agencies exercising DPA authority and then 
connecting the decisionmakers to small business stakeholders 
really through the DPA Committee.
    So things that I think Congress could do that I think would 
be low impact but high value for the strong preferences is to 
have the DPA Committee----
    Chairman GOLDEN. Mr. Black, if I could jump in, I 
apologize. We have gone through 5 minutes here, and in the 
interests of preserving a little time, I am going to cut you 
off there.
    Thank you for your opening statement, and we will certainly 
be able to work through the rest of your recommendations 
through the Q and A, I have no doubt, and I will be sure to 
give you more opportunities to continue.
    With that, I am now going to give 5 minutes to Ms. 
Lockhart.

                   STATEMENT OF MARY LOCKHART

    Ms. LOCKHART. Chairman Golden, Ranking Member Stauber, and 
the members of the Subcommittee. Thank you for the opportunity 
to testify here this afternoon and for your consistent efforts 
in supporting America's small business community.
    First of all, Chairman Golden, thank you very much for the 
introductions. My small business, PEMDAS, provides high-value 
engineering services and innovative hardware and software 
products to the Department of Defense.
    But today I am honored to be representing the Small 
Business Division of the National Defense Industrial 
Association, NDIA, the Nation's oldest and largest defense 
industry association, comprised of over 1,650 corporate and 
over 70,000 individual members. My testimony this afternoon 
will focus on leveraging Title III authorities to support the 
small business preference in the Defense Production Act. This 
will help to preserve America's small business industrial base 
during this very challenging pandemic.
    My small business colleagues and I support all efforts to 
make government procurement more efficient, streamlined, and 
cost effective. Unfortunately, COVID-19 has created unforeseen 
challenges to small businesses that are eclipsing the recent 
beneficial changes to the defense procurement systems.
    An NDIA survey that was published 2 months ago in April, 
consisting of over 750 members from the small business 
industrial base, found that 60 percent of the respondents 
experienced a serious cash flow disruption due to the crisis. 
51 percent reported that shelter-in-place orders negatively 
impacted their ability to execute contracts. Sixty percent 
expected to have long-term financial and cash flow issues 
resulting from COVID-19.
    The underlying reasons cited were cuts to billable hours, 
delays in payments due to government shutdown and telework 
requirements for both prime contractors and the government, and 
a lack of telework options or contract schedule flexibility. 
Now, granted this survey went out in March. We have a second 
survey that has gone out, and those results will be available 
next month.
    Unsurprisingly, the brunt of these impacts fall hardest on 
those small businesses with fewer than 50 employees because of 
their limited resources. These businesses are often new to the 
defense industrial base and represent a vulnerable, but vital, 
part of the national security procurement apparatus.
    Congress recently appropriated the $1 billion for DPA Title 
III in the CARES Act. This Act, as has been discussed, provides 
provisions relevant to small businesses that support our 
national security. It is important that these provisions and 
the investments reach small businesses as they are proven 
innovators of technology to strengthen military readiness.
    Small business also generates thousands of local jobs. 
Ensuring the vitality of small businesses will help America's 
preparedness, response, and recovery from this pandemic.
    It is important, therefore, to strongly emphasize the small 
business preference and to maximize opportunities to the extent 
possible, especially in areas of high unemployment and ones 
that demonstrate a continuing pattern of economic decline.
    In closing, I offer, on behalf of NDIA, the following 
suggestions: Use DPA Title III to maximize small business 
participation; accelerate, and streamline the acquisition 
process for small businesses; establish a centralized office 
for DPA implementation reporting and coordination; ensure DPA 
has ample funding for small business; use supplemental 
appropriations if DPA fund is exhausted; and allow small and 
medium size manufacturing enterprises to use Title III funds 
that are intended by DPA.
    This Act provides for guaranteeing the purchase or lease of 
advance manufacturing equipment and, subject to meeting certain 
requirements, to replace key equipment that supports the 
defense industrial base.
    Chairman Golden, Ranking Member Stauber, and the members of 
this Subcommittee, thank you very much for the opportunity to 
speak this afternoon, and I would be pleased to respond to any 
of your questions.
    Chairman GOLDEN. Thank you, Ms. Lockhart.
    And we would now recognize Ms. Tapani for 5 minutes.

                   STATEMENT OF TRACI TAPANI

    Ms. TAPANI. Thank you.
    Chairman Golden and Ranking Member Stauber, thank you for 
the opportunity to be here today. I want to thank all the 
members of the Subcommittee for your service in support of 
small business.
    As you have already heard, I am Traci Tapani, an owner of 
Wyoming Machine in Stacy, Minnesota. Our company was founded by 
my father, Thomas Tapani, in 1974, and I have owned and 
operated the company with my sister for the past 26 years. 
Small business ownership and strong leadership by women are 
part of our family DNA.
    Many of you may have been working remotely due to the 
COVID-19 pandemic. At Wyoming Machine we are part of America's 
critical manufacturing sector, and as an essential business, we 
have been reporting to work since the start of the pandemic, 
and I am joining you today from my office at Wyoming Machine. 
My apologies if you hear any unexpected noise. Sometimes it can 
be difficult to do manufacturing quietly.
    We are proud of our workforce for continuing to report to 
work even when most workers have been urged to stay at home. I 
am happy to share that so far everyone in our company has 
remained healthy and safe.
    Our purpose today is to discuss the interaction between the 
Defense Production Act and small contractors. It will be 
helpful for you to know that over time my company has 
participated in fulfilling defense contracts and other 
government orders. While I would not describe myself as an 
expert in the DPA, I hope to share useful information, and I 
look forward to answering any questions.
    The DPA is undoubtedly a valuable tool in times of 
emergency, but that doesn't mean that the DPA is the driving 
force that compels small contractors to act. Following the 
attack on Pearl Harbor, my great aunt, Magdalene Hallady, left 
her office job in Chicago and headed for shipbuilding yards in 
Sturgeon Bay, Wisconsin. When she arrived, she asked, ``What 
can I do to help?'' She soon joined many others who stepped up 
to ensure that the necessary goods were produced for our 
military.
    Magdalene stepped up not because she was ordered to do so 
or because she was paid a lot of money. She did so--or she was 
only paid 25 cents an hour, but she would have worked for free 
because it was the right thing to do.
    Magdalene's story illustrates my belief that small 
contractors and small businesses mobilize and act during times 
of crisis out of necessity and desire to support and provide 
for our Nation, our communities, and our employees.
    In March 2020, Wyoming Machine received an order to produce 
a part for a medical ventilator. We have been producing this 
part for about 15 years, but until just recently, we did not 
even know the part went into a medical ventilator. Over a 2-
month period, we produced a quantity of almost 60,000 parts or 
12 times our normal annual volume.
    You might be surprised to hear that the DPA was not part of 
the contract under which we produced these parts. When the 
production orders were released to our shop floor, they were 
accompanied by a note that told our employees three things: 
These parts are used in the production of a medical ventilator, 
you are an essential worker, and your work during the COVID-19 
pandemic has the potential to save lives, and we are proud of 
you and thankful for the work that you are doing at Wyoming 
Machine.
    Our workforce organized and mobilized among themselves to 
ensure that parts were produced quickly and accurately. When we 
were asked to deliver at a faster pace, our workers made it 
happen.
    So if it wasn't the DPA that compelled us, why did we 
mobilize and respond to the need for medical ventilator parts 
as quickly as we did? Wyoming Machine and many other small 
contractors operate under a business model that allows them to 
respond quickly to change in demand. We can produce many types 
of products and serve a wide array of industries 
simultaneously.
    The COVID-19 pandemic is both an economic crisis and a 
health crisis. Small businesses in the United States employ 
nearly half of all workers. As an employer, I feel a personal 
responsibility to ensure that my employees continue to have a 
place to work and that they can support themselves and their 
families. During the crisis our ability to be flexible in 
responding to demand for production of essential parts and 
products is just part of what we do. Author Simon Sinek wrote 
that working hard for something we don't care about is called 
stress; working hard for something we love is called passion.
    Wyoming Machine employees were told about the opportunity 
to help during the pandemic, and they were inspired and 
motivated. Our company passion for manufacturing, combined with 
our desire to help in a time of need, made our work feel almost 
effortless.
    My testimony before this Committee is not to argue for or 
against the merits of the DPA but rather to share a small 
business perspective during a time when the DPA has been used 
to direct private sector business to produce medical 
ventilators and other supplies needed during the pandemic. 
There will always be American businesses ready and willing to 
respond in a time of need, and I believe that the small 
businesses have a special role to play due to their agility and 
ability to quickly mobilize.
    Thank you.
    Chairman GOLDEN. Thank you, ma'am. I appreciate that 
testimony.
    And thank you to all of you for your opening remarks. I 
look forward to continuing the conversation through the 
question-and-answer phase of the hearing.
    Understanding that Mr. Stauber needs to testify with the 
Rules Committee shortly, I am going to begin by recognizing the 
Ranking Member for 5 minutes.
    Mr. STAUBER. Thank you very much, Chair Golden.
    And, Traci, as you are reading your story, if there is 
nobody that didn't get a lump in your throat, I want to check 
your pulse. That was very inspiring.
    But I do want to start out with you. You know, the job shop 
model exercised by Wyoming Machine that you describe in your 
testimony seems to be perfectly positioned in responding 
quickly in times of national emergency, you know, such as this 
pandemic.
    Can you tell us more about this model, like, is there 
something only small manufacturing or business practice as 
opposed to a large manufacturing facility?
    Ms. TAPANI. So thank you for your question, Representative 
Stauber.
    I believe that the job shop model is most common among 
smaller businesses. Part of the reason for that is that we 
ultimately supply larger businesses. So throughout Minnesota, 
we are supplying many different companies that are producing 
equipment. We need to bulk buy parts and assemblies in order to 
complete final pieces of equipment.
    So it is pretty common to the small business model to work 
in that type of environment and allows us to be successful by 
[inaudible] and that diversity is what helps us stay in 
business and keep people employed.
    Mr. STAUBER. Thank you.
    And then I appreciate you sharing your story about your 
great aunt.
    I want to know what it is like and I would like to hear 
more from you about some comments or concerns, if any, that 
your employees had during this time, obviously, helping the 
country in making the ventilators, keeping us safe. Can you 
describe to us the sentiment of your employees coming to work 
during the pandemic, being essential?
    Ms. TAPANI. Yes. Thank you for that question.
    You know, I think that when we knew that the State of 
Minnesota was likely to be ordering a stay-at-home order from 
our Governor, you know, many people's initial concern was what 
are we going to do and how are we going to get paid, and I 
think that would be a common concern among employees.
    We were happy to find out that we were considered an 
essential business and that we would be allowed to continue to 
report to Wyoming Machine and do our jobs every day.
    I think the most difficult part of this for people has been 
that early on in the pandemic, the information was changing 
rapidly, new information kept coming out, and trying to develop 
those plans and protocols to keep our workforce safe was 
probably the most difficult thing and I think the thing that 
people were most alarmed about.
    As time has gone on, and no one here has become ill at this 
point, and as we continue to improve the protocols that we have 
in place, I think people's comfort level has increased. But, 
honestly, they are very happy that they have been allowed to 
continue to come to work.
    And I tell people I think the reason for that is for people 
to maintain their well-being during a crisis like this, staying 
attached to your employer is critically important. They know 
that as of right now, no matter what happens, they are still 
working and they have an employer. Once they are released from 
their employer, it creates a whole other level of anxiety for 
them.
    Mr. STAUBER. I really appreciate those comments.
    And we are so proud of you. You are leading our State, and 
I can't say enough about Wyoming Machine, and it is a privilege 
and a pleasure to have you here.
    Thank you for those comments.
    Mr. Chair, I have one more comment for--one more question 
for Mr. Patterson. And that is, Ian, given the DPA's strong 
preference for small businesses, what role, if any, do you 
think that SBA should have in DPA-related efforts?
    Mr. PATTERSON. Thank you, Representative.
    I think that is a very good question. The SBA plays a very 
large role, and it is a little outside the scope of this; but 
they have a very large responsibility with respect to 
administering small business preferences in the traditional 
Federal acquisition regulation style of procurement. There is a 
lot of regulations that I deal with on a daily basis that are 
designed to try and provide opportunities for a wide variety of 
small businesses and then socioeconomic groups as well.
    These are well developed, and the SBA has a large 
background of experience to be able to implement these things. 
I think that leveraging that experience makes total sense, 
particularly given the DPA's stated desire to include small 
businesses.
    Mr. STAUBER. Thank you very much.
    And, Mr. Chair, I yield back. I do have to leave to get up 
to Rules.
    I appreciate all of the expert testimony. Thank you.
    Chairman GOLDEN. Thank you very much, Mr. Stauber, for 
yielding back. Thanks for your participation and enjoy the 
Rules Committee.
    So I will now recognize myself for 5 minutes, and I may end 
up asking a second round of questions.
    So, Mr. Black, having cut you off a little bit right in the 
middle of some of your recommendations, I wanted to come back 
to you first.
    Having read through your opening statement in advance, I 
know that one of your recommendations was to direct DPAC to 
establish a small business participation advisory subcommittee 
to provide annual recommendations on how to increase small 
business participation in DPA authorities and funding.
    I wanted to know, do you think that Congress would need to 
broaden DPA's scope so that the Subcommittee could provide 
those recommendations on how to include small business 
participation given what we know right now about their current 
scope and, you know, how effective they are under Title I 
authorities? But, please, in answering that question, feel free 
to use the remainder of the time if you have it to continue 
with your other recommendations.
    Mr. BLACK. Thank you, Chairman, I appreciate that. I 
appreciate your courtesy.
    Yeah, there is a--in the statute 4567 that establishes the 
DPAC, there is a list of things that are supposed to report on, 
and adding one section to ask it--because it already is 
supposed to make policy recommendations about how to improve 
the DPA. Arguably, it already could encompass a small business, 
but it hasn't been doing it. So showing that is important to 
Congress and adding a provision to ask it to report would 
certainly give a purpose and meaning to an advisory committee 
and potentially adding someone from SBA to the DPA Committee, 
which is something Mr. Patterson was talking about.
    You know, and the other provision, the DPA Committee really 
is the focal point for what Congress could do to strengthen 
this. Just starting to talk about how they could report 
annually on Title III awards, that could be the mechanism.
    The DPA Committee has representation from everyone who has 
been delegated Title I authority by the President, those are 
the agencies that are interested in building up capacity, so it 
has access to the information. It has got the people on its 
committee. It could probably easily collect that information 
and provide it to Congress.
    It could ask its members to establish procedures to have 
you consider small business in making Title III decisions. That 
would at least make the consideration happen. Right now there 
is nothing on the books. That would be an improvement, and you 
would see agencies having to at least have to wrestle with 
that.
    I was talking a little bit about the FPDS, the Federal 
Procurement Data System, adding simple fields to understand not 
only the total small business spend and large business spend, 
but run our DPA rated orders would provide amazing 
transparency.
    I think Congress would find that small businesses already 
participate and that to the extent there is concern about small 
businesses being able to respond to rated orders, you could 
probably bust that myth. And it would also help with 
identifying small business resources to help provide the 
maximum practicable opportunity to participate in the future; 
who are the small businesses already performing DPA rated 
orders.
    We talked about the Small Business Advisory Committee, and 
then having the DPA Committee--you know, there is this 
provision to consolidate information for small businesses about 
DPA activities. There ought to be a clearinghouse somewhere. No 
one is doing it at this time. It is sort of scattered. Congress 
wanted it done. And maybe making that the responsibility, 
appointing the DPA Committee to put up a website, consolidate 
that information would be helpful.
    Thank you.
    Chairman GOLDEN. Thank you very much, Mr. Black.
    And I had lined up another question, but you pretty much 
answered it in your testimony discussing some of the lack of 
data that is out there and what could be gained by getting our 
hands on it, in particular or perhaps even feeling reassured 
that small businesses are, in fact, already participating as 
you have suggested; but the problem being right now, we have an 
oversight responsibility, but a lack of data and information.
    So you and Mr. Patterson have shared some ideas already 
about how we could address that. And so rather than try and 
squeeze in like a quick last-minute question and knowing that I 
will have more time to come back to people, I wanted to go 
ahead and yield and recognize Congresswoman Sharice Davids for 
5 minutes.
    Ms. DAVIDS. Thank you, Chairman Golden. And I know Ranking 
Member Stauber had to head out, but I definitely appreciate the 
two of you holding this hearing on what is an incredible 
important topic.
    And it is definitely good to see a fellow Kansan on the 
panel today, Mr. Patterson.
    And so I want to--you know, I think that we have seen this 
since the beginning of this pandemic, our frontline workers 
haven't had enough of the personal protective equipment and 
testing supplies that they need to fight the virus, keep 
themselves safe and depending on which types of frontline 
workers we are talking about, keep the folks that they are 
helping safe.
    And I think that, you know, seeing that our national 
stockpile ran out of supplies so quickly and the global supply 
just could not keep up with the demand and then the 
interruptions we saw in supply chain, you know, we really need 
to be forward thinking on all of this and make sure that we 
don't allow our supply of PPE and testing materials to run so 
low again. And I think that most of us are in agreement that 
this is definitely a matter of national security and certainly 
one of public safety.
    You know, I was one of the folks who early on urged the 
administration to fully utilize the Defense Production Act to 
ramp up the domestic manufacturing of PPE and testing supplies. 
And then, of course, that is not the only thing that we need to 
be thinking about, but it is certainly a key tool in our 
toolbox, you know.
    And part of the reason that I became so familiar with this 
is because Dentec which is a local manufacturing company here 
in the 3rd District in Lenexa, Kansas, had previously produced 
N95 masks, and then they were forced out of the market or 
priced out of the market, you know, with overseas competitors.
    And so, you know, right now they make other types of masks; 
but Dentec attempted to get into contact with the CDC, with HHS 
about contracting to produce N95 masks for this current crisis, 
and they registered with the system for award management, and 
they just never heard back from anybody.
    And, you know, I think we have companies like Dentec out 
there, and not just Dentec but other companies, and that is why 
I introduced the Supplies Act. It is a bill that would provide 
capital for small businesses to help them shift manufacturing 
to produce some of the critical PPE that we are seeing needs 
for.
    And, you know, I think it also will help promote American 
manufacturing, domestic manufacturing here, and eliminate some 
of the price gouging that we have seen.
    So, you know, Ms. Tapani, I really appreciate you sharing 
your family's story about your manufacturing company, and I 
would love to start with you.
    I am curious, from your perspective--I know you mentioned 
that you had been producing a piece that was useful for 
ventilators. Hearing about Dentec and other companies that 
might not already--that might be able to maybe retool and get 
to that place, what do you think about how we can, you know, 
better utilize small businesses, better utilize manufacturers 
that are able to quickly get up and going?
    Ms. TAPANI. Thank you for your question.
    You know, I think that one of the things, as a 
manufacturer, it is hard for me not to think about the root 
cause of a problem, so what caused the problem that we are 
experiencing right now with the shortness of PPE and difficulty 
getting businesses up and running to produce something 
different. And I don't fully understand what the causes are.
    What I can tell you is that in Minnesota, I have heard from 
a number of people in the industry that businesses were working 
on ramping up to produce ventilators starting as early as 
December and certainly in early 2020.
    So it wasn't the Defense Production Act that caused 
necessarily that to happen, but I think a better understanding 
of how supply chains work for people that are in decisionmaking 
positions would also be beneficial because they are far more 
complex, and they are global, global in nature, and so it is 
more complicated than just ordering someone to do something.
    Even I had to look at--you know, for example, I saw stories 
of Ford Motor Company and General Motors ramping up to do 
ventilators, which I think is wonderful and I am so happy that 
they did that, but as a manufacturer, I had to look at that and 
say, how are they securing the supplies that they need because 
typically there are lead times for those.
    So I think finding out more about what the root cause of 
the current situation was will help us understand what we need 
to do differently.
    Ms. DAVIDS. Yeah. And that is an interesting point. I also 
think that one of the things that we need to be cognizant of is 
for the manufacturers who are able to produce but, you know, 
might end up having to push their customers down the list, they 
might run into contract issues without use of the Defense 
Production Act.
    But if I am here for the second set of questions, I might 
get into that with Mr. Patterson.
    Chairman GOLDEN. Thank you.
    We will now go to Congressman Troy Balderson from Ohio.
    Mr. BALDERSON. Mr. Chairman, good afternoon, and thank you, 
and bear with me one second. Don't start my timer yet. My thing 
went away there.
    There we go.
    Ms. Tapani, thank you again for testifying. My question for 
you would be, what can we do to leverage the ability and 
capability of small business companies like yours to meet the 
country's needs in time of crisis? And do you think we can or 
should use the DPA to achieve this?
    Ms. TAPANI. Thank you for your question.
    I think that one of the opportunities that we have with 
small businesses is, with or without the DPA, I think that 
there is a willingness to mobilize and volunteer to step in 
when times are difficult. Oftentimes when DPA needs to be used, 
we are also in an economic crisis, and small businesses feel 
that, I think, in a different way than large businesses. While 
certainly everyone in the economy feels a downturn, small 
businesses have shallower pockets and less resources to get 
funding during down times.
    So I think that we are standing at the ready and ready to 
jump in and do whenever we can to help, simply to keep our 
people employed and our businesses running, and, again, that is 
a little bit different than what we see with larger companies.
    But recognizing and finding a way to involve more small 
businesses on an ongoing basis so that there is more knowledge 
in the market amongst small businesses and through small 
business organizations for how we can be connected, how we can 
raise our hand and say that we have the capability and we are 
ready to help, often you hear from larger businesses when they 
are looking for smaller suppliers to work with that there is no 
one out there who could do the work.
    My personal experience is that that is not true; it is just 
that there is still a lot of difficulty in the marketplace for 
our larger suppliers, like our primes, to identify small 
businesses that have the capabilities that they are looking 
for.
    Mr. BALDERSON. Okay. Thank you for that answer.
    And I do want to say we talked about the PPE. I, along with 
a couple of other members of this Small Business Committee, 
introduced legislation last week for a tax credit up to $25,000 
for PPP--or PPE, excuse me, I am all PPP--PPE, so I hope that 
you will take time to look at that and hopefully that is 
something that can work for you.
    Mr. Black, my question to you, given that the SBA does not 
issue many DPA rated orders itself, what can the SBA currently 
do to further the statutory goal of providing small business 
opportunities under the DPA?
    Mr. BLACK. I think they can share techniques for other 
agencies. Agencies already have offices of small business 
utilization. The DPA--or sorry, the SBA has process and 
procedures for what we will call normal procurements for the 
research, market research, collecting information about sources 
that contracting officers can easily consult.
    You know, we all--I think many of us know about the Rule of 
Two, which is basically market research to look for small 
businesses. And so, you know, they are experts in those 
procedures. They develop the procedures that end up being in 
the Federal acquisition regulation.
    And so having that insight into the DPA process for rated 
orders I think could add value. And so even though they are not 
the ones issuing the orders, they would be teaching, funding 
best practices for the agencies that are.
    Mr. BALDERSON. [Inaudible] Are you aware of--a small 
business preference for Title III awards?
    Mr. BLACK. I am sorry, I didn't hear the question.
    Mr. BALDERSON. Excuse me. Are you aware of any Federal 
agency that has--I had to look and make sure I wasn't muted.
    Are you aware of any Federal agency that has issued any 
regulation pertaining to a small business preference for Title 
III awards?
    Mr. BLACK. I am not. The agency that is most active--and 
this really probably ties to the national defense purpose of 
the DPA going back many decades--is DOD. They have an Office of 
Industrial Policy that has a DPA Title III program, and they 
pose solicitations for companies to respond to.
    So they have kind of an active ongoing solicitation and 
award of Title III investments. But I am not aware of any 
regulations. They are sort of run on a full and open basis, the 
ones I have looked at, and I am not aware of any regulation or 
process or practice that that office has, which seems to be the 
most active one in the Executive Branch, to give life to the 
small business preference.
    Mr. BALDERSON. Okay. Thank you very much.
    Mr. Chairman, thank you very much, and I yield back my 
remaining time.
    Chairman GOLDEN. Thank you, Congressman.
    We are going to do a second round. I know I have still got 
plenty of questions and, you know, I don't know who else will 
be sticking with it, but I will certainly recognize them as 
well if they do have more questions.
    Ms. Tapani, could you just quickly confirm for me so I 
understand, were you, prior to the coronavirus pandemic, 
already--you had a preexisting relationship with the company 
you are making a part for.
    Were you also already a government contractor?
    Ms. TAPANI. So, yes, we are not directly supplying the U.S. 
Government, but we are a supplier to a number of prime 
contractors and have done work in support of those. We are also 
an ITAR registered company doing work in that realm as well.
    And the company that we were making the ventilator part 
for, we were already doing business with them, and we had about 
a 15-year history of making that particular part already.
    Chairman GOLDEN. Thank you. And, you know, I think that 
possibly that might be something that we can learn from is that 
where we have companies that have preexisting conditions who 
are already experienced in working with the Federal Government 
in the midst of a crisis where there is a need, they might be 
well suited to more quickly transition if necessary.
    Congresswoman Davids shared kind of a different example 
with a company that had previous experience, but the 
relationship was no longer there and they probably would have 
needed some help in order to, you know, step in and start doing 
that work that they wanted to be a part of making N95 masks.
    I was going to ask Mr. Patterson, DPA authorities enabled 
the small business in my congressional district up in Maine, 
Puritan Medical Products in Guilford to respond to the COVID-19 
pandemic and this was a company that was already making a 
product swabs, which we need more of in the United States, but 
they needed help in order to achieve ramping up production.
    And, you know, the unique thing that took place there is, 
the government helped connect them with another employer in 
Maine, Bath Iron Works and working together Bath Iron Works was 
able to make machines that could then be used to stand up a 
whole new second production site for Puritan Medical Products 
so that they could essentially triple or more their production 
capacity of swabs.
    It is a great example. The President of the United States 
came to my congressional district to highlight this very thing. 
I think it is a good example of how the DPA can work with a 
small business to help them meet the needs of the United States 
in the midst of a crisis, and so I wanted to ask, you present 
other examples from the last few months, such as this and how 
can we find out how many small businesses have been 
participating in these efforts?
    Mr. PATTERSON. Mr. Chairman, those are both excellent 
questions. You know, the first one is kind of a theme that 
myself and Mr. Black have hit on and it is that the data 
reporting when it comes to the Defense Production Act is 
spotty.
    And so finding discreet instances of small business 
participation really depends on whether or not there was a 
published press release, or press report, or something that 
that I could find because much of this is not readily reported 
and that is not to say there aren't ways to find certain 
information, but in terms of a holistic way to do it, it just 
isn't there.
    I certainly think that also there is ways to--like you 
mentioned--to definitely utilize the small business base to get 
involved, but to my knowledge, I am unaware of anyone--of any 
other small business who have had that and the other point I 
wanted to get to also was that, the prime level is one thing, 
but we also need to think about the supply chains. I know that 
a couple of my fellow witnesses talked about this as well.
    Getting small businesses involved in supply chains is a 
very important consideration and that is even harder to get 
data on. I know that Mr. Black had mentioned FPDS. That is a 
great tool. I also know that the Ranking Member had mentioned 
SBA involvement.
    One of the things that the SBA requires is for large 
businesses to enact a small business subcontracting plan. That 
is a tool that is pretty well accepted in other procurements 
and could also be utilized to try and get additional data about 
what is the depth of small business penetration on some of 
these Defense Production Act procurements.
    Chairman GOLDEN. Thank you. I only see 20 seconds left. I 
do have other questions but first I have to be polite in 
thinking about Congressman Balderson's time.
    Do you have more questions that you would like to ask, 
Congressman?
    Mr. BALDERSON. No Mr. Chairman, I am fine, thank you.
    Chairman GOLDEN. All right. Thank you.
    I am going to go ahead then and, you know, we have had Ms. 
Lockhart join us. We haven't had any more additional time to 
hear from you. And I thought I would ask, Congress appropriated 
a billion dollars for DPA Title 3 authorities in response to 
the pandemic. A spend report said that DOD intends to invest 
quite a substantial amount into the defense industrial base 
addressing impacts caused by the COVID-19 pandemic.
    Are you aware, has DOD shared anything about how it intends 
to apply the small business preference when spending of all of 
these funds? And in addition, why would it be of particular 
importance, in your opinion, to ensure small business 
preference is applied?
    Ms. LOCKHART. Chairman, thank you very much for that 
question. I am not aware of a formal document or anything at 
all. I am not sure there is such a document that states what 
defense is planning to do. However, what I will say is that, on 
the onset of this crisis, the Office of Small Business under 
the direction of Amy Murray has been phenomenal.
    NDIA and the other industrial associations have been 
meeting weekly and the lines of communication are there. The 
website for the small business has been updated and it is 
extremely valuable. Now, combine that with an increase of 
communications and then the ability to leverage DPA Title 3 to 
maximize opportunities for our small businesses is a win-win.
    We have seen an increase in communications. Ms. Murray has 
been phenomenal. She has been reactive, and then combine that. 
There was discussion about SBA. Well, I think the Office of 
Small Business is also a very important agency to be involved 
in this when it comes to the small business participation as 
well.
    So I hope that helps answer your question, but for right 
now cash flow is critical. Cash flow is and when you--to be 
able to do that, it is going to really make a difference.
    Chairman GOLDEN. Yeah. That is great. You just led me right 
into my other question for you. You talked about your small 
business survey and one of the biggest problems was cash flow 
issues.
    I happen to also serve on the House Armed Services 
Committee and I know this is something that we were hearing 
about down the supply chain was concerns that we were hearing 
from, let's say, a business like Bath Iron Works about problems 
that were occurring with their subcontractors, with the supply 
chain where cash flow was a concern for them.
    They didn't have reserves to float them through this 
pandemic and the loss of revenue coming in. And there were 
discussions about what DOD could do to help keep them afloat.
    I wanted to give you an opportunity to continue down this 
vein how Title 3 authorities might be used to help important 
small firms in the supply chain to make sure that we are not 
losing important assets.
    Ms. LOCKHART. Thank you, Chairman. Again, another excellent 
question. There has been some changes that were done for 
progress payments, so increases for the small business supply 
chain to increase up to the 90 percent, which has been a help.
    Also for those small businesses that are primed, there had 
been a big disruption. It was turbulent, right with the 
transition from the Government working, and telecommuting, so 
obviously cash flow became a problem because you were 
transitioning into a home office environment, so there were 
delays in payments. The accelerated payment is crucial for 
small businesses. That is absolutely essential because we need 
the cash.
    Small businesses as Ms. Tapani very eloquently answered, we 
do not carry the reserves like other businesses do because what 
we do is we invest right back into the company. And we also 
have to carry our very talented workforce, our cleared 
workforce that also is very important. We don't want to lose 
that expertise.
    So DPA Title 3 will be able to give more opportunities for 
small businesses to continue to maintain our warfighter 
readiness.
    Chairman GOLDEN. Well, thank you for that feedback. And 
interestingly, the Ranking Member, Mr. Stauber, is the sponsor 
of legislation that comes out of the work that we have had in 
previous hearings where we were seeing government change order, 
you know, in packages that was ultimately delaying payment to 
primes and, just as importantly, to subprimes in ways--you 
know, these small businesses sometimes getting paid, you know, 
quickly enough for their work is critical.
    And he is actually--I am working with him right now not 
only as the Chair of this Subcommittee, but as a member of the 
House Armed Services Committee to try and help him successfully 
get his legislation into the National Defense Authorization Act 
this year.
    Which would ensure that when the government makes a change, 
that small businesses are not negatively impacted by ensuring 
that, at least, a portion of the payment is sped up on the 
front end of that change and they could receive the rest when 
they deliver the work.
    And now I am hopeful that I will be able to help Mr. 
Stauber in successfully getting that through.
    Just to close things up here with a final question. Ms. 
Tapani, I think it is always a good opportunity to hear from a 
small business owner who has experience working with the 
Federal Government.
    What is the biggest obstacle that you had to overcome in 
order to enter into the Federal procurement marketplace and 
what advice do you have out there for other small businesses 
who haven't had that experience yet, but would like the 
opportunity?
    Ms. TAPANI. Thank you. That is a great question. You know, 
I think that just understanding the rules and the regulations 
and the jargon that goes along with working in this space is a 
challenge, but I would tell other small businesses that if you 
take the time to try to read the information that you are given 
or read the contracts or read the codes that you have----
    You know, I am a business person with a degree in business, 
not a manufacturing expert, but I have been able to 
successfully learn to read the technical nature of a welding 
code, for example, and understand it so that I can lead my 
business down the right paths so that we are successful in 
doing that business.
    So don't give up and just try to be patient and teach 
yourself what you can. I think the importance for this 
Committee and others to consider is that often times as a small 
business, when you talk about cash flow issues and what not. If 
you are not the prime and you are somewhere farther down the 
supply chain still playing a critical role in whatever needs to 
be manufactured or delivered, you often don't have the full set 
of information and so you might not be getting paid but you 
don't know why.
    An order may be delayed, but you don't know why. An order 
may be canceled and you don't know why. And so I think doing a 
better job from a Federal standpoint of being able to flow 
information through the entire supply chain would be really 
helpful because, you know, sometimes you are in the dark and 
you don't know. Is it something that I did or is there some 
other forces at play here that I don't fully understand?
    But, you know, if I get to say nothing else today, just 
know that from my perspective as a small business person who 
knows lots of small businesses, we want to help and we want to 
participate and we are here to do whatever we can to step up 
and do what is needed.
    So if nothing else, remember that.
    Chairman GOLDEN. Thank you very much. That is great 
feedback. I know my office has heard from businesses in that 
situation of just not knowing and needing clarity and this is 
what every business needs is certainty in information to make 
the best decision with that they can.
    Congressman Balderson, give me a thumbs up if you are all 
set. If you want to ask, you are good.
    All right. Thank you all very much. This has been a good 
hearing, informative, and helpful to the members of the 
Committee and the staff of the Small Business Committee.
    So I will quickly close things off by stating what you all 
know. Small businesses play an important role in the economy in 
the creation of jobs. Haven't we seen that demonstrated in the 
last several months as so many small businesses have been put 
in tough positions and jobs have been lost.
    Far too many. And thankfully through the work of this 
committee, in the House, and in the United States Senate, we 
had things like the Paycheck Protection Program to step in and 
keep as many people connected to their employer as we could and 
keep those paychecks flowing.
    Small businesses are an important part of the innovation 
that is going to lead the country forward into a better future. 
Now more than ever, ensuring that we do everything we can to 
preserve these businesses in these trying times should be a 
priority.
    I would like to thank all the witnesses for taking time out 
of your schedules to be with us today and for providing 
expertise and insight relative to this conversation about the 
DPA, the challenges faced by small businesses, and the actions 
that Congress can consider taking to preserve and guarantee the 
vitality of our small business industrial base.
    I would now ask unanimous consent that members have 5 
legislative days to submit statements, supporting materials for 
the record.
    Without objection, so ordered.
    And if there is no further business to come before the 
Committee, we are adjourned.
    Thank you all very much for joining us.
    [Whereupon, at 2:13 p.m., the subcommittee was adjourned.]
    
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