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


                   SBA MANAGEMENT REVIEW: OFFICE OF 
            GOVERNMENT CONTRACTING AND BUSINESS DEVELOPMENT

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

                                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
                           SEPTEMBER 15, 2020

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                               

            Small Business Committee Document Number 116-092
             Available via the GPO Website: www.govinfo.gov             
             
                              __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
41-346 PDF                  WASHINGTON : 2021                     
          
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                   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

                                WITNESS

Dr. Francis Spampinato, Associate Administrator, Office of 
  Government Contracting and Business Development, U.S. Small 
  Business Administration, Washington, DC........................     4

                                APPENDIX

Prepared Statement:
    Dr. Francis Spampinato, Associate Administrator, Office of 
      Government Contracting and Business Development, U.S. Small 
      Business Administration, Washington, DC....................    16
Questions and Answers for the Record:
    Questions from Hon. Golden to Dr. Francis Spampinato and 
      Responses from Dr. Francis Spampinato......................    20
Additional Material for the Record:
    None.

 
                   SBA MANAGEMENT REVIEW: OFFICE OF 
            GOVERNMENT CONTRACTING AND BUSINESS DEVELOPMENT

                              ----------                              


                      TUESDAY, SEPTEMBER 15, 2020

                  House of Representatives,
               Committee on Small Business,
    Subcommittee on Contracting and Infrastructure,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:06 a.m., in 
Room 2360, Rayburn House Office Building, Hon. Jared Golden 
[chairman of the Subcommittee] presiding.
    Present: Representatives Golden, Chu, Balderson, Hagedorn, 
and Stauber.
    Chairman GOLDEN. Good morning. I call this hearing to 
order.
    I would like to thank everyone, especially our witness, for 
joining us today for our Committee's hybrid hearing, and I want 
to make sure to note a few important requirements.
    Thank you.
    Let me begin by saying that standing House and Committee 
rules and practice will continue to apply during hybrid 
proceedings. All members are reminded that they are expected to 
adhere to the standing rules, including decorum.
    During the covered period, as designated by the Speaker, 
the Committee will operate in accordance with H. Res. 965 and 
the 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.
    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 to the proceeding.
    And, finally, remember to remain muted until you are 
recognized to minimize background noise. And, 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.
    For those members physically present in the Committee room 
today, we will also be following the health and safety 
guidelines issued by the attending physician. That includes 
social distancing and the use of masks. I urge members and 
staff to wear masks at all times during the hearing. Of course, 
when you are speaking, you are welcome to remove your mask.
    And I thank you in advance for your commitment to a safe 
environment for all here today.
    Today, the Committee will examine the management and 
operations of SBA's Office of Government Contracting and 
Business Development. The main purpose of this office, commonly 
known as GCBD, is to maximize small business participation in 
government contracting. We know that, when a small business is 
awarded a Federal contract, it spurs economic development and 
job growth in our communities.
    One of the ways in which the SBA assists small firms is by 
ensuring that a fair share of Federal contracts and 
subcontracts are awarded to small firms. In 1953, when Congress 
authorized the SBA, it expressly recognized that doing so would 
advance competition, bring economic growth, and allow the 
Federal Government to receive all the quality goods and 
services that small firms have to offer.
    To fulfill this mandate, the Small Business Act sets 
governmentwide small business contracting goals and codifies a 
series of programs, like 8(a), HUBZone, and WOSB, which 
provides contracting preferences based on socioeconomic 
categories. The proficient operation of these contracting 
programs is crucial for the achievement of the governmentwide 
contracting goals.
    Within the SBA, GCBD is the umbrella office that oversees 
the Federal Government's performance of these goals and 
administers the contracting programs. And so, today, our main 
objective is to discuss trends and administrative challenges 
within GCBD's purview, especially in this era of economic 
uncertainty due to the COVID-19 pandemic.
    Let me begin by saying I have been concerned about the 
overall participation of small businesses in prime contracts, 
which has declined in the last decade. According to SBA's 
scorecard, even though last year the Federal Government 
exceeded the goal of awarding 23 percent of all eligible prime 
contracting dollars to small businesses, with a record high of 
132.9 billion, the small business base shrunk 9 percent in only 
one year. This is not the direction that we would like to be 
trending towards.
    Furthermore, the Federal Government failed yet again to 
meet the HUBZone set-aside goal of 3 percent with only 2.28 
percent being awarded to these firms and the subcontracting 
goals for small and disadvantaged businesses, SDVOSBs in 
HUBZones going unmet in fiscal year 2019.
    We are also concerned about the declining number of small 
businesses that participate in the 8(a) program, the 
cornerstone of the contracting programs. In September of 2019, 
there were 4,450 firms participating in the 8(a) program, which 
is about a third less than the 7,000 companies that 
participated back in 2010.
    I would like to learn more about what GCBD is doing to 
increase participation, particularly now when this program 
could be a lifeline for many businesses who are in dire straits 
and losing business due to the pandemic.
    Turning to the IT systems which support the contracting 
programs, SBA spent $30 million on certify.sba.gov, their 
certification management IT system, as of last September. SBA's 
Office of the Inspector General reported that SBA abandoned the 
system which, after 4 years of development, still lacked 
critical capabilities, and plans to replace it with another IT 
program.
    It is imperative to learn more about SBA's strategy, the 
scope of this new IT system, and the timelines and costs 
associated. Another issue of concern is the WOSB formal 
certification process. It is my understanding that, while SBA 
already began intake of WOSB applications, decisions on 
certification applications will not be issued until October 15 
of this year, the same day that certifications will start being 
required governmentwide.
    We are wondering is SBA already reviewing applications, and 
are there any challenges with these timelines or the IT systems 
that support the certification process?
    Finally, we would like to know what SBA is doing to 
increase internal controls within programs, particularly within 
the All Small Mentor-Protege program and the HUBZone program.
    With that, we look forward to hearing from the Associate 
Administrator of the Office of Government Contracting and 
Business Development, Dr. Francis Spampinato, regarding these 
matters, as well as ways in which we can work together to 
improve small business opportunities.
    I would now like to yield to the Ranking Member, Mr. 
Stauber, for his opening statement.
    And good morning, Pete.
    Mr. STAUBER. Thank you, Mr. Chair, and I appreciate your 
leadership, as always.
    Thank you, Mr. Chairman, for convening this important 
oversight hearing. Each year, the Federal Government spends 
hundreds of billions of dollars in goods and services. In 
fiscal year 2019, Federal contract spending reached its peak at 
$597 billion, with a record high of 133 billion in Federal 
prime contracts to small businesses.
    Recognizing that the Federal Government is a significant 
economic driver, Congress has long mandated that the Federal 
Government take action to protect the interests of small 
business concerns and tasked the Small Business Administration, 
or the SBA, in leading those efforts.
    To this end, the SBA plays a major role in the formulation 
of the Federal procurement policies affecting small businesses 
and manages a variety of procurement programs that are 
exclusive to small businesses. Overseeing these important 
directives is the Office of Government Contracting and Business 
Development, or the GCBD, at the SBA.
    The GCBD's primary goal is simple: To advocate on behalf of 
small businesses in the Federal procurement world. This office 
is uniquely positioned to develop policies that affect nearly 
every Federal agency and, with hundreds of billions of dollars 
at stake every year, it is imperative that the GCBD operate 
like a fine-tuned machine, efficient, effective, and consistent 
in delivering the best outcomes for small businesses.
    Small contractors are relying on this office to be their 
champion, to understand the whole picture of Federal 
procurement, and identify where small business participation 
can and should be increased. Small businesses also rely on the 
GCBD to manage the SBA's Federal contracting program 
successfully since these programs are the cornerstone of 
success to many small contractors.
    Mr. Spampinato, I understand you are brand new to your 
current position as the Associate Administrator for the GCBD. I 
extend my congratulations to you on your recent appointment to 
your current post and welcome you here today. While this 
Committee will be discussing various concerns we have 
identified that may have originated prior to your time, these 
matters are still of great importance today, and I hope you 
will take this opportunity to learn from your predecessors and 
take what you hear today as a challenge to improve, to do 
better, and continue to do better.
    Small businesses everywhere are counting on you, are 
counting on the GCBD, to do your best. And we have every 
confidence in your ability.
    With that, I thank you, Mr. Chairman, and I yield back.
    Chairman GOLDEN. Thank you, Mr. Stauber.
    And, if Committee members have an opening statement 
prepared, we would ask that they be submitted for the record.
    I would like to take just a minute to explain the timing 
rules. Dr. Spampinato, you will have 5 minutes to testify, and 
each member will have 5 minutes for questioning.
    Assuming you are familiar with the lighting system that 
will assist you, the greens, yellows, and reds. So green means 
go. Yellow means you have one minute. Red means you have come 
up against your time limit, and if you could do your best to 
wrap it up at that point. We will have plenty of opportunity 
during the Q and A as well.
    Today, we welcome Dr. Francis Spampinato, the new Associate 
Administrator of SBA's Office of Government Contracting and 
Business Development.
    He brings almost 30 years of procurement experience in the 
public and private sector to the role. In particular, he served 
as a senior procurement official at the CIA, the Department of 
Energy, the Federal Aviation Administration, and the Federal 
Emergency Management Agency.
    Most recently, he served as program manager for CTR 
Management Group before joining the Small Business 
Administration in June of 2020.
    I would also note--as I learned this morning, when he 
greeted me with a welcoming semper fi, that he served our 
country during the 1980s in the United States Marine Corps, and 
we thank you for your service, sir, both in the Marines and 
ongoing in the public and private sector.
    Welcome, and you are now recognized for 5 minutes.

 STATEMENT OF DR. FRANCIS SPAMPINATO, ASSOCIATE ADMINISTRATOR, 
OFFICE OF GOVERNMENT CONTRACTING AND BUSINESS DEVELOPMENT, U.S. 
         SMALL BUSINESS ADMINISTRATION, WASHINGTON, DC

    Mr. SPAMPINATO. Thank you, Chairman Golden, Ranking Member 
Stauber, and members of the Subcommittee for inviting me to 
speak with you today.
    As the Associate Administrator of the SBA's Office of 
Government Contracting and Business Development, I am pleased 
to testify and share significant updates regarding small 
business participation in Federal contracting and the SBA 
program supporting this important activity.
    Last month, SBA released the fiscal year 2019 Small 
Business Goaling Report, which contained several notable 
achievements. Over 1 million jobs were created by small 
businesses across the United States as a direct result of prime 
and subcontracting awards made by Federal agencies.
    $132 billion were awarded to small businesses in fiscal 
year 2019, an increase of $12 billion over fiscal year 2018 and 
the highest amount in history. Every socioeconomic category 
realized growth in the number and value of small business 
contracts awarded.
    While I celebrate these small business contracting 
achievements, I know that COVID-19 brought incredible 
challenges for small businesses and Federal agencies alike. 
GCBD rapidly engaged with stakeholders to identify and 
implement measures to reduce barriers and increase 
opportunities for small businesses.
    These included posting guidance for small business 
contractors alongside SBA's COVID-19 resources, introducing 
flexibilities in 8(a) and HUBZone program participation, and 
conducting robust outreach to small businesses to connect them 
with Federal agencies in need of products and services to 
combat COVID-19.
    On the horizon is the launch of the SBA's Women-Owned Small 
Business Certification program, which implements the NDAA 2015 
provision to eliminate self certification for women-owned and 
economically disadvantaged women-owned small businesses 
participating in the program.
    GCBD commenced robust outreach to stakeholder groups and 
women entrepreneurs in late 2019 to ensure awareness of the 
changes ahead and to incorporate their feedback in our 
processes and systems.
    I am working closely with the SBA's CIO and CFO to ensure 
functionality and sustainability of beta.certify as we stand up 
the program. I am aware of the history of implementing this 
program and the application portal and the Committee's interest 
in both. I can assure you that this has my highest attention 
and focus as Associate Administrator.
    Each of the GCBD's programs is making notable strides. In 
December 2019, we published a rule and began implementing 
changes to strengthen the HUBZone program. These program 
improvements, long overdue, were the result of successful 
collaboration between SBA, Congress, and stakeholders, and were 
intended to make it easier for small businesses doing good work 
in their communities to join the HUBZone program and for all 
certified HUBZone firms to remain compliant with enhanced 
oversight from SBA.
    Within GCBD's Office of Business Development, the 8(a) 
business development program continues to grow and prosper. 
During these times of economic recovery, applications from 
eligible small disadvantaged firms has increased by 132 percent 
compared to this time last year.
    In addition to leading effective and compliant programs, I 
intend to vigorously promote strategies that lower barriers to 
entry and frictionless acquisition and reduce barriers to 
success that small businesses encounter.
    The Small Business Goaling Report and analysis of Federal 
Procurement Data System-Next Generation illustrate the 
decreasing number of firms involved in Federal contracting and 
receiving prime contract awards. I am engaged with Federal 
agencies, small business leaders, senior acquisition officers, 
and my GCBD team to understand the causes and how we may 
address the outcomes.
    Additionally, my office routinely engages with small 
business contractors to hear their frustrations and where their 
pain points are. My intent for GCBD is to be a collaborative 
facilitator with agencies and small businesses to achieve 
better outcomes.
    In closing, I want to thank the Committee for your support 
of our programs, and I am happy to take any questions.
    Thank you.
    Chairman GOLDEN. Thank you, sir.
    I will begin the question period by recognizing myself for 
5 minutes.
    So, while the Federal Government has been successful in 
achieving the 23 percent small business goals--and you laid out 
some of the other improvements that you are tracking--the 
overall participation of small firms in Federal contracts has 
declined in recent years.
    According to the most recent scorecard, the small business 
count in fiscal year 2019 was 102,422, while in fiscal year 
2018, it was 113,135. This represents a 9 percent reduction in 
the small business base in one year's time.
    Based on your expertise, why do you believe the small 
business base is shrinking, and what kinds of challenges are 
holding small businesses back from either joining or causing 
them to drop out?
    Mr. SPAMPINATO. Okay, sir.
    Well, first of all, what we have tried to do is--and I told 
my staff when I came on board, was we have got to be 
facilitators of business here. We don't want to stop business 
from happening; we want to be facilitators. So, there is an 
extensive education program going on with all our stakeholders, 
and we have extensive outreach with the OSDBUs at the agencies, 
the small business heads, and with the procurement officers.
    And so, I come from the other side of the house basically, 
the procurement side of the house. I understand that side of 
the house, and so I hold those conversations with those people 
also.
    And so we are trying to figure out what exactly--there is 
an awful lot of anecdotal evidence out there, you know, and--
but we need really good data and really good research to find 
out what the effects of, for instance, category management are 
on small business, what are the effects of the CMMC, the 
cybersecurity initiative, and what can we do in the areas of 
subcontracting to mitigate some of these issues.
    But I focus on hard data, because anecdotal will just get 
you so far, but we have got a lot of work to do in those areas.
    Thank you.
    Chairman GOLDEN. Thank you.
    Could you tell us a little bit about the work that you will 
be leading in this office to get SBA to help encourage other 
agencies to increase and diversify their small business base at 
the prime level?
    Mr. SPAMPINATO. Yes. As I said previously, we are doing 
extensive outreach to the OSDBUs. In the approximately 2.5 
months that I have been on the job, I have been able to reach 
out probably to half to two-thirds of the 24 CFO agencies, 
their OSDBUs, and learn what is difficult for them. What I hear 
all of the time is that focus is key.
    So, when you add balls to the juggler, and you have got all 
these balls in the air, you have got all these socioeconomic 
groups that you are focused on, and then you throw in category 
management and cybersecurity, like I said.
    There needs to be a lot of education and a lot of work 
done, and the OSDBUs have really helped me, even in just the 
2.5 months I have been there, understand where the problems 
are. But we still have a lot of work to do to figure out 
exactly where those issues are, and attack them.
    Chairman GOLDEN. One final question from me this round.
    Shifting to the HUBZone where, you know, in fiscal year 
2019, we didn't meet the goal of having 3 percent awarded to 
all--of all eligible prime contracts in the HUBZone businesses. 
I recognize this is a program where that goal has never been 
met, so this doesn't necessarily represent, you know, a 
backslide in success, but I did want to just get your thoughts 
on what you think you can do to help implement and ensure the 
agencies try and make better use of the HUBZone set-aside 
program to meet the 3 percent goal.
    Mr. SPAMPINATO. Yes. Sir, the first thing I want to say is, 
even though we did not meet the 3 percent, over the last 2 
years, there has been an increase in HUBZone, which is, to me--
I am an optimistic person, and I like to see the increases. So 
that is a good thing.
    But we have a specific HUBZone action plan underway--
statutory changes to the program helped with targeted effective 
outreach to firms and agencies, learning lessons from high-
performing agencies, and innovative acquisition strategies by 
NASA and other agencies. We are learning from all that.
    The other thing is I noticed, when I came on board, coming 
from the outside, sometimes even though you are not intimate 
with the subject matter, it is good to come from the outside 
with a different perspective, and I love to see that.
    So I noticed, with the HUBZone, there are a lot of small 
peculiarities in order to meet the HUBZone requirements. We are 
addressing those proactively and trying to facilitate--as I 
said, my philosophy is, we should make business easier for 
people, not more difficult.
    And those are a couple of things that are being done, and 
every time I talk to the OSDBUs, it is funny, because I have 
talked to a few that have really high HUBZone numbers. I mean, 
I had talked to one, like 13, 15 percent HUBZone. And I ask 
them what their HUBZone secret is every time. And most of the 
time the answer is: Focus on the HUBZone.
    So, you know, hopefully with that and the unique points of 
the program, which we are covering proactively in GCBD, we will 
find an answer to this 3 percent and hopefully exceed it next 
year.
    Chairman GOLDEN. Thank you very much for that.
    I am out of time. At this point, I am going to turn it over 
to Ranking Member Stauber for 5 minutes.
    Mr. STAUBER. Thank you, Mr. Chair.
    And, Dr. Spampinato, I apologize for mispronouncing your 
name during the opening statement.
    As the new Associate Administrator for the Office of 
Government Contracting and Business Development, what are your 
plans for the future of GCBD, and can you share with us your 
overarching goals as well as any specific items you would like 
to achieve?
    Mr. SPAMPINATO. Yes. Thank you, sir. Thank you for that 
question.
    Like I said when back in the days when I wasn't in the SBA, 
every once in a while, I saw the SBA as a place where sometimes 
we were stopped from doing certain things, because the SBA was 
looking over small business, and it was a slow ramp-up to 
learn, I think, on the agency procurement side that, hey, small 
businesses can do this work, so let's get on board here.
    So, my first and foremost thing, like I said, is to 
facilitate business. We have got to do better. Even though--I 
think SBA is doing a great job now. When I came on board, I 
have seen a lot of things, people working at home, doing a 
great job because of the situation.
    Mr. STAUBER. Yeah.
    Mr. SPAMPINATO. But, you know, it is our job to facilitate 
business, to make it happen. And so that is my overall vision, 
I guess you would say.
    But the other thing is we--and I know we will probably talk 
about this a little bit, but the other thing is to get our data 
needs together and get our IT together and work on a long-term 
plan so that we have good data. We----
    Mr. STAUBER. And, Mr. Spampinato, that was actually going 
to be one of my next questions, on the data gathering.
    So, to that point, just tell us a little bit about your 
thoughts on how you are going to do that and what your needs 
would be.
    Mr. SPAMPINATO. Okay. Well, I don't want to be premature, 
but what I do want to say is the old system that we currently 
have, we are not abandoning.
    Mr. STAUBER. Yeah.
    Mr. SPAMPINATO. That is kind of the wrong word to use for 
that. We are using, that system to the extent we can to 
maintain what we currently have. But we do need a new system, 
and I have started having great conversations with the CIO and 
the CFO, to determine how we are going to do that.
    But we are committed--I don't have specific plans with me 
today, and, like I said, I don't want to be premature here, but 
we are committed to getting a good system in place, because, 
like I said, if we don't have good data, how can we facilitate 
business?
    Mr. STAUBER. No. Right.
    Mr. SPAMPINATO. We can't do it.
    Mr. STAUBER. Exactly.
    Mr. SPAMPINATO. But we are going to--we are going to be 
completely honest with everyone in what we need and what we 
need to move into the future and to be that facilitator of 
business. So we will--as soon as we have something in granite, 
we will share that, and we just don't have it right now.
    Mr. STAUBER. And, also, if there is anything that this 
Committee can help you with, feel free to reach out to the 
Chair or myself, and whatever we can do to facilitate that.
    And just one more question. You know, this Subcommittee 
held an oversight hearing last May on the SBA's Women-Owned 
Small Business program. In the hearing, the SBA testified the 
new Women-Owned Small Business program would not be operational 
until sometime in 2021.
    Do you have or can you commit to a more specific time 
period or date?
    Mr. SPAMPINATO. Well, I believe--now, we have received--as 
of today, or yesterday, we have received 1,100 applications, 
and we are working through the system, but I can't--I----
    Mr. STAUBER. Would you say early 2021?
    Mr. SPAMPINATO. I respectfully----
    Mr. STAUBER. Mr. Spampinato, if you don't have the answer--
and I totally understand----
    Mr. SPAMPINATO. Yeah.
    Mr. STAUBER.--if you would get it to the Chair and myself, 
that would be great.
    Mr. SPAMPINATO. We will do that.
    Mr. STAUBER. Okay.
    Mr. SPAMPINATO. We will do that.
    Mr. STAUBER. I think my time is running out. Thank you for 
your testimony and your service to our country.
    Mr. SPAMPINATO. Thank you, sir.
    Chairman GOLDEN. The gentleman yields.
    I will now recognize Congresswoman Judy Chu, Chairwoman of 
the Subcommittee on Investigations, Oversight, and Regulations.
    Ms. CHU. Thank you so much, Mr. Chair.
    Dr. Spampinato, I wanted to ask about the 8(a) minority 
small business program. The participation has declined 
precipitously from 7,000 participants in 2010 to just 4,450 in 
2019, and this is why, last year, this Committee held a hearing 
on the 8(a) program where we heard from businesses and 
stakeholders. And they testified that a major contributing 
factor to decline in participation is that they often spent 
years in the program before receiving their first contract, and 
many businesses never received a contract at all over the 9-
year participation window.
    So can you tell us how many companies have been accepted 
into the 8(a) program this year and how this compares to 
previous years, and discuss why there is this decline and how 
you are addressing this decline in participation in 8(a)?
    Mr. SPAMPINATO. Yes, ma'am. Thank you for your question. I 
appreciate that.
    What we would like to--are happy to report a steady 
increase in the total number of firms accepted. In fiscal year 
2020, year to date, we have 527 new firms; over fiscal year 
2019, 437 new firms. So we have had an increase of roughly 90 
firms accepted into the 8(a) program, and we are still, of 
course, in this fiscal year.
    We acknowledge the decline of program participants in 2010. 
The number fluctuates due to a combination of factors: 
Successful completion of the 9-year program and graduation, 
voluntary withdrawal, firm requests early graduation, or 
terminated for noncompliance. We have had, you know, many in 
those categories.
    And what I would like to say, it is important to note that 
SBA has strategically focused on application education. We 
continue to emphasize to interested eligible firms the 
importance of being procurement ready from day one, so they are 
positioned for a fully successful 9-year program.
    And, in some instances, firms have informed us they are 
glad they waited to apply after having received training and 
education about the program. They want to apply when they know 
they are really ready so they don't waste time during the 
valuable developmental program years one through four before 
they must begin transition years five through nine and generate 
strong revenue streams.
    And, I will emphasize, the 8(a) program is a business 
development program as opposed to a government contracting 
program, so we are educating and helping firms to develop, to 
assist them, and we are doing our best to get more firms into 
the program with outreach and education.
    Ms. CHU. Well, thank you for that.
    I wanted to ask also about the shortfalls in the 
subcontracting goals. You did mention the prime contracting 
goals, and the Federal Government did increase in the prime 
contracting goals for small business, but, in the 
subcontracting, the HUBZone actually also declined. It was 1.4 
in 2018, and now 1.37 in 2019.
    But also the same decline occurred in the small 
disadvantaged business, from 4.9 to 4.17 percent, and then also 
for the service disabled veteran-owned small business, from 2.1 
to 1.95 percent.
    So what is the reason for this, and what are you doing 
about it?
    Mr. SPAMPINATO. Okay. Thank you for that thoughtful 
question, ma'am.
    I have got to be honest. A long time ago, when I was 
involved with the OSDBU at the Department of Energy, 
subcontracting was critical to us because we had such a big 
subcontracting component out in the field with the labs. I 
think basically what happens here, you do well in what you 
focus on, and I think that there hasn't been enough focus on 
subcontracting.
    And, you know, for the last 15 years, I have always thought 
subcontracting was critical. So we have got to take a refocus 
on subcontracting so that we can get those numbers up and get 
on board with the OSDBUs and the procurement side of the house 
to get these numbers up.
    But I think, if we focus on subcontracting and say, ``Hey, 
look, this is important as prime,'' I mean, for years, people 
looked at the prime numbers and said, ``Hey, prime is all we 
are about.''
    But I have been focused on subcontracting my entire career. 
So, I will put an extended focus on subcontracting, and we will 
move toward better numbers, I believe next year and the 
following years.
    Thank you.
    Ms. CHU. Well, thank you for that, yeah.
    And I yield back.
    Chairman GOLDEN. Thank you.
    We will now recognize Rep. Troy Balderson, Ranking Member 
of the Subcommittee on Innovation and Workforce Development, 
for 5 minutes.
    Mr. BALDERSON. Thank you, Mr. Chairman.
    Mr. Spampinato, thank you for being here. Excuse me.
    The GCBD has a critical role in formulating policy that 
affects small businesses contracting governmentwide. With that 
said, what policy changes or improvements are you considering 
in the short-term and the long-term?
    Mr. SPAMPINATO. Thank you for your question.
    Our first focus and like I spoke about earlier are the 
changes that we have made in the HUBZone program to clarify 
some of the what I call, which somebody else may not call, but 
me looking from the outside before I got here, some 
peculiarities of the HUBZone program. We are clarifying those, 
making them a little easier to understand. And so that is a big 
policy change.
    I believe we have to do something in what I just spoke 
about, subcontracting, some kind of a policy change to focus or 
reemphasize subcontracting, number two. I believe we have to do 
that.
    And we are also working closely with our OIG to ensure that 
we keep our eye on the ball and we are focusing on the right 
policy, and so we are working closely with them also in 
developing policy.
    Other than that, I can--you know, I can get back to you on 
other things we are focused on, but that is what I have right 
now.
    Mr. BALDERSON. Okay. Thank you very much. And if you would 
get that to the--myself and the Chairman, please, I would be 
grateful.
    My next question is: The fiscal year 2019 scorecard shows 
that the prime contracting achievement for women-owned small 
businesses was exceeded; however, the SBA Office of Inspector 
General released a fairly recent report showing severe 
deficiencies in the SBA's assessment of eligible women-owned 
small business firms.
    Do you think this achievement report in the scorecard may 
be inflated by awards made to ineligible firms?
    Mr. SPAMPINATO. I would say I do not believe it is 
inflated, but, this was a self-certification program, and, to 
some extent, you have to believe what people tell you, that 
they are certified. And I believe this--I mean, this is only 
the second time in the history of the scorecard where women-
owned small business goals were met, and I believe it is a 
great start-off point.
    I mean, to me, to continue on this trend. And I think it 
will only be strengthened by bringing the women-owned small 
business certification into the SBA.
    I really can't attest to or affirm what we have done in the 
past or how--you know, like I said, my past is 2.5 months here, 
but I think--I am very optimistic. Moving forward, once we get 
our certification and our certification abilities on women-
owned small business and work out some of the IT issues, I 
believe it is going to be a much better program, and I believe 
we are going to continue on an upward trend.
    Mr. BALDERSON. Okay. My follow-up to that would be--and, 
again, I will just have you--and I appreciate and understand 
your time as far as being there, but if you would also relay to 
the Chairman and myself, given the inspector general's report, 
what steps is the GCBD taking to ensure only eligible women-
owned small businesses receive contract awards? So if you can 
get that information to us also, I would be grateful for that.
    And, Mr. Chairman, I yield back my remaining time.
    Mr. SPAMPINATO. Yes. We will do that. Thank you.
    Chairman GOLDEN. Thank you very much.
    I am going to go ahead and ask a second round of questions. 
Do I understand you are all set? All right. Very good.
    I think I heard you correctly, sir, when you said that you 
didn't really view that the SBA was abandoning the IT program, 
which we have heard from the OIG, but, rather, expanding upon 
it, making some additional improvements, and I wanted to just 
give you an opportunity, if you could, to elaborate a little 
bit on what the system that will replace Certify will bring to 
the table in regards to new capabilities that you currently 
have been struggling with.
    Mr. SPAMPINATO. Thank you, Mr. Chairman.
    The only--I mean, I can talk in generalities. I don't know 
what the definition of abandoning a system is, because you 
can't just abandon any system midstream and have nothing. So, 
we are continuing to do the best we can with what we have.
    In the future, some of the things that have been talked 
about here. Just, you know, the certifications, having a good 
certification system, being able to talk to candidate 
businesses back and forth, pass information back and forth, 
those types of things, and to have a high level of validity to 
the system. When somebody is certified, you know they are 
certified.
    So, I mean, these are the kinds of things that we are 
looking for in a big general sense. You know, there are going 
to be definitely a lot more specifics coming forth, we can make 
those available, but we are--you know, they have this thing in 
government contracting which has historically been a problem, 
and that is generation of requirements. The requirements have 
always hurt us.
    And then we get, you know, two-thirds into the program; we 
figure out, well, jeez, we have got to go back and regenerate 
our requirements because we haven't done it correctly.
    We are being very cautious and very vigilant on the true 
requirements for us to facilitate business, and so we are going 
to be very deliberate in that approach. We are not going to 
rush to anything.
    So we are just being very--like I said, I am working 
closely with the CIO and the CFO, and we are going to move to a 
good solution where we can get the data we need and we can be 
the facilitators of business that we need to be for small 
business.
    Chairman GOLDEN. Thank you, sir.
    Just coming back to the women-owned small business program, 
according to the SBA website, SBA began intake of women-owned 
small business applications on July 15 of this year and 
reported it would not be until October 15 of 2020 that SBA 
would begin issuing decisions on certification applications, 
and I think I heard you in response to another question say 
that you have received about 1,100 applications under the 
program. Is that since July?
    And, also, has SBA started vetting these applications, and 
will participants likely be notified in October?
    Mr. SPAMPINATO. Sir, I can't be--I can't be positive on 
that, but--because I--I need to know more about the women-owned 
small business, so I don't want to comment on the new program, 
but we can get those responses back to you quickly.
    Chairman GOLDEN. Thank you. I appreciate that.
    Mr. SPAMPINATO. Thank you.
    Chairman GOLDEN. And, just lastly, as you have noted, in 
your testimony or during the Q and A, you have seen growth 
towards a lot of the goals in this fiscal year, and I think I 
made a note that you saw 8(a) applications up more than 100 
percent from the same period in 2019. I believe that was during 
the period in 2020 where we have been facing the coronavirus 
pandemic and some of the impacts on the economy and small 
businesses out there.
    Could you just take an opportunity to share with the 
Committee anything that you would like about how the COVID-19 
pandemic has impacted either SBA's resources assigned to the 
contracting programs, whether or not there has been any, you 
know, delays or challenges in the administration of these 
programs due to the pandemic?
    And, you know, some of the data you shared, I will actually 
suggest that you actually have seen an uptick in participation. 
Is that, in part, driven by the pandemic itself?
    Mr. SPAMPINATO. Yes, sir. What I would like to say about 
the pandemic--I mean, there are a lot of resources within SBA 
that do not include my office, which I really can't comment, 
but they have done some great things for small business.
    You know, in terms of what we do in GCBD and like I alluded 
to earlier, our people--most of our people are working from 
home. And, when I came on board, I was concerned about that. 
But, when I realized that the work was getting done and in fine 
form, I realized that is not an issue.
    The outreach continues to small businesses. The outreach, 
the education, the programs continue to work with their--their 
business--candidate businesses. So we really haven't lost a 
step in working with them and helping and outreach. So I am 
very pleased about that.
    Specifics, I don't have a lot of specifics for you, but I 
know I have heard at trade groups and others, and they are very 
pleased with the way my team has conducted themselves in terms 
of being available, you know, and being available in the 
Federal Government is a big thing, especially for small 
businesses. And it has been working well for us. And I don't 
see any problem with that continuing either.
    Chairman GOLDEN. Thank you very much.
    Representative Balderson, are you all set?
    Mr. BALDERSON. I am good. Thank you.
    Chairman GOLDEN. Okay. Well, with that, just some closing 
remarks, and one thing I wanted to make note of, sir, is both 
the Ranking Member and I represent rural communities, where one 
of the earlier frustrations I have experienced on the Committee 
was getting out into the community and hearing too often from 
small business owners that they were essentially unaware of the 
types of programs and services that the SBA provides.
    Generally speaking, people have viewed it as not much more 
than a loan program. I think, in too many cases where, you 
know, I see small business, you know, owners who are doing work 
that I think, jeez, government would really benefit if you were 
bringing this expertise, you know, to service, you know, for 
our government.
    Other programs, like the Small Business Development Center, 
if you are familiar with that, where, you know, you have been 
talking about education and outreach, they do great work all 
around the country, yet far too few businesses are even aware 
that they are there and that they are generally, you know, free 
of a fee.
    You know, services and, you know, consultation and all 
kinds of things that could help businesses even identify the 
opportunity to pursue a contract with the government, there is 
just a lot of options out there.
    Something else that I know Ranking Member and I have been 
interested in is the Office of Rural Affairs, which has for 
years been on the statutes but, under multiple administrations, 
basically unstaffed and the mission completely unfulfilled.
    So we are interested in hearing about education and 
outreach activities that will actually penetrate and get out 
there into rural communities, as well as urban ones, but I 
think really a lot of missed opportunities when people just 
aren't aware of the work that is being done and what they can 
bring to the table to the benefit of the entire country.
    I want to thank you for being here today and for everything 
that you have shared with us, as well as that you will follow 
up with in the wake of the hearing. For this Committee, 
strengthening the contracting and business development program 
is of the utmost importance because, overall, it plays an 
increasing competitiveness in providing access to Federal 
opportunities.
    I think the discussion today brings us closer in 
understanding how these programs can better serve the small 
business community, particularly in these times of economic 
challenges that we are all facing.
    I also want to thank the staff within GCBD for their hard 
work and constant commitment to small businesses. We look 
forward to working with you to level the playing field for 
small businesses across the country.
    Mr. Stauber, do you have any closing remarks?
    Mr. STAUBER. No. Thank you very much, Mr. Chair.
    I just appreciate your testimony, and, as the Chair said, 
we both represent rural areas of this country, and northern 
Maine is very similar to northern Minnesota. And we talked 
about many small businesses don't know the opportunities and 
the advantages that they can--that can be had by getting 
involved.
    So that is it, and I, again, thank you for your testimony.
    Thanks, Chair.
    Chairman GOLDEN. Go ahead and ask unanimous consent that 
members have five legislative days to submit statements and 
supporting materials for the record.
    Without objection, so ordered.
    If there is no further business to come before the 
Committee, we are adjourned.
    Thank you very much, sir.
    [Whereupon, at 10:56 a.m., the Subcommittee was adjourned.]
                           
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