[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
UTILIZATION OF SMALL CONTRACTORS IN THE
INFRASTRUCTURE PLAN
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HEARING
BEFORE THE
SUBCOMMITTEE ON CONTRACTING AND INFRASTRUCTURE
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
JUNE 10, 2021
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 117-017
Available via the GPO Website: www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
44-750 WASHINGTON : 2021
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HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELAZQUEZ, New York, Chairwoman
JARED GOLDEN, Maine
JASON CROW, Colorado
SHARICE DAVIDS, Kansas
KWEISI MFUME, Maryland
DEAN PHILLIPS, Minnesota
MARIE NEWMAN, Illinois
CAROLYN BOURDEAUX, Georgia
TROY CARTER, Louisiana
JUDY CHU, California
DWIGHT EVANS, Pennsylvania
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
ANDY KIM, New Jersey
ANGIE CRAIG, Minnesota
BLAINE LUETKEMEYER, Missouri, Ranking Member
ROGER WILLIAMS, Texas
JIM HAGEDORN, Minnesota
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
CLAUDIA TENNEY, New York
ANDREW GARBARINO, New York
YOUNG KIM, California
BETH VAN DUYNE, Texas
BYRON DONALDS, Florida
MARIA SALAZAR, Florida
SCOTT FITZGERALD, Wisconsin
Melissa Jung, Majority Staff Director
Ellen Harrington, Majority Deputy Staff Director
David Planning, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Kweisi Mfume................................................ 1
Hon. Maria Salazar............................................... 3
WITNESSES
Ms. Sheila Ohrenberg, National President, Women Construction
Owners and Executives (WCOE), President, Sorella Group, Kansas
City, KS....................................................... 7
Mr. Ralph Thomas III, Executive Director Emeritus, National
Association of Minority Contractors (NAMC), Attorney, Law
Offices of Ralph C. Thomas III PLLC, Washington, DC............ 9
Mr. Josh Bone, Executive Director, ELECTRI International,
Washington, DC, testifying on behalf of the National Electrical
Contractors Association (NECA)................................. 10
Dr. Annie Mecias-Murphy, Co-Owner & President, JA&M Developing
Corp., Pembroke Pines, FL, testifying on behalf of the
Associated Builders and Contractors in her role as the
Treasurer and Board Member of the Florida First Coast Chapter.. 12
APPENDIX
Prepared Statements:
Ms. Sheila Ohrenberg, National President, Women Construction
Owners and Executives (WCOE), President, Sorella Group,
Kansas City, KS............................................ 30
Mr. Ralph Thomas III, Executive Director Emeritus, National
Association of Minority Contractors (NAMC), Attorney, Law
Offices of Ralph C. Thomas III PLLC, Washington, DC........ 35
Mr. Josh Bone, Executive Director, ELECTRI International,
Washington, DC, testifying on behalf of the National
Electrical Contractors Association (NECA).................. 42
Dr. Annie Mecias-Murphy, Co-Owner & President, JA&M
Developing Corp., Pembroke Pines, FL, testifying on behalf
of the Association Builders and Contractors in her role as
the Treasurer and Board Member of the Florida First Coast
Chapter.................................................... 53
Questions and Answers for the Record:
Questions from Hon. Scott Fitzgerald to Ms. Sheila Ohrenberg
and Answers from Ms. Sheila Ohrenberg...................... 61
Questions from Hon. Kweisi Mfume and Hon. Scott Fitzgerald to
Ms. Annie Mecias-Murphy and Answers from Ms. Annie Mecias-
Murphy..................................................... 63
Additional Material for the Record:
Direct Steel LLC............................................. 73
UTILIZATION OF SMALL CONTRACTORS IN THE INFRASTRUCTURE PLAN
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THURSDAY, JUNE 10, 2021
House of Representatives,
Committee on Small Business,
Subcommittee on Contracting and Infrastructure,
Washington, DC.
The Subcommittee met, pursuant to call, at 1:01 p.m., via
Zoom, Hon. Kweisi Mfume [chairman of the Subcommittee]
presiding.
Present: Representatives Mfume, Newman, Andy Kim, Hagedorn,
Stauber, Meuser, Salazar, and Fitzgerald.
Chairman MFUME. Good afternoon, everyone. I would like to
call to order this hearing today of the Subcommittee on
Infrastructure and Contracting.
And I would like to thank, first of all, all of the Members
on both sides of the aisle who thought it important enough to
be with us. There is a lot going on today, and I can appreciate
that.
Without objection, the Chair is authorized, as most of you
know, to declare a recess at any time.
And let me begin by saying that standing House committee
rules and practices will continue to apply during the remote
proceedings. All Members are reminded that they are expected to
adhere to those standing rules, including decorum, when they
are participating in any remote event such as this.
With that said, the technology that we are using today
requires us to make small changes and modifications from time
to time to ensure that Members can fully participate in these
proceedings.
House regulations require Members to be visible through a
video connection throughout the proceeding, so I would
respectfully ask that everyone keep their cameras on. If you
have to participate in another proceeding, please exit and then
log back in later at a time convenient for you.
In the event that a Member encounters technical issues that
prevent them from being recognized for their questioning, I
will then move to the next available Member of the same party,
and I will recognize the other Member at the next appropriate
time slot, provided, that is, that they have returned back to
the proceeding.
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 the issues have, in fact, been
resolved.
And in the event that a witness loses connectivity during
testimony or questioning, I will preserve their time as staff
seeks to address the technical issue. In that event, I may need
to recess the proceedings to provide time for the witness then
themselves to reconnect.
And, finally, please remember to remain muted until you are
recognized in order to minimize the amount of background noise
that oftentimes accompanies these Zoom meetings.
In accordance with rules, staff has been advised to mute
participants only in the event if there is inadequate
background noise--or overwhelming background noise, I should
say. And should a Member wish to be recognized, they then just
should unmute themselves and seek recognition at, of course,
the appropriate time.
At this time, the Chair would like to recognize himself for
an opening statement.
Infrastructure helps to form the foundation of our nation.
Every day, Americans across the country rely on infrastructure
to commute to work, to access clean water, and to communicate
with one another. But despite infrastructure's fundamental
importance to our country, it has become an afterthought in
many respects over the past several decades.
The U.S., as we all know, is the wealthiest country
globally, but we are ranked 13th worldwide when it comes to the
quality of our infrastructure. Fortunately, there is a wide
consensus, which is bipartisan, that the current state of
American infrastructure is, in fact, unsustainable.
That is why in April, President Biden introduced the
American Jobs Plan. The plan would revitalize the American
infrastructure through major investments and federal funding
over the next decade.
The job plan would fix highways, repair bridges, improve
airports, water ports, expand transit and rail into new
communities. It would also eliminate lead water pipes and
improve high-speed broadband, upgrade our schools and federal
buildings, and so much, much more.
By all accounts, this plan, we believe, truly represents a
new vision for America, one through which by rebuilding with
purpose we take care of the environment, further enhance
equity, and create the basis for a stronger economic future.
In this respect, an investment in infrastructure would be a
significant benefit to small firms. Small businesses, as we all
know, rely on infrastructure systems daily to increase their
access to consumers and suppliers, to boost business
operations, and create new demand for their goods and for their
many services.
Infrastructure investment would also be a boon for the
millions of small businesses that directly and indirectly
support the development, modernization, and the maintenance of
many facets of infrastructure.
In the construction industry alone, it is estimated that
there are 3 million small businesses employing over 82 percent
of all U.S. employees in that one sector. Put simply, an
investment in infrastructure is indeed an investment in small
business.
Currently, there are an array of federal measures in place
to ensure small businesses can participate in the procurement
process and receive their fair share of contracting dollars.
For instance, a governmentwide goal requires that 23 percent of
all eligible contracting--or prime contracting dollars be spent
with small businesses, while other goals exist for specific
subsets of small contractors at the prime and at the
subcontracting level.
Other policies include the creation of contracting programs
administered by the SBA that reserve contracts for underserved
small businesses through set-aside and sole-source
opportunities.
And, finally, there are contracting programs implemented at
the State and local level whenever federal assistance is
involved, such as the case in the Department of
Transportation's Disadvantaged Business Enterprise Program.
The DBE Program is designed to enable women and minority
small firms to compete for federal contracts led by State and
local agencies. It is the Department of Transportation's most
important tool for remedying many of the effects of
discrimination and leveling the playing field for
transportation-related projects.
All of these programs are the well-being of the small
business community and help, obviously, guarantee that small
businesses will have a seat at the table when it comes to
contracting.
And so in light of the American Jobs Plan and the thousands
of contracting opportunities it will create, I hope that
today's hearing gives us a chance to look closer at these
programs which I believe are crucial to maximize small business
participation and contracting at the local, state, and federal
level.
I am also looking forward to hearing from our expert
witnesses on ways that Congress can leverage infrastructure
investment to meet the needs of small businesses across our
country.
I would like now, if I might, to yield respectfully to the
Ranking Member of this Subcommittee, Ms. Salazar, the
gentlewoman from the State of Florida, for her opening
statement.
Ms. Salazar, you are recognized.
Ms. SALAZAR. Thank you, Mr. Chairman. Wonderful to see you
and the rest of my colleagues. And holding this hearing is
extremely important because we are at a critical time of
economic recovery from the pandemic and our small business
should be driving this recovery.
Infrastructure is the vehicle. In south Florida, we
understand this dynamic, that our economy is linked to miles of
coastline. One of America's largest ports is in District No.
27. We have major U.S. highways and an international airport in
my district.
Infrastructure is fundamental to our daily lives. We rely
on it to go to work and to provide for our families. We spend
valuable time going from place to place, from here to there.
When it works, it improves our lives and it makes it a lot more
enjoyable. But when highways are congested or public transit is
delayed, it is not only frustrating, as I am sure you know, but
it hurts our productivity and our economic growth.
I think we can all agree that our aging infrastructure
needs a major upgrade, and we must maintain our focus on
improving the nation's core infrastructure system. I urge my
colleagues across the aisle to work with us towards this goal.
Where we disagree, I believe, is on the definition of
infrastructure. Unfortunately, President Biden's plan is not
about infrastructure at all, or very little. For example, the
plan the President has proposed expands Medicaid coverage for
home care. Medicare is fantastic for my constituents, but it
has nothing to do with infrastructure.
It puts billions and billions into social justice and
violence prevention programs. That is fantastic, but it has
nothing to do with infrastructure.
It provides $12 billion to college infrastructure. I think
education is key--the more you learn, the more you earn--but it
has nothing to do with infrastructure.
$180 billion for research and development. For what? I
don't think research has anything to do with infrastructure.
With only a fraction of those moneys related to
infrastructure, it makes it really hard for us to understand
and to agree with this bill the way it has been presented.
These issues may be fine for Congress to consider at
another time, but we need to be honest with the American
people, with your constituents and mine. The administration is
trying to fool us into believing that this wish list, which we
agree with but has nothing to do with infrastructure, should be
part of this bill.
Now, to small business and contracting. If the goal of
today's hearing is to discuss the utilization of small
contractors in the President's package, we must understand the
barriers that are imposed on small business owners.
Small business operates best when the government does not
stand in the way. Most things work best when government does
not interfere. However, unfortunately, this package subjects
the small business to an extended new set of rules,
restrictions, restrictive labor rules, like the PRO Act, and
other regulatory requirements that would end independent
contracting, the franchise industry, and sharing the economy
the way we know it now.
In addition to these job-killing regulations, the President
has proposed to pay for this multi-trillion dollar plan on the
backs of the small businesses through tax increases. At least 1
million small businesses will get a tax increase through this
proposal.
The foundation of any infrastructure project is the
construction business--and we have a lot down here in Miami--
and the majority of the builders and the contractors or people
that build buildings are small businesses.
In the construction industry, we have a labor shortage, as
you know, and there are already difficulties hiring workers,
not only in construction, but in welding and electricians, all
types of manufacturing-related jobs.
According to the Associated General Contractors of America,
81 percent of construction firms are having trouble finding
people. There are more jobs than hands. And 72 percent
anticipate labor shortages to be the big hurdle this coming
year.
I think, Mr. Chairman, that I look forward to hearing the
testimonies of the witnesses today, and I would love to work
across the aisle and make this a reality for all Americans.
I yield back.
Chairman MFUME. Thank you very much, Ms. Salazar.
The Ranking Member yields back. We appreciate your
comments, and as I said before, obviously, appreciate your
participation in this hearing.
I would like to take a moment, if I might, to do a couple
things. All Committee Members have opening statements, I
assume, and if they are prepared, we would ask that they be
submitted, without objection, for the formal record. Obviously,
those statements take longer than 5 minutes, and so the revise
and extend provision would apply here.
I would also like to take a moment to explain how this
remote hearing will proceed. Each witness will have 5 minutes
to provide a statement, and each committee Member will receive
5 minutes for questions. Please ensure that your microphone is
on, not like mine a moment ago, and that when you begin
speaking, and after you finish, you return to the mute option.
I would like to now introduce our witnesses, as they are
prepared to give their testimony. And, again, on behalf of all
Members of this Committee, we appreciate your willingness to be
here today.
Our first witness is Ms. Sheila Ohrenberg, the president of
Women Construction Owners and Executives. She is also president
of Sorella Group, Incorporated, a specialty contractor offering
full carpentry service and product supply and installation
nationwide.
Under Ms. Ohrenberg's leadership, Sorella Group has earned
multiple awards, including the American Subcontractor 2012
Associated Member Award, and Kansas City American Subcontractor
2013 Subcontractor of the Year Award.
Welcome to you, Ms. Sheila Ohrenberg. Thank you for being a
witness, and thank you for being here.
Our second witness is Mr. Ralph Thomas III, who is the
executive director emeritus of the National Association of
Minority Contractors. He is also a contracts litigator, who
focuses his practice on legal issues affecting small
businesses. And for more than a decade, Mr. Thomas has served
as the associate administrator for the Office of Small and
Disadvantaged Business Utilization at the National Aeronautics
and Space Administration in Washington.
He received his JD from Harvard Law School and his
bachelor's of arts degree with honors from the University of
California at Berkeley.
Mr. Thomas, we welcome you as well, and we will get to you
in just a moment.
Our third witness today is Mr. Josh Bone. Mr. Bone is the
executive director of ELECTRI International, a foundation
established by the National Electrical Contractors Association
in 1989, dedicated to conducting research and educating
electrical contracting industry workers and businesses.
Mr. Bone also served as the director of industry and
innovation for NECA. He holds a bachelor's degree in industrial
engineering from Southern Poly Tech State University.
Welcome, of course, Mr. Bone, to you as well.
And now, I would like to yield back to our Ranking Member,
Ms. Salazar of Florida, to introduce our final witness.
Ms. Salazar.
Ms. SALAZAR. Thank you, Mr. Chairman.
I would like to welcome our final witness, who is also from
south Florida, my district, Mrs. Annie Mecias-Murphy. Mrs.
Mecias-Murphy is the co-owner and president of JA&M, a
developing corporation. This is a family-owned operation,
started by Mrs. Mecias' father over 45 years ago.
Under her leadership, the company has grown into a very
well-established and dependable company, earning the trust of
many clients in the private and in the public sector.
Her government clients extend over several departments and
communities, like the Broward County Aviation Department,
Miami-Dade County, the Florida Division of Highway Safety and
Motor Vehicles, and the City of Miami.
As a testament of her outstanding leadership, her company
has won the Excellence in Construction Award given by the
Associated Builders and Contractors of East Coast Chapter in
2017.
Mrs. Mecias herself was honored as one of the top 50 women
business leaders in Florida, and in 2014, she was named VIP
Woman of the Year for her outstanding dedication to her
profession. She has also been selected this year as one of the
top 100 leaders in construction by the World Real Estate and
Construction Forum.
Giving back to her community and investing in the lives of
young people in my district, having taught in high school and
university for more than 20 years, she also serves on the board
of Boys and Girls Club of Broward County.
In addition to her many professional and personal
achievements, Mrs. Mecias serves as a treasurer and board
member of the South Florida Chapter of Associated Builders and
Contractors, or ABC, whose on behalf she is testifying today.
ABC is a national construction industry trade association
representing over 20,000 members.
Mrs. Mecias, thank you for being here with us, for your
participation, and we look forward to hearing your testimony.
I yield back now, Mr. Chairman.
Chairman MFUME. Thank you, Ms. Salazar.
And, Mrs. Mecias, welcome again to you, and thank you, like
the others, for being here with us today.
We will begin now our testimony from the witnesses, and the
Chair will recognize Ms. Ohrenberg for 5 minutes. Please feel
free to proceed.
STATEMENTS OF MS. SHEILA OHRENBERG, NATIONAL PRESIDENT, WOMEN
CONSTRUCTION OWNERS AND EXECUTIVES (WCOE), PRESIDENT, SORELLA
GROUP, KANSAS CITY, KS; MR. RALPH THOMAS III, EXECUTIVE
DIRECTOR EMERITUS, NATIONAL ASSOCIATION OF MINORITY CONTRACTORS
(NAMC), ATTORNEY, LAW OFFICES OF RALPH C. THOMAS III PLLC,
WASHINGTON, DC; MR. JOSH BONE, EXECUTIVE DIRECTOR, ELECTRI
INTERNATIONAL, WASHINGTON, DC, TESTIFYING ON BEHALF OF THE
NATIONAL ELECTRICAL CONTRACTORS ASSOCIATION (NECA); AND DR.
ANNIE MECIAS-MURPHY, CO-OWNER & PRESIDENT, JA&M DEVELOPING
CORP., PEMBROKE PINES, FL, TESTIFYING ON BEHALF OF THE
ASSOCIATED BUILDERS AND CONTRACTORS IN HER ROLE AS THE
TREASURER AND BOARD MEMBER OF THE FLORIDA FIRST COAST CHAPTER
STATEMENT OF SHEILA OHRENBERG
Ms. OHRENBERG. Good afternoon, Mr. Chairman, Ranking
Member, and Members of the Subcommittee. Thank you for holding
this hearing today.
As a small business owner and the president of Women
Construction Owners and Executives, I appreciate your
commitment to ensuring that all categories of small business
owners will benefit from the major infrastructure package being
debated.
I am Sheila Ohrenberg, the president of Sorella Group. I
founded the company in 2006 in my hometown of Kansas City,
Kansas. It has grown considerably over the past 15 years to a
full service, merit shop, carpentry company, performing private
and public work in 23 States, including 5 significant new
airports and additions.
I am pleased to be representing WCOE, one of the only
national associations representing women owners in the
construction industry.
Eleven women started WCOE in 1983 with a goal to help our
members grow and prosper. We are dedicated to creating a level
playing field for women-owned firms in the construction
industry.
Our membership is comprised of nonunion, union, small- and
medium-sized companies that perform work and provide supplies
in every aspect of construction. We are all eager to assist,
maintain, modernize our crumbling infrastructure.
This plan is essential to every business. The past 16
months have been challenging for everyone, especially small
businesses. An infusion of federal infrastructure projects
would generate contracting opportunities for small businesses
that would create backlog, jobs, company growth, thus improving
our communities.
We anticipate direct federal contracts as well as grants
and federally assisted programs that go to State and local
governments. These programs make up many of the set-aside and
DBE contracts that are vital to WCOE members.
Small businesses are absolutely necessary to our economy,
but women-owned small businesses, minority, and veteran-owned
businesses continue to face barriers to success. This is true
in federal and private marketplace.
The federal contracting programs Congress has put in place
to provide greater opportunities for small business are still
necessary today.
The cost of financing, bonding, and insuring projects is
disproportionately high for small businesses, especially women
business owners. WCOE members share stories of many of the same
barriers faced by women that started our organization almost 40
years ago.
The WOSB program 5 percent goal was implemented in 1996.
This goal has only been met in 2015 and 2019. That is twice in
25 years, despite the fact that approximately 13 percent of
construction companies are women-owned.
The 2021 CSR report details the WOSB program usage has
increased, but the WOSB set-asides and sole-source awards are
still not meeting the goals. I think we can do better.
We can create incentives to meet the goals and consequences
for never meeting them. We can make up for the 23 years that we
missed the goals by increasing the statutory goals above 5
percent for WOSBs.
We can require more transparency through the SBA
Procurement Scorecard by including how many WOSB programs are
awarded, along with the value of the contracts by each agency,
better coordination of agency resources for women business
owners. And this can be done by including the bill being
introduced next week by Representative Meng. This will ensure
the Interagency Committee on Women's Business Enterprises meets
regularly.
A bold infrastructure package will be a great vehicle to
increase contracting opportunities for disadvantaged businesses
for whom the playing field is not yet level. The robust funding
and the current programs alone are just not enough. We need to
protect the stability of our small businesses.
WCOE works alongside other construction industry coalitions
for legislation contracting reform. We need to ensure payment
protections for all construction projects by requiring payment
and performance bonds, including private-public partnerships.
We need to pass House bill 2949, the legislation would
exclude the threshold for construction contracts that must be
bonded under the Miller Act.
Change order reform is necessary. Did you know that change
orders do not typically get paid till the completion of the
project? It is costly and can be detrimental to small
businesses.
These programs should not be viewed as the cost of doing
business. They should not be viewed as a burden. And the
program should be designed to educate, train, and advance women
that were willing to take the leap into business ownership and
the American Dream.
WCOE hopes to continue to work with you to support future
generations of women business owners.
I appreciate your time.
Chairman MFUME. Thank you very much, Ms. Ohrenberg. We
appreciate your time, and we will obviously be getting back to
you with questions, comments, and observations in just a
moment.
The Chair would like to recognize Mr. Thomas now for 5
minutes.
Mr. Thomas, feel free to proceed.
STATEMENT OF RALPH THOMAS III
Mr. THOMAS. All right. Thank you, Mr. Chair, and other
ladies and gentleman of the Committee.
And, Mr. Chair, it is nice to see you again. It seems like
decades ago I testified before other Committees and
Subcommittees that you Chaired, so welcome back.
Chairman MFUME. [Inaudible.]
Mr. THOMAS. My name is--and my name is still Ralph C.
Thomas III, and I am testifying today on behalf of the National
Association of Minority Contractors. We are a group that was
formed in 1969, and that makes us 52 years old and the oldest
trade association representing minority contractors in the U.S.
We have chapters and affiliates all over the country, and we
represent the interests of, not only our members, but the
100,000 minority contractors across the United States right
now.
Now, the inclusion of minority contractors or DBEs,
disadvantaged business enterprises, in the rebuilding of
America's infrastructure is particularly important to ensuring
that America is operating at the full, productive capacity of
its citizenry. Needless to say, NAMC and minority contractors
look very much forward to playing a significant role in the
upgrading of this nation's infrastructure.
Now, my full testimony is already in the record, so I am
not going to repeat that, but I will summarize very quickly
some of the topics that we are interested in and why we are
interested in it.
First of all, we really are interested in this new plan
because of the benefits that it offers minority contractors.
The federal infusion of funds--of new funds to build roads,
bridges, highways, airways, et cetera, minority contractors are
already involved in that. That is what we do, but we need more
of it. We need to build our capital base so that we can do
more.
We have a vehicle right now through the U.S. Department of
Transportation, the DBE Program, the Disadvantaged Business
Enterprise Program, which requires 10 percent of the
transportation project funds to be expended with disadvantaged
business enterprises.
In order to make this new capital infusion work, we have
got to do better in the program. Right now, 23 of the 50 States
are not meeting the 10 percent floor, and we need--but we are
very encouraged by the comments of Secretary Buttigieg.
In a recent hearing that he testified in, he said he is
going to make this a much more robust program, that he is going
to make it a priority, and he is going to ensure that
contractors, disadvantaged businesses, can do a wider range of
contracts.
Now, we are also interested in the workforce part of this
infrastructure plan. The DOT had a workforce element in it in
2017, but for 2018, it doesn't. And that has hurt us. It is
said that for every billion dollars that DOT spends on
workforce development, that 13,000 jobs are created. So we are
interested in that.
We think that the impact of a successful program--a
successful DBE program that will get us more capital, will be
good for expanding, first of all, doing better--we can hire
better people. We can make more investments on technology and
equipment. We can hire better people, and that has so much of a
social impact in terms of a happier group of people. You know,
we can hire more people.
So we look forward to working closely with, not only the
DOT and the Secretary, but also with this Committee to hammer
out any kinks that we see in implementing DBE inclusion in this
new infrastructure plan.
Thank you.
Chairman MFUME. Thank you very much, Mr. Thomas. And we
appreciate your testimony, and we recognize that there is a
fuller set of that in the remarks that you submitted, to be
revised and extended.
But let me just say, it is good to see you also. It has
been many, many years. And when you say it seems like decades,
it is because it was decades. It was the late eighties and the
early nineties that you would come before this Committee and
others and give testimony, and I was happy to be one of the
Chairpersons and happy always to receive it. Thank you, sir,
very much for your remarks.
I would like to now turn and yield to Mr. Bone, who has
been patiently waiting.
Mr. Bone, you are recognized for 5 minutes, and you may
feel free to proceed.
STATEMENT OF JOSH BONE
Mr. BONE. Thank you, Chairman Mfume and Ranking Member
Salazar, the Members of the Subcommittee, for inviting me to
testify on behalf of ELECTRI International and the Electrical
Contractors Association, NECA. We greatly appreciate the
opportunity to submit a statement for the record to the
Subcommittee on Contracting and Infrastructure.
My name is Josh Bone. I am the executive director of
ELECTRI International. ELECTRI is a 501(c)(3) charitable
organization established with support from NECA. Our mission is
to help electrical contractors, large and small, meet today's
demands and tomorrow's challenges by transforming our
commission research into useful education, talent-initiative
programs, as well as practical publications.
The work for ELECTRI is simplified by NECA's network of
4,000 contractor members consisting of nearly 3,200 small
businesses. NECA is the voice of a $170 billion electrical
construction industry that brings power, light, and
communication technologies to buildings and communities across
the U.S.
ELECTRI, along with NECA, recognizes the key role small
businesses will play in any infrastructure package. It cannot
be stated strongly enough, the infrastructure of this country
is deteriorating. Thankfully, Congress and the current
administration have shown a clear and urgent understanding of
this need.
To that end, we view the American Jobs Plan as a
culmination of generations' worth of conversations on how to
address our aging and lacking infrastructure. That said, this
plan is the first step of many in moving the country forward.
There is no question, after the volatility created by
COVID-19 pandemic, small businesses must be prioritized by any
infrastructure package. Across the construction industry, we
have witnessed small contractors building their businesses
around niche markets to be more competitive, whether it be in
areas like the creation of microgrids, electrical vehicle
charging stations, low-voltage technologies, or otherwise.
Small contractors need to stay at the forefront of
advancing technologies in order to remain competitive. Although
this has yielded positive growth for small businesses, many
still face what seems to be an insurmountable challenge: access
to capital. The risks posed by lack of capital is compounded
with negative factors, such as delayed payment practices and
fluctuating material costs.
First and foremost, delays in payment are rampant in the
construction industry, especially to subcontractors. This has
the capability of crippling small businesses that are unable to
balance their books and anticipate exposure for upcoming
projects. Small contractors need prompt payment support and
enforcement when it comes to working on larger projects like
those identified by the American Jobs Plan.
In addition, the risk assumed by small business contractors
cannot be understated, with many subcontractors recounting
stories of offering their homes as collateral for various loans
or bonding.
The recent fluctuation in material costs has presented new
challenges. The main concern for electrical contractors is the
rising cost of copper, which has increased nearly 90 percent
since this time last year.
There is no denying that the broad federal investment
offered by the American Jobs Plan will not stretch as far when
construction materials cost exponentially more. To make matters
worse, a small business contractor typically holds their
estimated price to a contract owner for 90 days, while material
suppliers hold that estimate to their contractors for 7 to 10
days; in some cases, less.
Many of our industry electrical contractors never stopped
working throughout the pandemic. Because of this, our workforce
demands never slowed. Our industry must hire and train over
100,000 electricians to meet the workforce demands across the
country.
The gold standard for meeting this need was established
over 70 years ago by NECA and the IBEW. The National Joint
Apprenticeship Training Program, the NJATC, today invests over
$100 million annually and receives no direct federal funding.
The program's rigorous training methods require 8,000 hours
of on-the-job training and 900 hours of classroom time, and
this is what it takes to create a qualified and capable
journeyperson.
In my time at ELECTRI, I have had the pleasure to travel
this country and meet the small business owners employing the
men and women of the electrical construction industry who
should, and hopefully will, be tasked with rebuilding this
nation.
In the face of constant risk, competition, and an
overwhelming workforce need, they come to work every day,
striving to succeed. Efforts like the American Jobs Plan and
others proposed by Congress offer these businesses a promising
future.
On behalf of ELECTRI International and NECA, I want to
thank you again for the opportunity to testify at this very
important hearing. I applaud the Committee's unwavering efforts
to support and advocate for small businesses across the
country.
Thank you.
Chairman MFUME. Thank you very much, sir.
I am going to ask staff to do not mute me unless I mute
myself, because trying to find the unmute button can be
problematic, obviously, from time to time.
I am going to thank again and welcome Mrs. Mecias-Murphy
for being with us. I know the Ranking Member properly
introduced her, but I want to thank her.
It is always hard being the caboose on a train, but it is
your time, and we hope that you will proceed accordingly. You
are recognized for the next 5 minutes. Go right ahead.
STATEMENT OF ANNIE MECIAS-MURPHY
Mrs. MECIAS-MURPHY. Chairman Mfume, Ranking Member Salazar,
and Members of the U.S. House Small Business Subcommittee on
Contracting and Infrastructure, thank you so much for holding
this hearing on the utilization of small contractors in the
infrastructure plan and inviting me to be with you today.
My name is Dr. Annie Mecias-Murphy, and I am the co-owner
and president of JA&M Developing Corp. We are a family-owned
construction business and contractor, performing work in the
private and public sectors, serving the south Florida market.
JA&M is a small- and women-owned business with 26 full-time
employees.
I am testifying today on behalf of the Associated Builders
and Contractors, a national construction industry trade
association established in 1950, that represents more than
21,000 members across the country.
I am currently on the ABC Florida East Coast Chapter board
of directors, serving as the treasurer.
It is because of the construction industry that I am able
to be here to share my story with you today. I was born to
immigrant parents who chose to flee religious and political
persecution by the Cuban Government just 90 miles from Florida.
It is because of their bravery and a belief in greater freedom
that I have the opportunities I do in this country, to own and
operate a business in the construction industry.
When my father came to this country in 1969, he entered the
construction workforce with nothing except the clothes on his
back. Construction was part of our daily lives while I was
growing up.
While my initial focus was a career in education,
eventually earning my doctorate in philosophy and working in
the teaching and counseling field for close to 15 years, I
assisted my father with his construction company. However, it
wasn't until 2005 that my siblings and I founded JA&M. It was
then that our family came together to work full time in the
construction industry.
Today, I would like to share how a significant investment
in America's infrastructure would impact my small business and
other businesses like mine in the construction industry.
I also would like to provide a word of caution to the
Subcommittee and to urge Congress to avoid enacting restrictive
policies referenced President Biden's American Jobs Plan, like
the Protecting the Right to Organize, or the PRO Act;
government-mandated project labor agreements, or PLAs; and just
a one-size-fits-all approach to our workforce development. The
inclusion of these policies and others like them would
significantly limit the success of any potential infrastructure
bill, as they would prevent qualified merit shop contractors
from participating in rebuilding their communities.
Finally, I would also like to highlight the negative impact
that proposed tax increases from the majority in Congress and
the White House would have on small- and family-owned
businesses.
As a small business in the construction industry, an
ongoing challenge that we have is hiring the skilled workforce
we need to be competitive. And we are not alone, as there are
hundreds of thousands of open construction jobs right now.
Any infrastructure proposal should make it easier for
private employers to train tomorrow's construction workforce
through a variety of workforce development options, including
industry-tested and recognized craft training programs and
registered apprenticeship models.
Unfortunately, President Biden's American Jobs Plan urges
Congress to tie infrastructure investments funded under this
plan to the restrictive policies that I referenced before,
which would limit the pipeline of workers entering the
industry.
I would call on Congress to reject these policies as the
current shortage of workers would only be exasperated by an
increase in the money spent on infrastructure. Importantly,
Congress must realize that most small businesses in the
construction industry are not signatory to a construction
union.
These policies are likely to increase costs, reduce job
creation, decrease the number of infrastructure projects, and
discourage the merit shop construction industry and their
skilled local workforce from competing for taxpayer-funded
construction projects.
I urge Congress to consider investing in America's
infrastructure and ensuring that small construction businesses
are not excluded from the competitive bidding process for
federal infrastructure projects.
While I do appreciate the conversation taking place and a
public commitment to infrastructure improvements, it is my
understanding that only a small percentage of the funds in the
American Jobs Plan are allocated toward the construction of
physical infrastructure.
The construction industry can help lead America's economic
resurgence, and Congress should not allow this to become a
missed opportunity.
So in conclusion, construction is an industry that gave my
family its start. It was our shining light of opportunity, and
continues to provide for my family and my employees.
It has been an industry that has allowed us also to give
back, to improve the life of others, and to become a supporting
role in our local community. The industry has responded to the
skilled work shortage by increasing wage rates and improving
benefit packages.
In Florida, we are fortunate to participate in partnerships
between the Associated Builders and Contractors and groups like
the Boys and Girls Clubs where we can speak to students about
the benefits of a career in construction.
Through an all-of-the-above approach to pre-apprenticeship
and apprenticeship programs, we continue to work to expand the
numbers of people educated and upskilled in the trades.
The American Dream and construction industry, they go
together. It is through construction that we can provide for
our family, create jobs for workers, and give back to our
communities.
If enacted, I cannot imagine what this plan would mean for
all the families that depend on JA&M, let alone all the
millions of families around the country that depend on small
business for their survival.
I plead with you to help us preserve the construction
industry for the next generation. Without you, there may not be
a future for countless potential craft professionals.
I thank you for your time and consideration of this
testimony as a representation of a small, merit shop
contractor, and I look forward to answering any questions you
may have.
Chairman MFUME. Thank you very much, Mrs. Mecias-Murphy. I
appreciate your comments. And the fact that we have divergent
views on this bill that all of us are looking forward hopefully
to the same bright future, a future with good results, is what
drives this committee.
This is really sausage-making in the process, so it is not
pretty, but we will find a way to make the sausage hopefully,
eventually, and to deliver something very important on
infrastructure.
I want to thank all of you who have shared your time with
us. And I want to begin the questioning by recognizing myself
for 5 minutes.
And I would like to start with Ms. Ohrenberg. I read in
your testimony that a single million dollar contract is
different from 40 $25,000 contracts. Now, they both equate to
the same dollar amount.
My assumption is, and I hope you can expand on this, that
there are inherent benefits in wielding million dollar
contracts for small businesses that sometimes people in the
larger society may not understand and what that does to enhance
the growth of a small business, as opposed to 40 $25,000
contracts that you referenced.
Ms. OHRENBERG. Correct. So one single project is going to
require, from an internal office staff, a project manager. So
if you break those all up into 40 different contracts, you have
to have 40 different project managers.
It takes as much resources, from an office perspective, to
manage one $25,000 project as it does a million dollar project,
from an accounting, from project management, superintendents.
So if we have to divide our staff up against 40 jobs instead of
just one job, then we have to have 40 times more staff, and
that is very difficult for a small business to be able to staff
that many types of projects.
Chairman MFUME. And does it enhance bonding requirements?
Does it create, in addition to that, a better perception with
primes or with the government?
I am just trying to get to the heart of understanding all
of it. I do recognize the need to hire a bunch of different
people for project management, but are there some inherent
benefits there also?
Ms. OHRENBERG. A $25,000 project is not likely going to
require a bond, but a larger one would. So you would be
building your bonding capacity by having larger projects.
Chairman MFUME. Thank you.
And, Mr. Thomas, if I can come to you, I want to go
specifically to Amtrak and to kind of get your experience that
you have had representing contracting opportunities with
Amtrak. They are set to get quite a bit of support under this
program. Can you talk about that for just a moment?
Mr. THOMAS. [Inaudible.]
Chairman MFUME. I think you are muted.
Mr. THOMAS. Thank you. Thank you. So I said all that for
nothing. No. Oh, well.
What I mean is, you know, I was executive director of this
organization in the eighties, in 1985. And there was a big, big
project with Amtrak, $2.2 billion to our project, and we had
DBEs on the contract, a lot of our members. And a study was
done to test the effectiveness, and, you know, it was a great
report. It was documented that we performed within budget and
on time. The goal was 15 percent. The actual action was 17.8
percent. We got very good reviews, and that is what you can do
when you have the leadership.
The leadership at the time of Amtrak and DOT, they were
committed to the project, and it did well. The excuses like,
``we can't find them,'' was just not made available. And so if
we can have that same kind of commitment today, I think we can
have the same results.
Chairman MFUME. So was the ``we can't find them'' statement
meaning, we can't find minority contractors qualified?
Mr. THOMAS. Exactly. Well, it is the same excuse that we
have heard since I have been involved in the business, and it
is not something that can't be resolved. You know, they used to
do the same thing at NASA. You know, at NASA, it is the most
technological agency that there is probably in the world. And
we also got those excuses until we came up with a solution that
worked for a while.
We would measure--we would get the needs of the prime
contractors, what they said they needed, and we would send them
to our list of contractors, of small, disadvantaged business
contractors. And they would send their qualifications to these
prime contractors in the form that they ask it to be presented,
and that resolved that problem right away.
At one point for one project, they told us to stop sending
them, you know, so----
Chairman MFUME. Okay.
Mr. THOMAS.--so they are there. You can--you know, if you
do it right, you know, you will get the right person.
Chairman MFUME. Okay. Maybe we can come back to that. My
time has expired.
Mr. Bone and Mrs. Murphy, perhaps in the second round, I
will have an opportunity to pose a question to both of you. But
right now, I am going to yield to the Ranking Member, Ms.
Salazar of Florida, who is recognized now for 5 minutes.
Ms. SALAZAR. Thank you very much, Mr. Chairman, and I am
very happy that you are willing to invite the other side of the
aisle, the minority party, to create the sausage. So we really
want to make it big, fat, and good for everybody to eat.
Chairman MFUME. Okay.
Ms. SALAZAR. So I wanted to, first of all, recognize Mrs.
Mecias and thank you once again for being here with us. I have
a couple of questions, and I also, within my 5 minutes, I would
like to ask the other witnesses or the other guests.
You know, Mrs. Mecias, that the Biden administration is
proposing to favor unionized workers over nonunionized workers.
In other words, the people that are not part of a union could
be discriminated by people like you in the construction
industry.
So I would like you to explain to us, give me an example,
what would this look like for a small business entrepreneur,
minority-oriented company like yours. What would this look like
if this part of the provision were to be accepted?
Mrs. MECIAS-MURPHY. Thank you, Representative Salazar. It
pretty--what it does to my company, in particular, and a lot of
small businesses, it basically completely takes us out from
being able to bid, from the opportunities to be able to bid on
any one of these projects. Most than 80 percent of the
workforce is nonunion. We are a merit shop company, and
therefore, we wouldn't even qualify at all.
Ms. SALAZAR. That bad?
Mrs. MECIAS-MURPHY. Yes.
Ms. SALAZAR. All right. Now, what about the other side? You
know that your company is a very good example for what you
explained to us the other day, that under the Tax Cuts and Jobs
Act, that truly helped people like you and your employees, and
one of them, you were explaining to us, that was able to
purchase their first home because of the extra cash in their
pocket, thanks to that law.
Now, if we see the opposite happening and you see, as you
mentioned in your statements, that there is the possibility of
taxes increasing, give me, once again, a scenario, what would
that look like? What would that be--what type of effect will
that have in a small business, minority owner, entrepreneur
like you are?
Mrs. MECIAS-MURPHY. So, first of all, I would just like to
explain, the excitement that comes across my desk when I get an
employee verification form, which has not just been one, it has
been close to four employees that have purchased their first
home, and that to us is just super exciting.
Ms. SALAZAR. That is the American Dream.
Mrs. MECIAS-MURPHY. Yes, yes. What would--I mean, we have
been able to give health insurance benefits and 401 benefits
for the first time since our company opened. We weren't able to
do that before. And actually give higher bonuses.
Ms. SALAZAR. Okay.
Mrs. MECIAS-MURPHY. If this tax increase were to occur, we
most likely would have to let go some of our employees, and I
am not sure if we would be able to offer the incentives that
they so well deserve if----
Ms. SALAZAR. Thank you. I am going to cut you off because I
want to--we got your answer. But I want to go to Ms. Sheila and
Mr. Ralph Thomas.
Just briefly, we sponsored, along with other Members of the
Committee, a bill, H.R. 3065, the Expanding Contracting
Opportunities for Small Business Act. And this bipartisan
bill--and I am very proud to be part of it--would praise the
maximum threshold for sole source from $5 million to $8 million
for general contracts and from $7 million to $10 million for
manufacturing contracts. What do you think about this, this
initiative?
Mr. THOMAS. Are you addressing me first?
Ms. SALAZAR. Yes, sir, absolutely. We have 45 seconds. You
can have it all.
Mr. THOMAS. Okay. Well--so, well, that--well, a lot of the
smaller businesses would love that, you know, in terms of
because it would create more opportunities. If you make the
sole source higher, then that means there will be more
competition. So the smaller companies would like that as well
as the--you know, we have a problem with manufacturing
businesses, but, you know, in terms of--there is a shortage of
them. But for those that exist, I am sure they would prefer the
ability to do more work. And the higher the sole source limit
is, then they can compete for more projects.
Ms. SALAZAR. Thank you.
I yield back. My time is up. I will talk to you later on
today. I have a couple of other questions, but my time is up.
Yield back to you, Mr. Chairman.
Chairman MFUME. [Inaudible.]
Ms. NEWMAN. Mr. Chairman, I think you are on mute.
Chairman MFUME. Okay. Thank you.
I am going to make my second request to staff, do not mute
me. Allow me to mute and unmute myself. It is hard sometimes
locating the button I need. I don't know if I can be any
clearer than that.
Thank you very much for yielding back, Ms. Salazar.
The Chair would like to recognize the distinguished
gentlewoman from Illinois, Ms. Newman, to proceed for the next
5 minutes. Go right ahead, please.
Ms. NEWMAN. Well, thank you, Chairman Mfume, and thank you,
Ranking Member Salazar. Good to see everybody today. I hope
everybody is enjoying the summer.
I thought I would start by congratulating everyone, all of
our guests. You have all been through a heck of a year and
really came out on top, so congratulations.
Mrs. Mecias-Murphy, I have run a couple small businesses,
so God bless, and thank you for employing folks. And we all
have had challenges but excited to move forward.
I did want to correct the record on a couple comments that
were made. So I sit on the T&I Committee, and I am from the
labor movement. I am a former small business owner, ran a
couple of companies, as well as was a management consultant to
both Fortune 500 companies down to sole proprietor, so the
whole spectrum of folks, right, and got in the muck of it with
process and ops and facilities and on and on and on.
So, with all that, I just wanted to come back to you. At
4:15 this morning, we finished the Surface Transportation Act,
which is separate from the American Jobs Act.
So I wanted to tell you--Annie, Sheila, Ralph, and Josh--
that we have a robust, over $500 billion plus act that is
separate from the American Jobs Act, which will include fixing
bridges, fixing roads, and making sure that housing goes up
well, and that things are funded across our nation that are
civic infrastructure projects. So look forward to that and
enjoying all of that. I am excited the jobs that that will
produce.
Now, the American Families Act, let's just do a quick fact-
check on that, because we just got a fact sheet on that, so why
don't we just share a little bit about that.
So in the American Jobs Act, it includes housing, as well
as transit agencies, rail, fixing roads and bridges, civic
infrastructure, retrograde housing, and on and on and on. So it
is an infrastructure bill, largely, and a jobs bill. I just
wanted to clear that up for everybody.
So moving on, also with regard to the PRO Act, so given
that I have been actively involved in 30 years and have worked
with over 50 municipalities in this nation, around labor
movements, I just want to assure you, Mrs. Mecias-Murphy, that
in no town of those 50 did we have any negativity attached to
PLAs and that kind of thing. In fact, the exact opposite
happened.
In right-to-work--in those 33 right-to-work--or States,
rather, actually, the health incomes go down, incomes go down,
the overall income and tax income in a State goes down in all
33. So I just wanted to clear that up for everybody.
Now, Ralph, I have a couple questions for you. I am very
excited about what you said. I love workforce training. So
wanted to find out, can you share--by the way, congratulations
on 52 years, way to go. Can you share a little bit about what
would be helpful to you in terms of workforce training and
development immediately to help your organization?
I loved your NASA analogy, and I am very well aware of how
that program works, so tell us more about what you would like
to see happen.
Mr. THOMAS. [Inaudible.]
Ms. NEWMAN. Ooh, you are on mute, Mr. Thomas.
Mr. THOMAS. Okay. How is that?
Ms. NEWMAN. Great.
Mr. THOMAS. Yes, yes. Well, the first thing has already
happened. I mean, what we see--I don't know if this is in the
program that you just agreed to----
Ms. NEWMAN. Yeah.
Mr. THOMAS.--but we were happy to see projected more funds
for workforce development. Because we have to draw upon--and we
have to have it be diverse, because those are the employees
that we are dependent upon to draw from. And where there is no
move toward workforce development--and I don't think there has
been in DOT since 2017 when it wasn't re-funded----
Ms. NEWMAN. Yep.
Mr. THOMAS.--that leaves us in a bind, because where are we
going to get the people from, you know. And so we would like to
see that. We would like to always be involved in that, in terms
of apprenticeships, in terms of--we like to be involved in the
ground floor, so that we can determine, you know, what the
fields are that are going to be developed so that we can, you
know, get our folks into those programs, into those programs
and graduated from those programs. I mean, because that
provides the best--workforce development provides the best
training that I am aware of, so----
Ms. NEWMAN. We are at the end of our time. And Mr. Mfume,
if I may at this time at the end, I would love a couple more
questions if you have time. Thank you.
And I yield back.
Chairman MFUME. Thank you. Thank you. Absolutely.
Gentlewoman yields back.
The Chair would like to recognize the distinguished
gentleman from Minnesota, Mr. Hagedorn.
Mr. HAGEDORN. Mr. Chairman, thank you very much. And I know
it is not your decision, but I think we have a solution to this
mute/unmute issue and it is, let's start meeting in person,
again, and doing our job in Washington in our Committee room.
You know, we are watching NHL and NBA games played indoors with
10-, 20,000 people. I think we can squeeze 30 or 40 into a
Committee room and do our job in person. That is just my
opinion.
Of course, I support infrastructure--roads, bridges, locks,
dams, trucks, rail, and pipelines. And I think, actually, the
majority might have to explain to us how they are for
infrastructure, but they want to shut down things like Keystone
Pipeline. But that is very important to our district in
southern Minnesota, infrastructure. I am all for it. We have
farmers that need to move their grain. We have the Mayo clinic
and other institutions of medicine that receive samples and
tissues from all around the world every day. Small businesses
and manufacturers, of course, depend upon infrastructure and
transportation to do their businesses and, hopefully, we can
get together and have a bipartisan bill in order to focus on
those types of things.
So Dr. Mecias-Murphy, I am going to throw out a couple of
ideas about how we can have some good government policies
moving forward, and maybe you can address them. One is the in
the area of the labor shortage. Some Members of Congress in my
State, including Representatives Emmer, Stauber, Fischbach, and
myself have written Governor Walz and said, you need to forego
that extra $300 a week federal unemployment compensation and
get back to regular order when someone doesn't seek work or
they refuse work outright, they lose their benefits. They lose
that compensation. You need to push them into the workforce.
That is the first idea.
The second is, a bill that I have introduced, the American
Workforce Empowerment Act, H.R. 2691, which would enable
families to use 529 savings accounts for people not just to go
to 4-year college, but also go to vocational school and get
certificates, go do those programs, and get into the trades and
purchase equipment and tools and things like that which would
be necessary. We think that would be good to help our skilled
workforce.
What are your thoughts about those two ideas?
Mrs. MECIAS-MURPHY. So you have just hit an area aside from
construction that is just something that I am super passionate
about. Our involvement and our partnership with the Boys and
Girls Clubs and ABC allows us to work on apprenticeship level
because, as you know, kids in middle school and high school,
they are not always being said, Hey, the trades are a viable
option. It is something that can really work for you and can
give you a good living. It is a good first option.
So what we have been able to do is able to go into the Boys
and Girls Club, have different trades, different member
companies from ABC go in there and be able to show and expose
the students. I know not everybody has had the privilege to be
able to see on a daily basis growing up what the construction
industry is like, but going into these clubs and working with
the middle and high school students and being able to expose
them, taking them on field trips, providing internships for
them has allotted exposure to them.
And over the last couple of years, there has actually been
close to 40 students that have graduated, and have actually
been hired with some of our member companies. An example,
actually, is a crane company. An 18-year-old just to start
training was paid $20 an hour. And that is just to start
training. And as they went up, a crane operator can make high
as $30, $40 an hour, depending on their experience.
So anything that is going to help that aspect, especially
with the pre-apprenticeship, it is a little bit longer piece.
But we have also extended it to the family, to the parents of
these kids that may not have jobs that could actually start on
the labor level, and labor level starts at the $15 an hour.
Mr. HAGEDORN. That is great. I have to reclaim my time----
Mrs. MECIAS-MURPHY. So sorry about that.
Mr. HAGEDORN.--and I appreciate that very much what you are
doing. I would also like to point out that we talked a little
bit about--the witnesses did--about material cost and copper
was mentioned. And I think, you know, one of the things that
goes on, we are driving up the cost of things because they are
in short supply, because the environmentalists, extremists
won't let us go and get the copper and things like that in
America.
In Congressman Stauber's district, he is on this call right
now, up in northern Minnesota, they have a large supply of the
nickel and copper for the United States right up there, but he
is having a hard time, you know, getting through and getting
those mines open.
So I just want to commend Congressman Stauber for fighting
for his constituents and getting mining in America going. I
certainly support you, Congressman Stauber, every step of the
way. O thank you for what you are doing.
I yield back.
Chairman MFUME. Thank you very much. The gentleman yields
back.
The Chair recognizes, ironically, Mr. Stauber, for the next
5 minutes. Feel free to proceed. Thank you.
Mr. STAUBER. Well, thank you, Mr. Chair. And there are
times I have trouble with my mute button too, so if we can be
in the same class. I appreciate Mr. Chair and our Ranking
Member for holding this important meeting. I also want to thank
the witnesses for being part of the discussion. Your success
and your conversations are very vital to all of us as we craft
good legislation.
Line 3 is a 340-mile pipeline replacement taking place in
northern Minnesota. Construction of the new Line 3 will not
only help in our efforts for energy independence, but will
supply countless jobs to small contractors in an area desperate
for economic development and modernize our energy
infrastructure for the future.
This project should be celebrated, yet just this week,
thousands of dangerous protesters, led by Democrat Party
stalwarts like Jane Fonda, are being bussed in from Hollywood
and other coastal elite cities and are causing harm to small
contractors seeking to simply do their jobs. In fact, nearly 50
union workers had to be evacuated from their work site,
including employees of the entire Native American-owned and
operated pipeline contractor Gordon Construction.
Dr. Mecias-Murphy, could you describe the danger and damage
that protesters would pose to your construction business if
they showed up to your sites and chained themselves to
equipment, punctured tires, damaged windshields, and other
equipment? What would that do to your small business?
Mrs. MECIAS-MURPHY. Thank you, Representative Stauber, for
that question.
First of all, when I read about that, I--it just truly
really surged in me just so much concern, and my heart really
went out to that business. If that would have happened to our
business, first of all, with safety being such an important and
critical factor that for our employees and for everyone around
us, the first thing, obviously, that would have come to mind is
the concern for safety by these protesters having gone in,
having trespassed, having damaged property, and having tied
themselves to this equipment. But putting that piece aside to a
small business, I think folks might not realize that sometimes
a day of delay or just that--that the woman is saying, Oh, it
is just a day; it is not a big deal. In the construction
industry with so many overlapping pieces and parts of the
puzzle, that can delay you 2 weeks, 4 weeks. And what that
does, especially for a small business, is that in your cash
flow, you are having to pay for all these different things,
putting them up to speed to try to have them work where they
need to be back to the time that you lost.
And, then, not only that, put aside the small business
piece, you have workers that can't go into work. You have then
workers who can't get paid because they aren't working. Their
families aren't getting fed or paying their bills. You have
done a domino effect where maybe folks have been trying to
prove a point. What they have actually done is hurt the people
that they are saying that they are trying to help. They are
affecting families and communities.
Mr. STAUBER. So what I hear you saying is, it is
devastating for the small company; it is devastating for the
workers; it is devastating for the families, and it is
devastating for the communities?
Mrs. MECIAS-MURPHY. Absolutely. Yes, sir.
Mr. STAUBER. Thank you. Thank you. To me it is actually
laughable to me that we are here today to discuss Joe Biden's
infrastructure plan, and how it will, quote, help small
contractors. President Biden and his administration canceled
thousands of jobs already on the Keystone XL Pipeline earlier
this year, in fact, within 5 hours of his inauguration.
It is the actions of this administration that empowers
these activists currently doing damage in my district and
others throughout the country.
If President Biden wants to demonstrate that he is serious
about America's infrastructure future, he will call on these
activists to stop their protesting at once so that our small
contractors can get back to work.
And I yield back.
Chairman MFUME. The gentleman yields back.
The Chair is deciding to do a second round and unless we
are joined by other members, it should probably go faster than
the first round, but I would like to begin and recognize myself
for 5 minutes and go to Mr. Bone.
Mr. Bone, do recruitment strategies change based on the
segment of the population that you are trying to attract? And I
appreciate all the work that you are doing with ELECTRI. Can
you tell us what strategies would you recommend in this bill as
it goes forward to recruit men--women, I should say, and
minorities at a better and higher rate than we have previously
done?
Mr. BONE. Absolutely. Thank you, Chairman Mfume. Yes, to be
successful, you have to use different methods to recruit. For
me, I have had the privilege in my career to work more closely
with minorities and women in construction as a construction
technologist. A lot of the thought leaders in the industry that
have adopted new technologies have had that opportunity in our
industry. So--and today, one of the things I have found for
women in the industry, is they bring a lot of great skill sets,
and there is a lot of new technologies that enable them and
empower them to work in this industry. I think there is a lot
of misconceptions around the fact that this industry is a male-
driven industry. And we need to start at early ages educating
young girls in middle school, high school, and even in the
community and technical colleges, that this industry is
changing. We are adopting technology.
What once was a very strenuous job today with exoskeletons
and equipment, and moving work off-site looks more like a
manufacturing floor today on any--for a lot of these companies.
So we are doing a lot more off-site construction to help us
deliver projects on time and within budget.
Chairman MFUME. Thank you, Mr. Bone. And no matter what
kind of a bill we come up with, the electrical construction
industry is going to be significantly impacted.
Mr. BONE. Absolutely.
Chairman MFUME. Can you take a minute to talk about the
importance of unions in electrical construction and throughout
that industry?
Mr. BONE. Yes. Now, ELECTRI is not affiliated with any
unions, but our friends at NECA have worked closely with IBEW
labor partners for over a 100 years without a single strike. So
NECA and our contractors take great pride in the skill level
and commitment of the workforce that we bring to the table.
I just, last week, was in Jacksonville, Florida, visiting a
JTC that had opened up a new systems integrator lab that takes
these new technologies, provides hands-on training installing
new technologies like that are linked to software that connect
sensors and intelligent equipment that can help us invest in
infrastructure that is more sustainable, and it creates new
types of skills and jobs that are--that we can use for many
years going forward.
So it makes our--for small businesses that get involved
with this it provides an opportunity for them to create jobs
that have long-lasting impact to their small businesses.
Chairman MFUME. Thank you, sir.
And Mr. Thomas, I want to slightly change the conversation
and go from the electrical industry back over to
transportation. We don't know what is going to eventually come
out of this Committee, out of this Congress, but we hope that
we are going to have a bill, and whatever that bill is, I would
like for you, based on your experience and counseling in
serving small firms across the country, what is, in your
opinion, the biggest obstacle going forward that has to be
addressed in that bill to increase participation by minorities
in transportation projects.
Mr. THOMAS. Yes. We have to take a stronger approach to
compliance and enforcement. As I said, we have a 10 percent
goal floor for all the States, and 23 percent are not meeting
it. Many of them ask for waivers and, you know, whatnot, and,
you know, by saying they are not there. What we need to do is
find something that, you know--I think a lot of organizations
like those here should be funded, to some extent, for the
purpose of identifying eligible small contractors, whether they
be minority, or women, or otherwise disadvantaged, to identify
them for the prime contractors and the agencies.
Chairman MFUME. Thank you.
Mr. THOMAS. Thank you.
Chairman MFUME. Thank you, Mr. Thomas. I am almost at the
end of my time.
I do want to get over to Ms. Mecias-Murphy one more time
and ask, what role do you think, Ms. Murphy, that the SBA
contracting programs and DBE Program ought to play now as we
obviously move toward infrastructure, but also, as we see
businesses trying to recover from this year-long pandemic? Any
thoughts on those lines?
Mrs. MECIAS-MURPHY. From hearing the conversations, I would
say that it is just making sure that whatever laws are in place
and goals, that they are followed.
Chairman MFUME. Okay. I appreciate it. At some point in
time, maybe not here, but later, I would like to get all of you
to comment on the Prompt Payment Act and what prompt payment
has done, and is not doing with respect to small businesses,
but my time is expired.
So let me, again, recognize the Ranking Member, Ms.
Salazar, of Florida.
Ms. SALAZAR. Yes. Thank you, Mr. Chairman, and I think my
next question is for Mr. Bone. I was following your testimony,
and I am also very concerned, as you are, about the delays in
payments to subcontractors. I mean, if you don't get the money,
you may go under in a month or two. And I would like for you to
expand a little bit more on your suggestion regarding sending
payment notices and getting paid on time, if you can expand on
that a little bit further.
Mr. BONE. Absolutely. Capital is king in the construction
industry. It is how businesses survive, and small contractors
have limited amounts of capital. And what we have to ensure
that when you are a sub to a sub to a sub, and that happens
very frequently in these flow down policies on the larger
projects that it becomes even tougher to get paid.
So the ability to fund your business and work off that
capital to pay your people is extremely tough for the smaller
businesses that flow down in that work. So the larger contracts
that do sub out to these small arsenal of contractors, it makes
it much tougher for them.
Ms. SALAZAR. So what do you suggest? What can we do in
order to help that sub of the sub of the sub, the one that has
the small business, entrepreneur that has three employees and
needs that money right away?
Mr. BONE. We need to have opportunities to work with
contracts directly with those that are paying. So that it
doesn't have to go through the process of a general contractor
through the sub and working back up through that flow.
Representative Salazar, that is the challenge that we face. So
if it is--if we are waiting on pay if paid or paid when paid,
that language is what impacts our small contractors more than
anything else. We need to have the ability, once we can prove
we have done the work in a fair way, that the contracts can
ensure that our small contractors are being paid promptly.
Ms. SALAZAR. And I would like to ask the same question to
Ms. Mecias. Just give me a scenario, an anecdote, where you
have felt exactly what Mr. Bone is describing?
Mrs. MECIAS-MURPHY. Absolutely. You have the--especially on
federal contracts, you have a paid when paid clause and
sometimes it is 60, 90, 120 days. And for a small business,
that is completely detrimental. You have--I think in Florida,
the sunshine--there is Prompt Payment Act and the whole piece
is that you get paid promptly, but it is more of a theory than
really a practice.
Ms. SALAZAR. A reality. Uh-huh. So, in which way Congress
could help that very small business owner get paid on time in a
fair fashion, the way that it needs to be done? Because from
what I am understanding here is that someone is taking
advantage of the small guy. So in which way--and specifically
minority business owners, that I am sure don't have the
protections that the big general contractors have, so what can
we do with the last--we have a minute and a half, so I will
yield to you.
Mrs. MECIAS-MURPHY. So I can only speak from personal
experience and my personal experience, usually the contractors
that I have worked with, we will get paid within 5 days of
payment. So, it is not on that end. Unfortunately, it is on the
whole paperwork bureaucratic component that gets stuck up on
that level.
Again, I am not at the time one with all the answers, but
probably a quicker way of going through those leaps and hurdles
and trying to be a little bit more considering the small
business, and the businesses and realizing that the quicker
they are able to do that processing, and be conscientious of
that, and having a certain timeline to do that, realize how big
it really affects small businesses. And that really draws up
the cost, because any federal project that you know you are
going to bid, you realize that you have that in the back of
your mind, that I am not going to get paid for 60 or 90 days.
So it does drive up the cost to the taxpayer as well.
Ms. SALAZAR. I see. Very good point. Thank you.
I yield back, Mr. Chairman.
Chairman MFUME. Thank you very much. Gentlewoman's time has
expired.
I want to recognize Ms. Newman, but Ms. Newman, if you
would hold on for just a second. This whole issue of prompt
payment, which I think Mr. Bone referenced that we should just
follow existing laws on this, underscores an important point.
In 1996, when the regs were written on this, enter the Prompt
Payment Act. Any agency that fails to pay within the required
time would be liable for the delinquent payment. So obviously
if we know that the biggest hurdle and detriment to Black
businesses, Latino businesses, Asian businesses, women
businesses is the lack of access to capital and credit, prompt
payment does play an extremely crucial role, and it is maybe
something that the full Committee on Small Business decides to
look at, and if not, I could try to find some way for us to be
able to do that, because it is a law that just has to be
enforced.
I am going to stop my filibuster, since I am on the House
side anyway, and yield to the distinguished gentlewoman from
Illinois, Ms. Newman, and thank her for hanging around to the
end.
Ms. NEWMAN. Well, thank you for putting together this great
conversation today, and, Chair Mfume, I will gladly volunteer
to work with you on that topic. I am a big fan of paying people
on time, and having it be predictable. I am seeing a thumbs up
from my friend, Ms. Salazar. So maybe all three of us could get
together and have a coffee over that. So look forward to that.
Couple of things--first of all, Mr. Bone, thank you so much
for highlighting that. I think that is critical. But this
goes--this, actually, proves my point about PLA. So
interestingly--this is a fun little data point--is that more
than 80 percent of the time when there is a PLA in place, that
it requires whoever is engaged in the party system, so whether
there is a subcontractor, a contractor, a franchiser, whatever
it is, it requires a very specific payment chronology and
cadence on top of that federal law Mr. Mfume has talked about.
So PLAs are really good at enforcing those types of things,
particularly when there is a union involved. And, by the way, I
might remind everybody that when you have a PLA, it doesn't
prevent you from having nonunion help, it just requires and
protects those that are engaged in unions, and so that they
have better benefits and pay, et cetera, and that is safer.
I also might add on PLA-based construction sites that more
than 60 percent of those engagements, whether it is a GC
contractor or PLA/GC contractor, it is usually somewhere in the
range of 66 (ph) to 65 percent safer, there are fewer
accidents, people are paid on time, and they tend to be not be
overbudget, and they tend to be on-time projects. So I
understand there is some confusion around PLAs, but it is not
the boogie man as was suggested.
So I guess I am going to turn it over to Ms. Mecias-Murphy
and tell me the top three things that frustrate you about PLAs.
Mrs. MECIAS-MURPHY. Sure, Representative Newman. Thank you
for the opportunity to speak on that. I would say the biggest
part--it is not really that we are, you know, that I am
antiunion by any means; it is just basically that a lot of the
mandates they are not as good. They restrict someone like a
merit shop company to be able to bid on certain projects if
these things aren't in place. That is number one. We just want
fair all across the board.
Ms. NEWMAN. Uh-huh.
Mrs. MECIAS-MURPHY. Not--to this day, we are still in a
country that is free, and, you know, we could pick whether we
want to be part of a union or not.
Ms. NEWMAN. Sure.
Mrs. MECIAS-MURPHY. So with that being said, a high concern
is, especially as the Representative from Minnesota had
mentioned, and that concern, there is new possible concerns
regarding these labor union--again, I don't want to get into
all the weeds piece. I want to kind of stay very----
Ms. NEWMAN. Yeah. I--just to be clear, I just need--so I
haven't--the first reason why PLA is bad. So if you can go back
to your first reason.
Mrs. MECIAS-MURPHY. So the noncompetitive. Not being able
to compete--being able to be on a fair playing field as far as
it relates to this proposed bill. The second one, and with that
is the missed opportunities. The second one is if there is a--
if there is a project and there is a protest under this new
act, even though it may not deal with me as a subcontractor,
those labor unions can actually go on any one of my jobs and
actually do that as well. And that is a concern because that
can really hurt my company personally, and those that work for
us as well.
Ms. NEWMAN. So you are saying that you don't want anyone to
ever protest on any business ever?
Mrs. MECIAS-MURPHY. That is not what I said. That is not
what I said.
Ms. NEWMAN. Okay. I am not sure how that syncs up with your
right to protest and your freedom of speech.
Mrs. MECIAS-MURPHY. No. I just said that that could really
hurt our company. That is all.
Ms. NEWMAN. But it would anybody. So any business where
someone feels the need to protest, they have that right to do
that, as long as they are not physically harming people. So I
guess that is just a freedom of speech right to protest
situation, not necessarily, no one is targeting you, in other
words.
Mrs. MECIAS-MURPHY. So the third point is the increased
cost that typically having unions on the job tend to have. I
have seen that in different projects in Florida. I don't know.
Maybe in your State, or your area, it is a little bit different
and maybe in your experiences. But in Florida, the jobs have
definitely gone up a lot higher by using unions. You do have a
more limited, especially in Florida--and, again, I can only
talk about Florida. It is a right-to-work State. More than 80
percent of the workers are nonunion, so there is more
competitive, and it does allow to have better pricing;
otherwise, when you have the PLAs and those agreements, there
are certain amounts that are required.
So that is all I am saying as----
Ms. NEWMAN. Okay. I just want to remind, for the record,
that right-to-work States, all 33 States, health outcomes are
much far worse, lower incomes overall, and lower wages. So I
just want to end with that, but thank you very much.
And I yield back.
Mrs. MECIAS-MURPHY. Sure. Our offices can get back to you
as well, Representative Newman, with any additional questions
that you or the Committee may have.
Chairman MFUME. Thank you very much. The gentlewoman from
Illinois yields back.
The Chair recognizes the distinguished gentleman from
Pennsylvania, Mr. Meuser.
Mr. MEUSER. Thank you, Mr. Chairman. Happy to be with the
Committee here today, and thank you to the witnesses. I am, in
fact, joining a little bit late, but I did catch that exchange,
which I found fascinating. Ms. Murphy, I am going to ask you,
and you probably didn't come here to get inquisitioned about
whether or not you are antiunion, but I will say that is
certainly what it sounded like. I, myself, am a Republican in a
non-right-to-work State, Pennsylvania, and I am always
favorable to the trades.
I think our unions have some great apprenticeship programs,
and prevailing wage is something that we are all for,
prevailing wage plus when it is plus-plus, that tends to get in
the way of projects. So anything that is antigrowth and
antidevelopment, I think is certainly a matter of discussion.
And I think the trades--and it certainly sounded like you were
trying to get this out, was--deserve a seat at the table just
like those who choose not to be part of a trade or a union at
that particular time. And PLAs, by the way, are one of the
[inaudible]. It is not an inclusionary proposition, which is
the reason that many companies have an issue with it.
So I would just ask in the PRO Act, to have it remove
States' rights such as the right to work is just unfair. States
should be the ones who determine such things and the idea that
the PRO Act calls for a secret ballot, or looks to remove the
secret ballot, is quite interesting as well, because we are not
talking about fairness here; we are talking about some other
tactics that are simply inappropriate.
So I appreciate where you are coming from, but at the same
note, we have got to figure out how businesses can move
forward, wages can stay high, and it is a very inclusionary
atmosphere. But I will just ask you related to the PRO Act, and
this might be repetitive, how will that affect your business if
the PRO Act were to pass?
Mrs. MECIAS-MURPHY. Thank you, Representative. So I would
like to maybe focus on the taxes piece about the increase in
taxes, maybe, again, in this aspect as well, especially with
all the benefits and the growth that we have seen in the last
couple of years.
I guess the biggest piece about the Act is the taxes piece
also, that that concerns me. Because with--it just brings a lot
of uncertainty to my company of what that would look like. Will
I be able to continue with the employees that we do have? Will
we be able to still provide the benefits that we do have?
And those are high--those are high concerns, as well as--I
agree with you on the secret ballots and all those other
things, which kind of surprised me. I didn't really understand
why that would be in this kind of bill. All we are asking is
for, like what you said, a seat at the table and fairness all
across the board for everyone.
Mr. MEUSER. Let me ask you this, Ms. Murphy: The idea of
the tax reductions that took place a couple of years ago had
about a 20 percent reduction for small business. I have many
friends who have small businesses, and most of them told me
they were able to bring in more inventory, they were able to
hire one or two more people, they were able to expand their
business. They did not say, Hey, this is great. I am going to
be making an extra $20,000 a year.
What was your experience? What did you do with the tax
relief that took place?
Mrs. MECIAS-MURPHY. I immediately went back and it went
back into the employees. We were able to hire double the amount
of employees that we had before then. We were able to also give
raises, give very high bonuses, and be able to provide
healthcare and 401 plans for the first time.
Mr. MEUSER. So you are a passthrough business, of course.
If that was changed, and that is a lot of talk, of course,
about raising the income tax, as well as eliminating small
business relief, would that reverse things for you, or how
would you handle that, particularly after recovering out of
COVID?
Mrs. MECIAS-MURPHY. Yes, it would definitely affect our
business financially in a huge way, especially since with
COVID, even though the construction companies were still
working, there was a 3- to 4-month delay. Let's say we had
projects that we were working on during COVID and we continued
with those projects. But then, there was a lot of bidding and a
lot of projects got held, because the building departments were
closed, plans weren't being reviewed, or what have you.
So it is kind of now--I would say there is probably a 4- to
6 months that there weren't any new projects being awarded, and
that had an effect as well, especially with COVID, and that
would just add on top of that situation.
Mr. MEUSER. Thank you, Mr. Chairman.
I yield back.
Chairman MFUME. Absolutely. The gentleman from
Pennsylvania's time has expired.
In fact, all time has expired. And I want to personally,
again, thank all of our witnesses for being here today to have
comments on what we consider to be a very, very important
subject, particularly our new witnesses in the persons of Mr.
Bone, Ms. Ohrenberg, and Ms. Murphy, and our old friend, Mr.
Thomas, who has joined us, again, before this Committee.
We all agree, I think, that we have got to find ways to put
the funding of whatever we come up with as a Congress so that
it works for small businesses. Those businesses over the
centuries helped to build this country. It is critical now, I
think we will all agree, that they have to help be a part of
the rebuild.
It is my hope that this hearing shed light on existing
programs to ensure the participation of small firms in that
procurement process.
And as we consider infrastructure proposals, we have got to
work also to expand contracting opportunities, and provide
small businesses with the resources they need to complete them.
So at this point, I would like to ask unanimous consent
that Members have 5 legislative days to submit statements and
supporting materials for their record. Without objection, it is
so ordered.
And I want to thank, in particular, the Ranking Member, Ms.
Salazar, for joining us for what we both consider is,
hopefully, a step forward on this whole issue of contracting
and infrastructure.
If there is no further business before the Committee, the
Committee now does stand adjourned.
Thank you all very, very much.
[Whereupon, at 2:37 p.m., the Subcommittee was adjourned.]
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