[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                THE 8(a) PROGRAM: OVERVIEW AND NEXT STEPS 
                  TO PROMOTE SMALL BUSINESS SUCCESS

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

                                HEARING

                               BEFORE THE

             SUBCOMMITTEE ON CONTRACTING AND INFRASTRUCTURE

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                             MARCH 2, 2022

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                               

            Small Business Committee Document Number 117-047
             Available via the GPO Website: www.govinfo.gov
             
                             __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
46-931                    WASHINGTON : 2022                     
          
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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

Hon. Kweisi Mfume................................................     1
Hon. Maria Salazar...............................................     3

                               WITNESSES

Mr. Darryl K. Hairston, Retired, Small Business Advisor, 
  Woodbridge, VA.................................................     5
Ms. Jackie Robinson-Burnette, Chief Executive Officer, Senior 
  Executive Strategic Solutions, Woodbridge, VA..................     7
Mr. Arshdeep Khurana, President & Chief Executive Officer, Avosys 
  Technology Inc., San Antonio, TX...............................     8
Ms. Qin Li, President, Soliel, LLC, Vienna, VA...................    10

                                APPENDIX

Prepared Statements:
    Mr. Darryl K. Hairston, Retired, Small Business Advisor, 
      Woodbridge, VA.............................................    23
    Ms. Jackie Robinson-Burnette, Chief Executive Officer, Senior 
      Executive Strategic Solutions, Woodbridge, VA..............    35
    Mr. Arshdeep Khurana, President & Chief Executive Officer, 
      Avosys Technology Inc., San Antonio, TX....................    50
    Ms. Qin Li, President, Soliel, LLC, Vienna, VA...............    60
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    Ho-Chunk Incorporated........................................    67

 
  THE 8(A) PROGRAM: OVERVIEW AND NEXT STEPS TO PROMOTE SMALL BUSINESS 
                                SUCCESS

                              ----------                              


                        WEDNESDAY, MARCH 2, 2022

              House of Representatives,    
               Committee on Small Business,
    Subcommittee on Contracting and Infrastructure,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 11:00 a.m., in 
Room 2360 of the Rayburn House Office Building, and via Zoom, 
Hon. Kweisi Mfume [Chairman of the Subcommittee] presiding.
    Present: Representatives Mfume, Carter, Salazar, Stauber, 
Meuser, and Fitzgerald.
    Chairman MFUME. Good morning, everyone. I would like to 
officially call this hearing to order.
    And without objection, the Chair is authorized to declare a 
recess at any time.
    I would like to begin by noting some important 
requirements. Let me begin by saying the standing House and 
Committee rules and practice will continue to apply during this 
hybrid proceeding. All Members are reminded that they are 
expected to adhere to these rules, including decorum.
    House regulations require Members to be visible through a 
video connection throughout the proceeding, so please, if you 
are on a video connection, keep your cameras on. Also, please 
remember to remain muted until you are recognized to minimize 
background noise.
    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 will recognize that Member at the next appropriate time 
slot provided that they have returned to the proceeding.
    I want to again thank all of our witnesses who are here 
today. I appreciate your time and your effort to get here and I 
have a few comments.
    Throughout our history, small businesses, especially those 
owned by socially and economically disadvantaged individuals, 
have faced real challenges when it comes to participating on 
equal footing in the American economy, and specifically in the 
federal procurement space. Disadvantaged businesses often 
navigate obstacles like discriminatory lending practices, and 
fewer mentorship and business opportunities as they seek to 
grow their businesses and, of course, to serve their customers.
    Recognizing the struggles that disadvantaged businesses 
face, Congress created the Small Business and Capital Ownership 
Development Program known as 8(a) that was done in 1978. I take 
particular pride in the landmark program because my 
predecessor, Parren J. Mitchell was the author of that and we 
are reminded of him by his picture which hangs down at the far 
end of this hearing room.
    The 8(a) program is, as we all know, a 9-year program that 
offers small businesses owned by ``socially and economically 
disadvantaged individuals'' training, technical assistance, and 
contracting opportunities. 8(a) participants are eligible, as 
we also know, for 7(j) training, which offers valuable 
counseling and training opportunities in financing, management, 
accounting, bookkeeping, marketing, and identifying new 
business opportunities.
    The federal government has also established a statutory 
goal of awarding 5 percent of all eligible contracting and 
subcontracting dollars to small and disadvantaged business 
concerns, including those that are not currently participants 
in the 8(a) program where there is still more needed support. 
That is why I applaud President Biden's goal of increasing the 
share of contract awards to small and disadvantages from 5 
percent to 15 percent by the year 2025.
    For over 40 years, socially and economically disadvantaged 
businesses have relied on the 8(a) program to help them compete 
and innovate in the federal marketplace. When small businesses 
win federal contracts, they grow, create jobs, and they support 
our communities.
    While the 8(a) program helps thousands of small businesses 
annually, participants have reported and are still reporting 
ongoing challenges. For example, many business owners have 
reported concerns with the duration of the 8(a) program. So, 
when a small firm, as we know, is admitted, it typically takes 
a couple of years to receive its first award, which hinders the 
development of program participants and really raises the 
question of whether or not those enterprises are ready for 
graduation when they are expected to exit the program.
    8(a) businesses have also expressed concern with the 
program's technical assistance and training through the 7(j) 
program. And today, we will ask the question of whether the 
training provided to 8(a) participants is, in fact, adequately 
preparing small contractors for graduation, in addition to how 
to improve the 8(a) program to better support disadvantaged 
businesses.
    And lastly, we will examine how trends within the 
contracting space impact small 8(a) firms particularly. For 
years, the size and scope of contracts have been on the rise. 
That has excluded, as we know, many 8(a) firms that may not 
have the capacity to take on larger contracts. At the same 
time, sole-source contract thresholds have remained unchanged 
over the years and over time, resulting in fewer 8(a) sole-
source contracts. Before this Committee, the Full Committee, we 
have tackled the question of category management in the past 
and it is something to keep in mind as we look at reasons as to 
why there has not been growth in this sole source area.
    Consolidation in procurement has limited the ability of 
8(a) firms to compete for contracts, ensuring a level playing 
field for small contractors is one of the utmost importance to 
our economy.
    So, I hope that today's hearing will allow us to explore 
actions our Committee can take to improve legislatively and to 
modernize the 8(a) program, a program that all of us support 
and many of us are still concerned with as it relates to the 
challenges that many of you as small business owners and many 
others who are viewing this hearing still find yourself 
confronted with.
    With that said, I would like to yield to the distinguished 
Ranking Member, the gentlewoman from Florida for her opening 
statement, Ms. Salazar.
    Ms. SALAZAR. Thank you, Mr. Chairman. Wonderful to be here 
for the first time in person right next to each other. And 
thank you to all the witnesses.
    As you said, contracting with the federal government is the 
American dream. And today's hearing is a perfect example of 
this work this Committee must perform on behalf of America's 
small business contractors. We owe it to them.
    Congress is at its best when we are making laws that 
protect the interests of all small businesses. And let me 
repeat that. We must help all small businesses. Congress made a 
point to give special recognition to socially and economically 
disadvantaged entrepreneurs through the Small Business Act as 
you mentioned, the Minority Small Business and Capital 
Ownership Development Program, also known as the 8(a) program. 
This program creates a space for entrepeneurs to grow, to 
compete, and to be productive contributors to our nation's 
workforce. The law mandates that 5 percent of the federal 
government spending on goods and services must go towards 
small, disadvantaged businesses.
    But, according to the SBA, this goal was succeeded in 
fiscal year 2021 at approximately 10 percent or close to $60 
billion. That is what the SBA is saying. But I have doubts 
about these numbers, and also, we cannot ignore issues that 
continue to plague the 8(a) program. For instance, 
unfortunately, we are seeing that fewer small businesses are 
winning bigger and bigger rewards and that is a very big 
problem. Let me translate this for you. This means less 
diversity, less competition, more costs for our taxpayers, and 
more importantly, less money in the pockets of small business 
owners.
    We have to increase participation within all of SBA's 
contracting programs and enhance diversity of awards so that 
all small businesses can succeed and not just a few, the 
selected ones that know how to work the system. And the SBA's 
role is ensuring the success of its 8(a) participants is key. 
The SBA has the responsibility to make this program work.
    Recently, and unfortunately, I need to report that the 
Inspector General found that the SBA is failing to accurately 
measure the effectiveness of this program. So that means that 
we are allocating money but we do not know if that money that 
is being allocated is doing what it needs to do. It is 
effectively going to enhance and to help those small business 
owners. The program is as effective as its ability to root out 
waste, fraud, and abuse. So, the agency must aggressively 
tackle potential fraud and abuse within all of its programs. 
Every dollar going to the wrong firm is an American taxpayer 
dollar that is wasted and abused.
    So, what do we need to do? We need to ensure that the SBA 
is operating the program at optimal levels. That no level of 
fraud or abuse is acceptable. That the federal government 
awards the widest range of contracts to as many small firms as 
possible. That is the American way and that is why I am here 
and all of us to ensure that this occurs.
    I thank you. I yield back, Mr. Chairman.
    Chairman MFUME. The Ranking Member yields back. Thank you 
very much for your statement.
    I would like to take an additional moment to explain how we 
will proceed with the hearing today. Each witness will have 5 
minutes to provide a statement, and each Committee Member will 
have 5 minutes for questions. Please ensure if you are with us 
through the hybrid setup that your microphone is on when you 
begin speaking and that you return to mute when finished.
    I would like to introduce our witnesses beginning with Mr. 
Darryl K. Hairston. Mr. Hairston serves as a small business 
advisor. He has assisted small businesses for more than 35 
years as a dedicated employee of the Small Business 
Administration where he has held senior level positions, 
including acting administrator of the SBA and deputy associate 
administrator for the Office of Government Contracting and 
Business Development. Mr. Hairston, again, thank you very much 
for being with us.
    Our next witness is Ms. Jackie Robinson-Burnette, the CEO 
of Senior Executive Strategic Solutions, a consulting firm. And 
she is also a former federal senior executive having served in 
multiple positions, most recently in the SBA as the deputy 
associate administrator of the Office of Government Contracting 
and Business Development in 2016. Prior to joining the SBA, Ms. 
Robinson-Burnette served more than 20 years in the Department 
of Defense, both as a contracting officer and leading small 
business programs. Ms. Robinson-Burnette, thank you again, and 
welcome.
    Our third witness is Mr. Arshdeep Khurana, president and 
CEO of AVOSYS Technology, Inc., located in San Antonio, Texas. 
AVOSYS Technology is an 8(a) and HUBZone certified small 
business that offers information technology and management 
consulting services. Mr. Khurana founded AVOSYS in 1998 and 
that company will be graduating from the program this year. So, 
I want to thank you, sir, for your insight in advance because 
your graduation is a part of the issues that we are talking 
about. Not yours specifically, but the amount of time and the 
people who are, in fact, graduating.
    I would like to yield to the Ranking Member, the 
gentlewoman from Florida, to introduce our final witness. Ms. 
Salazar?
    Ms. SALAZAR. Our final witness is Ms. Qin Li. Welcome. She 
is the president of Soliel, a small business technology company 
providing innovative and cutting-edge technical engineering and 
development services to the United States Government. Ms. Li's 
work in government contracting began in 2010 out of a need for 
greater career flexibility. When an opportunity arose to 
subcontract to a large firm, Ms. Li took it. Good for her. And 
now the company is celebrating her 12th year and it is in the 
7th year in the SBA 8(a) program. Under Ms. Li's leadership, 
Soliel has invested heavily in technology and quality 
operations, successfully holding many high level cybersecurity 
and technological certifications necessary to compete for 
difficult and complex government contracts. A testament to her 
success, Soliel has successfully served many government 
customers such as the United States Navy, the United States 
Army, and the Defense Counterintelligence and Security Agency. 
Ms. Li, it is a pleasure having you to testify before this 
Committee, and I look forward to the valuable insights I know 
you will provide today. Welcome. I yield back.
    Chairman MFUME. Thank you. I join with the Ranking Member, 
Ms. Li, in saying welcome to you also. Thank you for being 
here. We look forward to your testimony.
    The Chair would now recognize Mr. Hairston, if you are 
prepared, and if so, you are recognized for 5 minutes. Go right 
ahead.

   STATEMENTS OF DARRYL K. HAIRSTON, RETIRED, SMALL BUSINESS 
  ADVISOR; JACKIE ROBINSON-BURNETTE, CHIEF EXECUTIVE OFFICER, 
    SENIOR EXECUTIVE STRATEGIC SOLUTIONS; ARSHDEEP KHURANA, 
 PRESIDENT & CHIEF EXECUTIVE OFFICER, AVOSYS TECHNOLOGY INC.; 
                 QIN LI, PRESIDENT, SOLIEL, LLC

                STATEMENT OF DARRYL K. HAIRSTON

    Mr. HAIRSTON. Good morning, Chairman Mfume, Ranking Member 
Salazar, and other distinguished Members of this Committee. I 
am pleased to present testimony in support of your examination 
of how the SBA's 8(a) Business Development Program currently 
works, the resources it provides, and to identify ways to 
modernize and improve the program's effectiveness.
    As noted, Congress enacted Public Law 95-507 in 1978 to 
provide statutory authority to an existing program that was 
previously created by Executive Order for socially or 
economically disadvantaged individuals. The law shifted the 
program's focus to Business Development and required program 
participants to be at least 51 percent owned and controlled by 
socially and economically disadvantaged individuals. Since 
1978, there have been several additional amendments to the law 
aimed at achieving the unfulfilled goals of Public Law 95-507 
by addressing abuses and improving its effectiveness. 
Additionally, the SBA's Office of the Inspector General and the 
General Accounting Office have also noted instances of fraud 
and the lack of quality and consistent SBA monitoring and 
oversight. Based on my experience, I believe the following 
recommendations for 8(a) business development program 
improvements will have a significant impact on the program's 
administration and effectiveness.
    First, while the associate administrator for 8(a) business 
development is responsible for the oversight of all matters 
related to the 8(a) Business Development Program, the business 
opportunity specialists who are defined by statute are the 
primary face of the SBA to an 8(a) participant and are 
responsible for delivering the programs and services of the 
program to participants. They work in district offices under 
the supervision of district management who report to SBA's 
Office of Field Operations. It in my view that this overlapping 
organizational structure creates programmatic challenges. 
Without the cooperation and the leadership of the Office of 
Field Operations, the associate administrator for business 
development has little to no control over the implementation of 
program, policies, and procedures, the hiring and selection 
process and no input into the performance review process.
    Consequently, I recommend a written agreement should be 
developed between the Office of the Associate Administrator for 
Business Development and the Associate Administrator for the 
Office of Field Operations delineating the roles and 
responsibilities associated with the district offices and the 
delivery of the 8(a) program.
    Additionally, the annual performance goals of the associate 
administrator for Business Development should be shared by the 
associate administrator for the Office of Field Operations and 
should be incorporated in his or her annual performance 
standards as well as those of the district directors and/or 
business opportunity specialists.
    7(j) resources should be allocated to the development and 
delivery of specific programs and curriculums for new and 
transitioning program participants. For new program 
participants, training should focus on preparing them to 
compete in the federal acquisition environment as small 
businesses and 8(a) program participants. Similarly, for 
transitioning companies, this coursework might include focus on 
long-term planning and consideration for market expansion and 
diversification. Such training for new firms in their beginning 
stage may help alleviate the lag that many experience in 
receiving their first contract opportunity.
    Public Law 100-656 amended Section 7(a) of the Small 
Business Act to include an 8(a) Loan Program. Specifically, the 
administration was empowered to make loans either directly or 
in cooperation with banks and other financial institutions. I 
have no recollection that it was ever implemented. The 
implementation of this program will provide a source of 
critical financing for 8(a) program participants.
    Under Section 8a)(12) of the Act, participants are required 
to annually prepare and submit to SBA a capability statement. 
Those statements are to be disseminated to executive agencies 
and used during their annual contract forecasting to identify 
simple contracts to support the 8(a) program. I am not aware of 
adherence to this requirement. Adherence to this requirement 
would greatly improve the likelihood of a new 8(a) program 
participant receiving contract assistance earlier in its 8(a) 
program participation.
    And finally, there should be a focus on preparing 
transitional stage firms to become mentors. The Mentor-Protege 
program is an excellent opportunity for transitional 8(a) 
participants to continue their growth and development. To 
ensure the effectiveness of this program and validate that its 
objectives are being met, SBA must improve its oversight to be 
certain that both mentors and proteges are adhering to the 
Mentor-Protege Agreement and that program regulations are being 
followed.
    Thank you for the opportunity to testify in connection with 
this Committee's hearing on SBA's 8(a) program. I am happy to 
answer any questions you may have.
    Chairman MFUME. Thank you, sir.
    Ms. Burnette-Robinson, you are now recognized for 5 
minutes. If I can ever get your first name in front of your 
second name and do this correctly before the hearing is over I 
will have made a major accomplishment. Ms. Robinson-Burnette, 
go right ahead.

             STATEMENT OF JACKIE ROBINSON-BURNETTE

    Ms. ROBINSON-BURNETTE. Good morning, Chairman Mfume and 
Ranking Member Salazar and other distinguished Members of the 
Committee. Thank you for all that you do for citizens like me, 
giving us a voice and a chance to be heard. I am humbled and 
honored to be here before you.
    My husband, this handsome man sitting behind me is a 
retired Army officer. We have two daughters serving as Army 
officers and one just signed her Army Cadet Command contract 
last week. We are a family committed to serving this nation.
    The 8(a) program expands our ability to easily tap into all 
the smart people in different corners of our country to help 
tackle the nation's most pressing challenges as we engage in 
humanitarian efforts or defend our great country, within our 
borders and across the globe.
    In the simplest terms, the 8(a) program offers a small, 
disadvantaged business a chance to learn how to win a federal 
government contract or subcontract, perform the work with their 
own money or an SBA loan, and if the work is deemed acceptable 
and timely, then expect payment. When I arrived at the SBA in 
December 2014, I found the pool of firms shrinking. As an 
inclusive leader, I brought my team around the table and asked 
for solutions. I wish I could say the excitement and the shift 
in operations that later led the team to win the highest-
ranking award at the SBA was due to how smart I was. But it 
turns out, if you bring smart people around the table and 
support them, you have a win.
    I would like to share my thoughts today. Unfortunately, a 
considerable amount of 8(a) firms graduate and they struggle to 
stay in business 5 years after graduation. I recommend giving 
8(a) graduate mentors priority with the Mentor-Protege program 
application process. It is a low-cost and effective way to help 
them quickly transfer their knowledge to a new 8(a). It would 
increase the competitiveness of a protege and build longevity 
for the graduate.
    For months, the Office of Federal Procurement Policy and 
GSA and contracting executives from multiple federal agencies 
met to create and implement category management. However, there 
were no small business executives at the table with an 
equivalent seat. The SBA had a seat but no voice and SBA 
regulations lagged behind for years without inclusion in the 
federal acquisition regulation like the similarly situated 
rule. I would suggest that Congress require OFPPs for our 
counsel to consider its regulations in tandem with the SBA's 
rulemaking. I also recommend a full-time senior executive at 
the Office of OFPP who understands contracting and values the 
contributions of small businesses. They would have a seat at 
the table where the discussion is category management, 
priorities for updates to the FAR or the next acquisition 
reform.
    I ran into a retired Army Lieutenant Colonel West Point 
graduate and he said he has tried unsuccessfully since 2016 to 
get 8(a) certification. He was a Special Forces officer. He 
trained Army and Foreign Services. He won a 5-year contract 
with the Special Operations Command. He shared with me his 
letter of rejection. One, his Board of Directors meeting 
minutes where he elected himself as president, treasurer, and 
secretary had errors in it. The other, he had 93 percent of his 
revenues from Special Operations Command. These issues are 
irrelevant to eligibility. I am not advocating for dismissing 
eligibility rules, but there must be a shift in the SBA culture 
to ensure that the program is accessible for eligible firms.
    I also recommend the SBA develop justification to 
significantly increase their 7(j) budget, and I know that 
Congress historically provides the funds based on it and I 
would ask you to support the increase.
    The 8(a) program typically has vacant positions for the 
8(a) BOS and the business development specialists. I know that 
the SBA is considering virtual support and I would recommend 
that the SBA also bring on an HR professional from another 
agency under detail to help assist objectively look at the 
allocations. I also think the 8(a) sole source threshold should 
be raised from $8 million for services and $10 million for 
manufacturing. I understand the simplified acquisition 
threshold is not within your jurisdiction but I would like it 
to be increased. I would recommend an increase from $250,000 to 
$1 million.
    Finally, I know that the smart SBA employees in our federal 
agencies will raise the bar and support President Biden's goal 
of increasing contracts to small, disadvantaged businesses. His 
goal is bold but it is very achievable. I urge you to take my 
suggestions today to further strengthen the program. Thank you.
    Chairman MFUME. Thank you, very much, Ms. Robinson-
Burnette. And Mr. Burnette, welcome to you also.
    Mr. Khurana, you are recognized for 5 minutes, sir.

                 STATEMENT OF ARSHDEEP KHURANA

    Mr. KHURANA. Chair Mfume, Ranking Member Salazar, and 
Members of the Subcommittee, thank you for the opportunity to 
testify before you today. My name is Arshdeep Khurana, and?I am 
the president and CEO of AVOSYS Technology, headquartered in 
San Antonio, Texas. AVOSYS provides enterprise IT support, 
information assurance, software development, healthcare 
staffing, biomedical research and support services to the 
federal government's clients. Established in 1998, I have grown 
the company from a one-man operation, to currently servicing 
over 50 commercial and government contracts across 14 states.
    When I immigrated to United States, I was in pursuit of 
higher education and had the American dream of becoming an 
entrepreneur. After naturalization, I started my business from 
my apartment with a single dial-up server connection with a 
server. For over a decade, I serviced several small and mid-
sized businesses as a trusted chief information officer. My 
business was 100 percent commercial when I was accepted to the 
SBA's 8(a) program in 2011. Through the program, my company has 
been able to grow and become highly successful in the federal 
marketplace. I am particularly proud of the multimillion dollar 
competitive contract I was awarded to provide clinical 
healthcare support services to the Air Force base clinic to 
service our men and women in uniform. It is an incredible honor 
to provide these services, and my company would not have been 
here today without the 8(a) program, tremendous support from my 
family, and the ever gracious, the Almighty Lord.
    The past 2 years have been difficult for small businesses, 
and 8(a) firms are no exception. I was thrilled when this 
Committee added an extra year to the 8(a) program as part of 
the pandemic response. This lifeline helped companies like mine 
save jobs and stay afloat. While this extension was incredibly 
impactful, the pandemic has unfortunately impacted operations 
not just for 1, but for 2 years. Recovery did not truly begin 
until the current fiscal quarter, leaving many 8(a) companies 
approaching graduation without feeling like they had their full 
time in the program. For companies like mine to truly succeed, 
adding an additional year extension would make all the 
difference.
    Given the increasingly complex and competitive procurement 
environment, I also recommend extending the 8(a) program to 10 
years permanently. The decline in the number of 8(a) firms has 
caused concerns across the program.
    According to the SBA, in August 2021, there were about 
4,906 program participants, while in 2010, there were about 
roughly about 7,000. I believe this is happening for a number 
of reasons and I suggest the following changes to the 8(a) 
program in order to increase the number of successful 
participants and dollars flowing to small, disadvantaged 
businesses.
    First, limiting the sole source awards to individually 
owned 8(a) firms and other socioeconomic set asides are too 
small. I suggest the Committee to increase the sole source 
threshold as you did in the 116th Congress by eliminating the 
option years and allowing the amount of $4.5 million and $7.5 
million each year for services and manufacturing, respectively. 
Group-owned 8(a) firms have seen huge success with the raising 
of their sole source threshold five times to $100 million 
without justification. Therefore, individual firms would also 
welcome this important change with similar five times increase 
from the current threshold amount.
    Second, multiple 8(a) procurements are being bundled and 
consolidated with scope additions making their follow-on 
contracts too large for the individual 8(a) companies' current 
direct award threshold level. Data on these awards remains too 
broad; therefore, I suggest SBA break down their annual 
scorecard spend into four subcategories. Mapping of the impact 
of these dollars would assist the administration in identifying 
contracts that could be set aside or directly awarded to 
individually owned 8(a) firms.
    Third, changing the business activity target requirements 
is necessary to the developmental stage of the program. It 
should start with the award of the first contract instead of 
right away. Additionally, 8(a) competitive dollars should be 
considered as small business competitive dollars meaning the 
Business Activity Target (BAT) restrictions would only apply to 
sole source revenue. Similarly, other program continuity ratios 
including the audit requirement threshold should be at least 
adjusted two to three times.
    I cannot express the appreciation I have for the 8(a) 
program and how it has dramatically changed my business after a 
tough survival in both the 2001 and 2008 recessions. I am 
sincerely thankful for the excellent support obtained from the 
San Antonio Small Business Administration office and the many 
SBA specialists on officers who are working hard for the 
thousands of 8(a) business like myself. Not only does AVOSYS's 
success impact me but it also impacts more than 200 employees I 
have hired around the country as a result.
    Thank you for holding this important hearing and I look 
forward to answering your questions.
    Chairman MFUME. Thank you, sir.
    We will get to questions in just a moment, but I want to 
make sure that we go to Ms. Li for her 5 minutes of testimony 
and to say welcome again. Thank you.

                      STATEMENT OF QIN LI

    Ms. LI. Thank you, Chair Mfume, Ranking Member Salazar, and 
other Members of the Subcommittee. I am really thrilled to be 
here to testify today.
    My name is Qin Li. I am the president of Soliel, LLC. 
Soliel is headquartered in the D.C. area in Vienna, Virginia, 
and we bring innovative technical solutions to our customers to 
help them develop and transform and modernize their IT systems 
and infrastructure.
    So originally from China, I came here and got my Master of 
Science degree from George Washington University 25 years ago. 
And I have called the D.C. area home since then.
    Soliel's adventure into the government contracting is also 
out of necessity. When I was seeking treatment for my middle 
child, who has a very rare chromosome abnormality. So, when the 
opportunity to subcontract arose, I took that risk and that is 
how Soliel started in government contracting. And 12 years 
later, today, we very proudly support a number of DoD agencies, 
including DISA, Army, Navy, and DCSA. And that success is 
really a testimony to our commitment and investment in 
innovation and technology, as well as the contributions from 
our team.
    It is also remarkable if you think about only 9 percent of 
women-owned businesses are Asian American owned, and only 6 
percent of the science and engineering employees in the United 
States are Asian. So, it is really a remarkable and very 
humbling experience for me. And again, I want to really thank 
this Committee to advance policies that will further advance 
the interests for this Committee, especially the 8(a) program.
    So, Soliel started in 2010 as a second-tier subcontractor 
as I mentioned earlier. And then we became a first-tier 
subcontractor. Gradually, we started bidding for small business 
prime contracts. So, we received our 8(a) designation in June 
of 2015. That is 5 years after we started our government 
contracting business. So, the first 5 years we were 
subcontractors and really building up our performance and 
qualifications. The 8(a) program is really a game changer that 
provided Soliel a critical, if not the only contract to really 
prime and be successful. So, I am very passionate and I am 
sincerely grateful for the program.
    While it has allowed me to find a successful way forward, I 
also just want to outline some thoughts on specific elements of 
the program that can be further improved.
    So, one of the challenges as mentioned earlier is for the 
graduating and successful 8(a) companies to minimize the 
potential loss in revenue once they graduate from the program 
and they are no longer an 8(a). So, I believe greater 
assistance from the SBA is much needed in this transition 
period out of the program. For example, it would be very 
helpful for the SBA to consider allowing contracts performed by 
a graduated woman-owned or HUBZone company after they graduate 
for that contract to be solicited as either a HUBZone or woman-
owned instead of just an 8(a) contract. This way, it aligns 
with the SBA's overall goal as the Ranking Member has mentioned 
to really advocate for the entire small business community, not 
just 8(a) or HUBZone or woman-owned. So, it is fully aligned 
with that if the graduating 8(a) is still a small business. But 
it also allows the graduating 8(a) companies to minimize the 
revenue loss and still retain their revenue.
    The other thing that we could use a lot of help from the 
SBA is oversight of the Mentor-Protege program. It is a very 
powerful program and Soliel has been in that since the second 
year we were admitted to the 8(a) program. While there is a lot 
of structured paperwork and very good oversight during the 
initial formation of the JV, there is not as much SBA 
supervision in the later stage, especially in the execution 
stage of the JV. So, there is also very limited recourse if the 
mentor is not fulfilling its commitment. And so, giving the SBA 
greater power with respect to the enforcement of the JV will 
really help 8(a) companies like ours, the Mentor-Protege 
program greatly.
    So again, I really appreciate the opportunity to be here 
today. It is very much an honor and I look forward to answering 
questions.
    Chairman MFUME. Ms. Li, thank you very, very much. And my 
thanks to all of the witnesses who are with us this morning.
    I would like to call your attention to the fact that we 
have been joined by the distinguished gentleman from 
Pennsylvania, Mr. Meuser, and welcome him, obviously, to this 
hearing as well.
    We have got some questions. You have all had great comments 
and great suggestions. One of the things I know I can say on 
behalf of myself and the distinguished gentleman from Florida, 
our Ranking Member, is that we passionately want to make the 
8(a) program much better. It is not something that divides us. 
It is something that unites us. And I think beyond this 
hearing, we have got to go directly to the administrator of the 
SBA to figure out what can be done in the time that we have. 
And I tell you, I speak out of a little bit of frustration.
    I joined this Committee in 1987 when I first got elected to 
the Congress. Served for 10 years, Chaired the Subcommittee, 
went away for 24 years, came back, and many of the problems and 
the issues and the suggestions that we were listening to then 
have languished. They are still before us today. So, it is a 
passion and there is absolute unanimity between the Ranking 
Member and myself to try to find a way to get something done 
legislatively with every bit of strength that we have.
    So let me recognize myself for 5 minutes and we will 
proceed with the Ranking Member and the order of Members as 
they appear.
    Mr. Hairston, we all know the 8(a) program is a 9-year 
program divided into two phases--an initial 4-year development 
stage and a final 5-year transition stage. You have heard from 
some of our witnesses today with respect to changing that, 
restructuring it because 9 years is not enough. Can you speak 
to this 9-year timeframe? Give us from your own experience a 
sense as to whether or not you believe, like many do, that it 
is just not enough time for a small firm to develop the skills 
needed to adequately compete in this economy, and by the time 
they do they are out the door.
    Mr. HAIRSTON. Thank you for that question. I listened to 
those comments with interest. Several years ago, we developed a 
proposal to redesign the 8(a) program along the lines that were 
mentioned by the witnesses. One of the things that we talked 
about was the fact that most firms coming into the program were 
truly eligible for the program, had little experience in the 
federal marketplace, and found it difficult to navigate the 
federal system early on and their ability to achieve contact 
assistance was hampered to an extent and sometimes they were 3 
or 4 years in the program before they actually realized some 
success in achieving that. The question around whether or not 9 
years is long enough, I think the timeframe is highly dependent 
upon how successful firms are coming into the program and how 
well they take off with the benefits that are available to them 
in the program. My thinking along those lines is that the 
program should be a 9-year program. I think the way it is 
structured though and how that term is implemented is what is 
important. I honestly believe that when a firm first comes into 
the program it should be provided targeted resources for 
learning how to do business in the federal environment. They 
should be given assistance in understanding acquisition trends, 
understanding how to respond to solicitations, understanding 
how to develop relationships and market themselves. And when I 
think of marketing, I do not speak of marketing generally. I 
speak of marketing and how that is actually done effectively in 
the federal system. I think a firm's term should be dedicated 
to receiving assistance under the 7(j) program targeted to 
developing its ability to do business in the federal 
government. If after that 1 year it does not receive a 
contract, its term may start. Or, if it receives a contract 
during that 1 year, maybe its term starts in that 1 year. I 
would look at structuring a program in phases that allow for 
business development to lead the way to success in the program.
    Chairman MFUME. Okay. Thank you, Mr. Hairston.
    Ms. Robinson-Burnette, I would like to just turn to you 
quickly before yielding.
    As was previously mentioned, the president has a goal of 
increasing the share of federal contracting dollars to small 
and disadvantaged firms from 5 to 15 percent by 2025. In your 
experience, are there any specific steps that the SBA should be 
taking and that we should be holding them accountable for to 
ensure that the initiative results in agencies reserving more 
opportunities for the 8(a) program and not less?
    Ms. ROBINSON-BURNETTE. Thank you, Chairman, for that 
question.
    When I was a contracting officer years ago, in accordance 
with the Federal Acquisition Regulation and my contract 
training, my first step was to conduct market research for any 
acquisition that came across my desk to determine if the rule 
of two could be met. Can two or more small businesses do the 
work? And if so, I would set the work aside for small 
businesses or I would find an indefinite delivery contract or 
GWAC, one of these multiple award contracts that would allow 
set-asides for small businesses. With the shrinking acquisition 
workforce and the new increase in use of GWACs and category 
management, contracting officers are picking a contract vehicle 
first, bypassing the small business staff, and saying that 
contract does not require them to set aside for small business. 
Even if an incumbent is the small business that would be 
devastated with the loss of this work, or if the program was in 
the 8(a) program, they pull it out and put it into these 
contracts, I think the SBA must get more depth and more depth 
engaged with the OSDIBU and the small business directors at 
these agencies to learn what is really happening at their level 
in terms of the challenges they have with getting contracting 
officials to abide by the rule of two.
    The OFPP memo, the White House Memo M2203, Advancing Equity 
and Procurement, now requires OFPP and SBA and the OSDIBUs to 
work together on category management. I think it is important 
that they look across the government and engage in every level. 
Our contracting officials abiding by the rule of two. When 
small businesses can do the work, is the work going to small 
business? Thank you.
    Chairman MFUME. Thank you, very much.
    My time has expired. I want to yield to the Ranking Member, 
the gentlewoman from Florida, Ms. Salazar, and I want to call 
your attention to the fact that we have been joined by the 
gentleman from Wisconsin, Mr. Fitzgerald, who is also a Member 
of this Committee. Thank you, sir.
    Ms. Salazar?
    Ms. SALAZAR. Thank you, Mr. Chairman. And I agree with you 
that we have the bipartisan spirit in trying to find solutions 
for this program because we are all, at least I consider myself 
part of the American dream. And Ms. Li said it specifically and 
the other witnesses as well. And thank you, Ms. Robinson-
Burnette, for your service. Not only yours but the handsome 
husband behind you and the children that are joining the Armed 
Forces of the United States. Very laudable. So, thank you.
    I think I have a question for all of you but I am going to 
start with Ms. Li. In very simple terms, if there is something 
that you need to fix with the 8(a) program that you are saying 
that helped you so much and it put you where you are right now, 
what would it be? What would you do if you had the power to fix 
that 8(a) program?
    Ms. LI. Number one, thank you for that question. Thank you. 
Number one would be to raise the threshold as echoed by my 
fellow witnesses. The current threshold of $4 million for 
services is way too small. Time has moved on. Contracting has 
moved on. Everything has moved on but that threshold stayed. 
And what that does is it really is an impairment to regular 
individual 8(a) companies. And Soliel, my company, had multiple 
times for our 8(a) contracts to be taken away because there is 
not enough threshold. Either they were given to 8(a) companies 
that can attain or support $100 million threshold or they were 
being put on other contract vehicles due to the consolidation, 
category management, all those reason to be put on an IDIQ 
contract as a task order. So that is our number one.
    Ms. SALAZAR. Number one. Okay. Okay. Let me give the 
opportunity to Mr. Khurana. One thing that you would do, that 
you would fix with this program?
    Mr. KHURANA. Ma'am, I would echo Ms. Li's comments as well. 
The threshold is way too limiting. It deserves the same 
increase as the group-owned 8(a)s, up to at least $22 million 
for the individual 8(a) owned. This will make a significant 
impact on the competitiveness for the business as they get 
ready for the competitive non-8(a) small business awards as 
well.
    The second would be to really enhance measures to the 
scorecard goals that is set for the agencies to recognize what 
really makes the bottom line difference to more than 99 percent 
of the companies like myself, which is identifying the 
trackability as you mentioned, ma'am, earlier, if the dollars 
being spent on the direct awards is indeed going to the 
individually-owned 8(a)s. And what the recent trend contrary 
has been unfortunately that the threshold has shifted 
predominantly to the group-owned 8(a)s in the recent years 
because of their unique capability to get awards at a much 
higher threshold value.
    Ms. SALAZAR. All right. Ms. Robinson?
    Ms. ROBINSON-BURNETTE. Thank you for that question.
    Some federal agencies have started decreasing their 
contracts going to the 8(a) program because the pool was 
shrinking and they did not want their contracts tied into the 
8(a) program and not have enough firms to perform the work. I 
would make sure that the SBA shift their focus to include every 
firm that is eligible. The SBA can provide statistics on their 
applications, but when I was at the SBA, I though the issue 
with the declining pool was we were not receiving enough 
applications. Then I found we were receiving 2,300 applications 
a year and certifying 300.
    Ms. SALAZAR. You said something about shifting the SBA's 
culture.
    Ms. ROBINSON-BURNETTE. Yes.
    Ms. SALAZAR. What do you mean by that?
    Ms. ROBINSON-BURNETTE. Right now the focus is making sure 
they mitigate the risk of firms getting into the program that 
should not be in the program. Focusing on the fraud and really, 
that is the 1 or 2 percent of firms that apply. And so, the 
other 90-plus percent of firms are struggling to get in, like 
this lieutenant colonel that I talked about, because the SBA is 
focused on the wrong thing.
    Ms. SALAZAR. And I would like to hear your opinion. We have 
a problem where the SBA is allocating those funds but is not 
tracking if those funds are being successful. Meaning, like at 
a university. We are paying for the tuition but we do not know 
if the student receiving it is getting good grades, if it is 
attending classes, or if it is graduating. So, the money is not 
being, I believe that is just, we do not know if it is being 
well used. So, do you feel the same way? Do you think that is 
your impression? Ms. Li?
    Ms. LI. Yes, I tend to agree. And one of the questions we 
always ask is how do you measure a program's success? Is it by 
how many new 8(a) companies are being admitted or how many 8(a) 
contracting dollars that went into individual firms like ours? 
Or is it by how many are graduating and how many are still in 
business 5 years after?
    Ms. SALAZAR. Which one do you think should be the right 
answer?
    Ms. LI. I think it should be number one, the dollars that 
actually go to individual 8(a) firms. And number two, are they 
still in business 5 years after graduation?
    Ms. SALAZAR. What do you say, Mr. Khurana?
    Mr. KHURANA. I would echo exactly the same, ma'am.
    Ms. SALAZAR. Ms. Robinson?
    Ms. ROBINSON-BURNETTE. Yes. The number of dollars----
    Ms. SALAZAR. What should be the guidelines?
    Ms. ROBINSON-BURNETTE. The number of dollars going to 
eligible, to firms. And not just the super 8(a)s but the 
individually-owned small businesses. The number of firms. And 
then how many firms graduate and can stay in business after 5 
years. I would also like to add, how many firms graduate and 
can actually sell their company to a new 8(a) that comes in. It 
is important that we reduce the burdens on that. A woman-owned 
can sell to another woman-owned and their contracts stay. A 
veteran to a veteran. If an 8(a) sells to another 8(a), a 
graduate 8(a) sells to a new 8(a) and transitions, those 
contracts are slated to be terminated. And that is unique only 
to the 8(a) program.
    Ms. SALAZAR. Mr. Hairston, I am going to give you the last 
word.
    I think he is muted.
    Chairman MFUME. Mr. Hairston, we cannot hear you.
    Mr. HAIRSTON. I apologize. I agree with the issues around 
measuring success, but I think you also have to consider the 
motivation of the entrepreneur coming in and what constitutes 
success to that entrepreneur. I think measuring based on 
dollars received is a fair measure, but we cannot forget that 
this is a business development program and it has basically 
survived based on the notion that it is a business development 
program. So, anything measuring success also has to be 
attributed to the business development assistance that has been 
provided to the firm.
    Chairman MFUME. Mr. Hairston, I am going to ask you to 
begin to conclude.
    Mr. HAIRSTON. Okay. But I would agree with the comments of 
the other panelists.
    Chairman MFUME. Thank you very much.
    Ms. SALAZAR. I yield back.
    Chairman MFUME. The gentlewoman yields back.
    The Chair recognizes the gentleman from Pennsylvania, Mr. 
Meuser, for 5 minutes.
    Mr. MEUSER. Thank you very much, Mr. Chairman. And thank 
you to our Ranking Member as well. Thank you to all of you. 
Very important subject. I can see it in your eyes. You are 
living this and it is very essential to your business 
livelihood.
    So, the questioning that is taking place here is specific, 
and boy, that is what we need to do. And as the Chairman stated 
earlier, that he has been dealing with such bureaucracy and 
less than business efficiencies in these requirements for many, 
many years. And I am hearing all that.
    So, my first question would be to Ms. Robinson-Burnette, 
and I think I already know the answer. But do you have a white 
paper outlining some strong suggestions of what would be in the 
interest of the contracting that we could have and we could 
work on to actually try to implement? Do you have such a plan 
already written?
    Ms. ROBINSON-BURNETTE. Thank you, Congressman, for the 
question.
    I do not have a white paper, but my written testimony is 15 
pages long that goes in-depth about the recommendations that I 
have offered today.
    Mr. MEUSER. Beautiful. I summarized it. I am sorry. I did 
not read the whole thing but that will suffice.
    Okay. So next, the administrative burdens the government 
placed on small businesses that everybody is agreeing we want 
to reduce, the fraud end of it, you say that is 1 to 2 percent, 
and I agree with that. I think a little bit of a phone call and 
a little bit of data analysis in today's information age should 
not be all that difficult to determine whether it is a real 
company or a phony-baloney company.
    Now, on the same note, we just came off of EIDL and we had 
some really rush initiatives which we are very familiar with 
that did have some significant fraud in them. So, it has got to 
be a concern.
    Quickly, Ms. Li, let me go to you, if you would. What can 
be eliminated from that so as we can have integrity and 
efficiency?
    Ms. LI. Thank you. From my own experience, the individual 
8(a) program seems to be administered better than the 8(a) 
Mentor-Protege Joint Venture program. Soliel has been in the JV 
program for 6 years now. There is a lot of opportunity for the 
SBA to really exert oversight and improve its oversight to stop 
the abuse from the mentors to its small business proteges. That 
is where my personal experience has been focused on.
    Mr. MEUSER. Okay. So, you all must be aware of some 
companies, and you have experienced it yourself, engage in the 
contracting, 4-year eligibility for the contracted self and 
just run into barriers that do not make a lot of sense to you 
but you need to overcome anyway because it is a very important 
contract. Does that happen regularly? And do you know other 
companies that just give up because it seems too burdensome?
    Ms. LI. Yes, I do.
    Mr. MEUSER. Go ahead, Mr. Khurana. Go ahead.
    Mr. KHURANA. Thank you for the question, sir. Absolutely. 
Through the 9-year journey, the first 3 years I almost gave up 
hope. This is after surviving two recessions, surviving in 
commercial for 14 years, and still facing the challenges. I 
mean, I thought 8(a) would be to the rescue but of course, in 
the third year I got blessed with the first U.S. Air Force 
contract. Then I started to foresee a few other challenges 
which are roadblocks, clearly distinguishing them as such on 
why they are there. What I started to notice is the 
consolidation efforts, the bundling efforts, scope creeps on 
the existing requirements just to make them above the direct 
award threshold by the agencies so that they could make it 
competitive or be awarded to the super 8(a)s. And that was at a 
big loss of the development dollars which are much essentially 
needed for the development firms like myself.
    Another common one seen is the category management, and 
once we are graduating, those 8(a) requirements are being 
removed from the 8(a) to small business or some other category; 
I believe requires strengthening the PCRs of the SBA which are 
procurement representatives. They are our guardians. Protecting 
the program and the requirements within the 8(a) program. They 
need to be empowered, should have the influence on the agencies 
and the additional scorecard mechanisms, as I have highlighted 
a few options in my 10-page testimony.
    Mr. MEUSER. Lastly, and I have very limited time, do you 
find that ineligible companies are gaming the system and 
gaining the contracts more in an unfair manner?
    Mr. KHURANA. Sir, within the 8(a) program, I believe it is 
very well vetted, at least the 8(a) part. The other 
socioeconomic I am not too privy about but there may be some.
    Mr. MEUSER. Okay. And are there any reasons that businesses 
do not apply because the payment is not there, the requirements 
are too costly? And I know I am over my time, Chairman, but a 
quick answer to that. Do some small businesses not apply 
because it is simply not worth it?
    Please, Ms. Robinson-Burnette.
    Ms. ROBINSON-BURNETTE. As I said, over 2,300 firms apply 
every year. They are applying. Only 300 are being brought in. 
Firms are paying advisors $4,000 to $10,000 to do applications 
for them. So, they are interested. It is just very difficult to 
get through the cumbersome process at the SBA, not relative to 
eligibility but mistakes or in the application. It has nothing 
to do with are they eligible.
    Mr. MEUSER. We will certainly work on this. And thank you.
    And thanks for your indulgence, Mr. Chairman, for being 
over.
    Chairman MFUME. The gentleman yields back.
    The Chair recognizes the gentleman from Wisconsin, Mr. 
Fitzgerald, for 5 minutes.
    Mr. FITZGERALD. Thank you, Mr. Chair.
    My colleague on this Committee, Mr. Evans and I introduced 
H.R. 5861, which is the Waiver Authorization Streamline Act. It 
seeks to reduce the regulatory burden on the 8(a) transferring 
its contract to another 8(a) company. So, I know that was kind 
of discussed here. And after acquisitions or simply just being 
gobbled up by the other company, instead of going through the 
multi-level review process, which could span months as was 
brought up earlier again, SBA administration, being the 
authority to waive the approval process so long as the 8(a) 
company is absorbing the contract can perform the work.
    So, I am going to ask Ms. Robinson-Burnette. So before 
serving as the CEO of the consulting firm you served as senior 
exec to the SBA Office of Government Contracting, so I 
appreciate your experience. Based on your experience, do you 
believe streamlining the approval process for transferring the 
8(a) contract after acquisition would help keep more small 
businesses in the program?
    Ms. ROBINSON-BURNETTE. Thank you, Congressman, for that 
question.
    The SBA administrator on a nondelegable authority is the 
approving authority for transferring the 8(a) contracts when an 
8(a) graduate is acquired. And I believe that that authority 
should remain at that level. But the contract should not be 
automatically slated for termination without that. I believe 
that the only time those contracts should be terminated is if 
the company is going to a non-8(a), or if with the 
consolidation of the company that acquires it the company now 
becomes other than a small business. Because once you join 
those two companies, they could now exceed the size standards. 
But if they are still small, what a great way for a new 8(a) to 
start out with contracts, customers, and possibly the 
mentorship of the firm that released the company.
    Mr. FITZGERALD. Yeah, I do not want to overgeneralize, but 
sometimes those mergers are either because there is a stress on 
one of the two, financially, or in some instances, I mean, it 
makes sense because both entities kind of say, you know, we are 
competitors now. We should kind of unite and be more 
competitive in the market; right?
    Ms. ROBINSON-BURNETTE. Yes. Also, after a 9-year term, 
sometimes--one real example I had, and it was the first time I 
encountered this, I was actually the associate administrator of 
the 8(a) program, an 8(a) participant died. And now his 
contracts had to go to another company. And if the company was 
sold to another 8(a), then, of course, his family that helped 
him build this company could benefit but then transition the 
company and the employees to a new 8(a) so the company could 
continue to go instead of the company having to shut down, 
employees lose their jobs and all the contracts be terminated. 
So it could be because of illness, a desire to retire after 20 
years in the business, or the company just wants to sell for 
other reasons.
    Mr. FITZGERALD. Gotcha. Very good. Very good. Thank you.
    Just real quick, Ms. Li, Wisconsin, my home state, our big 
three are tourism, agriculture, and manufacturing. And for the 
most part, light manufacturing. So, you have got kind of these 
smaller factories and then you have got the transportation 
component, and then you might have a tool and dye shop down the 
road. So, they are all integrated. In my experience, not only 
personal experience because of interacting with some of the 
small businesses and my father-in-law that was in manufacturing 
for years, but oftentimes, I mean, they would tell the story 
that the federal contracts would come, they would land on the 
desk, and they would put their best person on it. But by the 
time they got done bidding it and going through kind of what 
the standards and specs are, it just was not worth their time. 
So, they eventually would just give up on any of those types of 
contracts. The reason I bring it up is because I think there is 
a misnomer that, oh, my gosh, we cannot wait to get government 
contracts because it is just the best thing in the world and 
that is not always the case, I think, especially for medium to 
small businesspeople. And I am just wondering if you could 
comment on that and what your experience on that front is.
    Ms. LI. I would agree. Especially if you think about it, a 
lot of the acquisitions, even though it is a direct award or a 
small business set-aside, they require a huge amount of 
certification, especially with the cyber risk and supply chain 
risk for the DoD community that we support. It is a legitimate 
requirement, but to what extent for a small business that you 
need to require the same level of certification as those 
billion dollar companies that have resources to go through, you 
know, years of certification and investing hundreds of 
thousands of dollars to acquire those. So that is a legitimate 
concern and I share that.
    Mr. FITZGERALD. Very good.
    Thank you, Mr. Chair, and I yield back.
    Chairman MFUME. The gentleman yields back.
    The Chair is happy to recognize and to welcome Mr. Stauber, 
the gentleman from Minnesota who has joined us.
    Mr. STAUBER. Thank you very much, Mr. Chair.
    While we can all agree that increasing contracting goals of 
the federal government, especially of the disadvantaged small 
businesses, it is a laudable goal, I think we need our agencies 
to be more transparent. It seems to me that agencies are 
picking a few of their favorite small businesses, dumping all 
their money into those very select few, and then reporting that 
they are far exceeding their contracting goals year after year. 
So, without competition, we are guaranteed to see an increase 
in prices for taxpayers in the long run.
    Ms. Li, can you explain how contract consolidation 
practices has harmed more competition amongst 8(a) businesses?
    Ms. LI. Thank you. I would be very happy to.
    As mentioned by my fellow witnesses earlier, this category 
management----
    Chairman MFUME. Ms. Li, would you speak into the 
microphone? Thank you.
    Ms. LI. Oh, I am sorry.
    Chairman MFUME. That is okay.
    Ms. LI. I would be happy to. And that is what we live with 
as individual 8(a) companies on a daily basis because there is 
the group 8(a)s that have now a threshold of $100 million. So 
even when there is an 8(a) opportunity that is being solicited 
or directly awarded and Soliel was on the receiving side of 
that multiple times, the question for a contracting officer is 
very realistically, if you have a requirement that is $4 
million a year but a 5-year requirement totaling $20 million or 
above, so what do you do? Would you give to an individual 8(a) 
company that you need to then subsequently, if you are even 
allowed to reissue that same contract five times or four more 
times? Or would you give it to another 8(a) company, group 8(a) 
company that has a much higher threshold?
    So, it is really a challenge. And one of the contracts that 
Soliel performed, we lost that because of the real 
consideration, very practical considerations. It went to a 
group-owned 8(a) company but I cannot say the performance was 
up to the level, so it was subsequently recompeted. So, to your 
question, I am really saying one of the ways to address that is 
to raise the threshold so there is more a level playing field 
among 8(a) companies and also extending that to all small 
business. You have HUBZone, woman-owned, veteran-owned, SDVOSB. 
So that would really help the small business. Thank you.
    Mr. FITZGERALD. Thank you very much. That was the only 
questions I have. And I yield back, Mr. Chair.
    Chairman MFUME. Thank you very much. The gentleman yields 
back.
    The Chair recognizes the gentleman from Louisiana, Mr. 
Carter, for 5 minutes.
    Mr. CARTER. Mr. Chairman, thank you very much. I greatly 
appreciate the opportunity to ask questions.
    Let me ask a question very basically. When we talk about 
8(a) contractors, we know that the issues that impacted those 
contractors during COVID have been somewhat adjusted by 
advancing an additional year. We know that many of those 
contractors suffered beyond that 1 calendar year. What are your 
thoughts on some additional time and/or assistance that can be 
given to those people that were graduating out of the 8(a) 
program but lost significant time because of the pandemic?
    Mr. KHURANA. Thank you for the question, sir.
    As a graduating 8(a), the recent addition has made a decent 
impact but it is not yet just enough. I will give an example. 
The last year, our own follow-on contract from the United 
States Air Force for the clinical healthcare services came up 
for Avosys to be able to recompete on and that was only made 
possible because of the 1-year extension given. However, there 
are many other large government vehicles which are delayed 
through the pandemic response in getting reprocured and I feel 
that I will be losing that once in an 8(a) lifetime chance to 
bid on them. So, I humbly request another year of extension 
which will make a real big difference to many graduating 8(a)s 
like myself.
    Mr. CARTER. Anyone else want to add on that?
    Ms. ROBINSON-BURNETTE. Thank you, Congressman.
    I think an additional year would significantly benefit the 
8(a)s that are in the program right now. Also, I think it is 
incumbent on the SBA to really push the Mentor-Protege Program 
which allows a graduating 8(a) to joint venture with a new 8(a) 
and transition the contracts and continue to perform on 60 
percent of the work. And this is a real legitimate way that an 
8(a) that is graduating can maintain their work and their 
customer base.
    Mr. CARTER. How much of that actually happens? I hear about 
the Mentor-Protege Program. I hear varying thoughts on some 
that work, some that do not work as well. What is your general 
experience on the availability of willing mentors?
    Ms. ROBINSON-BURNETTE. Thank you for that question. I think 
the SBA's Mentor-Protege Program is one of the most successful 
programs that has come out of the SBA. The director of that 
program is Mr. Stanley Jones, Jr., I think one of the smartest 
leaders at the SBA. It is work exceptionally well and the SBA 
has a Mentor-Protege Program conference every year. They had 
one before COVID-19. And this is a great place to do 
matchmaking between graduated 8(a)s and new 8(a)s and allowed 
them to meet and connect at that event.
    Mr. CARTER. Can some body speak to the reverse of that, 
becoming and finding a protege? How successful has that been 
and are there seamless opportunities to create that linkage?
    Mr. KHURANA. Sir, I would like to add there are elements 
which can be implemented to come in line with the mentor-
protege intention and the success which can be achieved through 
it. First, the sole source threshold, if it comes close to the 
four or five times the capacity it is, it will help directly 
give the empowerment to the prime contractor or the 8(a) 
contractor to compete for the real world awards which are 
generally on an average of $20 to $25 million.
    Two, the SBA lending program could be empowered with 
working with the banks to provide the line of credit which is 
much needed on the financial support rather than reliance on 
just the mentors.
    Three, empowering SBA with the additional PCRs for the 
support, they can then further help us in providing the 
contract legal HR negotiation support which is much needed. 
These are all elements which a mentor would typically provide 
to the proteges and SBA has been instrumental in giving many of 
those but more could be done. Thank you.
    Mr. CARTER. Mr. Chairman, unless there is somebody else 
that wanted to weigh in? I am sorry; did I hear someone jump 
in?
    Chairman MFUME. None of the witnesses unless it is Mr. 
Hairston, who is not here.
    Mr. CARTER. Okay, in that case, Mr. Chairman, I would like 
to, first of all, thank you, and thank all of our witnesses.
    Mr. Chairman, I ask at a later date if we can revisit the 
possibility of visiting with SBA to see what the likelihood and 
ability for us to advance discussion to consider an additional 
year of resources for those 8(a)s who were undoubtedly 
significantly harmed by the pandemic.
    Chairman MFUME. Thank you very much. It is so noted and I 
appreciate your comments.
    One of the things we really I think are committed to doing 
in this Committee is to find a way to start being able to mark 
some progress so that 5 years from now this is still not the 
discussion.
    And I want to take a moment just to thank again all of our 
witnesses, Mr. Hairston, Ms. Li, Mr. Khurana, and Ms. Robinson-
Burnette. I have to say I am a little troubled to hear though, 
and I was not aware of this and maybe it is my own fault, that 
if you are an 8(a) contractor and you die or you retire after 
25 years or something else happens and your business is sold to 
me, that all of the contracts that are in place are considered 
null and void. I mean, that really, really disturbs me, 
particularly I think as you said, Ms. Robinson-Burnette, that 
that is not the case with any other category of business. There 
are a lot of good ideas and suggestions from all of you that I 
hope we will find our way to make into legislation. The Ranking 
Member and I as I have said before are committed to real change 
and change that is verifiable so that we are able to mark 
progress.
    But again, I want to thank all of you. I want to thank Ms. 
Salazar. She was kidding earlier when she was not really 
kidding. This is the first time we have sat together on a 
Committee because we have been in a hybrid virtual situation. 
But here we are, the A Team. My thanks to all of you and this 
hearing now stands adjourned. Thank you.
    [Whereupon, at 12:14 p.m., the subcommittee was adjourned.]
                           
                           
                           A P P E N D I X


[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                              TESTIMONY OF

                                 QIN LI

                         PRESIDENT, SOLIEL LLC

                   HOUSE COMMITTEE ON SMALL BUSINESS

             SUBCOMMITTEE ON CONTRACTING AND INFRASTRUCTURE

             ``THE 8(A) PROGRAM: OVERVIEW AND NEXT STEPS TO

                    PROMOTE SMALL BUSINESS SUCCESS''

                             MARCH 2, 2022
    Chair Mfume, Ranking Member Salazar, and Members of the 
Subcommittee, thank you for the opportunity to testify before 
you today. My name is Qin Li, and I am the President of Soliel 
LLC, located in Vienna, VA. Soliel brings innovative solutions 
and capabilities to help its customers develop and transform 
its IT systems and infrastructure. We provide technical and 
functional engineering, development expertise in IT 
modernization, cloud migration, DevSecOps, software 
engineering, data analytics, and cybersecurity.

    Bringing the same innovation and cutting-edge solutions 
that I worked with in the private sector to the government 
sector, I steered Soliel into government contracting in 2010. 
Soliel, a woman-owned, 8(a) company provides technical 
engineering and development services to the U.S. Government. We 
have built an impressive team of subject matter experts that 
have extensive expertise in computing, networking, data, and 
cloud. We serve many U.S. Government customers, which include 
the Defense Information Systems Agency (DISA), Army, Navy, and 
the Defense Counterintelligence and Security Agency (DCSA). 
Originally from China, I got my Master of Science degree from 
the George Washington University and have called the Washington 
D.C. metro area home ever since.

    Soliel's adventure into government contracting was also out 
of a need for flexibility and taking advantage of opportunity. 
Seeking treatment for my middle child with a rare chromosome 
abnormality requires more flexibility than full time employment 
offers. When the opportunity to subcontract to a large firm 
presented itself, I took the risk. Soliel's success is 
remarkable given that only 9% of all women-owned companies are 
Asian American owned, and Asian women account for only 6% of 
science and engineering employees in the United States.\1\ 
Navigating the complex acquisition process and competitive 
federal contracting industry is a daunting task for any 
company. We have invested heavily to build our own innovation 
lab to stay on the forefront of new ideas and technologies--
before bringing them to our customers. I am always looking for 
opportunities to empower other women to pursue careers in 
technology or start a business, as well as participate in 
acquisition and small business policy discussions.
---------------------------------------------------------------------------
    \1\ The 2019 State of Women-Owned Businesses Report: Summary of Key 
Trends. American Express, 2019. https://s1.q4cdn.com/692158879/files/
doc--library/file/2019-state-of-women-owned-businesses-
report.pdf

    I would like to start by thanking the Committee for its 
commitment to small businesses and for advancing policies that 
support small businesses doing business with federal 
government. Soliel started in government contracting in 2010, 
as a 2nd tier subcontractor in support of DISA. We 
then became a 1st tier subcontractor, and gradually 
started bidding for small business prime contracts. Soliel 
received its 8(a) designation in June 2015, and it provided 
Soliel a critical contract vehicle to accelerate our growth. I 
would like to outline my thoughts on some specific elements of 
---------------------------------------------------------------------------
the 8(a) program.

    While the 8(a) program has allowed me to find a successful 
path forward, I know many companies have not had the same 
experience. For example, one of the downfalls for any company 
is relying on 8(a) awards as the majority of their business. 
So, when it is time to graduate, companies do not have exit 
strategies to transition out of the program. One of the ways 
the Small Business Administration (SBA) is trying to tackle 
this issue is through the 7(j) Management and Technical 
Assistance program. According to the SBA, the 7(j) program 
provides assistance in a wide range of business activities, 
including marketing, accounting, opportunity development and 
capture, contract management, compliance, and financial 
analysis. When I attended a 7(j) training, I found it was 
geared more towards businesses just starting out, instead of 
those who were newer 8(a) program participants but more 
developed contractors. Although training for companies new to 
contracting is necessary, it would be beneficial for the SBA to 
consider having two tracks--one for businesses who are in the 
beginning phases of the program and one that is more advanced. 
Utilizing this existing resource could be a way to tackle the 
issue of businesses struggling to succeed after graduation. SBA 
resource partners and 7(j) training would benefit from 
information shared from Business Opportunity Specialists (BOS) 
who counsel firms like mine, so that more relevant resources 
could be provided to 8(a) program participants.\2\ Tracking 
success of 8(a) participants throughout their time in the 
program is important for all of these programs to best support 
small, disadvantaged businesses (SDBs).
---------------------------------------------------------------------------
    \2\ See Finding 2: SBA Needs Improved Procedures for Providing 
Business Development Assistance. https://www.oversight.gov/sites/
default/files/oig-reports/SBA/SBA-OIG-Report-22-08.pdf

    It is also important to assess how participant firms are 
performing once they have left the program. I have heard many 
stories of fellow program participants struggling to continue 
after their 9 years have ended. A recent report from the SBA's 
Office of Inspector General (OIG) suggested tracking whether 
the program achieved business development objectives, including 
the number of graduated 8(a) firms.\3\ I think it is important 
that the Committee examine ways to ensure better success of 
program graduates. Additionally, greater assistance from the 
SBA is needed in the transition out of the program. For 
example, it would be helpful for the SBA to consider allowing 
contracts performed by a graduating 8(a) women-owned small 
business (WOSB) to be solicited and awarded as a WOSB contract 
instead of 8(a). This approach fully aligns with the goal of 
promoting small business success and provides graduating 8(a) 
small businesses additional opportunities to perform their 
contracts, especially when requirements were introduced into 
the 8(a) program by the graduating small business. Currently, 
all graduating 8(a) small businesses will not be able to prime 
for their work once they are no longer an 8(a), losing a 
significant portion of their revenue.
---------------------------------------------------------------------------
    \3\ Id.

    There have been some issues with SBA oversight with respect 
to the joint venture (JV) program, which has directly impacted 
my company. While there is a lot of paperwork and scrutiny in 
the initial stages of a JV, there is not much SBA oversight 
beyond that stage, and there is limited recourse if the mentor 
is not fulfilling its commitment. In many instances, small 
businesses are being taken advantage of by large companies in 
these arrangements. For example, Soliel's large business mentor 
used their ``negative control'' / ``veto'' to block the JV from 
responding to opportunities that they did not want to pursue, 
despite them being viable for the JV. This action, taken by the 
mentor solely out of self-interest, significantly impaired the 
JV's success and breaches its fiduciary responsibility as a 
mentor and shareholder of the JV. The issue was brought to the 
SBA district office, but it was not clear what recourse the SBA 
can give to enforce a correction of the mentor's behavior. 
Giving the SBA greater power with respect to enforcement of 
these agreements would help assist 8(a) companies, as well as 
---------------------------------------------------------------------------
all small businesses, when mentors take these type of actions.

    Further, there are additional policies that impact not just 
8(a) firms, but all small businesses doing business with the 
federal government. Small business contractors are currently 
facing unprecedented economic and workforce challenges due to 
the ongoing COVID-19 crisis. According to the survey by the 
National Defense Industrial Association, 60% of small business 
respondents expect to have long-term financial and cash-flow 
issues.\4\ Additionally, the small business industrial base has 
been shrinking over the past 10 years. Analysis of agency data 
reported in the Federal Procurement Data System (FPDS) finds 
similar trends regarding the small business supplier base at 
large, including a loss of 49,000 small businesses (or 38% of 
small businesses) in the Federal supplier base since 2010.\5\
---------------------------------------------------------------------------
    \4\ NDIA COVID-19 Small-Business Impacts Survey Summary (2020). 
Available at: https://www.ndia.org/-/media/sites/ndia/policy/documents/
covid-19-small-business-impacts-survey-summary.ashx.
    \5\ Memorandum from Executive Office of the President Office of 
Management and Budget M-22-03, Advancing Equity in Federal Procurement 
(December 2, 2021).

        I. Bring sole source thresholds in line with current 
---------------------------------------------------------------------------
        government buying

    Since the 8(a) program has a time limit of 9 years, it is 
important to me that other socioeconomic set-aside programs at 
the SBA can be utilized after graduation, such as WOSB. One 
area that needs to be changed is the current sole source 
thresholds for individual 8(a), WOSB, service-disabled veteran-
owned (SDVOSB) and Historically Underutilized Business Zones 
(HUBZone) certified firms. Both the House and Senate Small 
Business Committees have attempted to increase sole source 
thresholds and bring them more in line with government buying. 
The House passed H.R. 190 in the 116th Congress, which 
eliminated option years and would have allowed for the current 
threshold amounts per contract year. A draft of the Senate 
Small Business Committee SBA Reauthorization bill in the 116th 
Congress also made changes to the thresholds--raising them to 
$8/$10 million per year by eliminating option years. Included 
in the 2021 House passed version of the National Defense 
Authorization Act (NDAA) was H.R. 3065, Expanding Contracting 
Opportunities for Small Businesses Act of 2021. This bill 
raised the sole source thresholds to $8/$10 million per year 
but did not eliminate option years. I would like to thank the 
Committee for their tireless work to achieve this increase over 
the past two Congresses, especially Ranking Member of this 
Subcommittee, Representative Salazar, as well as Ranking Member 
of the Committee, Representative Luetkemeyer and his staff.

    Soliel has had multiple 8(a) direct awards where our team 
performed extremely well. However, because some of the 
requirements had a higher dollar amount than the $4 million 
threshold, the work was awarded other contract vehicles that 
have a higher ceiling threshold. In one case, Soliel's work was 
consolidated into another 8(a) sole source award to a 
community-owned 8(a) contractor because they can be awarded up 
to $100 million without justification. In another case, instead 
of making a direct award to Soliel, since the threshold was too 
low, our work was instead competed on a large existing 
indefinite delivery/indefinite quantity (IDIQ) and awarded as a 
task order.

    Broad bipartisan support for increasing small business 
participation in the federal marketplace dictates changes are 
needed to bolster awards to these businesses. Increasing these 
thresholds is a necessary change to acquisition policy given 
the average size of contracts. By making these programs more 
accessible for federal agencies to use such as the 8(a) 
program, many more small businesses will benefit.

        II. Strengthen subcontracting transparency and 
        accountability

    Since subcontracting was so integral to my long-term 
federal contracting success, I want to discuss how the 
Committee could improve this process. Subcontracting serves as 
an important avenue for small businesses to enter the federal 
marketplace and build past performance and often the only way 
to win work. With larger contract being utilized by the federal 
government, subcontracting is more important than ever. It is 
critical that prime contractors are rewarded for adhering to 
subcontracting plans and penalized if they do not. Presently, 
there is little to no recourse for prime contractors that fail 
to meet their small business subcontracting goals. Soliel 
started out its federal work as a 2nd tier 
subcontractor. We worked as a subcontractor in the first four 
years of our operation. Our first competitive contract win was 
in our 4th year as a contractor. However, it was 
protested, which delayed our ability to perform. Thankfully 
this protest was defined by the Government Accountability 
Office (GAO), and Soliel was able to resume support. 
Subcontracting was the critical to Soliel's survival and 
success as a contractor, as I know it is to many other small 
businesses.

    The FY2021 NDAA included language to require large primes 
with subcontracting plan requirements to provide past 
performance evaluations when requested. However, many small 
businesses have faced issues when requesting this information. 
Creating a streamlined framework for large primes to provide 
this information to small businesses would greatly assist 
businesses trying to enter the prime contracting arena.

    Although reports by federal agencies show that dollars are 
being awarded to small businesses at consistent levels in best 
in class (BIC) contracting vehicles, the number of small 
business concerns being awarded prime contracts is shrinking 
drastically. Category management undoubtedly plays a role. 
Consequently, subcontracting is now incredibly important for 
small business concerns. Many small businesses are not prime 
awardees of BIC vehicles, and many may not have the 
qualifications to even bid on these large contract vehicles. 
Transparency should include whether prime contractors have 
aggressive small business goals in their subcontracting plans. 
It would be extremely beneficial to small businesses if data 
existed on three fronts: (1) the number of subcontractors on 
BICs broken down by small businesses and the socio-economic 
set-aside programs listed under the Small Business Act; (2) 
compliance of primes in achieving goals set forward in 
subcontracting plans; and (3) the percentage of subcontracting 
work performed by small business concerns on taskorders.

    A 2020 GAO report on subcontracting compliance \6\ found 
that agencies did not consistently follow all required 
procedures for oversight of small business subcontracting 
plans, both before and after contracts were awarded. GAO 
reviewed 26 contracts with a subcontracting plan at 4 agencies 
and found that of the reviewed contracts, about half of the 
agencies could not demonstrate that procedures for Procurement 
Center Representative (PCR) reviews were followed. PCRs are 
critical for ensuring small business success in federal 
agencies--they have been shown to increase the small business 
share of Federal procurement awards through their work. PCRs 
initiate small business set-asides, provide small business 
sources to identified opportunities and counsel small firms. 
However, there are currently a limited number of PCRs available 
to do this important work. Increasing the number of these 
positions would assist the success of 8(a) firms, both during 
their time in the program and after they graduate.
---------------------------------------------------------------------------
    \6\ U.S. Gov't Accountability Off., GAO-20-464, Small Business 
Subcontracting: Oversight of Contractor Compliance with Subcontracting 
Plans Needs Improvement (2020).

    Further, category management shuts out any small or midsize 
companies from competing for the work--the requirements were 
structured for very large businesses. Subcontracting is 
becoming an increasingly important tool for small businesses to 
enter the federal market. I encourage the Committee to look at 
incentives that would spur subcontracting plan compliance, 
---------------------------------------------------------------------------
transparency, and accountability.

        III. Align rulemaking between SBA and the FAR Council

    Each year, SBA issues a procurement scorecard, which 
indicates how agencies performed in meeting their small 
business goals.\7\ The governmentwide goal of contracting with 
WOSBs is 5%. Despite this small number, the federal government 
has only met this goal twice. However, fewer contracts have 
likely gone to WOSBs due to inaccurate reporting. Agencies 
often count the same dollar value towards multiple 
socioeconomic program goals, even though the contract was not 
explicitly a set-aside for more than one program. For example, 
if a contract is set-aside for the WOSB program, and the 
winning company is also a certified HUBZone and SDVOSB, those 
contract dollars count toward the agency's goals in each of the 
3 programs. This practice ultimately inflates the data reported 
on small business contracting awards. It would be beneficial to 
the small business contracting community if agencies reported 
progress toward small business based on how the contract was 
solicited. In other words, if an agency set a contract aside 
for the WOSB program, then the dollars should only count as a 
WOSB award. This change would hold agencies accountable for 
truly awarding 5%, for example, to WOSBs, and result in an 
increase in the number of awards to small businesses.
---------------------------------------------------------------------------
    \7\ SBA FY2020 Small Business Procurement Scorecard, available at 
https://www.sba.gov/sites/default/files/2021-07/GW-508.pdf (last 
visited Feb. 24, 2022).

    Further, pervading inconsistencies exist in government 
contracting due to discrepancies between final rules issued by 
the SBA and the Federal Acquisition Regulatory (FAR) Council. 
This causes confusion for both companies and federal agencies 
on which guidance they should ultimately follow. Many in the 
acquisition workforce do not follow changes in small business 
rules unless it is in the FAR, despite the fact that final 
rulemaking by SBA is sufficient. The time lapse between FAR 
Council action and final rules promulgated by the SBA can span 
many years. For example, in 2016, the SBA updated its 
regulations pertaining to limitations on subcontracting. It 
took until August 11, 2021, 5 years later, for the FAR Council 
to finally publish two final rules that largely mirrored the 
SBA's. To remedy this problem, I suggest requiring the FAR 
---------------------------------------------------------------------------
Council issue its rulemaking simultaneously with SBA.

    As mentioned in the beginning of my testimony, I credit the 
8(a) program to accelerating my company's success. I believe in 
the value of this program and thank the Committee for holding 
this hearing to ensure it is helping SDBs to the fullest extent 
possible. Thank you again for the opportunity to speak today 
about my experience, and I look forward to answering any 
questions.
                         HO-CHUNK INCORPORATED


    VIA EMAIL TO: [email protected]

    March 14, 2022

    The Honorable Kweisi Mfume, Chairman
    Subcommittee on Contracting and Infrastructure
    Committee on Small Business
    2361 Rayburn House Office Building
    Washington, DC 20515-6315

    Dear Chairman Mfume:

    On behalf of Ho-Chunk Inc. (Ho-Chunk), I am pleased to 
submit this response to the hearing held on March 2, 2022, by 
the Subcommittee entitled ``The 8(a) Program: Overview and Next 
Steps to Promote Small Business Success.'' The hearing examined 
how the 8(a) Program currently works as well as the resources 
it provides to small businesses. Members heard from 
stakeholders about ways to modernize the program and improve 
its effectiveness. We would like to thank you and other members 
of the Subcommittee for carefully considering the impact the 
Small Business Administration's (SBA's) 8(a) Business 
Development Program has had on small business. We would also 
like to expand on the information provided by the witnesses 
during the hearing and detail the economic opportunities the 
Program has provided for entity-owned companies such as ours.

    Background:

    The designation of Indian tribes as socially disadvantaged 
for purposes of the 8(a) program arose due to the high levels 
of unemployment across Indian Country, often in excess of 60%. 
Like other governments, tribal governments are responsible for 
the health and welfare of their tribal citizens. But relocation 
to remote areas of the Country, along with failed federal 
policies, led to disparate treatment of tribal governments and 
their citizens in areas such as healthcare, education, and home 
ownership. Removal and relocation left few opportunities for 
economic development. Acknowledging the need to create 
entrepreneurship and economic development opportunities for 
tribal governments and their citizens, tribes were included in 
the 8(a) Program to spur economic opportunity.

    Ho-Chunk believes the 8(a) Program has been one of the most 
successful and consistent federal programs aimed at creating 
economic opportunities and affecting generational change in 
Indian Country. We wish the Subcommittee to understand that the 
role of 8(a) corporations in Native Communities differs from 
other non-tribal small businesses. Our letter details some of 
the requirements for entity-owned firms in the 8(a) Program, 
and we make some recommendations for improvement.

    In 1986, Indian tribes, as owner-groups, became eligible 
for the 8(a) program when Congress passed legislation providing 
that firms owned by Indian tribes were to be deemed socially 
disadvantaged for 8(a) Program purposes. During the 1980s, 
other owner-groups became eligible for the Program, including 
Community Development Corporations (CDCs), Alaska Native 
Corporations (ANCs), and Native Hawaiian Organizations (NHOs).

    There are several exceptions to the 8(a) program rules for 
entity-owned participants based on the acknowledged lack of 
economic resources and access to capital. These exceptions to 
federal regulations allow entity-owned companies to provide 
revenue to their tribes that is used for health care, 
infrastructure for very rural communities, education, housing, 
language and cultural retention and revitalization, and other 
important tribal initiatives.

    The 8(a) Business Development Program certification and 
participation is governed by regulations contained in 13 CFR 
124. These regulations are primarily the same for both 
individual and tribally-owned corporations, with some 
exceptions for ``group'' or entity-owned firms. All 8(a) 
companies, including tribally owned, must meet strict 
certification qualifications, are restricted to nine years in 
the Program, must be small, must report on their progress in 
the program annually, and must meet the limitations on 
subcontracting, among other CFR and FAR, contracting rules.

    The primary exceptions for entity-owned firms are the 
ability for tribes to own multiple firms in the 8(a) program 
and the exemption from competitive thresholds for sole source 
awards. These few exceptions to the Program allow entity-owned 
firms to provide profits to benefit communities, sometimes 
numbering in the hundreds of thousands of tribal citizens, as 
opposed to individually-owned firms that provide benefits to 
only the owner.

    Entity-owned firms, however, are the only 8(a) Participants 
that have a regulatory requirement that they must report on the 
benefits they provide to their communities during each required 
annual update. In addition to the requirements of an individual 
applicant, tribally owned firms must submit documentation with 
their applications that they are included on the official 
Bureau of Indian Affairs list of federally acknowledged Indian 
Tribes in the contiguous 48 states and Alaska. Tribes must also 
show that the applicant companies are owned and controlled by 
the tribe. If a non-tribal person is managing the 8(a) company, 
the tribe must retain control of the company and have a 
management plan in place that shows how the tribe is mentoring 
and developing tribal members to manage its companies in the 
future.

    Recommendations:

    SBA Systems: The SBA has modernized the 8(a) application 
and annual reporting process through the SBA.Certify system. 
The system was designed for an individual applicant and not 
entity-owned applicants. The Administration has tried to 
address the system deficiencies through training and some 
workarounds, however, the additional documentation required for 
entity-owned firms is difficult to fit into the system as it is 
currently designed. Ho-Chunk, Inc.'s experience has shown that 
the SBA analysts also have a difficult time finding submitted 
documentation in the system. There is a lack of communication 
between the SBA and applicant companies regarding the submitted 
applications, and a lack of transparency in the system. We 
recommend that SBA improve the existing system to allow for 
entity-owned differences and require less personal information 
from the managers of the companies, or create a new system that 
tracks the regulatory requirements of tribally certification. 
We support SBA's efforts in trying to modernize the reporting 
process.

    SBA Hubzone Program: We applaud SBA's efforts in recent 
years to improve the Hubzone Program such as allowing an 
employee that was living in a Hubzone at the time of 
certification to remain counted as living in a Hubzone if they 
subsequently moved outside a Hubzone, and allowing firms a one-
year certification. However, Hubzone status is very difficult 
to maintain when performing service contracts for the federal 
government. Often the employees on a government contract can be 
in very disparate locations, most of which are not in Hubzone 
areas. We would like to recommend that the SBA consider a two-
year certification period.

    Conclusion:

    The Native 8(a) program at the Small Business 
Administration has been one of the most successful economic 
opportunities for Tribes. In many cases, this program is the 
only economic opportunity available--especially for tribes who 
are in rural areas. Ho-Chunk Inc. through its government 
contracting businesses and other subsidiaries has been able to 
create jobs for tribal members and members of the local 
community, has raised the median household income of 
Reservation residents and has started to reverse hundreds of 
years of poverty on the Reservation.

    The 8(a) program at the Small Administration is a model of 
self-determination, allowing tribal governments to determine 
what type of businesses best suit the needs of their citizens 
and how to enter a market that is local, national, and 
international. The program musts be protected and encouraged to 
grow to take into account the capacity and infrastructure that 
tribally-owned entities now have so the gains of the 
corporations can be returned to the tribal governments and 
citizens.

    Please do not hesitate to contact us if you would like any 
further information.

    Sincerely,

    Annette Hamilton

    COO - Ho-Chunk, Inc.

                                 [all]