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

                      SBA MANAGEMENT REVIEW: OFFICE OF
                GOVERNMENT CONTRACTING AND BUSINESS DEVELOPMENT

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

                                    HEARING

                                   before the

                          COMMITTEE ON SMALL BUSINESS
                                 UNITED STATES
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  HEARING HELD
                                 JUNE 23, 2022

                                   __________

      [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                Small Business Committee Document Number 117-059

                                 ______

                 U.S. GOVERNMENT PUBLISHING OFFICE
    47-840                  WASHINGTON : 2022

                 Available via the GPO Website: www.govinfo.gov
                       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
                         CHRISSY HOULAHAN, Pennsylvania
                              ANDY KIM, New Jersey
                             ANGIE CRAIG, Minnesota
                            SCOTT PETERS, California
                  BLAINE LUETKEMEYER, Missouri, Ranking Member
                             ROGER WILLIAMS, Texas
                            PETE STAUBER, Minnesota
                            DAN MEUSER, Pennsylvania
                            CLAUDIA TENNEY, New York
                           ANDREW GARBARINO, New York
                             YOUNG KIM, California
                             BETH VAN DUYNE, Texas
                             BYRON DONALDS, Florida
                             MARIA SALAZAR, Florida
                          SCOTT FITZGERALD, Wisconsin

                     Melissa Jung, Majority Staff Director
                Ellen Harrington, Majority Deputy Staff Director
                         David Planning, Staff Director
                                C O N T E N T S

                               OPENING STATEMENTS

                                                                       Page
    Hon. Nydia Velazquez.............................................     1
    Hon. Blaine Luetkemeyer..........................................     2

                                    WITNESS

    Ms. Bibi Hidalgo, Associate Administrator, Office of Government
      Contracting & Business Development, U.S. Small Business
      Administration, Washington, DC.................................     4

                                    APPENDIX

    Prepared Statement:
        Ms. Bibi Hidalgo, Associate Administrator, Office of
          Government Contracting & Business Development, U.S. Small
          Business Administration, Washington, DC....................    31
    Questions and Answers for the Record:
        Questions from Hon. Luetkemeyer to Ms. Hidalgo and Answers
          from Ms. Hidalgo...........................................    37
    Additional Material Submitted for the Record:
        None.

                       SBA MANAGEMENT REVIEW: OFFICE OF
                GOVERNMENT CONTRACTING AND BUSINESS DEVELOPMENT

                                  ----------

                            THURSDAY, JUNE 23, 2022

                      House of Representatives,
                   Committee on Small Business,
                                                        Washington, DC.
        The committee met, pursuant to call, at 10:02 a.m., in Room
    2360, Rayburn House Office Building, Hon. Nydia Velazquez
    [chairwoman of the Committee] presiding.
        Present: Representatives Velazquez, Davids, Mfume,
    Bourdeaux, Carter, Chu, Evans, Houlahan, Craig, Luetkemeyer,
    Williams, Stauber, Meuser, Tenney, Garbarino, Young Kim of
    California, Van Duyne, Donalds, and Fitzgerald.
        Chairwoman VELAZQUEZ. Good morning. I call this hearing to
    order.
        Without objection, the Chair is authorized to declare a
    recess at any time.
        I would like to begin by noting some important
    requirements. Standing House and Committee rules and practice
    will continue to apply during hybrid proceedings. All Members
    are reminded that they are expected to adhere to these rules
    including decorum.
        House regulations require Members to be visible through a
    video connection throughout the proceeding, so please keep your
    cameras on. Also, remember to remain muted until you are
    recognized to minimize background noise.
        In the event a Member encounters technical issues that
    prevent them from being recognized for their questioning, I
    will move to the next available Member of the same party and
    will recognize that Member at the appropriate time slot
    provided they have returned to the proceeding.
        With that, let's start this hearing.
        When a small firm wins a federal contract, it creates a
    ripple effect that creates jobs, invests in communities, and
    generally boosts the economy. The presence of small firms also
    helps drive innovation nationwide and competition in the
    federal marketplace.
        Congress recognized these benefits in 1953, when they
    created the Small Business Administration and tasked the agency
    with ensuring that a fair proportion of contracts and
    subcontracts are awarded to small businesses.
        Today, SBA's Office of Government Contracting oversees this
    mission and works to create an environment where small
    businesses can compete on a level playing field in federal
    procurement.
        In addition to supervising governmentwide contracting
    goals, the office is also responsible for administering
    multiple programs like the 8(a) program, the Service-Disabled
    Veteran-Owned Small Business program, the Women-Owned Small
    Business program, and the HUBZone program. These initiatives
    help create contracting opportunities for disadvantaged small
    businesses and are instrumental in helping the government reach
    its overall small business contracting goal.
        Given its critical mission of maximizing small business
    participation in the federal marketplace, we must take steps to
    ensure the Office of Government Contracting and Business
    Development operates as effectively as possible.
        Today, I hope we can take a close look at the office's
    challenges and actions Congress can take to alleviate them. For
    instance, despite the federal government consistently meeting
    its goal of awarding 23 percent of eligible federal contracting
    dollars to small firms, small business participation has been
    steadily declining. Last week, we held a hearing detailing the
    severe impact of category management and governmentwide
    contracting vehicles to small firms. I would like to hear what
    steps SBA is taking to minimize these effects and safeguard the
    small business base.
        While the government has met the overall small business
    contracting goal in recent years, the goals for programs like
    HUBZone and the Women-Owned Small Business program were not
    met. In fact, the goal for the Women-Owned Contracting Program
    has only been met twice, and the HUBZone goal has never been
    met. It is important that we address these shortcomings and
    ensure that program participants are getting an adequate number
    of opportunities.
        I also want to discuss IT challenges. As reported by the
    SBA's Office of Inspector General, SBA abandoned
    Certify.SBA.gov alleging it was unsustainable in the long term
    and intended to replace it. Given the importance of having an
    IT platform that can successfully and efficiently service all
    of the contracting programs, I am interested in examining SBA
    plans and timelines related to this initiative.
        These are just a few important issues we will cover today.
    I would also like to hear more from our witness about staffing
    resources, strengthening internal controls, and implementing
    key legislation related to contracting programs.
        When small contractors can thrive, our nation's small
    businesses, government, and economy all benefit. I look forward
    to hearing from Associate Administrator Hidalgo about the ways
    Congress and the agency can work together to protect the role
    of small businesses in the procurement process.
        I would now like to yield to the Ranking Member, Mr.
    Luetkemeyer, for his opening statement.
        Mr. LUETKEMEYER. Thank you, Madam Chair. And thank you for
    having this important hearing with the associate administrator
    of SBA's Government Contracting and Business Development
    Office.
        Now, more than ever, small businesses deserve to hear from
    agency officials that administer some of the most important
    small business programs within the government, including
    federal contracting programs. These are incredibly challenging
    times for small businesses, their employees, and their
    communities. Inflation is running rampant across the nation and
    impacting nearly every product and service. In fact, the
    Consumer Price Index is at a 40-year high, and wholesale
    inflation is in the double digits. This is unacceptable for our
    nation and for Americans.
        Surging prices and runaway costs have direct and immediate
    impacts on main street. Not only is inflation one of the top
    concerns for small business owners, but also has direct effects
    on the entire small business supply and demand ecosystem.
    According to the most recent survey out of NFIB, nearly three-
    quarters of all business owners are increasing prices. This
    matches the highest percentage on record.
        In addition to red hot inflation, the nation's smallest
    firms continue to experience sharp supply chain issues and an
    ongoing labor crisis that is hindering the busy summer season.
        It is for these reasons why it is so important for this
    Committee to hear from Treasury Secretary Yellen. This
    administration has the ability to talk directly to small
    business through one of the federal government's most important
    cabinet-level agencies, the Department of Treasury. Despite
    being legally required to testify before this Committee last
    year and twice this year, Treasury Secretary Yellen is a no-
    show. Small businesses employ approximately half of all workers
    in America; yet, she cannot find the time to speak to us.
        COVID programs, including the PPP, which the Treasury
    Department assisted with by bringing in new lenders, is
    currently in the loan forgiveness stage. Secretary Yellen
    refuses to talk to us and talk directly to small business
    owners. This continues to be unacceptable and a violation of
    the law. It is my hope she stops ignoring the loss to small
    businesses on this Committee and testifies soon.
        When it comes to contracting, small businesses are a
    critical player in helping to strengthen the nation's
    industrial base. They act as prime contractors and
    subcontractors on numerous projects that span the federal
    government.
        Billions of dollars are processed through federal
    contracts, and small businesses have a significant role to
    play. Unfortunately, their impact is waning and this Committee
    must continue to study a balanced approach when it comes to
    cost savings and consolidation.
        I look forward to having a thorough conversation on this
    very important topic. Additionally, I look forward to
    discussing the federal government's practice of setting and
    measuring goals within federal contracting, the role of
    subcontracting, and various other issues related to small
    businesses that participate in federal contracting programs.
        As I mentioned, these are difficult times for small
    businesses, their owners, and their workers, as well as the
    nation's businesses that supply the federal government with
    goods and services.
        With that, Madam Chair, I yield back.
        Chairwoman VELAZQUEZ. Thank you, Mr. Luetkemeyer. The
    gentleman yields back.
        I would like to take a moment to explain how this hearing
    will proceed. Ms. Hidalgo, you will have 5 minutes to provide a
    statement, and each Committee Member will have 5 minutes for
    questions. Please ensure that your microphone is on when you
    begin speaking and that you return to mute when finished.
        With that, I would like to introduce our witness.
        Ms. Bibi Hidalgo is the Associate Administrator of the
    SBA's Office of Government Contracting and Business
    Development. In this role, Ms. Hidalgo oversees and reviews
    procurement-related policy for small business contractors
    hoping to work with the federal government. Before joining the
    SBA, she was a co-founder of Future Partners, LLC, which
    advised Fortune 500 corporate executives on procurement and
    minority business strategy and created a model for how to
    facilitate significant opportunity for both. She also served in
    the White House where she managed a government-wide initiative
    with 24 cabinet agencies to position the federal government to
    meet the 23 percent small business goal for the first time in a
    decade. Ms. Hidalgo has a Master's in Public Policy from the
    John F. Kennedy School of Government at Harvard University.
        Welcome, Ms. Hidalgo. You are now recognized for 5 minutes.

     STATEMENT OF BIBI HIDALGO, ASSOCIATE ADMINISTRATOR, OFFICE OF
      GOVERNMENT CONTRACTING AND BUSINESS DEVELOPMENT, U.S. SMALL
                        BUSINESS ADMINISTRATION

        Ms. HIDALGO. Thank you, Chairwoman.
        Good morning, Chairwoman Velazquez and Ranking Member
    Luetkemeyer, and distinguished Members of the Committee. On
    behalf of our Administrator, Isabella Casillas Guzman, and the
    SBA, thank you for the opportunity to appear before you today
    to discuss the important role that government contracting plays
    in empowering small businesses across the United States.
        The federal government is the largest purchaser of goods
    and services in the world, leveraging its immense spending
    power of over $500 billion annually on everything from
    biopharmaceutical research to cybersecurity improvements to
    green building architecture. And time and again, it is our
    nation's small business contractors who are driving these
    innovations, strengthening our supply chains, moving our
    economy forward, and keeping our country secure.
        For small businesses, there is real power that comes with
    getting to say that the United States Government is one of
    their clients.
        Under the leadership of President Biden, we have seen an
    overhaul in how federal agencies approach and promote small
    business procurement. This administration has shown that it
    believes in advancing small and socioeconomic business
    contracting not only for the sake of our congressional goals,
    but also for the health, security, and prosperity of our
    industrial base. I am proud to be a part of the
    Administration's work to ensure that innovative businesses can
    engage in the federal marketplace.
        By way of background, I am the daughter of Cuban exiles who
    came to the United States after the Cuban Revolution. The day
    of the Bay of Pigs invasion, the Cuban militia stormed into my
    grandparents' house in Havana and took my grandfather, my mom,
    who was only 17 years old, and her two sisters to prison.
    Though my mom and her sisters were deprived of their freedoms
    for 39 days, America soon offered an open door for a better
    future, a future for my mom and dad to start their family,
    raise five children, and teach each of us about grit and
    determination. And based on our deep Ignatian faith, we were
    taught the importance of working in service of others.
        I have worked to promote small business interests under two
    U.S. Presidents. I was a small business owner myself, starting
    a business with my younger brother Patrick to serve Fortune 500
    companies in developing strong supply chains. During this time,
    I faced many of the same challenges that I hear about from
    small business owners across the country, from making payroll
    to landing that first contract.
        And I faced devastating loss at the start of the pandemic.
    My brother Patrick, who was my best friend and business
    partner, passed away suddenly in March of 2020.
        As Associate Administrator of SBA's Office of Government
    Contracting and Business Development, I am deeply aware of the
    impact the pandemic has had on small businesses. My team and I
    work daily to widen the doors of access and opportunity by
    monitoring the progress of all agencies towards the
    congressionally mandated goals for small business contracting.
    Collectively, these goals translate to almost $150 billion in
    small business contracts per year.
        As part of the Administration's commitment to equity in
    procurement, SBA worked last year with the White House, OMB,
    and our partner agencies to develop five major policy changes
    for federal contracting to ensure that socioeconomic firms have
    a strong footing on which to compete in the federal
    marketplace. These changes included incorporating all
    socioeconomic firms into Tier 2 credit of category management,
    tracking all new entrants into the federal marketplace,
    publicly releasing FY20 disaggregated contracting data, adding
    small business goals to SES performance evaluations, and
    increasing the small disadvantaged business goal to 15 percent
    by 2025 with an initial goal of 11 percent for this fiscal
    year.
        At the same time, we have spent the past year working to
    modernize our certification IT systems. These changes have come
    in two forms. First, as client-facing improvements to the
    system itself, such as making the application process easier to
    navigate. And second, as staff facing system improvements that
    have cut down on processing times.
        Our reforms are making a difference. Across the board, SBA
    is processing certification applications over 20 percent faster
    than statute requires. And the new Veteran Certification
    Program that Congress entrusted to us and is slated to begin at
    SBA next year will be leading our technology-forward approach
    across SBA. As we work to support a new generation of
    entrepreneurs, it is more important now than ever to ensure
    that small businesses can access the exceptional resources of
    SBA and the opportunities afforded through federal contracting.
        Thank you again Chairwoman Velazquez, Ranking Member
    Luetkemeyer, and distinguished Members of the Committee for the
    opportunity to appear before you today. I look forward to your
    questions and our conversation today.
        Chairwoman VELAZQUEZ. Thank you, Ms. Hidalgo.
        I now recognize myself for 5 minutes. I am very sorry for
    your loss.
        Last Tuesday, we held a hearing here on category management
    and the impact that it is having on small businesses, so it is
    great that we have achieved the 23 percent small business goal.
    That is a good thing. However, the overall participation of
    small firms in federal contracts has declined significantly
    over the past years, largely because of initiatives such as
    category management.
        My question to you is, based on the anecdotal data stories
    that we have heard and the numbers that are showing a decline,
    what is SBA doing to counter defects of category management?
        Ms. HIDALGO. Well, thank you very much, Chairwoman, for
    that important question. That is the top issue that the White
    House and Administrator Guzman wanted us to address. And so
    right out of the gate we started to meet with everybody across
    the White House, OMB, and the largest contracting agencies to
    figure out how we could reverse that trend, realizing that
    category management was one of the biggest issues. And so as a
    result, we negotiated with OMB and the White House to have all
    the socioeconomic firms, that includes service-disabled
    veterans, women-owned businesses, all place-based HUBZone
    firms, and small disadvantaged businesses into Tier 2 of
    category management, which is the rating system that they had
    created. So that means that 33,000 more firms are part of that
    higher level tiering category which will create more access for
    contract opportunities.
        Chairwoman VELAZQUEZ. So we have followed-up with OMB to
    obtain more information about this change, Tier 2 Category. We
    have not received a response. Do you have a sense of the impact
    this change is having thus far, and would you please share with
    them that we are awaiting a response?
        Ms. HIDALGO. Absolutely, Chairwoman. I will share with them
    that you are awaiting response. What I do with my team is check
    initially for anecdotal information while we also track the
    data, and we are seeing positive trends. We are hearing from
    business owners that they have been contacted for the first
    time in years. We are seeing an increase in new entrants, which
    is one of the things that we are tracking to make sure that it
    is not only an increase in dollars but that we are bringing
    back the industrial base, that we are lifting it up.
        Chairwoman VELAZQUEZ. In fiscal year 2020, the federal
    government also failed to meet the 5 percent prime contracting
    goal for the women-owned businesses program and the 3 percent
    goal for the HUBZone program. In fact, the women-owned small
    business goal has only been met twice as I mentioned in my
    opening statement and the HUBZone goal has never been met. What
    is SBA doing to ensure agencies make use of these programs and
    meet the goals?
        Ms. HIDALGO. Thank you for that great question, Chairwoman.
        This is really important to us, and so now we have the
    women-owned business goal and the HUBZone goal in the
    performance evaluations of not just acquisition staff but all
    senior executive program managers. So this is part of
    essentially their KPIs. And so we are seeing a difference. They
    are now reaching out more and more, the agencies. My staff was
    just telling me this yesterday, across the board agencies are
    reaching out to identify more businesses across all the
    socioeconomic categories.
        Chairwoman VELAZQUEZ. Are you optimistic that the 3 percent
    and the 5 percent goal will be achieved?
        Ms. HIDALGO. I am optimistic that we are approaching closer
    to getting to the goal. I cannot say where we will be this year
    but I am optimistic of the trend that we are seeing.
        Chairwoman VELAZQUEZ. Okay. Let me ask you about an
    important concern that I have, and that is that the agency now
    has performed a strategic review of certified.sba.gov. Could
    you please share with us what the plans are and associated
    timelines to implement an IT platform that achieves this goal?
        Ms. HIDALGO. Thank you, Chairwoman.
        We are very pleased that the systems are fully functioning
    and that was the number one thing I asked my team was to make
    sure that it is functioning and that we gain small wins along
    the way. Rather than doing an outright overhaul, we wanted to
    see that it would become much more user friendly for the
    customer. And I am pleased to say that we just recently
    released a rollout----
        Chairwoman VELAZQUEZ. Okay, so to be clear, will SBA have
    one IT platform for all of the contracting programs or is the
    plan to improve each of the existing certification applications
    IT sees?
        Ms. HIDALGO. Yes. We are working towards one contracting
    platform. But in the meantime, we wanted to make sure that it
    was fully functional, what we have, so that applicants are not
    unduly burdened in the process.
        Chairwoman VELAZQUEZ. My time has expired. Now I recognize
    the Ranking Member, Mr. Luetkemeyer, for 5 minutes.
        Mr. LUETKEMEYER. Thank you, Madam Chair. And thank you, Ms.
    Hidalgo, for being here today. And for your compelling personal
    story. It is always great to hear people's willingness to come
    to this country and participate in our process. As a capitalist
    and entrepreneur, you were able to take advantage of the
    economic freedom this country presents and start your own
    business and do well with it. I congratulate you and your
    family on that.
        Along those lines, as a small business owner, I am sure you
    understand the effects of things that go on with regards to
    what is going on right now with our economy, with inflation,
    for instance, taxes and things like that. So in your position,
    you know, the Consumer Price Index right now is at 8.6 percent,
    and as I go home, that is the number one concern I hear from
    small businesses. With regards to contracting, I have heard
    from several businesses that seem to be stuck with a situation
    where they signed a government contract pre-COVID and because
    of runaway inflation and supply chain problems now they are
    stuck. There is not enough flexibility in the contracts to be
    able to recover the increased costs that are there due to
    inflation or delays. So my question I guess is do the
    government contracts have some type of clause or flexibility to
    allow small businesses who more than likely do not have a large
    cash flow to survive in these instances?
        Ms. HIDALGO. Thank you, Ranking Member, first of all for
    your acknowledgement of my family's story. We are so proud to
    be in this country and my parents taught us that all our lives,
    to be proud of being able to become and be American citizens.
        This issue is top of mind for me and so as a result I met
    with all of my Procurement Center Representatives to ask them
    what can we do to solve these challenges for our businesses?
    Contracting affords an incredible opportunity to contract with
    the largest purchaser in the globe and so we realize that this
    helps to serve as a strong buffer during these challenging
    times. And apart from that, I have been asking my team how we
    can adjust for inflation, and they have been giving me a number
    of recommendations, some of which we are working into our
    regulations now to provide additional relief to small business
    contractors.
        Mr. LUETKEMEYER. I asked this question last week of one of
    our witnesses and they said that there was some flexibility in
    some of the contracts. They were making changes to allow that
    to happen. I know that I have got some of my constituents who
    are working to try to get that done because there apparently is
    not any flexibility in theirs. So the reason for the question I
    guess is it does not seem to be consistent across the board and
    do you find that there is flexibility? And if not, are you
    working to try to fix the problem immediately so that they can
    exist? Otherwise, it is going to run the small businesses out
    of business.
        Ms. HIDALGO. Yes, thank you. So fortunately, given that
    small business contracting is a big priority of the President,
    we are in constant conversations with the Office of Federal
    Procurement Policy that issues guidance to address
    systematically all of these issues. And so together with OFPP,
    the White House, and the largest seven contracting agencies, we
    are trying to find ways to make sure that we can be consistent
    across the board in our guidance and allow for more variability
    in the costs associated with the contracts.
        Mr. LUETKEMEYER. One of the things that the Government
    Accountability Office and SBA's Inspector General originally
    criticized the SBA for their lack of controls on these programs
    leading to potential fraud risks. Can you tell us what new
    measures you have implemented or plan to implement to combat
    the fraud risks? There seems to be a lot of problems with it,
    and from the IG report, there does not seem to be a lot of
    concern.
        Ms. HIDALGO. So we are pleased that we have closed out many
    of those reports. We do have a couple of management challenges
    which we have been addressing and have proposed to the IG now
    to move them to green. So making sure that we have all the
    firms that Congress intended for us to have in the program. And
    I am really pleased to share that our Size Protest program
    issues a formal size determination when contractors' size is
    questioned by another bidding firm or a contracting officer.
    And in fiscal year 2021, because of these reviews, GCBD, or my
    office, was able to identify 66 companies that were not
    legitimate small businesses.
        Mr. LUETKEMEYER. I have got one real quick question for
    you. How many of the recommendations from GAO and IG are still
    outstanding?
        Ms. HIDALGO. We have two that are outstanding from the IG.
        Mr. LUETKEMEYER. Okay.
        Ms. HIDALGO. And those are what we are working on right
    now. One, of course, is on business development for 8(a) firms
    which we are pleased to be working on that and really
    strengthening----
        Mr. LUETKEMEYER. Do you have a date where you think you
    will get those fixed or can be compliant with?
        Ms. HIDALGO. We are working diligently with IG daily. I
    actually hired a top team to address these issues and as you
    know, the Administrator has increased vigilance through the
    Fraud Risk Management Board of which we are very much a part in
    it.
        Mr. LUETKEMEYER. Thank you. My time has expired.
        Thank you, Madam Chair.
        Ms. HIDALGO. Thank you, Ranking Member.
        Chairwoman VELAZQUEZ. The gentleman yields back. Now we
    recognize the gentlelady from Kansas, Ms. Davids, Chairwoman of
    the Subcommittee on Economic Growth, Tax, and Capital Access.
        Ms. DAVIDS. Thank you, Chairwoman Velazquez and Ranking
    Member Luetkemeyer for holding this hearing today. And thank
    you, Ms. Hidalgo for testifying before us today.
        The SBA is charged with ensuring that a fair proportion of
    contracts and subcontracts for the federal government are
    placed with small businesses, which we have been discussing.
    And while the federal government has met its overarching goal
    of awarding 23 percent of contracts to small businesses, as we
    have been talking about there has consistently been a failure
    to meet the contracting goals for the Women-Owned Small
    Business program and HUBZone program. And one of the things
    that I have been made aware of more recently in part because
    the Kansas 3rd happens to have a really strong entrepreneurial
    ecosystem, is that the federal contracts we are seeing are
    largely going to small businesses in concentrated areas. Forty-
    three percent of the contracts went to around 17 congressional
    districts, 12 of which are located in Maryland and Virginia.
    And I, of course, want to make sure that all the amazing
    businesses that we have in Kansas that could absolutely provide
    the services and expertise that federal contracts require are
    able to do that.
        So I am curious if you are aware of or can speak to some of
    the factors that have lead to this kind of high geographic
    concentration as it relates to these small business contracts.
        Ms. HIDALGO. Thank you, Congresswoman, for that very
    important question.
        We are deeply concerned about the issue of contract
    bundling and it favors companies that tend to be larger or that
    are working with larger corporations, and so as a result, that
    is part of the reason why we are seeing that concentration as
    well as with category management. And so, we are quite often
    looking at, studying the maps, including in your district to
    figure out what we can do to unleash more opportunity. And that
    is part of the reason why we are now tracking new entrants and
    we are hearing from agencies constantly what they can do to
    connect with new small businesses or small businesses that have
    not been contracting with the federal government. And recently,
    I signed a rule that also provides a lot more NAICS codes for
    set-asides for women-owned businesses. So now 92 percent of all
    federal spend can qualify as a set-aside for women-owned
    businesses. So we are hopeful that that will have an impact on
    women-owned business contracting as well.
        Ms. DAVIDS. Thank you. That is really good to hear and I am
    sure our office will follow up so we can figure out if there
    are ways that we can be helpful in making sure that
    geographically diverse small businesses are able to access the
    government contracting.
        I am curious if you could talk a little bit about the $5
    million funding, most recent funding request for HUBZone and
    8(a) and the Women-Owned Small Business program for staffing
    resources. Can you just share with us a little bit about how
    you hope to use that funding to increase the effectiveness and
    efficacy of those programs?
        Ms. HIDALGO. Yes, definitely. Thank you for that question,
    Congresswoman.
        When I arrived, there were historic lows in some of our
    staffing, particularly around the Procurement Center
    Representatives who monitor the contract awards as well as the
    Commercial Market Representatives who monitor subcontracts. So
    this is one of the areas where we want to make sure we can get
    back to more historic levels of staffing. Each one of the PCRs,
    I asked my team to give a ballpark figure of what that
    represents in the return and value on contracts to small
    businesses. Each one represents about a billion dollars in
    additional contracts for small businesses. So we will leverage
    that $5 million in staffing to be able to increase significant
    opportunity for small businesses.
        Ms. DAVIDS. Thank you. And we will follow up about that as
    well. Thank you for your time today and Madam Chair, I yield
    back.
        Chairwoman VELAZQUEZ. The gentlelady yields back.
        Now we recognize the gentleman from Texas, Mr. Williams,
    Vice Ranking Member of the Committee, for 5 minutes.
        Mr. WILLIAMS. Thank you, Madam Chair. And thank you for
    being here. I appreciate it.
        You probably know the president. Well, you do know the
    president much better than I do. You probably see him or you do
    see him more than I do. I am a small business owner. Tell him a
    couple things. Tell him that he needs to quit talking about tax
    increases. He needs to be fixing inflation. Okay? And he also
    needs to quit burdening small business owners with regulations
    through adding to compliance costs that are destroying profits
    in small business. If you would tell him that I would
    appreciate it.
        And thank you again for being here. And as a small business
    owner for over 50 years--actually 52 years now--I still have my
    business. I employ about 330 people back in Texas. I can tell
    you that the Biden administration is completely out of touch
    with Main Street America. Main Street America is what this
    country is about and small businesses across the country are
    concerned with supply chain disruptions that are leaving
    storage shelves empty. And in my personal situation, I have no
    cars to sell on my lot. I cannot get cars. Excessive government
    regulations cause an increase in compliance. We just talked
    about. And the inability to find qualified workers and the
    constant threat of tax increases coming from Democrats in
    Washington are really hurting small business.
        However, when I talk to my business owners back in Texas,
    they are most concerned about the out-of-control inflation we
    are all experiencing. And instead of taking and faking steps to
    bring down energy costs and bring relief to families and small
    businesses, the only thing the Biden administration is doing is
    making excuses. The best I have ever seen. They have switched
    between blaming the Russian invasion of Ukraine to corporate
    greed as the main cause of inflation but I can tell you, Texas
    are not buying that. And Americans see the reckless government
    spending and the hostile posture towards our energy companies
    as the main factor in these record levels of inflation that are
    killing small businesses and owners who must drastically alter
    their operations.
        So we have talked a little bit about this but I would say
    what is your office doing to help small businesses struggling
    with inflation. We talked about that earlier. But has
    Administrator Guzman asked you to examine inflation's impact on
    the federal contracting? Now, you did talk about the impact but
    you did not have the answer to the problem. And you mentioned a
    focus group I think that give you ideas and so forth but we
    have not talked about what are they saying? What are they
    saying that you need to do to fix this problem?
        Ms. HIDALGO. Well, thank you----
        Mr. WILLIAMS. You have got the problem and then you have
    got to have the fix.
        Ms. HIDALGO. Thank you very much, Congressman, and I really
    deeply appreciate your perspective as a very successful small
    business owner.
        So this is top of mind for the Administrator and the White
    House. And so as a result, that is why I met with all of my
    team members that are very much on the ground working with
    small businesses every day to get contracting opportunities to
    say what can we do to alleviate any of these challenges. So
    allowing for more variable price adjustments is one of the
    issues that we are looking at. Looking at thresholds to match,
    adjust for inflation are other areas. And so we are meeting
    regularly as a team to put together a package of fixes that
    will help to alleviate challenges----
        Mr. WILLIAMS. Well, that's good. I hope you have some small
    business owners giving you some real world experience to help
    you do that.
        And small business contractors are some of the hardest hit
    businesses by runaway price increases. And if a contractor's
    resource costs are rising each month, their margins will get
    smaller and smaller. And additionally, every business I speak
    to has told me how hard it is to find workers. We talked about
    that. Everyone knows that. And this is delaying the timelines
    on projects when they can be completed and then the project
    drags out. And with high inflation the cost goes up. So
    unfortunately, there is rarely any flexibility within these
    contracts to ensure they can still get the job done at a
    reasonable cost when these economic factors outside of their
    control are biting into their margins. So how is your office
    working with small businesses that have been awarded a federal
    contract? Before inflation, employers' shoulders were
    calculating the original bid. And I think one of the biggest
    things, too, is payment terms. Are you all paying them on time?
    How long does it take to get payment from the federal
    government?
        Ms. HIDALGO. So we are actually----
        Mr. WILLIAMS. That is one of the biggest things you can do
    right now to help. My experience with the federal government
    has been pretty much a slow pay.
        Ms. HIDALGO. And we are working now to get back to during
    the Obama era where we fast-tracked payment. And so with the
    Prompt Pay Act, it is a 30-day requirement and we are trying to
    get that back to 15 days so that businesses will have more of a
    capital flow during these circumstances. And we are continuing
    to look at all the tools that are available at our disposal to
    ensure that small businesses can compete and that is where our
    strong relationship with OFPP and the White House has been
    critical in allowing us to provide those recommendations.
        Mr. WILLIAMS. Thirty-day pay is good. Ninety-day is bad.
        Thank you for being here. I appreciate it.
        Ms. HIDALGO. Thank you, Congressman.
        Chairwoman VELAZQUEZ. Time has expired.
        Now we recognize the gentlelady from Pennsylvania, Ms.
    Houlahan, for 5 minutes.
        Mr. HOULAHAN. Thank you, Madam Chair. Just making sure you
    can hear me okay. Can you hear me?
        Chairwoman VELAZQUEZ. Oh, I am sorry. Yes, Ms. Houlahan, we
    can hear you.
        Mr. HOULAHAN. Excellent. Excellent. And thank you so much,
    Administrator Hidalgo, for your really compelling testimony
    today.
        And as a women entrepreneur myself, increasing
    opportunities for government contracting and business
    development for women-owned businesses is obviously
    particularly important to me and it very much informs my work
    on this Committee. I also happen to be a systems engineer and
    so I really believe in measuring what matters, and I am
    grateful to hear some of your KPIs and some of your emphasis on
    systems and systems change.
        My Women-Owned Small Business Program Transparency Act, or
    the WOSB Transparency Act, passed the house earlier this month
    with very strong bipartisan support which would allow Congress
    and the SBA to gather necessary data that would improve this
    really important program that we have been talking about. I
    look forward very much to continuing to work with your office
    on ways to make sure that the SBA is able to reach their 5
    percent prime contracting goal for women-owned small businesses
    and I am really pleased that the Chair and also Representative
    Davis have also highlighted this really important goal that has
    only bee met twice in history in their remarks.
        I am particularly interested in hearing more from you about
    how the certification process for that program can be improved
    because as I understand it, according to the latest data from
    the SBA's Office of the Inspector General, SBA initially
    received 15,000 applications for that WOSB program and 12,000
    were screened apparently and returned to the applicant for more
    information. Do you know what the primary reasons were that so
    many applications were, in fact, return. And what actions is
    the SBA able to take to improve this process so that applicants
    can get to this process, get this process correct from the
    beginning?
        Ms. HIDALGO. Well, thank you very much, Congresswoman, for
    that important question. And also, for your perspective as well
    as a business owner.
        This has been top of mind for me since day one. We need to
    get women-owned businesses in the pipeline certified as soon as
    possible so that they can get access to set-asides. And so this
    is partly why immediately I asked my team to figure out what is
    going on in the system that leads to incomplete applications.
        And I will give you an example. We learned that the way it
    was set up is they would ask applicants for all of their
    documents at once. But it turns out if they did not upload them
    individually, then it would only accept one of the documents.
    So I said, this is unacceptable and we need to fix this right
    away. And my team got right on it, fixed it to at least inform
    the business owner that they needed to upload one at a time.
    And as a result, we are seeing differences like that are having
    an impact. We have now certified well over 5,700 firms. We are
    on pace to certify over 6,000 this year. Any incomplete
    applications, I have my pre-screeners working directly with the
    applicants to make sure that their application is not rejected
    and that they can work towards a complete application as soon
    as possible.
        Mr. HOULAHAN. I look forward to learning more of kind of
    the reason codes for why those things are happening and that is
    a really obvious glitch that you are talking about that I have
    experienced personally myself in submitting paperwork for
    health care as an example.
        With what remains of my time, similarly, I am really
    interested in exploring the proposals that exist to benefit
    economically disadvantaged women-owned small businesses. While
    there are clearly requirements to participate in the
    Economically Disadvantaged Women-Owned Small Business
    contracting program or the very easy to remember EDWOSB such as
    income and net worth requirements, there really does not seem
    to be currently a separate and dedicated contracting goal that
    is EDWOSB's which would likely further maximize the utilization
    of such firms. Given the administration's commitment to these
    kinds of causes, I am wondering how the SBA is working to
    increase contracting opportunities for Economically
    Disadvantaged Women-Owned Small Businesses. For instance, do
    you believe a separate contracting goal might be beneficial?
        Ms. HIDALGO. Thank you very much, Congresswoman, for that
    question and concern for EDWOSB firms. Fortunately, a lot of
    the firms will benefit from the President's emphasis on
    increasing Small Disadvantaged Business contracting and my team
    negotiated with all 24 agencies so we can get to 11 percent for
    fiscal year 2022. And so between that and the recent rule that
    I signed that allows for a significant number of more NAICS
    codes to be used for women-owned and economically-disadvantaged
    women-owned set-asides, as I mentioned, 92 percent of federal
    spend now falls under those NAICS codes. So we are hopeful that
    we will see an increase in both EDWOSB as well as WOSB set-
    asides.
        Chairwoman VELAZQUEZ. Time has expired.
        Mr. HOULAHAN. Thank you. I have run out of time, Madam
    Chair. I appreciate it and I yield back.
        Chairwoman VELAZQUEZ. Thank you.
        Now we recognize the gentleman from Pennsylvania, Mr.
    Meuser, Ranking Member of the Subcommittee on Economic Growth,
    Tax, and Capital Access, for 5 minutes.
        Mr. MEUSER. Thank you very much, Madam Chairwoman. And
    thank you, Ms. Hidalgo for being with us and testifying today.
        I am very concerned about the health of our small
    businesses. I am sure you folks at SBA are quite concerned and
    have a sense of alarm and urgency because small businesses are
    facing this tattered economy and the repercussions of it
    certainly more than large businesses. Now, first, gasoline
    prices, fuel in general, diesel, heating oils as you well know
    are doubling in people with homes anyway, and so businesses,
    instead of paying $3,000 or $2,000 a year, they will be paying
    $4,000 a year. Gasoline is costing $5,000 more a year. Diesel,
    many businesses are concerned diesel is going to be rationed. I
    mean, it is that bad. And yet, the Secretary of Energy just
    yesterday very alarmingly said what we need to do is go to EVs
    and renewables which the administration should know that even
    if every country in the world hit its carbon reduction targets
    over the next 10 years, it still will only account to about 25
    percent of the energy needs of the country and the world. And
    at increased demand, we need more of the current energies that
    we produce here domestically in 10 years. So it really was an
    unfortunate, I think, thing to say and kind of foolish. Because
    it is simple math on how that works. And so for the energy
    secretary administration to say something like that I think
    that raised a lot of fear in small businesses and certainly to
    our economy as a whole.
        Small businesses are dealing with workforce issues, right,
    as well know. Access to capital. Supply chain disruptions. I
    mean, it is crazy. You go into a small business and they are
    waiting on things. They will have excess inventory or too
    little inventory and that is what throws off their cashflow to
    much. Regulations, taxes.
        You know, it was disappointing when I asked Administrator
    Guzman a few meetings ago, Committee meetings ago, what she
    thought if she goes to the president and asks, informs him as
    the advocate for small business, that raising taxes is not a
    good thing. And she said she does not deal with taxes. You
    know, taxes are very important, keeping them as low as
    possible. We need to be a competitive nation. And you know,
    when you increase taxes, you reduce revenues, not just for the
    business but for Treasury, for government. Or inflation will do
    that. But you are reducing their net income. So therefore, you
    will be receiving less revenues and particularly with
    inflation.
        Now, I went through that whole list and then let's just
    talk about inflation, which is definitely, as you know, the
    number one concern and problem small businesses are facing. And
    you did not mention anything about that in your opening. So I
    just have a couple of questions on that.
        When businesses are dealing with, and why it should be very
    relevant to you, inflation, when businesses are paying more for
    goods and abiding by the contracts that they have with the SBA,
    they therefore, are squeezing their margins, their
    profitability. Are you in kind in the process of raising the
    contracted prices by 8.6 percent, the highest level of
    inflation in 40, 50 years, whatever it is? Are you doing that?
        Ms. HIDALGO. Thank you very much, Congressman, for that
    question. And we are actually studying the data to figure out
    where we can provide relief for small business contractors.
    Fortunately, what is amazing about these congressionally
    created programs is that it is close to $150 billion a year
    that is contracted through small businesses which helps, has a
    significant impact on the well-being of contractors and firms,
    small businesses around the country during uncertain economic
    times. And so we are looking to see where we can adjust
    thresholds working with the Office of Federal Procurement
    Policy to issue guidelines, as well as adjust any of our rules
    or regulations that will provide relief on inflation for small
    businesses and our contractors.
        Mr. MEUSER. I have limited time. I was going to ask about
    the technology contract that you are engaged in. I am sure that
    is a lot of fun. But good luck with it and I will have follow-
    up questions on that in writing. Thank you.
        Ms. HIDALGO. Thank you.
        Mr. MEUSER. I yield back, Madam Chair.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        Now we recognize the gentleman from Louisiana, Mr. Carter,
    for 5 minutes. Mr. Carter?
        The gentleman from Pennsylvania, Mr. Evans will be
    recognized for 5 minutes.
        Mr. EVANS. Thank you, Madam Chair.
        In the latest budget request, SBA is sort of thumbing--for
    a new initiative known as the Manufacturing Hub proposal. Could
    you please expand on the scope of this issue and how SBA
    envisions it will work?
        Ms. HIDALGO. Thank you very much, Congressman, for that
    question.
        The president has been very focused on increasing
    manufacturing within the United States, and he and our
    Administrator see small business manufacturers as being the
    pioneers in bringing back manufacturing to our shores. And so
    as a result, this is why we responded with the proposal to
    create a Manufacturing Hub office focusing more of our
    technical assistance and outreach to manufacturing firms,
    understanding some of their challenges and ways that we can
    leverage, for example, some of the contracting tools so that
    they can get the much needed supplies that they need to partner
    with our federal agencies. And so basically, our proposal is
    taking a laser focus on the ways that we can support our
    nation's pioneers in manufacturing and ensure that more of our
    products are made right here in America.
        Mr. EVANS. Contracting vehicles have only gotten larger and
    more complex in recent years. What is SBA doing to make sure
    that these vehicles are not hurting small businesses and
    chances of winning contracts?
        Ms. HIDALGO. This is an excellent question, Congressman,
    and it is top of mind for us every day. Most recently, we saw
    an award, a bundled contract that was going to be a total of
    $7.7 billion without any small business set-asides. And so my
    office immediately negotiated with the agency, was very
    steadfast, and as a result, we were able to negotiate $2.85
    billion within that bundled contract just for small business
    set-asides. But the reality is this is our PCRs and our
    government contracting team and policy teams were critical to
    the success but the PCRs are so critical for monitoring
    contracts like these and if we are able to be able to get an
    increase in staffing, we will be able to have more of the PCRs
    monitoring these contracts across the government to ensure that
    there will always be a large amount of set-asides for small
    businesses and that we continue to adhere to the Rule of Two
    across the federal government in setting aside contracts for
    small businesses.
        Mr. EVANS. How is SBA working to make sure agencies hold
    larger contracts accountable to the subcontracting plans and
    how is SBA supporting small businesses especially new entries
    as they work as subcontractors?
        Ms. HIDALGO. Thank you for that great question. It is
    something that we know needs to change as far as ensuring more
    accountability around subcontracting plans. With limited
    resources, we are trying to figure out administratively what we
    can do to ensure more of that accountability from having, for
    example, potentially firms indicate to the small businesses if
    they included them in their subcontracting plan, to having
    potentially, for example, I just recently met via satellite
    with a number of contractors in Guam who suggested that they be
    able to indicate what the cost involved was for them to help
    support a bid proposal and be able to attach that to those
    plans.
        So we are looking at all the administrative tools that we
    have to make sure there is more accountability. The ESRS
    system, unfortunately, does not allow for real-time data
    analysis and that would be of significant support if we were
    able to find a way to enhance that system operated through one
    of our partner agencies to be able to track in real-time
    whether or not major contractors are following through on their
    subcontracting plans.
        Mr. EVANS. Thank you. I yield back the balance of my time.
    Thank you, Madam Chair.
        Chairwoman VELAZQUEZ. Thank you. The gentleman yields back.
        Now we recognize the gentlelady from California, Ms. Kim,
    Ranking Member of the Subcommittee on Innovation,
    Entrepreneurship, and Workforce Development for 5 minutes.
        Ms. YOUNG KIM. Thank you, Chairwoman Velazquez, and Ranking
    Member Luetkemeyer, for holding this important hearing. And I
    want to thank you, Ms. Hidalgo, for joining us and testifying
    before our Committee. And also for sharing your inspiring
    story.
        Like you, I am an immigrant from South Korea, and I can
    tell you that America has also opened the door for me for, you
    know, a better future for me and my family now. And I am a
    grandma, so I am working really hard to ensure that we leave
    America better for our future generations. So I hope we can
    work together to preserve that American dream for all
    Americans, but especially for small businesses to prosper and
    succeed because small businesses are the backbone of our
    economy as we heard this millions of times.
        But unfortunately, according to the National Federation of
    Independent Businesses survey, small business owners, their
    expectation for better business conditions over the next 6
    months are at their lowest in nearly 50 years. And small
    business owners are increasingly pessimistic about the economy
    because of the increasing costs, rising inflation, supply chain
    disruptions, and chronic workforce shortages. As a Ranking
    Member on that Subcommittee on Innovation, Entrepreneurship,
    and Workforce Development, this is really a critical and
    important issue for me.
        And given the economic headwinds main street is facing, it
    is extremely important that SBA is laser focused in fulfilling
    existing mandates and providing business development assistance
    in a timely manner.
        There was an IG report February 2022, this year. The 8(a)
    program found that SBA has regularly misused mandated deadlines
    to report to Congress on program performance because the data
    reliability issues would certify. Additionally, the report also
    states that SBA does not have established standardized
    procedures for business opportunity specialists to use to
    monitor program participants.
        So, have you met with the inspector general to discuss the
    findings of that report?
        Ms. HIDALGO. Thank you very much, Congresswoman, for those
    important questions. Business development is really top of mind
    for our team, our dedicated team of civil servants and everyone
    across the agency. And I am very grateful for the plus-up that
    we received in 7(j) technical assistance funding from Congress.
    We have requested additional resources as well for fiscal year
    2023 so we can continue to enhance our technical assistance and
    business development.
        But that said, as you mentioned with the data and the
    report to Congress, given that there was a conversion from
    paper to digital in 2018, now our team has been catching up in
    their data analysis and we are on track to catch up with the
    reports this year.
        Ms. YOUNG KIM. Is that the reason for the delay in coming
    up with a solution, conversion from paper to digital?
        Ms. HIDALGO. That is one of your questions in terms of
    reports, you know, reporting out to Congress, that was the
    reason for the initial delay was that conversion. And now we
    have actually addressed that and the team is on track to catch
    up on our report to Congress on business development for 8(a)
    firms.
        And then apart from that, the wonderful issue that you
    mentioned of Business Opportunity Specialists, we see that
    there is a great opportunity there. And this is top of mind for
    Administrator Guzman. And so my team just recently met with the
    leads of all 68 offices around the country to develop an
    approach for more training with Business Opportunity
    Specialists to support our small business contractors.
        Ms. YOUNG KIM. Thank you. You know, I am also hearing that
    SBA's service to small contractors may be falling. For
    instance, the 8(a) small business was referred to the wrong
    specialist, an economic development specialist, rather than
    business opportunity specialist when seeking contracting
    assistance. District offices also may be more preoccupied with
    SBA's other programs like its lending programs. Failing to
    realize they also have a duty to offer business development
    assistance to small businesses. So my question is, are you
    aware of these issues?
        Ms. HIDALGO. We are very aware that over time there has not
    been as much emphasis at the district level on business
    development and more on compliance. And so we would like to
    strike more of a balance to ensure that across the board there
    is more support for business development. And connection with
    our PCRs and CMRs. So we are making sure that there is that
    streamlined communication across offices.
        Chairwoman VELAZQUEZ. The gentlelady's time has expired.
        Ms. YOUNG KIM. Thank you. My time is up. I yield back.
        Chairwoman VELAZQUEZ. Now we recognize the gentleman from
    Louisiana, Mr. Carter, for 5 minutes.
        Mr. CARTER. Madam Chair, thank you very much for the
    opportunity.
        Ms. Hidalgo, can you share with me the percentage of
    African-American contractors in the 8(a) program?
        Ms. HIDALGO. So, in terms of percentage, we have well over
    1,000. About 1,500, I believe, African-American firms owned in
    the 8(a) program.
        Mr. CARTER. And can you share with me the percentage of
    contracts that are awarded to these African-American
    contractors?
        Ms. HIDALGO. So for the first time in history, we released
    disaggregated data on race and ethnicity. And of all federal
    contracts, 1.67 percent are awarded to small businesses that
    are African-American owned.
        Mr. CARTER. How many have you lost? My understanding is
    that the program has been somewhat diminished and there has
    been a decrease in the amount of African Americans that
    actually participate in the 8(a) program. Can you share with me
    some light on that?
        Ms. HIDALGO. We are trying to make sure that across the
    board small businesses can compete in federal contracting. So
    the programs that Congress has created, the five contracting
    goals are really important for ensuring that all small
    businesses can participate, including African-American owned
    firms. And so as a result, we are making sure that we are doing
    outreach across the board in urban areas, as well as in rural
    areas. We are trying to figure out ways that individually owned
    businesses can participate in more of these ordering vehicles,
    the contract vehicles. Our work in trying to dismantle contract
    bundling also has an impact on African-American owned
    businesses, and especially African-American women-owned
    businesses in being able to compete for these opportunities.
        But what we wanted to do is have transparency and establish
    a baseline so that we have an understanding of where we are and
    where we need to go to ensure that there is access across the
    board for all small business contractors.
        Mr. CARTER. And forgive me. I do not want to appear to cut
    you off but we have limited time, so if I do, please forgive
    me. It is not being rude.
        Share with me very quickly what plans you have or what you
    are doing to increase African-American participation not only
    in the program but for those that are in the program to ensure
    that they are getting a fair share of contracting
    opportunities. What are your aggressive steps or marketing
    efforts?
        Ms. HIDALGO. Well, part of it is certainly marketing but
    also it is providing more assistance to applicants across the
    board, making sure, I have asked to make sure that our pre-
    screeners work with all the businesses. So if we receive any
    incomplete applications, rather than being rejected, we are
    having our prescreening and screening team work with them to
    make sure that they can get all the important documents in for
    the application.
        And then I asked my team to think about Certify in the same
    way that you would when you get your iPhone and it guides you
    through the process in setting it up. So they should not have
    to----
        Mr. CARTER. Ms. Hidalgo, could you share with us in writing
    the percentages that I asked in question, if you can submit
    them to the Committee for our review, the percentages of
    African-Americans and other minorities that are in the program
    against what percentage of contracts are being awarded to them,
    that would be very helpful.
        Lastly, before my time elapses, I mentioned this before.
    8(a) program was disrupted greatly during the pandemic. I know
    there was a restoration of theoretically a year. That year was
    actually truncated. It was not a full year. We know that the
    impacts of COVID still exist and it hurt 8(a) contracts. I have
    consistently asked for some relief that we consider how we can
    yet again advance and grant additional time to those 8(a)
    contractors so they can enjoy the full complement of their term
    of an 8(a) contractor.
        Can you share with me any actions that are being taken
    along those lines and your thoughts?
        Ms. HIDALGO. Thank you very much, Congressman. That is a
    very important question and I am asked all the time by small
    business owners if we will extend it an additional year. We
    would welcome that opportunity to extend it. I have asked my
    team if there is anything we can do administrative, and
    unfortunately, we cannot. It would need to be by statute. And
    so we welcome any opportunity to extend it an additional year
    and we would be pleased to work with your office or with any of
    the Members of the Committee here for that purpose.
        Mr. CARTER. I would love to visit with you on that and to
    work with our Chair and our Ranking Member to come up with a
    bipartisan measure that will give us the opportunity to extend
    it to make up for the tremendous loss that many of our small
    and emerging businesses had to suffer at the hands of something
    that was beyond any of our control, COVID>
        Thank you very much.
        Chairwoman VELAZQUEZ. The gentleman yields.
        Mr. CARTER. If you could get back to us with that
    information, particularly those areas of interest relative to
    contracting opportunities and percentages, I would greatly
    appreciate it.
        Ms. HIDALGO. I would be happy to. I will have my team
    circle back with you promptly, Congressman.
        Chairwoman VELAZQUEZ. The gentleman's time----
        Mr. CARTER. As well as the (8)a opportunity extensions.
    Thank you so much.
        I yield back, Madam Chair. Thank you.
        Chairwoman VELAZQUEZ. The gentleman from Florida, Mr.
    Donalds, is recognized for 5 minutes.
        Mr. DONALDS. Oh, my apologies, Madam Chair. Thank you so
    much.
        Ms. Hidalgo, thanks for being here. We really do appreciate
    it here in the Committee. I also commend you on everything you
    have done personally in your life. You know, this country, I
    think people sometimes think that success is easy. Success is
    really, really hard. It requires a ton of sacrifice. So that is
    a credit to you and to your family. But it also requires an
    environment that allows for these sacrifices to come to
    fruition. And it is crystal clear that examining the globe, it
    is just not possible in so many other places the way it is
    possible here in the United States. So it is really a credit to
    you, your family, and it is a credit to the bedrock of our
    society here in America.
        Obviously, dealing with governmental contractors, can you
    speak to some of the inflationary pressures that the
    contractors are having to face right now considering the fact
    that I think it was said earlier in the hearing that the
    contracts are what they are from the federal government. Yet,
    business owners have to procure product or deliver services,
    whether that is procuring employees to do the work, whether it
    is procuring other products to assemble for the federal
    government to use. Can you speak to the inflationary pressures
    that the contractors are faced with today?
        Ms. HIDALGO. Thank you very much, Congressman, for that
    important question and for your initial comments. I much
    appreciate it regarding my family and their coming here to this
    country.
        So this is very top of mind for us and we have been looking
    at any which way that we can provide relief for our small
    business contractors.
        I will give you an example of a firm that, for example, is
    having trouble getting retractor bags and they are on the
    cutting edge of fighting super bugs, a small business. And the
    costs are high. And so one of the requests we got is, are there
    ways that we can look to using some of the schedules, even
    though they have impacted the small businesses, but could we
    use some of the schedules to get supplies at lower costs for
    small businesses, particularly since they are part of our
    government contracting portfolio. So we are looking across the
    board at all types of solutions to address any type of
    inflationary pressures that businesses are facing at this time.
        Mr. DONALDS. Have you guys had an opportunity to engage the
    administration to talk about potential regulatory relief,
    frankly, in the economy overall. I understand the purpose of
    this hearing is with governmental contractors but, you know, if
    it works for a government contractor, it will work for any
    other business in the United States. Have you guys had an
    opportunity to engage the White House about proposals on
    regulatory relief which would actually really open up a lot of
    these issues that businesses across the country are facing?
        Ms. HIDALGO. Yes, definitely. Thank you. That is a great
    question. And that is one of the reasons why I met across the
    board with our PCR team and other staff to figure out how we
    can use regulations to provide relief to businesses. And we are
    working now on that and hope to be having relief sometime soon
    working with OMB to provide relief on some of the thresholds.
        Mr. DONALDS. Switching gears, back under Section 1683 of
    the NDAA from fiscal year 2013, the SBA has to submit a report
    on suspension and disbarment to Congress. What is the status of
    that report? How come that report still has not been provided
    to Congress? Is there any discussion within SBA about that
    report actually getting to the Hill?
        Ms. HIDALGO. Yes. We are right now working on updating all
    of our reports. It is top of mind for the Administrator and me
    to make sure that we follow through on our duty to Congress to
    report back. And so the team has been working extremely hard in
    updating and getting our reports to you and being timely going
    forward. That is of utmost importance to me and the leadership
    at SBA.
        Mr. DONALDS. Final question and I will turn you back over
    to the Committee, I guess.
        The 2019 OIG audit of SBA's suspension and disbarment
    process found that SBA had not established sufficient
    guardrails to prevent ineligible entities from participating in
    small business programs. What is happening right now at SBA to
    address the OIG's findings?
        Ms. HIDALGO. Thank you, Congressman. This is really
    important to us and to the Administrator. And I will give you
    an example. Because of our reviews in fiscal year 2021, we were
    able to ensure that $5.28 billion in contracts were redirected
    to legitimate small businesses because of some small businesses
    that were no longer legitimate small businesses. So this is an
    example of the kind of work we are doing to make sure. And I
    have a top team in place that is very focused on this to make
    sure we have the controls in place, working with the Fraud Risk
    Management Board that Administrator Guzman also recently
    created, to make sure that the businesses that Congress
    intended to benefit from these programs are, in fact,
    benefitting from the programs.
        Mr. DONALDS. All right. Thank you.
        Thank you, Madam Chair.
        Chairwoman VELAZQUEZ. Time has expired.
        Now we recognize the gentlelady from California, Ms. Chu,
    for 5 minutes.
        Ms. CHU. Ms. Hidalgo, from 2010 to 2019 we saw a steady
    decline in the number of firms participating in the 8(a)
    program. That was under the previous administration. And I
    asked your predecessor what steps the office was taking to
    address this decline. However, since then, data does show that
    under the Biden administration, the SBA was able to reverse
    this downward trend in 2021. And for the first time in 10
    years, increased the number of small businesses in the program.
        So Ms. Hidalgo, can you talk about what factors contributed
    to last year's growth? And what steps your office is taking to
    ensure that we keep up that growth and continue to bring more
    firms into the program?
        Ms. HIDALGO. Thank you very much, Congresswoman. This is
    such an important issue, and we are all working, the dedicated
    team of civil servants and staff are working diligently to try
    to reverse this trend. And so, by tracking new entrants, we now
    have a requirement across the federal agencies to track new
    entrants. And as a result, we are seeing results. The agencies
    are reaching out to us on a regular basis asking for lists of
    firms that are new to the federal marketplace. We want to make
    sure that we are being welcoming to firms that want to contract
    with the federal government because of the opportunity it
    provides contracting with the largest purchaser in the globe.
    And so by tracking and also putting the goals and performance
    evaluations, the KPIs of our senior executives across all 3,000
    buying offices, that is where we are seeing a whole of
    government approach to ensuring that we do not only increase
    the dollars but we also increase the number of businesses that
    can benefit. That is what is so extraordinary about these
    programs is just the impact that it can have on our small
    businesses across the country in communities and our nation.
        Ms. CHU. Well, thank you for that because it has truly made
    a turnaround. But however, I did want to ask about other
    programs. I know under the previous administration the federal
    government failed to meet the subcontracting goals for three
    programs--the Small and Disadvantaged Business Program, the
    Service-Disabled Veteran-Owned Small Business Program, and the
    HUBZone program. These subcontracting goals are so critical to
    ensuring these underserved small businesses have a fair shot at
    competing for federal contracts. And I had asked your
    predecessor under the previous administration what they were
    going to do to remedy this. Now, I do not know what the current
    results are for those goals under the current administration.
    Nonetheless, what do you know about whether you are meeting the
    subcontracting goals for these three areas and what steps your
    office is taking to make sure that we do meet these goals going
    forward?
        Ms. HIDALGO. Thank you very much, Congresswoman. We are
    trying to figure out what we can do to have more accountability
    with the major primes' subcontracting plans. And we have
    limited resources in terms of direct monitoring, so we are
    looking at ways to issue more administrative guidance on this
    front. And we are working closely with the White House and
    office of Federal Procurement Policy now to take a more laser
    focus on subcontracting in particular. If we were able to track
    in real time through the ESRS system, whether or not primes are
    following through on their subcontracting plans, that would
    make quite a significant difference. But my understanding is
    that system would need a lot more additional resources in order
    to be able to do real tracking. And I think if we were able to
    do that we would see an increase in billions of dollars going
    to our nation's small business subcontractors.
        Ms. CHU. Well, in fact, I know that the SBA requested an
    additional $5 million to be divided between 8(a), HUBZone, and
    Women-Owned Small Business programs for staffing resources. Can
    you explain the purpose of this and how this funding would be
    divided between three programs and whether you think it will
    increase participation in these programs.
        Ms. HIDALGO. Yes. Thank you very much. And definitely, we
    want to make sure----
        Chairwoman VELAZQUEZ. Ms. Hidalgo, time has expired. Will
    you please send a written answer to the Committee in response
    to that question?
        Ms. HIDALGO. Yes, I would be happy to follow up on that,
    Congresswoman. Thank you.
        Chairwoman VELAZQUEZ. Thank you.
        The gentleman from Minnesota, Mr. Stauber, is recognized
    for 5 minutes.
        Mr. STAUBER. Thank you, Madam Chair, and Ranking Member
    Luetkemeyer for holding this. Ms. Hidalgo, thanks for being
    here and presenting your testimony.
        I think you have a very tough job to try and defend this
    disastrous administration with the inflation and materials,
    increase in materials pricing for small businesses that are
    being devastated today.
        Do you know how many billions of dollars of additional
    regulations the Biden administration has put on small
    businesses last year alone?
        Ms. HIDALGO. Congressman, thank you very much for your
    question and for your support of the programs. I do not----
        Mr. STAUBER. I can answer that for you. It is $201 billion
    of additional regulations that you put on small business. That
    is just unacceptable.
        So in the fiscal year 2022 National Defense Authorization
    Act, I was able to successfully add an amendment that will help
    reduce fraud in government contracting programs. The amendment
    requires firms to update their status in SAM within 2 days if
    they have received a final adverse decision against their
    status. If they do not, SBA is required to update it.
        Could you tell me how the implementation of this provision
    is going thus far?
        Ms. HIDALGO. Thank you very much, Congressman. We have
    implemented that and my team has briefed me on that. Exactly as
    you said. They have 2 days, and if they do not put the
    information in SAM.gov then my team does.
        Mr. STAUBER. I appreciate that.
        What other controls have you put in place to reduce the
    number of government contracts from going to ineligible firms?
        Ms. HIDALGO. So as I mentioned, I hired a team that is very
    focused on this issue in particular. We are pleased that most
    of the IG audits and GAO audits on any of this have been closed
    out. And as I mentioned, the Administrator created the Fraud
    Risk Management Board so that we are cohesive as an agency in
    addressing any issues related to fraud. And I am pleased that
    in fiscal year 2021, we were able to redirect $5.28 billion in
    contract dollars to legitimate small businesses that had been
    previously awarded to businesses that were not legitimately
    small.
        Mr. STAUBER. One of the things that I hear from small
    businesses back home, again, as I said, the regulations and the
    frustrations of government interference, and to me it is
    unacceptable having been a small business owner myself for 31
    years.
        Do you actively seek out feedback from small contractors on
    the regulations which are holding them back?
        Ms. HIDALGO. Thank you, Congressman. That is very important
    to me. I have met with many small businesses around the United
    States. And asked them regularly for their feedback on what we
    have been doing, how we can provide relief. For Administrator
    Guzman, it is very important that any regs we adopt are not
    overly burdensome for our firms, and that is what she often
    asks us to look at, how we can relieve any burdens for the
    businesses.
        Mr. STAUBER. And do you have a list of those that you can
    send the Committee here----
        Ms. HIDALGO. A list of----
        Mr. STAUBER.--the recommendations that the small businesses
    around the country that you spoke to?
        Ms. HIDALGO. I am happy to circle back with you,
    Congressman, to see what I can provide to you. Yes.
        Mr. STAUBER. So when you circle back, what timeframe would
    you be circling back?
        Ms. HIDALGO. I am happy to get you any additional
    information on ideas that we have heard from businesses
    sometime in the next few weeks.
        Mr. STAUBER. Few weeks?
        Ms. HIDALGO. Mm-hmm.
        Mr. STAUBER. Okay. I appreciate that.
        And the last thing is, on the regulations, when you are
    listening or hearing the small business feedback on the
    regulations that are opposite of what this administration has
    put forward, for example, the WOTUS rule. Are you pushing back
    on behalf of small businesses?
        Ms. HIDALGO. I am sorry, Congressman----
        Mr. STAUBER. Waters of the United States rule, are you
    pushing back on behalf of small businesses?
        Ms. HIDALGO. We are looking at, the President wants to make
    sure that all of our regulations are fair and balanced. And so
    we are looking across the board at making sure that whatever we
    do, the regulations are reflective of being fair and balanced
    to all of our small businesses.
        Mr. STAUBER. We are seeing that WOTUS is one rule that is
    definitely disastrous for farmers and small businesses.
        Madam Chair, I yield back.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        Now we recognize the gentlelady from New York, Ms. Tenney,
    for 5 minutes.
        Ms. TENNEY. Thank you, Madam Chair and Ranking Member
    Luetkemeyer. I really appreciate--I am over here. I am live
    over here. Yeah, thank you much. I want to just echo the
    sentiments of my colleague. Your personal story is really
    compelling and as Americans, we love freedom, and we love the
    idea of entrepreneurship in the small business community and
    what they bring. And I am a small business owner as well. And
    we have seen just incredible issues facing our small business
    community in light of the pandemic.
        And I also have to echo the sentiments of Mr. Stauber. I
    cannot imagine trying to explain what you have to explain for
    this administration. I understand that you have got to defend
    it but, I mean, our small businesses are suffering under
    incredible inflation. And that is the biggest tax that you can
    have on any business right now, the inflation that we are
    seeing at such a high percentage. Among the highest that we
    face is our sales tax burden in the State of New York. But the
    inflation rate is now even higher than our sales tax burden. So
    that is even a bigger tax on us.
        We also have supply chain issues. Energy is a huge issue
    for our business, especially my cousins in farming and others
    are suffering under the huge costs of fertilizer who is also
    affected by that.
        But also, you know, we are talking about taxes, inflation,
    excessive burdens that are put on small businesses that cannot
    afford to bear the costs of government and compliance like the
    big competitors have. So when it comes to government
    contracting, you know, we see the small business at a huge
    disadvantage.
        And one of the questions I wanted to ask you about on the
    small business contracting side is often these small businesses
    do not end up getting the higher value contracts. They get the
    smaller contracts. What is your plan for trying to get these
    small businesses that are now overburdened by inflation, supply
    chain problems? How do we get them access to higher value
    federal contracts? Is that something you are specifically
    working on? If you could give me one or two ways that the
    administration is doing that so I can get an opportunity to
    actually be in this ecosystem.
        Ms. HIDALGO. Thank you, Congresswoman, for that excellent
    question.
        We are often discussing ways that through competition--so
    for example, the limitations on the 8(a) program, the sole
    source cap, if it is competed through an ordering vehicle, then
    they are able to qualify for a higher value contract award. I
    also understand that Congresswoman Salazar has introduced
    legislation on increasing the cap on the 8(a) sole source
    award. And so we welcome the opportunity to work with the
    Committee in ushering or providing any technical assistance on
    that legislation. But higher value contracts are really
    important to ensure that we not only increase small business
    contacting but that the businesses themselves can continue to
    generate wealth and employ people in more meaningful jobs. And
    contract bundling is another issue that really impacts the
    question that you have stated of higher value contract awards.
    When contracts are no longer set aside for small businesses and
    bundled, that decreases the opportunity for the firms. And so
    we are every day on the frontlines monitoring these contracts
    and trying to make sure that the agencies are following the
    Rule of Two.
        Ms. TENNEY. Okay. While I say that I want to just also ask
    you, you stated in your testimony that the top priority of the
    Small Business Administration is to boost the number of
    certified small businesses receiving federal contracts behind
    the current goal of 23 percent. Are you concerned at all that
    by expanding this goal, it may cannibalize contracting
    opportunities for some of the medium-sized businesses and also
    some of the growing emerging businesses that are also in
    competition for those as we continue to try to make sure that
    we always talk about quality and the ability of these companies
    to do those contracts.
        If you just answer quickly because I have one follow-up
    question on that for you.
        Ms. HIDALGO. Thank you, Congresswoman.
        We want to make sure that all businesses have the
    opportunity to continue to grow and compete. Given that we are
    the largest purchaser in the globe with over $500 billion in
    opportunity each year, we feel that there is significant
    opportunity for all businesses that want to compete. And so,
    you know, we feel that we want to continue to see the firms
    grow. We also recently released our 5-year review of the NAICS
    codes, so that 59,000 small businesses are eligible for small
    business set-asides. So we are doing----
        Ms. TENNEY. I want to just say one thing because I know you
    have got to go back to the president of the United States and I
    would just wish he would please, to our small business
    community which provides 94 percent of the jobs in our
    community, stop playing the blame game. Help us out. We are
    paying record high gas prices, inflation. It is affecting
    everyone across our agro communities, our small business
    community, and every sector. Let's solve these problems. And I
    think SBA can be part of the solution but stop blaming these
    small business owners. We are struggling just like everyone
    else.
        And thank you. I appreciate your testimony.
        Chairwoman VELAZQUEZ. The gentleman from Wisconsin, Mr.
    Fitzgerald, is recognized for 5 minutes.
        Mr. FITZGERALD. Thank you, Madam Chair.
        Ms. Hidalgo, the Small Business Act requires the SBA to
    compile an annual report on the government-wide bundling and
    its impact on small businesses. But what we are hearing is that
    the SBA has indicated that the report is either difficult to
    compile or is oftentimes incomplete due to the challenges in
    and around getting this information. A lot of times either the
    agency is just flat out declining to compile this information
    and provide it. So, let me ask you this first. Is this
    accurate? I mean, is this really happening? And if it is, what
    I would like the Committee to do and I am working on a bill to
    force them to actually compile this and provide it for SBA.
        Ms. HIDALGO. Thank you very much, Congressman. This is
    critical to ensuring that more contracts are set aside for
    small businesses. And I have asked the White House if we can
    make sure that we take an even more laser focus now that we
    have issued the reforms on category management on contract
    bundling. And what would make a significant difference is if
    our PCRs and the OSDBU offices are on the front end of these
    contract ends rather than the back end. Otherwise, we are given
    30 days' notice to contest any bundled contracts. However, if
    we are on the front end before any of the bundling takes place,
    we are going to be able to negotiate quite significantly much
    more opportunity for small businesses. And so I welcome to work
    with you and your team to ensure that we have more
    accountability around this and that we get more opportunity to
    the small business contractors.
        Mr. FITZGERALD. So Madam Chair, I would suggest, I think it
    is a laudable thing for the Committee to work on and probably a
    pretty simple bill to just once again put a directive in place
    that all that information should be provided.
        Let me just switch quickly to in my district, the 5th
    District in Wisconsin, DoD is in the middle of that
    implementation on the cybersecurity maturity model. And along
    with that, what I am hearing from some of the DoD contractors
    or those that participate in that process, that what they are
    finding is that the compliance costs are so astronomical that,
    especially those that are on the smaller end of the scale, are
    almost throwing up their hands saying it is not worth it
    because it is such an abstract kind of program and they are
    having difficulty in not only participating in the program but
    also, you know, kind of getting across the finish line saying
    we have done everything we have been asked to do. So is this
    something you are aware of? And is it something that you are
    working on?
        Ms. HIDALGO. Yes. Thank you very much, Congressman. This is
    so critical for our small business contractors. And the
    Administrator has talked with the Deputy Secretary of Defense,
    and I talk regularly with the head of the small business office
    to make sure that whatever is ultimately implemented is fair
    and supportive of our small businesses and the costs associated
    with this. So my understanding is DoD has been taking quite a
    strong look at ensuring that ultimately whatever is adopted
    does not unfairly hamper the businesses. And they are also
    getting additional resources to support them on these costs
    associated with these requirements.
        Mr. FITZGERALD. So Madam Chair, once again, I think it is
    another issue that this Small Business Committee could deal
    with. And if my office is getting a steady stream of these
    contacts, I am sure there are other Members of Congress that
    are getting the same thing. So I would hope it would be
    something that we could take a look at related to small
    business. And I yield back.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        Now we recognize the gentlelady from Texas, Ms. Van Duyne,
    Ranking Member of the Subcommittee on Oversight,
    Investigations, and Regulations.
        Ms. VAN DUYNE. Thank you very much, Madam Chairwoman.
        So I want to follow up on those questions about the
    cybersecurity maturity model certification. You said that they
    were working on it. That they were taking steps. Can you give
    us more detail? What steps are they taking?
        Ms. HIDALGO. Thank you very much, Congresswoman.
        We have talked extensively with DoD about how this could
    unfairly burden the small business owners. We have been hearing
    from them as well, their concerns directly. And so DoD has
    promised to keep us apprised of any ultimate steps that they
    are going to take. But one, they are well aware of the costs
    involved and are trying to figure out ways to alleviate those
    costs and where they can provide extensions on implementing the
    program to make sure that ultimately it does not unduly burden
    the businesses but that we continue to keep national security
    top of mind. And so----
        Ms. VAN DUYNE. And I appreciate that. I appreciate that.
    But what can we do to expedite that? Because they cannot wait
    years. I mean, some of these companies are already coming off,
    you know, the pandemic, 2-1/2 years of, you know, falling
    revenues. They cannot wait that long. What can we do to be able
    to expedite that?
        Ms. HIDALGO. Well, one of the things DoD has done is
    contracted with a firm to provide free training to any small
    business contractors on this issue, and so part of it is
    getting the word out on those resources and the training that
    the DoD is providing. And then additional technical assistance
    for the firms would make a significant difference. So any
    resources that Congress can provide on that would have an
    impact on ensuring that the firms are CMMC ready.
        Ms. VAN DUYNE. Okay. According to NFIB's May Jobs Report,
    the labor shortage continues to be a challenge for small
    businesses with over half of them reporting job openings that
    they could not fill. And I have seen this directly in my
    district up in North Texas. This is up four points from April.
    Can you tell me what the SBA is doing to address this growing
    labor shortage?
        Ms. HIDALGO. Thank you very much, Congresswoman.
        It is really important for our small business contractors
    to continue to create very meaningful jobs. And as a result in
    the increase that we are seeing in contracting and new
    entrants, they are able to create more meaningful job
    opportunities and so that is very top of mind because we know
    that this incredible resource through congressional goals has
    an impact on ensuring that more small businesses can employ and
    provide meaningful job creation in districts all----
        Ms. VAN DUYNE. I appreciate that you saw it but I want to
    make sure, we have a very short time, what are the steps that
    you are doing? I see that you understand the problem but what
    exactly are the steps that SBA is doing to address the labor
    shortage?
        Ms. HIDALGO. Well, thank you, Congresswoman. This is a very
    important issue for the Administrator and for the President. We
    want to make sure that small businesses have the support they
    need to be successful.
        Ms. VAN DUYNE. And I appreciate that. But what are the
    steps that you are taking?
        Ms. HIDALGO. We are looking at everything from where we can
    focus on rules and administrative guidance to provide relief to
    small businesses. Every day it is top of mind that we use the
    vast resources that Congress has provided us to provide support
    and technical assistance to our firms.
        Ms. VAN DUYNE. And I appreciate that. But when I get calls
    from, you know, our businesses, what can I tell them that you
    are doing?
        Ms. HIDALGO. So we have very much focused on creating the
    opportunities that lead to more meaningful job creation, and as
    a result, allows for the businesses to provide excellent
    opportunities for their employees. And that----
        Ms. VAN DUYNE. So we have the jobs. The jobs are available.
    It is not job opportunities. It is actually the labor shortage
    that we are looking. We have got a number of job openings. The
    problem is filling those.
        Ms. HIDALGO. Yes. And that is why government contracting is
    so critical because as the labor market is looking for
    meaningful opportunity, that is what government contractors
    provide.
        Ms. VAN DUYNE. Okay. Thank you very much.
        Chairwoman VELAZQUEZ. The gentlelady's time has expired.
        Now we recognize the gentleman from New York, Mr.
    Garbarino.
        Mr. GARBARINO. Thank you, Chairwoman, and the Ranking
    Member for holding this hearing. Thank you for the witness for
    her testimony.
        I will follow up on Ms. Van Duyne's questions. I would love
    to actually find out what SBA is doing to help. I am hearing
    from every different aspect, every small business and they are
    all having the same problem. And this is where I think the SBA
    needs to help them. So if you actually do have a list of things
    that you are doing and I can send them to your office for that
    would be very helpful. So I want to thank my colleague for
    asking those questions.
        Last hearing, the witness was questioned whether pursuing
    access to the SBA's contracting programs was worth it. And in
    light of her observation that an increasingly higher proportion
    of small business opportunities are found through
    governmentwide contracts rather than individual set-aside
    opportunities. What is your response to her observation?
        Ms. HIDALGO. We see that the increasing reliance on these
    governmentwide vehicles does have an impact on small
    businesses' ability to compete because as you heard in the
    hearing last week, it's fewer and fewer firms that are able to
    get onto these contract award vehicles. We are working closely
    with GSA to figure out if there is a way to have more frequent
    onramps, which is another issue that you heard last week. And
    so that more small businesses can participate in these ordering
    vehicles.
        And then apart from that, by our success in getting all the
    socioeconomic firms onto Tier 2 of category management. So as
    these agencies are rated in their performance, it includes
    contracting with small businesses that are separate from the
    ordering vehicles.
        Mr. GARBARINO. Okay. So you heard what she said and you
    guys are actually coming up with issues to address it. So I
    appreciate that.
        Another question, according to payroll data, head counts at
    companies with fewer than 50 employees declined in 3 of the
    past 4 months. In your opinion, why do you believe this decline
    is happening and what can the administration do to reserve the
    decline?
        Ms. HIDALGO. We are very focused on making sure that we
    leverage all the tools that we have at our disposal, from the
    socioeconomic programs to the small business set-aside to our
    technical assistance programs, to make sure that the small
    businesses can compete and they have the employees and staff
    and resources to do that. And fortunately, because of these
    programs and the enormous impact it has on the U.S. economy.
    They are able to create meaningful jobs. And these jobs are
    key, are critical in addressing the labor shortage.
        Mr. GARBARINO. I mean, the jobs are there, and my colleague
    made this point before. It seems the employees are not. The
    jobs are there. There are signs everywhere, you know, jobs
    available. So, I mean, what, again, this goes back to my
    previous colleagues, why are people leaving the companies? Why
    are the headcounts going down and what is the administration
    doing to change it? Is it a payroll problem? I mean, what is
    the issue. The jobs are there; it is the employees that are
    not.
        Ms. HIDALGO. Right. And I think part of it is when I am
    talking about or referencing meaningful jobs that the firms are
    able to provide more competitive opportunities to employees and
    that makes a difference in being able to hire and find top
    quality talent.
        Mr. GARBARINO. All right. I appreciate your answer.
        One last question. I am concerned that the rising use of
    joint ventures for the SBA's Mentor-Protege Program is creating
    a dependency among small businesses on them to be competitive.
    It is a problem since up to 60 percent of the work performed by
    a joint venture and corresponding revenues can be obtained by a
    large mentor. These are dollars specifically designated for
    small businesses that large businesses can now easily access.
    Please share your own assessment of the Mentor-Protege Program
    and the formation of joint ventures' impact on these small
    businesses.
        Ms. HIDALGO. Well, it is definitely an important tool for
    our small businesses to be able to partner with other companies
    to go after contract opportunities and create more value. We
    have seen a marked increase in applicants to the Mentor-Protege
    Program thanks to the All Small Mentor-Protege Program. We are
    now tracking regularly the impact that it is having and we are
    seeing a significant increase in revenue for the small
    businesses as a result. So it is yielding outcomes and we are
    continuing to monitor all the rules and regulations to ensure
    that ultimately the small business benefits most from this
    important resource that the SBA is able to provide.
        Mr. GARBARINO. I appreciate it. I am out of time.
        Chairwoman VELAZQUEZ. Time has expired.
        I would like to thank Associate Administrator Hidalgo for
    appearing here today.
        Strengthening the ability of small businesses to compete
    for and win federal contracts is one of this Committee's top
    priorities. A robust Office of Government Contracting and
    Business Development is integral to achieving this goal. Today,
    we have covered issues facing the office, and we will work on a
    range of potential solutions to help the office operate more
    efficiently and effectively.
        Without objection, Members have 5 legislative days to
    submit statements and supporting materials for the record.
        If there is no further business to come before the
    Committee, without objection, we are adjourned. Thank you.
        [Whereupon, at 11:44 a.m., the committee was adjourned.]

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