[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
ARE GOVERNMENTWIDE CONTRACTS HELPING OR HURTING SMALL CONTRACTORS?
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HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
JUNE 14, 2022
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 117-058
Available via the GPO Website: www.govinfo.gov
___________
U.S. GOVERNMENT PUBLISHING OFFICE
47-847 WASHINGTON : 2022
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
WITNESSES
Ms. Amber Hart, Co-Founder & Co-Owner, The Pulse of GovCon LLC,
Sterling, VA................................................... 5
Mr. Isaias ``Cy'' Alba, IV, Partner, PilieroMazza PLLC,
Washington, DC................................................. 7
Ms. Lynn Ann Casey, Chief Executive Officer & Founder, Arc
Aspicio, Washington, DC........................................ 8
Ms. Rebecca Askew, Chief Executive Officer & General Counsel,
Circuit Media LLC, Denver, CO.................................. 10
APPENDIX
Prepared Statements:
Ms. Amber Hart, Co-Founder & Co-Owner, The Pulse of GovCon
LLC, Sterling, VA.......................................... 35
Mr. Isaias ``Cy'' Alba, IV, Partner, PilieroMazza PLLC,
Washington, DC............................................. 43
Ms. Lynn Ann Casey, Chief Executive Officer & Founder, Arc
Aspicio, Washington, DC.................................... 52
Ms. Rebecca Askew, Chief Executive Officer & General Counsel,
Circuit Media LLC, Denver, CO.............................. 56
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
Statement of Daniel Chow, Senior Economist, Minority Business
Development Agency, Office of Policy Analysis and
Development................................................ 63
ARE GOVERNMENTWIDE CONTRACTS HELPING OR HURTING SMALL CONTRACTORS?
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TUESDAY, JUNE 14, 2022
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 10:01 a.m., in Room
2360, Rayburn House Office Building, Hon. Nydia M. Velazquez
[chairwoman of the Committee] presiding.
Present: Representatives Velazquez, Golden, Bourdeaux,
Carter, Evans, Houlahan, Kim of New Jersey, Craig, Luetkemeyer,
Williams, Stauber, Meuser, Tenney, Garbarino, 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 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 I
will recognize that Member at the next appropriate time slot,
provided they have returned to the proceeding.
With that, we are going to start with the hearing.
Ensuring access to federal contracting opportunities is one
of this Committee's core priorities. Winning fair contracts
allows small firms to create jobs, grow their businesses, and
invest in their communities.
That is why the recent decrease in the number of small
firms doing business with the government is so concerning. From
2010 to 2019, the number of small companies providing common
goods and services to the federal government shrank by 38
percent. This staggering decline not only hurts small
businesses but it also leads to less competition in our federal
marketplace and less innovation nationwide.
One of the primary causes behind this trend is the Category
Management Initiative. Since its implementation beginning in
2016 to 2019, the number of small firms serving as federal
contractors shrank by 17 percent.
Category Management is a nationwide procurement initiative
that involves buying common goods and services as a single
enterprise. It tries to make government purchasing more
efficient, less redundant, and ultimately more cost-effective.
However, the practice has produced many unintended consequences
for small businesses.
One of the most troubling consequences of Category
Management is the reduction in the use of individual contracts
in favor of governmentwide contracts and those designated as
best in class. These larger contracts are structured to serve
multiple agencies and require businesses to provide an
extensive range of products and services. As a result, many
small businesses are at an inherent disadvantage when it comes
to winning governmentwide contracts.
Yet the concerns do not end there. For example, these
contracts last many years and essentially lock out those small
businesses that are not included in them.
Also, the costs and resources needed to bid on these
contracts are substantial, and there are no assurances that the
small business will receive an award. In fact, the procurement
itself may not even come to fruition. This Committee has heard
from numerous businesses that invested thousands preparing for
a contract that failed to materialize.
As if this was not enough, governmentwide and best-in-class
contracts are relying on a self-scoring evaluation process that
rewards those who come with vast experience, past performance,
and certifications. Hence, only the biggest businesses or those
that team up to collectively become the biggest can
successfully compete.
Given all the costs, hurdles, and uncertainty associated
with these vehicles, many small businesses have been left
wondering whether these are best-in-class contracts or worst-
in-class.
Today, I want to take a close look at the challenges that
governmentwide contracts pose for small businesses and reforms
Congress can pursue to ensure attempts to improve federal
procurement aren't at the expense of small firms.
I now would like to yield to the Ranking Member, Mr.
Luetkemeyer, for his opening statement.
Mr. LUETKEMEYER. Thank you, Madam Chair.
I think we both agree there are many important situations
in the federal procurement space that demand congressional
attention. The issue we are exploring today rises to among the
very top.
Like Netflix disrupting the entertainment industry or
Amazon fundamentally changing the way we shop, the federal
government's use of multibillion-dollar governmentwide
contracts might be permanently altering the way the government
buys goods and services.
It is important to keep in mind that these contract
vehicles are not inherently good or bad. They are simply tools,
and their use or misuse is what determines their impact on the
contractor base.
While I understand and even agree with the Office of
Management and Budget's interest in maximizing cost savings and
obtaining administrative efficiencies, there must be a thorough
weighing of the balance. Choosing to procure with these
vehicles must not result in devastating impacts to the small
industrial base--a base which is, as this Committee has long
documented, in decline at an alarming rate.
The Department of Defense recently released a report coming
to the bold conclusion that contract consolidation in the
defense industrial market is a national security threat,
recommending that the agency prioritize engagement with new
entrants and small businesses.
Unfortunately, one of the unintended consequences of the
rising use of governmentwide contracts is the exclusionary
impact this has on most small contractors and the ensuing
negative ripple effects stemming from the loss of this critical
cohort of business.
Only a limited number of small contractors are awarded
spots on these lucrative long-term contracts. This leaves the
rest locked out of the lion's share of federal opportunities.
No federal opportunity means no incentive to remain in the
federal marketplace.
The resulting loss of small contractors means less
competition and, ultimately, higher costs to the taxpayers,
less innovation, and risk of stagnation and may snowball into
broader, more debilitating concerns, such as threatening our
national security and economy.
The high-stakes nature of these contracts also creates a
whole set of issues for small businesses themselves. For
instance, small businesses have only a limited pool of
resources; thus, these resources must be diverted either to
create the best possible bid or to meet other business needs.
Small businesses may further feel the need to expend even
more valuable resources protesting unfavorable contract terms
or awards in order to protect their sizable investments, with
no guarantee that the outcome will be in their favor.
On a similar note, because these contracts are so sweeping
in their requirements and highly competitive, many small
businesses feel forced to give up their independence, pressured
to partner with large firms via joint ventures for the best
possible chance of winning a coveted spot on these contracts.
This presents a whole host of issues, including that many
large businesses are essentially legally granted access to
federal dollars dedicated specifically to assist small
businesses.
Unfortunately, it seems at this point the genie is out of
the bottle, and it is difficult to imagine a world returning to
mostly individual, direct contract actions. However, we can be
wiser, more thoughtful, and more intentional in seeking the
appropriate balance.
I will end with this thought. In the struggle to simplify
and manage federal spending, the federal government should not
lose sight of the importance of small businesses, nor should it
disregard the impact that increased use of governmentwide
contracts may have on the industrial base. The federal
government must do more to ensure the majority of small
businesses can thrive in this new environment.
Briefly, on a separate topic, I would like to note that
another week has passed and Secretary Young continues to fail
to fulfill her statutory duty and appear before this Committee.
Madam Chair, with that, I yield back.
Chairwoman VELAZQUEZ. Thank you, Mr. Luetkemeyer.
I would like to take a moment to explain how this hearing
will proceed. Each witness 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 witnesses.
Our first witness is Ms. Amber Hart, who is the Co-founder
and Co-owner of The Pulse of GovCon, an advisory firm in
Sterling, Virginia, that provides business intelligence
information, tools, and data to empower government contractors.
Ms. Hart is a federal business developer and has over 12 years
of experience in all aspects of selling to the federal
government. She is an active member of the Professional
Services Council, the president-elect of Women in Technology,
and sits on the advisory board for the Center for Government
Contracting at George Mason University.
Welcome, Ms. Hart.
Our next witness is Mr. Isaias ``Cy'' Alba, a partner with
the law firm PilieroMazza in Washington, D.C. Mr. Alba counsels
clients on a broad range of government contracting matters
before government agencies and federal courts, which includes
overall regulatory compliance with the Small Business
Administration small-business programs. He also represents
small and midsize government contractors looking to structure
compliant teaming, joint venture, and mentor-protege
agreements.
Welcome, Mr. Alba. We greatly appreciate your expertise on
today's topic.
Our third witness is Lynn Ann Casey, the Founder and CEO of
Arc Aspicio, a certified women-owned small business. Arc
Aspicio is a consulting and solutions company that solves
problems by applying integrated capability and strategy design
data, human capital behavioral science, and technology. Ms.
Casey founded Arc Aspicio in 2004 and has had a 29-year career
driving innovation for government agencies.
Welcome.
Now I will yield to the Ranking Member to introduce our
final witness.
Mr. LUETKEMEYER. Thank you, Madam Chair.
Our next witness is Rebecca Askew. Ms. Askew is the chief
executive officer and general counsel for Circuit Media, and
she is testifying on behalf of the Women's Procurement Circle.
Having been founded 16 years ago, Circuit Media is a
government-contracting small business that specializes in
creative services, staffing, and communications. With offices
in Colorado and Washington, D.C., Circuit Media and Ms. Askew
are familiar participants of the SBA's contracting programs.
Ms. Askew, thank you for once again testifying before this
Committee and for your participation today.
I would also like to thank all the witnesses for being here
today and joining us, and I look forward to your conversation
and discussion.
With that, Madam Chair, I yield back.
Chairwoman VELAZQUEZ. Thank you, Mr. Luetkemeyer.
Ms. Hart, you are recognized for 5 minutes.
STATEMENTS OF AMBER HART, CO-FOUNDER AND CO-OWNER, THE PULSE OF
GOVCON, LLC, STERLING, VIRGINIA; ISAIAS ``CY'' ALBA IV,
PARTNER, PILIEROMAZZA, PLLC, WASHINGTON, D.C.; LYNN ANN CASEY,
CHIEF EXECUTIVE OFFICER AND FOUNDER, ARC ASPICIO, WASHINGTON,
D.C.; AND REBECCA ASKEW, CHIEF EXECUTIVE OFFICER AND GENERAL
COUNSEL, CIRCUIT MEDIA, LLC, DENVER, COLORADO
STATEMENT OF AMBER HART
Ms. HART. Chair Velazquez, Ranking Member Luetkemeyer, and
Members of the Committee, thank you for the opportunity to
testify before you today.
My name is Amber Hart, and I am the co-founder and co-owner
of The Pulse of GovCon. The Pulse of GovCon is a self-funded,
women-owned small business focused on empowering government
contractors. We break down barriers across the contracting
ecosystem and bridge the fundamental gaps surrounding federal
procurement.
Our day-to-day involvement has allowed us to not only
observe the impacts of governmentwide contracts on our small-
business clients but to actively participate in the realities
of strategic sourcing and bear the brunt of its unintended
consequences.
In a world of uncertainties, small businesses just want
clarity by way of clear, concise, and consistent regulations to
ensure compliance. However, mixed messages in the usage of
these procurement vehicles meant to simplify acquisition have
resulted in increased challenges for small businesses.
With limited resources and intense demands on time and
money in the bidding process, contract cancellations can be
catastrophic to small firms that have dedicated months and
years to the process.
Vague contract vehicles with never-ending technical
functional areas often devolve into protests, with very little
funding making it to small businesses. This creates two
distinct consequences.
First, the bundling and consolidation required by Category
Management has required the industry to buy or be bought.
Companies now must acquire their competitor to scale at a
meaningful pace or buy into a sector to increase revenue. This
increase in merger and acquisition activity has certainly
reduced the number of small businesses eligible for prime
contracts.
Second, in the end, it is likely that the same vendors will
be on GSA Polaris, HHS CIO-SP4, and GSA 8(a) STARS III due to
little to no difference between the focus areas of the
vehicles. As a result, the government will not gain access to a
wide range of solutions and services from the wider federal
marketplace.
At its core, strategic sourcing initiatives minimize
channels for acquisition and reduce lanes where contractors can
supply services and products. Since its establishment in fiscal
year 2016, Category Management has resulted in a 26-percent
decrease in small-business utilization across best-in-class
contracts. This is identical to its precursor, which shrunk the
office supplies industrial base by 26 percent over 6 years.
Furthermore, the number of small-business awards under
best-in-class contracts in Category Management has decreased by
22 percent over the past 6 fiscal years. Simply put, small-
business dollars have increased but have been consolidated into
a shrinking competition pool of fewer vendors and even less
contract opportunities.
Under Category Management, governmentwide acquisition
contracts serve as the motivating force through the utilization
of best-in-class solutions. One of the most important pieces of
the best-in-class criteria is having rigorous requirement
definitions and planning processes. However, most best-in-class
contracts are now being created to support the broadest
spectrum possible, resulting in requirements gymnastics for
small-business bidders.
For example, GSA Polaris contract is supposed to serve as
GSA's future small-business GWAC to deliver complex IT
services. Many performance areas laid out in the final RFP do
encompass these types of requirements, including cloud
services, cybersecurity, and system design. However, the RFP
also lists out ancillary support services, including
construction, which does not constitute complex IT.
Standardization of best-in-class criteria, how it is
managed, and how small-business contractors get a seat on these
vehicles is of critical importance. This includes establishing
individual definitions for the federal, civilian, and defense
markets.
Current best-in-class contracts are all over the map when
it comes to important small-business factors like size standard
recertification, bid requirements, experience qualifications,
ramping timelines and procedures, and how set-asides are
tracked.
These collective initiatives have resulted in less access
and transparency into government procurement activity and
opportunities and has increased requirement bundling, vendor
consolidation, and market uncertainty. The unintended
consequences of strategic sourcing and governmentwide contracts
impact the critical elements that sustain the industrial base--
competition, innovation, and economic stimulus.
Surviving in this marketplace is not easy for any vendor,
but it is made especially difficult for a small business who
could prove real value to our country. The move to Category
Management, further contract consolidation, shrinking
contracting offices, bundling of requirements, and a strict
focus on socioeconomic spending, versus the quality of the
small-business requirements being competed, has had a
significant impact on small businesses.
The U.S. economy is firmly dependent on a healthy market
competition. Competition for federal contracts breeds
innovative solutions and passes on cost savings to the
taxpayer. To increase competition, there must be equal
opportunity to contribute to each agency's unique missions.
If the federal government wants small businesses to thrive,
we need to rethink how new, innovative, and qualified players
can enter the market, while structuring vehicles that allow
agencies to procure the right solutions that truly fit their
mission needs. Without these considerations, small businesses
may flounder in the wake of large business conglomerates.
On behalf of The Pulse, I thank you for your attention on
this important issue, and I look forward to answering your
questions.
Chairwoman VELAZQUEZ. Thank you.
Mr. Alba, now you are recognized for 5 minutes.
STATEMENT OF ISAIAS ``CY'' ALBA IV
Mr. ALBA. Thank you. Chair Velazquez and Ranking Member
Luetkemeyer, Members of the Committee, thank you for this
opportunity.
My name is Cy Alba, and I am partner of the law firm of
PilieroMazza, with offices in Washington, D.C.; Annapolis; and
Boulder, Colorado. We serve clients that operate throughout the
United States and around the world, spanning virtually all
industries, but we have historical focus on government
contractors.
That said, my testimony today represents my own views and
not those of PilieroMazza clients or the firm. I greatly
appreciate the opportunity to share my thoughts with the
Committee on changes that can better serve the small-business
community, who make up the foundation of our economy.
As the federal contracting landscape is difficult to
traverse, companies of all sizes must invest a great deal of
time and money to ensure compliance with applicable laws and
regulations. For small businesses, this difficulty is only
exacerbated by the mandated use of best-in-class contracts and
large governmentwide acquisition contracts.
Many of our clients have seen work vital to their
businesses swept up into these large vehicles outside of their
reach, their incumbent small-business work being consolidated
with other requirements, forcing them to team with companies or
become subcontractors, where their fate is dictated by a prime
contractor with whom they have never worked and may not trust.
That being said, it is important to note that GWACs and
best-in-class contracts are not inherently problematic. Indeed,
obtaining work on these contracts is a critical component of
many small businesses' growth strategies, as companies can
continue to qualify for task-order awards even after they have
organically outgrown their size standards, instead of being
unceremoniously thrown into the unrestricted space.
These contracts can be used to help these companies survive
long enough to learn the rigors of unrestricted procurement,
which can include higher compliance challenges and lower profit
margins. This struggle is very real, as even being 1 cent over
your size standard means that your company must now compete
with firms that may have revenues of $100 million, $100
billion, or more. There is no limit.
Given this, we have to find a better way of using GWACs and
best-in-class contracts to support small-business growth and
development.
For instance, GWACs and best-in-class contracts should have
more frequent on-ramps, perhaps even every year or two. This
would allow small businesses to participate and not lose out on
5- or 10-year vehicles based merely upon their status or
ability to compete as of the date of the initial solicitation.
On-ramps would greatly reduce the stress on companies to
secure a spot on these large contracts, thereby reducing the
incredibly high stakes of these procurements, reducing bid
costs for small businesses, and avoiding locking out firms who
come into existence mid-contract, outside of the on-ramp
period.
Additionally, prohibit removing requirements that have been
previously set aside for small businesses onto these large
vehicles without first performing some impact analysis of how
the incumbent contractor and the small-business community would
be harmed by the move. I cannot count the number of times I
have had small-business owners beg for help when requirements
their companies had performed for sometimes over 20 years are
suddenly moved into IDIQ vehicles that they do not possess.
Third, it should be made clear that the Rule of Two, which
requires contracts to be set aside for small businesses when
two or more such firms can perform the work, applies to task
orders issued under IDIQ contracts pursuant to FAR Part 16 as
well as GSA Schedule Contract task orders under FAR 8.4.
Otherwise, contracting officers will continue to exploit this
loophole to strip small businesses of procurement opportunities
while enriching the largest companies.
In addition to the ability for small businesses to survive
the struggles of graduating to a midsize company, the SBA's
Mentor-Protege Program is also an extremely important tool for
growing the industrial base. The SBA's Mentor-Protege Program
allows mentor firms to help proteges grow and develop using
small-business set-aside contracts while allowing these teams
protection from being affiliated and incentivizing larger
businesses to truly mentor the small-business participants.
This program is not without its faults, but with proper
oversight by SBA, it can truly help build the next generation
of our supply chain for the federal market.
Many of these issues surrounding large contracts are due to
shortsighted decisions by agencies to force Category Management
upon the market without thinking about the negative
consequences on small businesses. As a result, our entire
industrial base is impacted, and it becomes increasingly
difficult for new companies to enter the federal market.
Every small-business federal contractor must be protected,
and, as a nation, we cannot afford to lose more of our critical
industrial base--a very real risk noted by the Department of
Defense this past February and as noted earlier today.
I applaud the Committee for holding this important hearing
today to address these ongoing issues. Thank you for the
opportunity to testify, and I look forward to answering any
other questions.
Thank you.
Chairwoman VELAZQUEZ. Thank you, Mr. Alba.
Now we recognize Ms. Casey for 5 minutes.
STATEMENT OF LYNN ANN CASEY
Ms. CASEY. Chairwoman Velazquez, Ranking Member
Luetkemeyer, and the Members of the Committee, thank you for
this opportunity to testify on behalf of small businesses as
our governmentwide contractors and contracts.
I am the CEO and founder of Arc Aspicio, a women-owned
small business. We do have governmentwide vehicles, including
the Human Capital and Training Solutions contract with GSA. And
we made our way up to that by first subcontracting, then
winning our initial contracts on Multiple Award Schedules
before being able to compete on a large GWAC.
We are also a small-business mentor to protege 2ndWave in
the Mentor-Protege Program. And as a small business that helps
other small businesses, we find it rewarding to help them grow
as well.
While Category Management broadly helps the federal
government increase procurement efficiencies, our company has
seen it reduce the number of small businesses and the type and
number of opportunities that are available for small
businesses, including us, to compete on. This reduces
innovation that the small businesses can offer.
Like other small businesses, we absolutely love to work for
the government, and we simply want the opportunity to compete.
Governmentwide vehicles shift small-business opportunities to
very small pools of winning contractors rather than fostering
competition among diverse companies under the GSA MAS schedules
or other contracts. This reduces opportunities for newer small
businesses who seek their first opportunities as a prime
contractor.
It also reduces opportunities for established small
businesses who were high performers on incumbent contracts,
essentially pushing these recompete opportunities to best-in-
class vehicles and not allowing great small businesses to
recompete for their current work. This actually places burden
not only on the small business who can't recompete; it provides
extreme additional administrative burden to the government, who
has to transition and is forced to transition to new
contractors, and this puts the mission at risk.
Small businesses should be allowed to compete on their
follow-on contracts. And the Committee can explore innovative
best practices, such as permanent legislation rather than
frequently changing policies at the agency level about these
topics and mandates. This will spur competition, lower prices,
and foster innovation.
Another issue for the Committee to consider is the
incredible cost to pursue governmentwide contracts. Arc Aspicio
estimates that it costs us somewhere between $60,000 and
$100,000 for each proposal for a governmentwide vehicle.
In addition, we have to pay costs to get quality
certification, such as the Capability Maturity Model and ISO
9000. And while these are great quality certifications, these
certifications cost $60,000, $70,000, $80,000 and require
annual audits.
In addition, award timeframes and protests really delay any
investment we make. We would love the Committee to consider the
GSA Multiple Award Schedules and expanding use of these,
helping companies to get their first opportunities at prime
contracts.
Based on our experience--and we have 18 years in the
federal government--Arc Aspicio does not want to cede control
of our work and enter into a joint-venture prime contract with
a large firm. We have built our experience and really want to
win on our own. However, this puts us at a disadvantage when
competing with other small businesses who are backed by and
often controlled by large businesses of a $100 billion or more.
We want fair opportunities against other non-joint-venture
small businesses.
We look forward to the Committee exploring incentives for
more established small businesses to help other small
businesses grow. This might take the form of grants or
encouraging the use of additional evaluation credit on task-
order bids when a small business mentors a protege and they bid
together.
In conclusion, I want to thank the Committee and ask them
to consider additional ideas to regrow the small-business base
and help them recover from the unintended consequences. Thank
you so much for your time.
Chairwoman VELAZQUEZ. Thank you, Ms. Casey.
Ms. Askew, you are now recognized for 5 minutes.
STATEMENT OF REBECCA ASKEW
Ms. ASKEW. Thank you. Chair Velazquez, Ranking Member
Luetkemeyer, and Members of the Committee, thank you for the
opportunity to testify before you today.
My name is Rebecca Askew, and I am the owner and general
counsel of Circuit Media, based in Denver, Colorado. I am
testifying today on behalf of the Women's Procurement Council,
which advocates for policies that strengthen women-owned
companies that do business with the federal government.
Women fought for 11 years to get the Women-Owned Small
Business Federal Contracting Program in place and an additional
2 years to get sole-source authority. Yet the federal
government has only met its 5-percent goal for contracting to
women twice since 1994.
As a new participant in governmentwide contracts, I hope to
provide insight into the resources required to adequately
respond to these opportunities.
I started Circuit Media out of my basement with a focus on
providing clear and concise communications to law and
government. Circuit Media has since grown into a strong
supplier of goods and services to local, State, and federal
governments. With a diverse background in communications,
creative services, and staffing, Circuit Media assists clients
in creating cost-effective and compelling deliverables.
Circuit Media had the opportunity to participate in SBA's
8(a) Business Development Program. This program allowed us to
learn and develop expertise in the federal contracting arena.
As we entered the transitional stage of the program, our
plan for growth focused on differentiating our company through
the continued use of set-asides and attempting to obtain slots
on governmentwide contracts.
For a small business to respond to an IDIQ, it takes
significant time, money, and human capital. The response
consist of hundreds of pages over multiple volumes and dozens
of pricing categories. At Circuit Media, we dedicate at least
one proposal writer and one financial analyst to manage the
bulk of the submission. This removes these individuals from
their normal work responsibilities and requires others to
double up work.
There are always multiple amendments and changes to the
original solicitation, which demands extraordinary attention to
detail and record-keeping, as errors or omissions are
deductions.
Winning a slot also in no way guarantees a company will win
work with a federal agency. It only allows you to compete for
the opportunities released on the IDIQ. I liken it to getting a
fishing license. You can throw your line into the water, but no
catch is assured.
I would like to discuss our recent experience responding to
GSA's staffing IDIQ, HCaTS. As Circuit Media provides staffing
services to the government, we felt it was necessary to
respond.
We spent weeks preparing our submission. Our final proposal
was hundreds of pages and included 168 different pricing
categories. It had to be physically mailed to New York City and
was only accepted on DVD disc. We submitted our response on
March 20, 2020, the day we closed our offices to the pandemic.
After submission, our first communication with GSA occurred
9 months later. Because of the significant lapse in time, GSA
changed components of the evaluation criteria, which they
applied retroactively. This subjective post-submission change
in evaluation resulted in our company missing the award cutoff
by 100 out of 28,470 points.
Agencies fail to realize that delays in contract award and
changes in midstream can be seismic shifts for a small
business, making or breaking their ability to win work.
My experience points to the need for simplification on the
agency front. Congress can assist women in being more
successful in securing government contracts by adopting the
following actions proposed by the Women's Procurement Circle.
Number one, increase awards to women-owned business,
including increasing EDWOSB goals and raising the WOSB goal to
10 percent.
Maximize WOSB awards on governmentwide contracts.
Number three, expand sole-source contract opportunities for
WOSBs.
Number four, eliminate EDWOSBs to have access--allow
EDWOSBs to have access to business development tools to grow
and thrive.
Number five, eliminate double counting for contract awards.
And, number six, require agencies to fully utilize Made in
America products.
The federal government's acquisition practices are geared
towards large companies competing on enormous government buying
vehicles. Congress rightfully continues to require agencies to
buy from small business. Over 90 percent of all women-owned
businesses are small. Therefore, women are major stakeholders
in these policy actions.
Thank you for the opportunity to testify today, and I am
happy to answer any questions.
Chairwoman VELAZQUEZ. Thank you, Ms. Askew.
Now I recognize myself for 5 minutes.
Ms. Hart, so what you described in your opening statement,
as well as the other witnesses, is consolation at its best, at
the expense of small businesses, at the expense of taxpayers
and innovation.
GSA tracks small-business utilization through the Category
Management Dashboard. What does the dashboard show regarding
small-business utilization in more recent years?
Ms. HART. Thank you for your question, Chair.
So the GSA GWCM small-business utilization dashboard, which
is under the dashboard you just referenced, shows 30-percent
utilization consistently from fiscal year 2018 to today, which
is about the only thing that is tracked.
When compared to industry-wide, that is about consistent of
about 29 percent. So it seems to be consistent with how
industry is tracking. But there is very small--but you can see
it--decrease, actually, in that utilization that is beginning
to track.
Chairwoman VELAZQUEZ. If the small business space has
decreased substantially, how could you explain the federal
government still meeting the small-business goals?
Ms. HART. So the key statutory tracking for agencies is to
actually focus on the small-business dollars, which has
increased; we are all aware of that. However, the number has to
be carefully looked at, because within each socioeconomic
category, numbers can be counted double or triple, depending on
the socioeconomic category.
So that is how they are able to keep the numbers rising as
well. So the business report can kind of exist for different
vendors' transactions, and obligations can be counted triple
times.
One example of this metric could be the number of unique
vendors receiving small-business dollars is how that really
could be fixed, if we actually look at the number of vendors,
unique vendors, getting that----
Chairwoman VELAZQUEZ. Thank you.
Ms. HART.--those dollars.
Chairwoman VELAZQUEZ. Thank you.
Mr. Alba, not only are requirements being consolidated into
a few best-in-class contracts, but these contracts use a self-
scoring evaluation process that has its own set of unique
challenges.
What are some of the challenges the self-scoring evaluation
process poses for some businesses?
Mr. ALBA. Yeah. Thank you.
I think the main thing with the self-scoring is, like has
been talked about, a lot of businesses are just looking to tick
boxes because you have to. That is the way the system is set
up, right? And so companies are looking for either the large-
business mentor; or they are looking for 10 or 15 different
companies to joint-venture with; or if it is allowed by
subcontractors, they do that.
And they are forced to go after, not the best companies to
do the job, but the companies to maximize the point scores--one
person with a $7 million contract; one likely big guy who has
an approved purchasing system; one person who has this skill;
one person who has that skill set. So you get this ``jack of
all trades, potentially master of none'' scenario instead of, I
think, the best procurement for the best companies.
Chairwoman VELAZQUEZ. Thank you.
Ms. Casey, so you are a company that has served as a mentor
for another small contractors. Can you please talk to us about
the benefit to a small business of being mentored by a larger
small business?
Ms. CASEY. Absolutely. We mentor a company called 2ndWave.
They are an 8(a) and service-disabled veteran-owned company.
Because we have recently been a smaller company, yet we
have 18 years of experience, we understand the challenges of
newer entrants and newer and smaller small businesses.
Our executives have the time to take to actually spend time
with our protege company. We have done off-sites with them and
helped them create strategies to pursue new business. We have
pursued new business with them. We have helped build up their
proposal process so they can actually compete. And they have
since won more contracts.
This idea of more established small businesses working with
newer small businesses is a wonderful idea, because we have
recently lived through it; it is very rewarding for me, as a
CEO, to work with another small business. And small businesses
are great both advocates and resources for other smalls who are
newer entrants to the market.
Chairwoman VELAZQUEZ. Thank you.
Ms. Askew, in 20 seconds, in your perspective, what are
some of the areas that must be improved?
Ms. ASKEW. Thank you for the question.
In my opinion, the areas that must be approved is clear and
concise communications and standardization. If you are applying
to one of the governmentwide contracts, that you can actually
understand what the rules are and how they are being applied to
you, as well as, you know, looking at opportunities for women-
owned, other types of opportunities within those GWACs so that
everyone can have a level playing field.
Chairwoman VELAZQUEZ. Thank you.
Now I recognize the Ranking Member.
Mr. LUETKEMEYER. Thank you, Madam Chair.
Ms. Askew, it seems the goal of these governmentwide
contracts is to reach administrative efficiencies and cost
savings through contract consolidation. This is something I
agree with, but it seems to hinder small-business growth.
Do you think it is possible for the government to find both
efficiencies and save taxpayer dollars while also building a
robust and healthy small-business base?
Ms. ASKEW. Thank you for the question.
In my estimation, it has been difficult to be able to
balance both of those. It is sort of you throw the baby out
with the bath water. You are trying to do consolidation, but
that leaves small businesses in the lurch and unable to respond
or even to be on the playing field.
That example of us trying to respond to a governmentwide
contracting opportunity really displayed that capability. You
know, we put all of our resources towards that opportunity and
still came up short.
So I think that, you know, when you are looking at the best
way to manage, you know, the balance between the two, I think
it is best to realize that, being a small business, you aren't
going to have that equal playing field, and there needs to be
some kind of measurement for that.
Mr. LUETKEMEYER. Thank you for that.
Just a quick question with regards to the things that are
going on in society today and how it is affecting your ability
to bid on contracts here.
With additional inflation and supply-chain problems and the
reliability of the supply chain, do you have something built
into your contracts to be able to allow the bidder to--is there
flexibility in there with regards to inflationary costs,
inability to, you know, to weather some of the supply-chain
disruptions? How do you manage that situation?
Ms. ASKEW. That is the $24 million question, actually.
You know, when you enter into a contract and when you, you
know, enter into a contract with the government, you are
contracting at that moment in time, and there is not any kind
of additional remedies that can occur.
You know, an example of that is Juneteenth. We moved from
having that not be a holiday to that being a federal holiday.
And all contracts--you know, you needed to be flexibility
during that period of time.
So, you know, I----
Mr. LUETKEMEYER. Okay. The question, I guess, is: Is there
enough flexibility in the contracts to allow you to be able to
adjust and be able to--you know, if you are sitting there
guessing at what inflation is going to be down the road, you
don't have any firm commitments from people who are your
suppliers, with supply-chain problems, how--is there enough
flexibility in the contracts to be able to allow you--or do you
have to bid up significantly higher in order to be able to, you
know, be able to run the risk of not having enough built into
there to be able to make some money on it?
Ms. ASKEW. That is a great question. Actually, you know,
with LPTA or some of the contracts where they look at lowest
price or best value, you end up--your margins become pretty
slim, they become pretty small, because you want to be
competitive with all the other businesses. And so, you know,
there isn't a ton of flexibility, to be honest.
Mr. LUETKEMEYER. Well, one of the problems, it would seem
to me, is the length of time some of these contracts take for
you to be able to fulfill the contractual obligation. And so it
may be weeks, months, years to be able to fulfill a contract.
So how do you project out?
I know I have some constituents that are stuck in the
situation here where they bidded and now, with this runaway
inflation that we have, they are going to be--you know, unless
the government is willing to come back and help them
arbitrarily, they are going to be in big trouble here, because
they are not going to have enough income or enough equity in
that contract to be able to survive. They are actually going to
wind up losing money out of the deal.
So I would think there needs to be some sort of clause or
flexibility in there to allow the small businesses, who are
probably not flush with tons and tons of cash--otherwise, they
would be bigger businesses--to be able to survive.
Ms. ASKEW. I think that is very astute. And I would say
that it is a difficult problem. And I am not sure I have the
solution.
I would say that, you know, there are brief increases that
occur every year with the contract. But, once again, you have
to measure that increase with the ability or the need to win
one of those contracts to continue to compete.
Mr. LUETKEMEYER. Ms. Hart, did you--you heard my question.
Do you want to--I mean, that is part of what you do, is
consulting on these contracts. Would you have a comment on
that?
Ms. HART. Absolutely.
So I believe there was a recent EO on inflation from the
administration allowing flexibility, for at least defense
contractors to take that into consideration.
And then there are some IDIQ vehicles and GWACs that are
now allowing you to compete at the task-order level on pricing,
which means you don't submit pricing at the umbrella level, if
you will, and----
Mr. LUETKEMEYER. So--I am sorry to interrupt, but I am out
of time here--just a clarification here. So the executive order
allows enough discretion by the agency to be able to work out a
deal with the contractor, then, to make sure they don't go
under?
And, then, if they go under, they may not be able to
actually provide the service or product. Although they probably
have a bond to make sure that works. But we don't want to lose
people in this process.
Ms. HART. It is not my area of expertise, but, from what I
understand, it does allow some flexibility for contractors to
bring in inflation.
Mr. LUETKEMEYER. All right. Thank you very much.
I yield.
Chairwoman VELAZQUEZ. The gentleman yields back.
Now we recognize the gentleman from Louisiana, Mr. Carter,
for 5 minutes.
Mr. CARTER. Madam Chair, thank you very much for the
opportunity.
I have a general question that any of you who would like to
can address.
We know that, during COVID, there was an extension for
individuals that were 8(a) contractors to theoretically make up
for the loss of opportunity because of [inaudible] that year
there was an extension. It actually turned out to be less than
a year.
What value, if any, do you believe that extension gave? And
how could we be able to perhaps grant even additional time for
people who may have met on the time out, running out of time
with the certification [inaudible] didn't fully get in the
amount of time.
Could someone share with me their views on how we can do
better, how that worked, and your thoughts?
Mr. ALBA. Yeah, I would be happy to answer that. I am a
member of the board of the Bowie Business Innovation Center,
which has an 8(a) accelerator program, in a historically black
college and university, the only in the country, and so I deal
with these issues often.
And this is one of those things that I have heard
repeatedly, where the companies have sort of begged to get an
additional year. Given the way that COVID has extended itself
out, they have not been able to meet with contracting officers
as often. The events are only just starting to happen,
conferences and whatnot. And so it has been difficult to
interface with individuals in market.
And that has been, I think, a major factor, in a lot of the
8(a)s that I have been talking to and who we work with in our
program, in getting new contracts and growing, especially those
who are towards the end and are looking to maybe get on some
new contracts to weather this next challenging storm.
Mr. CARTER. Ms. Casey?
Ms. CASEY. I would say as mentor to an 8(a) company, since
things are really only starting back, they would love an
additional year to be able to build up their business. COVID
has really hurt the opportunity to sell to the government.
Mr. CARTER. So I think, more than them just loving to have
an additional year, I think there is a case to be made that
they did not get the full complement of what the program is
designed to do, because even though there was an extension, the
extension wasn't, in fact, a full year.
But the effects of COVID and the supply-chain crises is
very much still in effect, so people are still suffering. So I
just wanted get your observations and your thoughts on that. I
am happy to hear that it is consistent with what I hear from my
constituents.
And, Madam Chair and Ranking Member, I would like to ask
that we include this in our further due diligence as we move
forward on how we can really make these individuals whole who
have suffered greatly at the hands of something that is beyond
all of our control, COVID and supply chain.
Quickly, pivoting from that, I would like to ask a question
about the Mentor-Protege Program. What obstacles, if any, have
you had in really getting to businesses that are out there that
would benefit but aren't aware of the various resources?
Mr. ALBA. Yeah, I am happy to take that too.
So, you know, dealing with small businesses all over the
country and things, I think it is--there is a disparity in
information, I think, depending on where you are. So some
places in the country, like around here, around the Beltway,
there is a lot more knowledge of these programs, whereas when
you go in other places--and I have a number of clients in the
Huntsville area and things of that nature--they have fewer and
fewer resources available to them, and there isn't as much, I
think, outreach.
Potentially, SBA could have more sessions in some of these
areas and explain the benefits of the program with potentially
all these great small-business mentors, like we heard about
earlier, who are willing and offering this type of help.
Mr. CARTER. Let me ask you real quickly before my time runs
out. So this is something I hear from my constituents quite
often, is some of the mentorship-protege programs, while they
work financially, they don't always work in the vein of giving
that protege a true opportunity to learn the business and
really perform.
How do we overcome the relationship that becomes one more
of a financial partnership and less a partnership with that
protege to actually learn the business to become a mentor to
someone else?
Mr. ALBA. So I would say there are already a number of
rules in place that we could just do a better job of enforcing.
So SBA looks at reports that proteges give every year as to
how the mentor-protege relationship is going, but I haven't
personally seen them do much with it. So potentially the SBA
could take a closer look at these issues, go through the
mentor-protege agreement, make sure the promises that are in
that agreement are being met, specifically--not just joint-
venturing, not just contracting.
SBA says all the time that it is to develop your business,
it is not a business development program. And to take that to
heart and move that forward, I think, is what we need to do.
Chairwoman VELAZQUEZ. The gentleman's time has expired.
Mr. CARTER. Thank you very much. I yield back.
Chairwoman VELAZQUEZ. The gentleman from Texas, Mr.
Williams, Vice Ranking Member of the committee, is recognized
for 5 minutes.
Mr. WILLIAMS. Thank you, Madam Chairwoman and Ranking
Member Luetkemeyer and witnesses, for being here----
[Audio interruption.]
Chairwoman VELAZQUEZ. Can you please, the Members that are
hybrid, mute yourself?
Thank you.
Mr. Williams, yes, I will give you more time.
Mr. WILLIAMS. Thank you, Madam Chairman. This why we need
everybody here and quit this nonsense we got going.
Thank you all for being here today.
And before I address small businesses' role in government
contracting, I would like to take a minute to address the
current state of our economy.
I am probably one of the few--maybe Ranking Member
Luetkemeyer--that was a small-business owner in the 1980s. I
still own the same business I had in the 1980s, in 1981 and
1982, where we saw so many of the same issues we are facing
today. If we keep going the way we are going, there are not
going to be any mentor programs, I am just telling you.
Let's go back to 1981. In 1981, we had inflation out of
control. We had leadership that had no idea what to do about it
except condemn our country. So we had inflation out of control;
the federal reserve was raising interest rates. We had 20-
percent interest--20-percent interest. So, if you were a small-
business owner, you went to bank and you borrowed at 19
percent--19-percent interest. And if you had any money, you had
a CD. Ranking Member Luetkemeyer's banks were paying 19 percent
on 2-year CDs, if you can imagine that.
So interest rates were out of control, and principal
balances were so much different. Today, everybody is concerned
about 6 percent, which we should be. We are paying 6-percent
interest on--I am in the automobile business, and in 1981 you
could buy a car from me for 3,000 bucks and finance it at 20
percent. But that same car now is $50,000, $60,000, $70,000,
$80,000, you can finance it at 6 percent, and the principal
balances are so much higher. It is just creating one heck of a
problem for us.
And homes, we see what is happening with homes. Homes you
could buy for $40,000 now you buy for $400,000.
Chain disruptions, we didn't have that in 1980. The one
thing we had 1980 was product. We could sell our way out of it;
we could claw our way out of this problem. But now there is no
product. There is no--I don't have any cars to sell. There is
no nuts and bolts and hardware stores. It is a mess. We have
chain disruptions like we have never seen before. So at least
we had debt.
So 20-percent interest paved (ph) the 6-percent interest.
That is a real problem. I have a concern for our economy. Our
economy is in a serious, serious issue.
And you all talk about growth and getting the government
out of small business and talk about competition. That is what
it is all about, but we don't have that now, you see. We need
to get out of this by quit spending money we are printing that
is worthless. And we need to let main street compete and be
able to help get ourselves out of this mess.
But we all need to have our eyes open of the situation we
are in right now. We have the best workers in the world, and we
are paying them to sit on the sidelines. So we need to make it
easier on main street, we need to cut taxes, we need to reduce
regulations, and we need to let the private sector and small
business get us out of this mess. I am for that. I think all of
you are, too, from what I hear with your testimony.
So, with that, before I move into my other question, Ms.
Askew, what is your general take on the economy? And how is it
impacting your small business and the businesses you represent?
Ms. ASKEW. Thank you for the question.
At the end of the day, revenue is the driver that makes any
small business successful. And, you know, obviously, no one
wants higher taxes or inflation----
Mr. WILLIAMS. Thank you for saying that.
Ms. ASKEW. That is--I think we would all agree to that. And
so trying to figure out----
Mr. WILLIAMS. Not everybody.
Ms. ASKEW. Well, trying to figure out a way in which you
can manage that and still grow your business is really a
challenge.
Mr. WILLIAMS. Well, it is.
And all American small businesses deserve an opportunity to
compete, as we talked about, for government contracts against
their larger counterparts. However, the current bidding
process, we hear, is extremely resource-intensive and prevents
small businesses from even attempting to break into this
potential revenue stream.
Businesses are having to make the decisions to commit
significant resources to secure a spot for these federal
contracts or take one more additional growth opportunity like
hiring that additional employee or investing in new equipment.
These two options should not be an either/or scenario. So every
qualified small business should be able to have their
opportunity to secure a contract without it being prohibitively
expensive.
So, again, Ms. Askew, you have experienced the same
frustrations firsthand. Can you elaborate on the decisions your
business had to make to decide to break into the contracting
world? And what recommendations do you have that would allow
smaller businesses with less resources the opportunity to
compete?
Ms. ASKEW. Thank you for the question.
It is a day-by-day decision-making process that we go into
at Circuit Media, trying to decide: There is this opportunity.
How is that going to impact us? Who do we have to pull off of--
the opportunity to respond, just, you know, to respond, to get,
you know, that opportunity to perhaps win? And how are we going
to manage that with our current workload?
And so it is a day-by-day decision-making process that my
team and I go through to try to figure out--you know, it is, do
we rob Peter to pay Paul? How do we manage that?
Mr. WILLIAMS. Trying to figure out how to beat the
government is tough.
Thank you for being here. Appreciate it.
Ms. ASKEW. Thank you.
Mr. WILLIAMS. I yield back.
Chairwoman VELAZQUEZ. The gentleman yields back.
Now we recognize the gentleman from Pennsylvania, Mr.
Evans.
Mr. EVANS. Thank you, Madam Chairperson.
Ms. Casey, to what extent has engaging in joint ventures
become necessary for small businesses to successfully navigate
the federal procurement space, and why?
Ms. CASEY. Well, we are an established small business, and
we decided to enter into being a mentor to a smaller small
business to be able to help them compete on additional
contracts. Certainly we do get a benefit if we win any of those
contracts, but that is really helping grow a small business.
On the other hand, though, we have decided not to enter
into a mentor-protege program with a large business.
Arc Aspicio really likes to control our own destiny, manage
contracts, and deliver on our contracts. And we have the
experience to do that with the federal government and have
worked on more than 150 projects.
The current business environment, though, is pushing us to
almost be forced into a joint venture with a large business in
order to continue to be able to compete on contracts. And that
is a big challenge for us, because we would like to not have to
compete with joint ventures that are backed by hundred-million-
dollar companies, because we can perform the work on our own.
Mr. EVANS. Given the shift towards governmentwide contracts
and best-in-class vehicles, what would be your number-one
recommendation for new businesses interested in becoming
federal contractors?
Ms. CASEY. That is a great question.
What helped us when we started out was the support of other
small businesses. I think networking among small businesses
will really help newer entrants navigate the complexities of
today's business environment and the challenges of
governmentwide contracts--networking to gain experience and
knowledge of how to write proposals, how to get subcontract
opportunities that lead to prime contract opportunities on
things like GSA Schedules so that when the time comes you are
ready to bid on a governmentwide contract.
But it is a journey, and you can't just jump to a
governmentwide contract. And I think smaller businesses can
help other new entrants navigate that complex environment and
build a business strategy that is lasting and could help these
new entrants succeed.
Mr. EVANS. Thank you, Ms. Casey.
I yield back, Madam Chairperson, the balance of my time.
Chairwoman VELAZQUEZ. The gentleman yields back.
Now we recognize the gentleman from Pennsylvania, Mr.
Meuser, Ranking Member of the Subcommittee on Economic Growth,
Tax, and Capital Access.
Mr. MEUSER. Thank you very much, Madam Chairwoman, and I
thank the Ranking Member.
And I certainly thank the witnesses for being here on a not
necessarily complicated but interesting set of circumstances,
where you can see the benefits for these government contracts
on the side of the purchaser, the government agencies, and you
can certainly understand your point, because being on such
government contracts is referred to as ``winning a golden
ticket.'' That is not good.
So, you know, the governmentwide contracts, you know, the
benefits: less contracts--I mean, I was in State government;
you know, none of them makes life easier, but it allows you to
analyze things more so perhaps--less work, less contracting
overall. The idea of consolidating purchasing, you have to
appreciate that. That could create lower prices overall.
The double-counting issue was misguided. I have a bill,
actually, if you take a look at it, 7685, the Truth in Small
Business Contracting Credit Act. So take a look at that. Maybe
you could weigh in on the committee, Republicans and--both
sides, and see if that is something you think that we should
get behind and endorse.
But, in the meantime, you know, solutions: you know, the
joint venture. Okay. Latch on to someone who is already on a
GWAC and then just reapplying.
Now, Mr. Alba you mentioned the challenges in reapplying,
but let me just start with Ms. Askew.
So, if you are not on these GWACs and you do fit well but
you--on one particular agency and you are active, to gain
additional business, additional contracts, is that a virtual
impossibility because the GWAC is already confined for a 5-year
period?
Ms. ASKEW. Thank you for the question.
It is difficult, it is definitely difficult, as a small
business when we are working within an agency, you know, trying
to increase our exposure or our opportunities within that
agency.
You know, I think one of the other witnesses mentioned the
fact that there is no way to communicate our market to those
agencies really now going forward, because of the fact that
everything is virtual and, you know, you aren't having an
opportunity to really meet with anyone that could assist you.
In my experience, trying to, you know, increase our
exposure or our opportunities within a contracting vehicle or
on a GWAC is difficult because, you know, you are out in the
void; you are trying to respond to opportunities that you
aren't aware that they are even coming.
Mr. MEUSER. Yeah. And I was on the private-sector side, as
well, trying to get contracts for a number of years, and there
is no question, even though you work hard towards it and you
have the right price point and right product, you feel almost
lucky to get it in the end. It is like you are happy that you
felt so fortunate that you spoke to the right person and they
reviewed things right.
So, being that is still the case, or maybe even worse--
because I am going back a good 10 years--what could each of you
tell me, maybe the one thing that--or two things if you would
like--that we really need to zero in on here? Because the goal
is small businesses, women-owned businesses, diversity, but, at
the same time, the highest quality and best price.
So maybe, I don't know, Ms. Hart, if you want to start.
Ms. HART. Sure, I can start. I can give two
recommendations.
I think we need to formally and legally define best-in-
class contracts. Currently, it is a very objective five-point
standard that is not really followed, and it is not in the FAR,
and so it is very hard for small businesses to understand and
comply.
My second recommendation would be creating governmentwide
IDIQs with explicit technical focus. As I mentioned, GSA
Polaris has construction on there as a requirement, and that is
not atypical. That is a very typical thing that you see now.
Mr. MEUSER. And, Mr. Alba, to you. And, then, is there a
particular agency that is the most difficult, that needs to
really pick up their game?
Mr. ALBA. I mean, CIO-SP4 was somewhat of a mess. I think I
have written a lot about that. So that would be one, the NITAAC
folks.
But I think, just generally, if you could have these GWACs
and, instead of this jack-of-all-trades idea, to narrow it down
and maybe allow you to bid on different pools--each, like,
contract line-item number or section of the contract--to get
the best people for that section, as opposed to having to award
someone who can do everything, because I don't think you get
the best product that way.
Mr. MEUSER. Thanks.
I yield back, Madam Chair.
Chairwoman VELAZQUEZ. The gentleman yields back.
Now we recognize the gentleman from Maine, Mr. Golden,
Chairman of the Subcommittee on Underserved, Agricultural, and
Rural Business Development.
Mr. GOLDEN. Thank you.
Ms. Hart, under the mentor-protege joint venture, as you
know, a small business has to perform at least 40 percent of
the work. Is that the appropriate share of the workload, in
your opinion? And, if so, why? If not, why not?
And if you think there should be changes, so if these joint
ventures should be modified so that small businesses take home
more of the work, what is the right mark? And what might be the
pros and cons of increasing that?
Ms. HART. That is a great question.
So, in order to perform under these IDIQs or even task
orders, the prime has to perform 51 percent of the work. So I
do believe that increasing it from 40 percent to a little bit
higher makes a lot of sense.
I do understand that that puts some burden on small
businesses, but I think you do get a better product and a
better vendor out of that that is a little bit more qualified
and maybe one that is a little bit more established to take
advantage, as the witnesses have also said, of the large
business offering those support services.
So I would definitely take a look at increasing that. I
think that that could definitely help.
As the Mentor-Protege Program has kind of been taken
advantage of over the past few years with these governmentwide
contracts, people are just kind of forming them in order to
compete. So I think to bring it back to an actual technical
focus would be a good idea.
Mr. GOLDEN. Thank you. I appreciate that.
Ms. Askew, in your testimony, one of the things that really
got my attention the most was when you said that you had to
send in your application by mail, and then, of course, you had
to wait 9 months, you said, to get any kind of a contact, even,
from the entity that you were submitting your application to.
So it seems like, in general, through the Q&A here, that
what you have highlighted: One is that, for your business, even
choosing whether or not to compete, there are a lot of staff
hours that are going to go into even figuring out if it is the
right move for your company, a lot of staff hours obviously
into what is often, you know, a pretty burdensome application
process, and then probably some significant challenges, just
knowing that it could take a very long time before you even
know if you are going to get the award and move forward.
So, with that in mind, just knowing that you are here in
front of the Committee and small businesses will be watching
this: If you were in a situation where you were meeting with
another business who was thinking about getting involved in
best-in-contract-type work for the first time, what would your
advice be to them on how to best prepare for that and what the
challenges would be that they need to consider?
Ms. ASKEW. Thank you so much.
I think we have highlighted most of the significant
challenges--the money, the time, and the resources. And when
you are repurposing your resources, you are not doing the other
work that you need to do in order to continue to have your
business thrive.
My advice to an organization, a company that might be
interested in going after these larger vehicles is--you know,
our position at Circuit Media is that that is where the
opportunities are. And I would not be telling the truth if I
told someone, Don't go after it because, you know, it is too
much work or it is too hard. It is where the opportunity is,
and I would be remiss to tell someone not to do that.
Mr. GOLDEN. That is helpful.
Do either of you two have any followup to that?
Mr. ALBA. I will say--this might be a sad comment, but I
would tell people to read the solicitation very carefully and
just tick the boxes. And I think that is the biggest problem of
all of this, but that is all you need to do. Read it very
carefully, and find someone to tick every single box you can.
Ms. HART. I would chime in on that, as a saying that we
have is ``compliance is king,'' and if you are not compliant,
it doesn't matter if you are compelling, in order to compete.
Mr. GOLDEN. In general, where do you see small businesses
try and fail?
Mr. ALBA. I would say, when it comes to unclear language, I
think a lot of companies are afraid to ask questions because
they want to try to take advantage of any ambiguity, not really
understanding, through the protest process and the laws that
currently exist, if you don't get your questions answered, you
lose the opportunity to challenge those things or deal with it.
Chairwoman VELAZQUEZ. The gentleman yields back.
Now we recognize the gentleman from Wisconsin, Mr.
Fitzgerald, for 5 minutes.
Mr. FITZGERALD. Thank you, Madam Chair.
I am over here, you guys, over in the corner.
Ms. Askew, can you go back to--there was kind of a general
discussion about the costs associated with just making the
application. And this is not the first time we have kind of
skirted around the discussion about, you know, is there the
wherewithal, first of all, for a small business to kind of just
come up with, not only the resources available through their
own labor force, but being able to pull this stuff together.
And I think you said there was, like, a $20,000 figure just
imposed during the IDIQ.
Can anyone talk about the costs associated with that?
Ms. ASKEW. Yes. Thank you.
Our costs--every time you decide to go after one of these
contracts, you have to make a decision: Am I going to hire out
or have a consultant assist me so that I know which boxes to
tick? I think Mr. Alba had an interesting comment that, yes, in
fact, it is really hard as a small business to try to figure
out which boxes do you try to check off.
And so, whether you are using a third-party vendor that can
come in and say to you, here are the 18 boxes or, in our
situation, you know, hundreds of boxes that you need to check,
that really becomes a financial decision. You know, am I going
to utilize my in-house staff--and we might not be as well-
versed or as capable as a vendor might be able to help us.
And that is where the money really comes in, whether you
are choosing to hire someone to help you or whether you are
doing it internally.
Mr. FITZGERALD. The other thing--and any one of the
panelists can talk about this, I guess--is, can you elaborate
on the contracting officer's subjectivity and just how that
plays into whether or not you get the contract as well?
Go ahead, Ms. Askew.
Ms. ASKEW. Sure. I can provide an example in our HCaTS
opportunity.
From the period of time that we submitted our application
to after that period of time that we got our first response,
they changed the evaluation criteria. And, in my situation, one
of the things they evaluated were your reviews, your company
reviews. They are called CPARs.
And, in my situation, the CPARs--we had a change in
contracting officer, who made a decision that they would not
give ``exceptional'' CPARs; they would only give ``very
good''s. It had nothing to do with the quality of our work. It
was just a subjective decision by the contracting officer.
And so, in that situation, our points actually dropped
because we were--although same work, same company, we were
evaluated differently during that period of time.
Mr. FITZGERALD. And, again, any one of you can jump in on
this. Because I know that, at some level, in the higher DOD
contracting, you almost have this situation where sometimes
those in charge on the technical level will become somewhat
imbedded with the corporation, so there is a back-and-forth,
that that exchange can develop into something that happens on a
regular basis.
How much contact was there with those that were overseeing,
kind of, the process? Was there any exchange on a regular
basis?
Ms. ASKEW. I could respond to that. We had no exchange.
Mr. FITZGERALD. Okay.
Ms. ASKEW. The first contact we had was at 9 months, where
they said: We are changing the criteria, and can you respond
based on this new criteria?
Mr. FITZGERALD. Yeah.
So maybe a suggestion for you, Madam Chair. It would be
interesting to see, like, at what level some of those, you
know, exchanges start to happen.
Because, obviously, at some point, there are many different
resources being poured in by the government to develop these
strategies, especially when they have to determine what kind of
inclination or escalation, I guess--a better word--in labor
force you would need to meet the needs of the contract.
So I think it would be something great for the Committee to
dig into and see if we can't get some better answers on that.
But thank you very much for being here.
I yield back.
Chairwoman VELAZQUEZ. The gentleman yields back.
Now we recognize the gentlelady from New York, Ms. Tenney,
for 5 minutes.
Ms. TENNEY. Hi. Am I on?
Chairwoman VELAZQUEZ. Yes, you are.
Ms. TENNEY. Oh, thank you. Thank you, Madam Chair. I
greatly appreciate it.
It is a very interesting hearing. And thank you to the
witnesses. Because I think this is something that a lot of
people don't understand, how complicated government contracting
is, and the amount of money that we spend of taxpayer dollars,
and how important it is to make sure that money is distributed
in a way--or awarded in a way for contracts with reliable
vendors and reliable people that are going to live up to the
standards that we set by this code.
But it is really interesting to show how--just listening to
you all, it has been very interesting just to hear an awful lot
of alphabet soup of terms that I think a lot of people don't
understand.
And I wanted to just go to Ms. Askew first, if I could, and
just elaborate on what Representative Fitzgerald was getting
into.
And you are talking about the $20,000 that you needed for
an IDIQ. And I am just going to say, this is an indefinite-
delivery, indefinite-quantity type of contract, which may make
somebody in business like me go, ``Agh.'' You know, how do you
have a contract that isn't clearly defined?
And I just wondered if you could talk about that $20,000
being a barrier to entry and getting new businesses, like your
business and smaller ones, involved in the process and why that
is sort of an undefined concept.
Ms. ASKEW. Yes. Thank you.
In our situation, being able to respond--and you might say,
in the large scheme of things that $20,000 might not be a lot
of money. But that only allows you to get on the--if you win
and if you are successful, it only allows you to get onto the
vehicle. You then have to respond to every one of the
subsequent opportunities. You don't win anything. You just win,
as I was saying, a license----
Ms. TENNEY. You just get to be in the bidding; that is it.
Ms. ASKEW. That is----
Ms. TENNEY. Are there additional fees that you have to pay
after that initial $20,000? Because this looks--I mean, am I
interpreting this wrong? This looks like sort of an open-ended
contract situation, because you are not reacting to a defined
bid. It is just, you are in a situation where bids will emerge,
and then you will eventually--you know, you are in the system.
And then, if it is undefined, you know, there could be more
coming up that would be available.
Ms. ASKEW. Right. I mean, you do have that opportunity to
respond. I just approximated $20,000 because that is how much
it cost for us to use third-party assistance so that we
wouldn't--we perhaps could win. You know, when we have done it
ourselves, it is internal time, you know, which probably
actually equals more than $20,000.
But, for us, you know, once again, when we are looking at
those opportunities out there, these best-in-class vehicles are
where everything is going. And so you have to--you know, if I
am going to continue to be a viable business, that is a
decision we have to make.
Ms. TENNEY. Yeah. It is interesting. I think, you know, for
anyone watching this that is not a government contractor, just
the idea that it is so complicated makes it look like there is
room for subjectivity, and, therefore, the best contract is
maybe not getting awarded. It is a contract being awarded based
on, maybe, somebody with an inside relationship--which would be
developed, obviously. If a contractor works with someone, they
are going to end up getting a good relationship.
But I wanted to ask--so, Ms. Hart, you mentioned something
about defining ``best in class.'' And I just wondered if you
could elaborate a little more. I didn't quite catch what you
were saying about that.
When you say ``best in class,'' what do you mean? And how
can we legislatively make that easier so that contracts are
more available to small businesses and they could break through
some of the barriers that we are seeing with them getting into
this?
Ms. HART. So that is a great question.
In my written testimony, I do expand upon this, on how GSA
and OMB, currently, they define best-in-class contracts. But
the question you just asked, what does this mean, is actually
what industry is currently asking all the time, what best-in-
class contracts are. It is very subjective, and it is very
open-ended. And there is no legal definition in the FAR or
anywhere that says, this is what a best-in-class contract is.
So GSA very much gets to kind of make their own decisions
on what that constitutes and what those definitions mean and
then apply that to industry. And we have to adjust and pivot
and basically be at that whim in order to respond.
So, in summary, there is no definition of that currently.
Ms. TENNEY. Right.
So what would we--if we are legislators, we are supposed to
be making laws, what would you say--how should we define ``best
in class'' in legislation if we were to propose it?
Ms. HART. Well, that is a really large question. I would
have to probably think on that and get back to you, but the way
that I would look at that is: Having a one-size-fits-all
approach to procurement is not sustainable for the federal
government or to meet their mission needs, and a one-size
approach even for defense versus civilian is not a right way to
approach this.
I mentioned looking at creating governmentwide IDIQs with
explicit technical focuses or looking at standalone contracts
that have more of an incentive in order to use that. I think
that that might be a better approach in looking at that, rather
than trying to define what a best-in-class contract is, because
I do think that that could easily be taken advantage of, and we
might find ourselves sitting here again with the exact same
problem in a few years.
Ms. TENNEY. Yeah. Thank you.
No, I can--the frustration--I know people in government
contracting from the DOD side and a number of other areas where
it is just a very frustrating process. And taxpayers don't
really understand it as well. It is so confusing, and they are
worried that, you know, everything is an inside deal.
And I would just like to see it be more objective so that
we can get good small businesses in that can provide excellent
services at a lower cost and better quality to our government.
And, obviously, that is the mission of our inquiry today.
But thank you again to the witnesses, to the Chairwoman,
and the Ranking Member. I appreciate the time. I yield back.
Chairwoman VELAZQUEZ. The gentlelady yields back.
Now we recognize the gentlelady from California, Mrs. Kim,
Ranking Member of the Subcommittee on Innovation,
Entrepreneurship, and Workforce Development.
Ms. YOUNG KIM. Thank you very much, Chairwoman Velazquez
and Ranking Member Luetkemeyer, for holding this important
hearing to discuss many different ways [inaudible] contracting
opportunities for small businesses.
And I want to thank the witnesses for joining us today.
Ms. Casey, let me start with you with my first question. I
am concerned that the rising use of joint ventures in SBA's
Mentor-Protege Program is creating a dependency among small
businesses on them to be competitive.
So what is your assessment of the Mentor-Protege Program
and the formation of joint ventures and their impact on small
businesses?
Ms. CASEY. So I think that the Small Business Mentor-
Protege Program, at its heart, has the spirit of intending to
grow small businesses and help small businesses get their feet
on the ground and get a good start.
I think there are a lot of unintended consequences that
have not yet been assessed or studied. And I think there is a
great opportunity to provide additional help and oversight to
the Small Business Administration so that they actually collect
more data and understand the implications.
How much of the revenue that is going to these joint
ventures is really ending up in small business? And how
successful are these small businesses, beyond the joint
venture, in winning contracts and building up their corporate
capabilities to be a great prime contractor on their own?
And so I think this is a great opportunity to collect data
to understand these unintended consequences so that you can
seek to identify additional legislation that may actually take
a program that has the spirit of helping small businesses and
make that much more successful.
Ms. YOUNG KIM. Thank you, Ms. Casey.
You know, let me ask to all witnesses: There is currently
no process in place allowing the government to gather data on
the federal contracts that went to small businesses versus
large mentors.
So would you be in favor of having a process that could
allow us to tap into that data? And, if so, how do you think
having that data could improve federal contracting for small
businesses?
Any one of you can answer.
Mr. ALBA. Sure. So, yeah, I mean, there are laws and
regulations that dictate the performance of work and what is
allowed as a maximum, but, yeah, you are absolutely right that
there is no way of tracking internally what is happening in
joint ventures.
Some of these IDIQs, though, or other contracts do make you
report back data on whether you are meeting the performance-of-
work requirements, and perhaps expanding that and making sure
that it is done correctly.
But I would say not just the dollars, but also making sure
you report who is doing what, so that you can show that the
small business is actually learning from this experience,
actually managing, actually doing the work, as opposed to just
hitting some arbitrary number.
Ms. YOUNG KIM. Yeah.
Unless any other witness would like to respond to that, I
have one other question, so let me throw it out there in the
short period of time I have.
It seems like there aren't many governmentwide contracts
that offer very limited spots, although there are many
qualified contractors out there. So do you have any thoughts on
whether the government should open that pool to many more
contractors and push competition [inaudible]?
Maybe, Ms. Askew, you can answer this one.
Ms. ASKEW. Thank you.
I would say that opening it up to more spots could be an
answer. The issue still becomes, how do you get on--you know,
what resources and requirements do you need to be able to
actually get onto that opportunity, no matter how many spots
are open? And so I think that is really where the difficulty
lies.
Ms. YOUNG KIM. Well, I would like to hear more about the
agency delays and amendments (ph) impacting small businesses'
chance of success at getting on an award.
So what is the typical timeline in which an award is made?
And what potential factors delay these awards? And is there
anything that can be done to mitigate the negative impact felt
by small businesses?
Ms. CASEY. I can cover that.
In my experience with some of the governmentwide contracts,
it takes between 1 and 3 years to get to an award.
Delays come in multiple forms. One, it takes a very long
time for the government to evaluate the proposals. Secondly,
there is an increase in the number of protests, because maybe
the requirements weren't as clear as they could have been. And
then those protests create delays, as is seen in the examples
of CIO-SP4 and recently in Polaris.
So the time between making the investment and the time you
actually get the award, if you are lucky enough to get one of
these coveted spots, could be 3 years. And you could have
spent, in our case, between $60,000 and $100,000 on a single
IDIQ bid.
So making sure that the government provides a near-final
draft prior to releasing the solicitation, that would really
allow businesses to know exactly what they are going to be
bidding on, create a strategy, and reduce costs and time. So
that could help quite a bit.
Ms. YOUNG KIM. Well, thank you so much.
I really look forward to working with my colleagues to
improve the federal contracting process for small businesses.
And thank you so much for letting me go over time, and I
yield back my time.
Chairwoman VELAZQUEZ. The gentlelady 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 Chair Velazquez
and Ranking Member Luetkemeyer, for holding this hearing today.
While large corporations might provide the manufacturing
and scale to power our economy forward, our small-business
industrial base provides the agility and innovation necessary
to keep us leading the world. Our ability to protect the supply
of entrepreneurs from government over-regulation and being
crowded out by larger companies, who have a greater ability to
tip the regulatory scales, will be crucial to the United
States' ability to compete on the world stage in every
industry.
In the fiscal year 2020, the SBA announced that the federal
government exceeded its small-business contracting goals, with
$145.7 billion in federal contract dollars, up $13 billion from
the previously year. And, while that number may sound good, it
hides the fact that the number of small businesses contracting
with the federal government is actually rapidly shrinking.
One reason for this almost-40-percent decline in the
government's small-business vendors is increased regulation and
consolidation of contracts.
Last year, Chairman Dean Phillips of the Oversight
Committee and I held a hearing over the DOD's new cybersecurity
assessment framework versus Cybersecurity Maturity Model
Certification. And while the intent behind the framework was
good, it left many small-business contractors scrambling trying
to navigate massive compliance manuals, while large contractors
could simply rely on their large legal teams to meet the new
requirements.
And if you want to talk about how important it is to have
people come up here and actually testify, this guy held up a 3-
inch binder that was multiple inches thick, and he says, ``For
me to be able to implement this, I am going to have to hire a
team of people. It is going to cost me about $100,000. And I,
as a small-business owner, do not have those margins. Think
about what you are doing when you pass these. For large
corporations, no big deal. But for the small businesses, this
is something that we cannot do.''
So I guess my first question is going to be to Ms. Askew.
In your view, when competing for contracts with the federal
government, is the scale tilted too far toward companies with
greater compliance resources instead of businesses with the
best product?
Ms. ASKEW. Thank you for that question.
We are actually engaging right now in deciding how we are
going to manage the maturity model that we are required to
comply with in order to continue to win contracts.
And so, for Circuit Media, we really had to--you know, you
are making a day-to-day decision about, am I going to do this
or that? And, you know, the 3-inch binder is no joke.
And so our position has been, how can we continue to
compete but still be able to pay our bills? And that has really
been, you know, something that you think about on a daily
basis.
Ms. VAN DUYNE. Does anybody else on the panel want to weigh
in on that question?
Mr. ALBA. Yeah, I will say a couple things dealing with
regulations. Some of them are written so broadly and so
vaguely, and it is really unfair.
I mean, I deal with False Claims Act defense work as well,
and I have situations right now where: Someone has a firm-
fixed-price contract. The contract is not clear what that firm
fixed price is for. And they billed the government on a firm-
fixed-price basis. And the Department of Justice is now coming
after them because they said, well, certain work wasn't done.
It was firm-fixed-price.
And so how is someone supposed to figure out what ``firm
fixed price'' means if it doesn't mean firm fixed price? It is
things like that that are causing needless problems for our
small businesses.
Ms. VAN DUYNE. Ms. Hart?
Ms. HART. From a proposal standpoint--so I have been
working on federal proposals for over a decade now, and I have
never seen a request for proposal that was actually
straightforward, that didn't involve a very large conversation
on ``what does this mean'' several times.
There are amendments that are put out that are ambiguous,
that don't answer questions, that just say--when you ask a
three-part question, their answer to that three-part question
is ``yes,'' and it is, ``yes'' to what? And that is a common
occurrence. That happens all the time.
So I would say, absolutely, as someone that does support
vendors in this, absolutely, there is a lot of time and money
spent on us just figuring out what is being asked.
Ms. VAN DUYNE. I don't know if we have another witness up
there. If she wants to----
Ms. CASEY. Yeah. I would echo what Ms. Hart and Ms. Askew
have said. The number of regulations when you are bidding on
one of these proposals, it is extremely complex. Newer small
businesses don't understand what some of these compliance
requirements really mean. And you have to go through so much
compliance to just put in the proposal, and then you have to
make sure you comply during delivery.
So I would say that the proposals could be significantly
simplified and less complex. We have seen attempts to do that
through SAM.gov. But I would say, you get one thing that gets
better and three things that get harder, in terms of compliance
and proposals.
Ms. VAN DUYNE. Thank you. And I appreciate your--I
appreciate your input. We had actually introduced a bill that
would look at SBA, and any regulation that you add, it would
have to be budget-negative or budget-neutral. I hope we can
move forward with that bill.
But I thank all of the witnesses for your testimony today,
and I yield.
Chairwoman VELAZQUEZ. The gentlelady yields back.
Now we recognize the gentleman from Minnesota, Mr. Stauber,
for 5 minutes.
Mr. STAUBER. Thank you, Madam Chair, and thank you, Ranking
Member Luetkemeyer.
I just want to follow up on my colleagues' questions.
Under this administration, there has been an additional
$201 billion of additional regulations on small businesses.
The four of you said exactly what we have been talking
about. You cannot continue to punish the small businesses
across this country. As a former small-business owner, that was
one of the most devastating things that happens to small
businesses.
We always talk about ``the engine of our economy is our
small businesses.'' In anywhere, main street, USA, our small
businesses employ our friends and neighbors and make our
economies grow. And this administration added an additional
$201 billion to that.
Mr. Alba, can you comment on those regulations? You just
talked about some of them. How destructive are they, and how
cumbersome?
Mr. ALBA. So I think it probably depends on which
regulations. You know, some are there to protect the government
or protect others.
But there are certainly a lot of issues that are very
ambiguous. And the ambiguities, I think, are really what
creates most of the additional cost----
Mr. STAUBER. Right.
Mr. ALBA.--because they have to ask people like me what the
heck something means.
And sometimes the answer is ``I don't know.'' Like, what is
the totality of the circumstances? How am I supposed to
determine what I am supposed to do if an agency bases what I am
doing as whether legal or illegal on a totality of the
circumstances?
Mr. STAUBER. Right. Right.
Ms. Askew, would you like to comment on these additional
$201 billion of regulations that are stifling and destructive
to small businesses? What is your comment?
Ms. ASKEW. Well, I would agree with Mr. Alba about the
ambiguity. I think that anytime you can provide clear and
concise information so that you can actually respond and
respond accurately--because every time you don't respond
accurately, it is counted against you.
Mr. STAUBER. Right.
Ms. ASKEW. And so being able to, I think, really look at
the ambiguity and try to look at, you know, the language of
what they are asking you to do would be very valuable.
Mr. STAUBER. Ambiguity, bureaucracy--same thing here.
So, recently, the House passed my bill, the Strengthening
Subcontracting for Small Businesses Act. This bill will help
incentivize prime contractors to comply with small-business
subcontracting goals.
To our witnesses: As we continue to study and examine
federal contracting and subcontracting issues, where should we
focus our attention?
Ms. Hart, go ahead.
Ms. HART. So, from my perspective, it would actually be
providing more transparent data behind that. That information
is currently not accessible and not reviewable for accuracy.
So I think focusing on that--because there is a lot of
reporting structured around that, but no one really knows what
is being collected and how it is being collected and if it is
being reported accurately by prime contractors.
So I think talking to maybe subcontractors----
Mr. STAUBER. Right.
Ms. HART.--about that and making sure that they are being
represented correctly and that maybe the prime is not
overinflating how much support they are giving would be a great
place to start.
Mr. STAUBER. Ms. Askew?
Ms. ASKEW. I think being clear about the work performed.
Often, on these small-business plans, what ends up happening is
that you might be part of that team but you never see the work.
And so I think, to that point of having clarity and
accountability and transparency, that would be really valuable,
because you aren't sure--although you might list a small
business, you aren't sure that they are actually getting to be
able to perform the work.
Mr. STAUBER. Right.
And it is well-known that there are high administrative
costs associated with competing for and winning a large
contract. Can you speak to your experience with this?
And do you believe that the federal government acknowledges
the unintended consequences these contracts have on small
businesses?
And, Ms. Askew, I will ask you first again.
Ms. ASKEW. Yes. Thank you. I am not sure if they
acknowledge the amount of work that is required. I can
certainly talk about the impact that it has on the small
business.
Mr. STAUBER. Please. Go ahead.
Ms. ASKEW. Being able to, you know, go back to your day-to-
day operations and you are trying to, you know, manage a team
and move your company forward and be successful, being able to
adequately respond and to be involved in a contracting
environment with the federal government really does take, you
know, wherewithal and tenacity and all of the things that we do
as small businesses, but being able to manage that and manage
all the other things is really a difficult feat.
Mr. STAUBER. Thank you. My time is out.
And to the witnesses, thanks for your comments, and we
appreciate that.
Madam Chair, I yield back.
Chairwoman VELAZQUEZ. The gentleman yields back.
The gentleman from New York, Mr. Garbarino, is recognized
for 5 minutes.
Mr. GARBARINO. Thank you, Chairwoman, and to the Ranking
Member for holding this hearing today.
Actually, I wanted to follow up on my colleague Mr.
Stauber. He just asked a question about, do you believe the
federal government acknowledges the unintended consequences,
the administrative costs associated with competing for and
winning these large contracts, the effect on a small business?
And, Ms. Askew, you answered that question, but I want to
let the other witnesses.
Ms. Hart, you talked about the administrative costs in your
testimony, as well as some of the other witnesses. So I want to
open that up to you, Ms. Hart, first, and then maybe the other
two witnesses to talk about that.
Ms. HART. So, like a lot of this, I think the answer is: It
depends.
Every contracting officer that puts out these requests for
proposal, I think, has a different understanding of the
practices of a government contractor. We most certainly
communicate with a lot of them back and forth or have, kind of,
you know, off-the-record conversations, and it ranges anywhere
from they absolutely recognize the commercial practices and the
cost of this, to ones who very much believe that we already
have something put together and we are able just to slap it
into a template and submit it.
I think that is shown when requests for proposals are
released on Fridays before holidays--on Christmas, on New
Year's, and things like that--as well as the administrative
costs for, you know, 25 amendments and what that means.
So I think the answer is, it depends, since this is such a
human-to-human type of selling process.
Mr. GARBARINO. I appreciate that answer.
Ms. Casey?
Ms. CASEY. I think that some in government understand the
unintended consequences and others don't.
I think, though, senior government officials are really
measured by their compliance to Category Management and say, We
are meeting our Category Management goals, we are meeting our
small-business dollars, so we are doing great; we are meeting
our small-business dollars. But they are not measured on, like,
how large the small-business piece is and whether it is
shrinking or it is growing.
So I think figuring out how to measure based on the size of
the small-business space and its growth is also another metric
that is critical for these agencies that are involved in major
procurements.
Mr. GARBARINO. I appreciate that. It sounds like they are
just checking a box if the money is getting out the door, you
know, and it might not actually be doing all it is supposed to
be doing.
Mr. Alba, did you have anything to add?
Mr. ALBA. I think--I am not sure if the consequences are
actually unintended. I think some of it is in order to reduce
competition and reduce the number of proposals and things that
have to be reviewed.
The entire Category Management system is structured, I
think, to look focusing primarily on reducing administrative
burden as opposed to actually getting the best products. And I
think that is part of the issue.
Mr. GARBARINO. I appreciate all those answers. And it
definitely paints a picture from what I have been hearing from
some of my small businesses.
Ms. Hart, I wanted to follow up with something that--I have
to tell you, your testimony that you submitted was very
detailed. I appreciate it. And you detailed in it numerous
governmentwide acquisition activities, and you also outlined
the number of protests associated with each.
Why do you believe you are seeing these levels of protests?
Ms. HART. So that might be a better question for Witness
Alba. But what I do believe and what I see is: Because the
business life depends on it. You need it to survive. So, if you
aren't given that award, your business might go under. And so,
in order to keep that alive or keep those task orders running,
protesting sometimes is the only way that you can do that to
continue revenue streams.
Mr. GARBARINO. Mr. Alba?
Mr. ALBA. Yeah, I think that is the number-one reason.
Everything is do or die. And so it is the criticality of the
requirement that is probably driving it more than anything
else. Which is why things like on-ramps or rolling admission,
things like that, I think, would greatly lessen that issue.
Mr. GARBARINO. Okay. I appreciate it.
So, Mr. Alba, just a followup for you. As we continue to
look at this and study--as Members of Congress continue to look
at this and study, examine federal contracting issues, if there
is one thing--it is probably more than one thing, but if there
is one thing we should absolutely focus on, what is it?
Mr. ALBA. I think the big thing is clarity, and clarity in
the regulations, and probably reducing the discretion of
contracting officers in the process. Because that allows
contracting officers to do things without any rhyme or reason.
Like, for instance, requesting reconsideration of small-
business status after--like, you are a year into the
procurement. They have submitted proposals maybe a year ago you
are still evaluating. You suddenly ask for recertification for
some option or some amendment, and then people who submitted a
year ago are no longer small. They wasted all those dollars,
and they are thrown in the trash.
Mr. GARBARINO. I appreciate it.
I am out of time. I yield back.
Thank you to all the witnesses.
Chairwoman VELAZQUEZ. The gentleman yields back.
I would like to thank our witnesses again for appearing
before the Committee today.
It is clear from your testimony that governmentwide
contracts have changed how small firms do business with the
federal government. While its goals are worthy, they are also
forcing small contractors out of the marketplace and impeding
new entrants.
Today's hearing has not only shed light on the significant
challenges that small contractors face, but it also has put
forward potential solutions.
I just want to acknowledge that this is an issue that falls
also under the jurisdiction of Government and Oversight.
I look forward to working with my colleagues on both sides
of the aisle to advance policies that ensure small businesses
have meaningful ways to contract with the federal government.
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
again.
[Whereupon, at 11:44 a.m., the Committee was adjourned.]
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