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

                  LEVERAGING THE INFRASTRUCTURE INVESTMENT
                   AND JOBS ACT: THE ROLE OF THE SBA'S
                   BOND GUARANTEE PROGRAM

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

                                    HEARING

                                   BEFORE THE

                          COMMITTEE ON SMALL BUSINESS
                                 UNITED STATES
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  HEARING HELD

                                 JULY 27, 2022

                                   __________

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                Small Business Committee Document Number 117-064
                 Available via the GPO Website: www.govinfo.gov

                                  __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    48-108                     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
                              MIKE FLOOD, Nebraska

                     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..........................................     3

                                   WITNESSES

    Mr. Peter Gibbs, President & Former Director of SBA's Office of
      Surety Guarantees, Foundation Surety & Insurance Company,
      Bowie, MD, testifying on behalf of the National Association of
      Surety Bond Producers..........................................     5
    Mr. Ralph Pulver, Regional Underwriting Officer, Traveler's Bond,
      Hartford, CT, testifying on behalf of the Surety & Fidelity
      Association of America.........................................     7
    Mr. Alan Gravel, President, Willow Construction, LLC, Powder
      Springs, GA....................................................     8
    Mr. Joel Griffith, Research Fellow, Financial Regulations, Thomas
      A. Roe Institute for Economic Policy Studies, The Heritage
      Foundation, Washington, DC.....................................    10

                                    APPENDIX

    Prepared Statements:
        Mr. Peter Gibbs, President & Former Director of SBA's Office
          of Surety Guarantees, Foundation Surety & Insurance
          Company, Bowie, MD, testifying on behalf of the National
          Association of Surety Bond Producers.......................    25
        Mr. Ralph Pulver, Regional Underwriting Officer, Traveler's
          Bond, Hartford, CT, testifying on behalf of the Surety &
          Fidelity Association of America............................    28
        Mr. Alan Gravel, President, Willow Construction, LLC, Powder
          Springs, GA................................................    31
        Mr. Joel Griffith, Research Fellow, Financial Regulations,
          Thomas A. Roe Institute for Economic Policy Studies, The
          Heritage Foundation, Washington, DC........................    33
    Questions and Answers for the Record:
        Questions from Hon. Flood to Mr. Joel Griffith and Answers
          from Mr. Joel Griffith.....................................    41
    Additional Material for the Record:
        American Property Casualty Insurance Association.............    43
        Glen Rose Veterinary Clinic..................................    45
        Glenroy......................................................    46
        MO-03 Constituents Statements................................    48
        Precision Pattern Co., Inc...................................    50
        Significant Labor Shortage Statement.........................    51
        Statements for the Record from Hon. Williams, Hon. Tenney,
          Hon. Donalds, and Hon. Kim.................................    52

    LEVERAGING THE INFRASTRUCTURE INVESTMENT AND JOBS ACT: THE ROLE OF THE
                          SBA'S BOND GUARANTEE PROGRAM

                                  ----------

                            WEDNESDAY, JULY 27, 2022

                      House of Representatives,
                   Committee on Small Business,
                                                        Washington, DC.
        The committee met, pursuant to call, at 10:00 a.m., in Room
    2360, Rayburn House Office Building, Hon. Nydia Velazquez
    [Chairwoman of the Committee] presiding.
        Present: Representatives Velazquez, Mfume, Carter,
    Houlahan, Craig, Peters, Luetkemeyer, Williams, Stauber,
    Meuser, Tenney, Garbarino, Van Duyne, Fitzgerald, and Flood.
        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.
        Before I begin, I just want to let the Ranking Member know
    that our thoughts and prayers are with the people of St. Louis
    who are affected by the recent historic flooding and I will
    work with you to make sure that SBA in an expedited way assists
    the people from St. Louis.
        Before we begin, I want to welcome our newest Small
    Business Committee Member from our side. First, we have Mr.
    Scott Peters from California. He brings his experience serving
    on the Committees on Budget, Energy and Commerce and Joint
    Economic Committee to our efforts to strengthen
    entrepreneurship and the challenges facing America's small
    employers. Mr. Peters' understanding of the importance of
    bipartisanship will be integral to his work on our Committee.
    Welcome, Mr. Peters.
        And I will yield later on to the Ranking Member for the
    introduction of Mr. Michael Flood from Nebraska.
        Last November, President Biden signed the $1.2 trillion
    Bipartisan Infrastructure Bill into law. The package culminated
    years of work to reverse decades of underinvestment and
    revitalize American infrastructure. This effort represents the
    most significant investment in America's infrastructure in
    generations.
        The funds outlined in the bill include $550 billion in new
    spending, which will help rebuild our nation's roads and
    bridges, strengthen public transportation, expand broadband to
    more Americans, and improve drinking water and wastewater
    infrastructure. Every American stands to benefit from these
    upgrades. But, crucially, the bill will also boost small
    businesses as they will play a critical role in rebuilding
    American infrastructure.
        Today, I want to examine one of the key mechanisms that
    facilitate small business participation in government
    infrastructure projects, SBA's Surety Bond Guarantee Program.
        Surety bonds are three-party agreements with a surety, a
    contractor, and a project owner. If a contractor cannot
    complete a project, the surety is responsible for ensuring that
    the obligation is met. These bonds help reduce risks in the
    contracting process and protect project owners, subcontractors,
    and suppliers.
        That is why the Miller Act requires all federal
    construction contracts greater than $150,000 to have a surety
    bond. This practice has spread outside the public sector as
    more and more private projects require surety bonds.
        The SBG program guarantees bonds for contracts of up to
    $6.5 million, and up to $10 million for federal contracts if a
    contracting officer deems such a guarantee necessary. Under the
    program, SBA guarantees bonds to small entities when a bond is
    required, the businesses cannot obtain it elsewhere, and there
    is a reasonable expectation they will be able to complete the
    project they are competing for.
        The SBG program is vital to disadvantaged businesses that
    typically have a harder time obtaining a bond from traditional
    sources. In fiscal year 2021 alone, SBA guaranteed 9,633 bonds
    for a contract value of approximately $7 billion, which
    supported more than 34,000 jobs.
        As projects related to the bipartisan infrastructure bill
    continue to develop, demand for surety bond guarantees may
    increase. Given that, this Committee must look for ways to
    improve the program to better serve more small businesses. For
    instance, some experts have promoted raising program limits on
    individual and federal contracts to keep up with increased
    investment in infrastructure.
        Questions have also been raised as to whether the SBG
    program has the resources to adapt to the challenges that come
    with increased demand. In this respect, advocates believe that
    there is room for improvement in areas like information
    technology, staffing, and outreach activities, which could be
    addressed by allowing the Revolving Fund to be used for
    administrative expenses.
        Today, I want to take a close look at how the program is
    operating and how Congress can ensure it is equipped to meet
    small businesses' needs as they rebuild America's
    infrastructure.
        I would now like to yield to the Ranking Member, Mr.
    Luetkemeyer, for his opening statement.
        Mr. LUETKEMEYER. Thank you, Madam Chair. And thank you for
    convening the Committee meeting this morning. I appreciate your
    kind words with regards to St. Louis. Yes, it took me a lot of
    extra time to get to the airport yesterday. I live about 2-1/2
    hours from the airport. So between me and the airport there was
    a lot of flooding and I made my flight by 5 minutes.
    Thankfully, it was delayed. And so I was able to get here at a
    reasonable time.
        Later today, the Federal Reserve will announce its next
    interest rate hike. The decision to raise rates is directly
    tied to inflationary pressures our country is facing. As we sit
    here today, inflation is at a 41-year high of 9.1 percent. This
    elevated rate did not happen out of the blue. It has been
    rapidly rising for the last year despite some calling this
    transitory or temporary.
        In addition to a CPI reading of 9.1 percent, wholesale
    inflation, or the Producer Price Index, is running hot at 11.3
    percent. These highs are impacting all Americans and all small
    businesses. From the pump to the grocery store to the energy
    bill, it all costs more than it should and you are not going to
    get more for the money you are spending. For instance, the
    latest number that I saw yesterday was $8,600 is what it is
    costing more for people to live this year than last year. That
    means $165 a week more to live to pay the same expenses today
    as what you were paying last year but getting nothing extra for
    it. No difference in amounts or quality of what you are
    getting. That is astounding.
        For small business, this means a cycle of price increases
    that cannot be easily offset. The options or tools that they
    have at their disposal is limited. They can raise prices on
    their own, which NFIB has found that 86 percent of small
    businesses have already done. Or small business owners can
    decrease the goods and services available, use less expensive
    products, or resign to the fact that revenues will be down.
        All options are disastrous for a small business owner,
    their employees, and the communities that they serve.
        Inflation and the ongoing cost pressures cannot be ignored.
    In survey after survey, small businesses report that inflation
    and raising prices are the top challenge facing their company.
    When I am in district visiting with small businesses, the
    conversation always begins and ends with inflation.
        And it is not just rising costs. Rather, there is a
    multitude of economic headwinds that are hitting main street
    businesses. From ongoing and persistent supply chain issues
    that are leaving shelves bare, to an employment crisis where
    small businesses cannot find workers, current economic
    conditions remain forbidding. In fact, NFIB found that small
    businesses anticipating a more robust and healthy business
    environment has soured every month this year.
        Simply put, we are heading in the wrong direction. Yet, my
    democratic counterparts are proposing more spending and
    potential tax increases on all passthrough small business
    entities. This will be devastating. Higher taxes on the
    nation's job creators do not result in growth, expansion, and
    job creation.
        In addition to the proposed tax increases, the Biden
    administration just finished off its first year in office by
    proposing over $200 billion in regulatory costs. During a time
    of economic uncertainty that is hallmarked by inflation running
    at a 40-year high, it is illogical to propose tax increases in
    an enhanced regulatory environment.
        Plain and simple, this administration is ignoring the
    plight of small businesses, from the Small Business
    Administration's quest to become a voter agency, to Treasury
    Secretary Yellen's refusal to testify before this Committee.
    Continued refusal, by the way. The Biden administration
    continues to disregard and overlook the top concerns of small
    businesses that produce almost half the nation's GDP and create
    two out of every three new jobs.
        While some of my colleagues dismiss these concerns, we will
    not. I am confident that if we listen and address the needs of
    our small business owners, including the soaring levels of
    inflation, our country will grow leaps and bounds. The
    entrepreneurs, innovators, and startups of our nation can drive
    our economy forward. In order for this to happen, we need to
    get out of their way. We need to usher in a pro-growth economy
    that is focused on less regulation and taxes and do this before
    we continue to put ourselves in an even deeper recession.
    Otherwise, this downward cycle will continue.
        With that, Madam Chair, I yield back. Thank you.
        Chairwoman VELAZQUEZ. 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 mic 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 Mr. Peter Gibbs, the president of
    Foundation Surety and Insurance Solutions, an authorized agent
    for SBA's Surety Bond Guarantee Program. His prior work
    experience includes working at SBA for over 30 years, most
    recently as the director and deputy director of the Office of
    Surety Guarantees where he served for 16 years. Under his
    leadership, the office established federal partnerships with
    some of the largest surety companies in the world. Mr. Gibbs is
    also a lieutenant colonel who served 27 years in the U.S. Army
    Reserve. Welcome, Mr. Gibbs. We greatly appreciate your service
    and your expertise on today's topic.
        Our next witness is Mr. Ralph Pulver, a regional
    underwriting officer for construction services of Travelers
    Bond and Specialty Insurance based in Hartford, Connecticut.
    Travelers is a participating surety in the SBA Surety Bond
    Guarantee Program since its inception, and Mr. Pulver is
    Travelers expert for the program counting with over 20 years of
    experience. Mr. Pulver serves on the Board of Directors for the
    Minority Business Development Institute. He also provides
    technical support for the Surety and Fidelity Association of
    America with its initiatives involving small, emerging
    contractor bond readiness. Welcome, sir.
        Our third witness is Mr. Alan Gravel, the president of
    Willow Construction, a small business located in Powder
    Springs, Georgia. Willow Construction is a heavily civil
    contractor. The company specializes in the construction of
    treatments plants and pump stations for local water and sewer
    authorities. It has also taken on the construction of dams. Mr.
    Gravel is a civil engineer and Air Force veteran. He founded
    his company 30 years ago. Welcome, and thank you for your
    service, Mr. Gravel.
        And now I yield to the Ranking Member to introduce our
    final witness.
        Mr. LUETKEMEYER. Thank you, Madam Chair.
        Our next witness is Joel Griffith. Mr. Griffith is a
    research fellow in financial regulations for the Thomas A. Roe
    Institute for Economic Policy at The Heritage Foundation. With
    a background in law and financial services, Mr. Griffith's most
    recent research explores the perils of inflation. Mr. Griffith,
    I would like to thank you for joining us today and for your
    continued commitment tracking the top issues and concerns that
    are confronting the nation's small businesses. Your testimony
    will certainly be appreciated. I would also like to extend my
    thanks to all witnesses joining us this morning.
        With that, Madam Chair, I yield back.
        Chairwoman VELAZQUEZ. Thank you. The gentleman yields back.
        Mr. Gibbs, you are recognized now for 5 minutes.

       STATEMENTS OF PETER GIBBS, PRESIDENT, FOUNDATION SURETY &
       INSURANCE SOLUTIONS; RALPH PULVER, REGIONAL UNDERWRITING
      OFFICER, TRAVELERS BOND & SPECIALTY INSURANCE; ALAN GRAVEL,
     PRESIDENT, WILLOW CONSTRUCTION, INC.; JOEL GRIFFITH, RESEARCH
                    FELLOW, THE HERITAGE FOUNDATION

                        STATEMENT OF PETER GIBBS

        Mr. GIBBS. Thank you, Chairwoman Velazquez, Ranking Member
    Luetkemeyer, and Members of the House Small Business Committee,
    for the opportunity to testify today where I will discuss what
    I believe is among the most important public-private
    partnership in government, the U.S. Small Business
    Administration Office of Surety Guarantees, Treasury listed
    surety companies, and surety bond producers.
        My name is Peter Gibbs. I am a small business owner and the
    founder and president of Foundation Surety and Insurance
    Solutions, a licensed insurance agency who assists small
    businesses to obtain surety bonds.
        I started my agency in October of 2021, and I am a Member
    of the National Association of Surety Bond Producers. Prior to
    starting my agency, I served as director of Office of Surety
    Guarantees at the SBA. I retired in 2021 after serving at the
    agency for over 30 years. I also retired from the U.S. Army
    Reserves as a lieutenant colonel, and from 2006 through 2010, I
    served on active duty at the Pentagon, the Defense Intelligence
    Agency, and in the Middle East.
        I strongly believe that today's hearing is vital to make
    sure that small businesses, especially those that may have
    difficulties obtaining surety bonds, have everything necessary
    to better compete for work funded by the Infrastructure
    Investment and Jobs Act.
        For over 50 years, the SBA's Surety Bond Guarantee Program
    has been successful because of the efforts of the SBA, surety
    companies, and bond producers who work cooperatively to provide
    bond into companies which otherwise cannot qualify for surety
    credit due to financial or other reasons.
        I will first describe the recent changes to the program
    which over the years have expanded opportunities to small
    businesses to participate on public and private work projects
    and have spurred great participation from the surety industry.
    Recent program enhancements have included the following:
        Increasing the contract size bond amount from $2 million to
    $6.5 and up to $10 million for federal contracts;
        Granting the SBA administrator with statutory discretion to
    determine the portion of liability assumed by the SBA and the
    surety company;
        Increasing the bond guarantee up to 90 percent for
    participating surety companies;
        Instituting a paperless application process while approving
    bond applications in less than 2 days;
        Raising the streamlined Quick-App Bond application from
    $250,000 to $400,000; and
        Reducing the fees charged to sureties and contractors.
        There is still work to be done, however, to expand
    opportunities for small businesses especially in the current
    economic climate.
        I suggest the following additional enhancements to
    streamline the program.
        Ensure that adequate staff levels for the Office of Surety
    Guarantees, as natural attrition and retirements have reduced
    staffing levels significantly and position replacements have
    not been made;
        Dedicate resources for the investment in information
    technology infrastructure to increase program efficiency;
        Explore techniques to manage, mitigate, and transfer risk
    which may attract participation from the reinsurance industry;
        Consider adding other surety products to the program, which
    may be difficult for small businesses to obtain in the
    marketplace;
        Establish parity, internal coordination, and communications
    between SBA's Bond Guarantee Program and other SBA Small
    Business programs, such as those relating to loan guarantees
    and business assistance;
        Enhance the marketing resources and budget available to the
    program;
        Provide marketing resources and incentives for federal and
    state procuring agencies to make small businesses aware of the
    program;
        Consider a temporary suspension of program fees paid by
    small businesses to access the program; and
        Consider raising the current contract guarantee amounts
    from $10 million to $20 million, and on non-federal contracts
    from $6.5 million to $10 million.
        In the last 50 years, the Surety Bond Guarantee program
    supported over 55,000 small businesses, 750 surety bond
    guarantees, and an estimated $150 billion estimated contract
    value. As impressive as that sounds, I believe that more can be
    done for the benefit of small businesses with the right
    enhancements.
        Thank you again for your consideration and the opportunity
    to testify before the Committee. I am happy to address your
    questions.
        Chairwoman VELAZQUEZ. Thank you, Mr. Gibbs.
        Mr. Pulver, you are now recognized for 5 minutes.

                       STATEMENT OF RALPH PULVER

        Mr. PULVER. Good morning. My name is Ralph Pulver. I am
    employed by Travelers Bond and Specialty Insurance in Hartford,
    Connecticut, where for the past 20 years I have served as
    regional underwriting officer in our Construction Services
    business unit. My day-to-day responsibilities include
    underwriting contract surety bonds for our construction
    clients. This includes underwriting support for a dedicated
    team that services our small contractor clients, including
    those that are underwritten through the SBA Bond Guarantee
    Program.
        I am here today on behalf of the Surety and Fidelity
    Association of America, otherwise known as SFAA, a nonprofit
    organization based right here in Washington, D.C., whose
    Members are primarily insurance companies that provide over 98
    percent of the surety bonds written in the United States.
        Today, I will be addressing three topics. The background on
    surety bonding and the operation of the SBA Bond Guarantee
    Program. Secondly, discuss how the SBA program helps small and
    emerging contractors grow their companies and contribute to the
    economic strength of their communities. And lastly, the
    positive improvements to the SBA program.
        Firstly, Mr. Gibbs and Madam Chair Velazquez, did a very
    good job of talking about the background of the program and the
    parameters and so forth, so I will not be redundant there and
    adding anything onto there. I will tell you that the SBA Bond
    Guarantee Program currently consist of a Plan A, which is known
    as the Prior Approval Program, and Plan B, which is otherwise
    known as the Preferred Surety Bond Program. Travelers
    participates in the Plan B program. This means that the SBA has
    reviewed our underwriting and administrative practices and our
    financial strength and made a determination as to the aggregate
    limit of bonds that Travelers can underwrite. Under the Plan B
    program, Travelers does not have to submit individual bonds to
    the SBA for approval, which streamlines the process. The SBA
    has given us the authority to underwrite and issue the bonds on
    behalf of SBA. As a preferred surety, Travelers must also agree
    to periodic review and audit of those SBA bonds.
        As of the most recent update from SBA, Travelers is the
    third largest writer in the Plan B program, averaging about 262
    bonds annually and impacting about 85 to 100 contractors each
    year annually.
        It should be noted that this ranking is determined by the
    number of bonds written, not by the amount of the surety bond
    premium.
        Under the Plan A and Plan B programs, the emerging
    contractor must qualify as a small business as classified under
    the U.S. Office of Size Standards. The size standard is
    determined by the gross revenues of the company and their
    affiliates averaged over the last 5 years, as well as the
    company's industry or class of work. The SBA's regulations
    provide that a bond must be required in the contract in order
    for it to be eligible for the guarantee. And, the contractor
    must certify that they have been unsuccessful in finding surety
    bond credit in the standard marketplace.
        The Surety Bond Guarantee Program provides an effective
    tool for surety companies to favorably underwrite small and
    emerging contractors that would otherwise not qualify for
    surety support. Although these emerging contractors may not
    have the balance sheets that reflect financial strength of
    larger companies, the surety will still undertake a very
    rigorous prequalification process focused on the contractor's
    ability to complete the obligation.
        Providing an initial opportunity for small and emerging
    contractors to participate in public bid market is critical for
    their future success. While there is no time restriction for a
    contractor regarding how long the SBA supports them, most
    growth-oriented contractors aim to meet the underwriting
    standard requirements or traditional surety markets and in
    effect, graduate from the SBA program.
        This is what I often refer to as the ``groom and grow''
    period, where the small and emerging contractor receives
    coaching and advice from their surety bond professionals on how
    to best position their company to obtain surety bond support in
    the traditional surety marketplace. Undoubtedly, the
    Infrastructure Investment and Jobs Act will provide increased
    opportunities for small and emerging contractors, including
    minority- and women-owned businesses. For some contractors new
    to the surety bond market, the SBA Surety Bond Guarantee
    Program helps make that opportunity a reality.
        Under the leadership of Peter Gibbs and currently, Jennifer
    Vigil, significant, positive operational and program
    improvements have been made to the SBA program, including the
    size enhancements that Peter mentioned earlier. The
    enhancements to the Mentor-Protege Program, including the size
    for eligible projects that has been referred to earlier,
    increasing the guarantee percentage, permanently decreasing
    fees for the contractors and increasing the quick application,
    again, that Mr. Gibbs referred to earlier. All these
    improvements have increased the number of participating small
    and emerging contractors, surety bond producers, and surety
    companies, now the largest number of sureties ever
    participating in the program.
        I commend the SBA for making these improvements to the
    program and would like to thank the Committee for your support
    and leadership on this issue.
        And thank you for the opportunity to appear before you
    today.
        Chairwoman VELAZQUEZ. Thank you, Mr. Pulver.
        Now, Mr. Gravel, you are recognized for 5 minutes.

                        STATEMENT OF ALAN GRAVEL

        Mr. GRAVEL. I am Alan Gravel, Chairman of the Board of
    Willow Construction. I grew up in Louisiana, earned a B.S. in
    Civil Engineering at Louisiana Tech, and an MS in Environmental
    Health Engineering at the University of Texas. I joined the Air
    Force and flew the C-7 Caribou in country in Vietnam and then
    the KC-135 in Vietnam after that. In 1974, I left the Air Force
    and moved to Atlanta to work for a civil engineering consulting
    firm. In 1981, I left that firm to work for a utility
    contractor. When that company went out of business in 1992, I
    started Willow with the employees who had worked for me at the
    old company. Of the 28 or so employees, we now have about six
    or seven of them who have been with me over 35 years. Willow
    itself has completed 600-plus jobs worth about $170 million in
    our 30 year history. We just celebrated our 30th anniversary.
        In the beginning, we were, like many startups,
    undercapitalized but we established modest banking and bonding
    relationships and steadily built our business. In 1997, we
    bought a tract of heavy industrial property and built a shop
    and an office, you can see it behind me, and moved from the
    office where we had been renting. By 2000, we reached our
    target volume of work and were on reasonably sound footing. In
    these early days, almost all our work was public bid work that
    required payment and performance bonds.
        Between 2000 and 2008, we gradually picked up some private
    and subcontract work which did not require bonding, but we were
    still actively bidding bonded work. Our bonding agent at the
    time was an experienced professional who recognized us as a
    minimal risk to the bonding company. We had always been able to
    provide the financial documentation that he needed because of
    the experience we had had in the previous company.
        The financial crisis of 2008-2012 ended our steady progress
    toward financial security. My late wife, Sheri, said to me,
    ``So let me understand. We are giving up our retirement savings
    to ensure that all Willow employees have a steady paycheck
    through the recession?'' And my answer was, yes, that is
    exactly what we are doing, but if Willow survives then all
    problems can eventually be solved.
        Willow lost significant amounts of money in 2009-2012 and
    essentially broke even in 2013. I depleted most of my
    retirement savings, and in 2011, we had to sell some of our
    construction equipment. All salaried employees took pay cuts.
    We did not have raises for 7 years. We survived and throughout
    that time, our experienced bond agent, who knew us well, was
    able to provide bonds at the reduced level of business that we
    were able to maintain.
        Things improved starting in 2014 but we had dug a pretty
    deep hole for ourselves. Our private and subcontract work
    picked up significantly but when public bid opportunities came
    along, we had to do some serious negotiation to get our bid
    bonds. Then, our long-term professional bond agent fell ill and
    had to retire. His company replaced him with a young man with
    no experience and things quickly went downhill from there.
        Howard Cowan and I were friends in college. We had
    maintained that friendship through all of the years since. When
    he left the Air Force, he became a surety underwriter and
    eventually a surety agent. When I left the Air Force, I worked
    for a consulting engineering company and then a utility
    contractor. We have always found it amusing that I studied
    civil engineering and he studied philosophy and somehow we
    ended up in two parts of the same business. Particularly since
    Willow had started, I had relied heavily on Howard's advice
    about bonding and many other things.
        When bonding became very difficult for Willow, I called
    Howard. After some discussion he said, ``I have resisted doing
    this for 30 years, but I think it may be time for me to become
    your bonding agent.'' He recognized that Willow had a proven
    track record but for circumstances that were somewhat beyond
    our control, we did not meet the normal commercial standards
    for bonding.
        Howard had a long-term relationship with the underwriters
    at SureTec. They studied our situation and concluded that
    Willow was a good candidate for SBA's Preferred Surety Bond
    Program. Early in the relationship, Howard and the SureTec
    underwriters visited our office in Atlanta to meet our key
    people and to get a better understanding of our capabilities.
    Through SureTec's comprehensive understanding of Willow's
    operations and their strong partnership with the SBA, we were
    able to continue bidding bonded work.
        Through lots of hard work, some good luck, and the SBA-
    backed bonding program, Willow has recovered our financial
    stability, and in 2020, we were able to re-enter the commercial
    bond market. Since then, we have had our third and fourth best
    years in our 30-year history. We are steadily reducing our
    debt, upgrading our equipment fleet, and hiring young employees
    to carry the company into the future.
        In those dark days of 2010 and 2011, we could have chosen
    to declare bankruptcy. Instead, we chose to never give up. Had
    the SBA program not been available, we might have eventually
    recovered but it would have taken much, much longer and it
    would have been a lot more painful. With it, we returned to
    financial health, providing good incomes to our employees,
    paying taxes, and completing quality projects for our community
    and the environment. Thank you.
        Chairwoman VELAZQUEZ. Thank you, Mr. Gravel.
        And now we recognize Mr. Griffith for 5 minutes.

                       STATEMENT OF JOEL GRIFFITH

        Mr. GRIFFITH. Chair Velazquez, Ranking Member Luetkemeyer,
    Members of the House Small Business Committee, thank you for
    the opportunity to testify.
        My name is Joel Griffith. I am a research fellow at The
    Heritage Foundation. The views I express today are my own.
        Businesses of every size, especially smaller businesses,
    are struggling with supply chain issues, rising prices, and a
    shortage of people willing to work. The Biden administration
    insists that these problems are transitory, and the
    administration continues to blame the pandemic and the war in
    Ukraine for these economic woes.
        Meanwhile, this presidential administration refuses to
    acknowledge the primary culprit behind our economic turmoil.
    Senseless COVID restrictions throttle production. Ill-targeted
    transfer payments that shrink the workforce. The opposition by
    organized labor to common sense port operations. New
    environmental regulations that target diesel semi-trucks in
    California, and record government spending financed by the
    Federal Reserve. In short, the federal government reduced
    supply while stoking demand. This is a recipe for the shortages
    and higher prices that we are facing today.
        Far too many here in Washington, D.C. continue to blame the
    pandemic for our economic woes. But it is important to keep in
    mind that the pandemic itself did not shut down the world. To
    the contrary, governments across the world shut us down with
    lockdowns and oppressive restrictions. These erratic,
    unpredictable, arbitrary tramplings of human freedom made
    planning by businesses even for the short term nearly
    impossible. Politicians across the world pushed millions of
    families and businesses off an economic cliff all the while
    misleadingly blaming the pandemic.
        Government policies also created the unprecedented labor
    shortage that we are experiencing today in the United States, a
    shortage caused by millions of workers leaving the workforce.
    Generous federal unemployment bonuses in terms of payout and
    duration acted as a powerful disincentive to returning to work
    even as the economy reopened, especially when combined with
    multiple federal stimulus checks. Many individuals delayed
    their return to the workforce even after benefits ended,
    instead choosing to live off the stockpiled cash.
        Private vaccine mandates and a threatened federal vaccine
    mandate pushed many others out of the workforce. Now,
    businesses across nearly every industry are desperate for
    workers and have expanded their benefit packages. Of course,
    those failed to keep up with the rise in prices. Nearly half of
    small businesses are unable to fill open positions. This is
    more than double the national average, or the historical
    average.
        Small businesses, too, are suffering from the supply chain
    disarray. California, specifically, matters on this because it
    receives nearly half of all containers coming into the U.S.
    Yet, in the midst of this supply chain crisis, what did
    California do? Well, California ordered a continued phaseout of
    older diesel trucks and organized labor in California continues
    to resist modernization of their ports in favor of inefficient
    modes of operation.
        Labor costs and bottlenecks on the supply chain side could
    increase even further if the Teamsters Union convinces the
    Biden administration to change the definition of employee so
    that businesses can no longer hire independent truckers to
    transport their goods.
        Lastly, while governments hampered the supply of goods and
    services, the federal government has used the Federal Reserve
    as a piggybank, selling trillions of dollars in debt for newly
    printed cash, nearly $80,000 per family of four that has
    flooded into the economy. Our Federal Reserve has doubled its
    balance sheet from just $4 trillion in March 2020 to nearly $90
    trillion just months ago.
        Unfortunately, today's proposals to expand the Small
    Business Administration's Lending and Bond Guarantee Programs
    do nothing to counteract these destructive policies. Broadly
    speaking, calls to expand the role of the SBA and the credit
    markets also ignore this reality, that small businesses are
    being serviced by private credit markets. Only 3 percent of
    respondents to the January 2022 NFIB Survey reported that their
    borrowing needs were not satisfied. Only 1 percent of small
    businesses reported financing as their top business problem.
        In conclusion, misguided COVID-19 restrictions, combined
    with Federal Reserve financed government borrowing and spending
    set in motion the current economic turmoil, the skyrocketing
    inflation, and the supply chain havoc that are crippling
    businesses and families. Proposals for yet more government
    spending, more labor regulations, more attacks on energy
    production, and massive tax hikes on businesses risk further
    pain. Thank you.
        Chairwoman VELAZQUEZ. Thank you.
        And now I will recognize myself for 5 minutes.
        Mr. Gibbs, considering the bipartisan Infrastructure
    Investment and Jobs Act that Congress passed last year, $1.2
    trillion, it was great to see in the social media every Member
    praising the projects that have been funded in their district
    thanks to the infrastructure legislation. Why is the Surety
    Bond Guarantee program more important than ever?
        Mr. GIBBS. I think it is important because it is going to
    allow small businesses who are having difficulties to get
    bonded and to take advantage of opportunities because of the
    infrastructure bill. They will be in a better position to get
    into the game. They will be able to bid on projects. I mean,
    there are companies who cannot even, if they cannot get a bid
    bond, they cannot even bid on a project. So they are left out
    of the process. So I think small businesses having the
    opportunity to bid on projects puts them in the game and gives
    them a fairly equal opportunity to get awarded a project.
        Chairwoman VELAZQUEZ. Thank you.
        Mr. Pulver, many small businesses across the country are
    unaware of the existence of the SBA Surety Bond Program. Based
    on your knowledge of the program, what can we do to spread the
    word?
        Mr. PULVER. Yes. Program awareness, increasing the number
    of agents and producers that are involved in security the bond
    aids for contractors, making more sureties aware and making
    more contractors aware of the program, it could use that to
    help to your question.
        Chairwoman VELAZQUEZ. Thank you.
        Mr. Gravel, your company was able to recover financially
    with the help of the SBG program. What does the SBG program
    mean for you, your business, and the personnel you employ?
        Mr. Gravel, you are muted. You need to unmute yourself.
        Mr. GRAVEL. We were able to more quickly return to a
    position where we could give raises, our employees can send
    their kids to college. We were able to focus on safety and
    quality issues instead of feeling like we have to cut corners
    to get by. It means that we can afford to provide healthcare,
    Section 125 flexible spending programs, a 401(k) retirement
    plan. It means that the sacrifices that you expect to make when
    you start a business do not have to last forever. And we are
    back up on our feet financially in a time period that we could
    not have accomplished without SBA assistance.
        Chairwoman VELAZQUEZ. Thank you.
        Mr. Gibbs, I understand that there are concerns with the
    capital access financial system which is the IT system SBA uses
    for the SBG program. Could you please expand on those concerns
    and what needs to be done to improve that situation?
        Mr. GIBBS. Yes. So as stated earlier, I spent 18 years in
    that program. And that system needs a total overhaul. I think
    it would assist not only the external users but also the
    internal users of the program. The system is antiquated and it
    needs to be upgraded.
        Chairwoman VELAZQUEZ. Thank you.
        And Mr. Pulver, there have been efforts to increase the
    bond guarantee thresholds to $20 million for federal contracts
    and $10 million for all other contracts. And these thresholds
    have not been increased in more than a decade. Would it make
    sense to increase those now, and why?
        Mr. PULVER. It is the position of SFA and their Members
    that the program works very well at the current levels and that
    further dialogue around increasing them is something that SFA
    would like to be a part of.
        Chairwoman VELAZQUEZ. Thank you.
        Mr. Gravel, it seems you were not able to access the
    standard market for bonds due to economic losses experienced
    following the 2007 recession. So what options would you have
    had to have to save your company had it not been for SBA's
    Surety Program Guarantee Program? Would your company----
        Chairwoman VELAZQUEZ. Yeah, go ahead. Go ahead.
        Mr. GRAVEL. Without bonding, without SBA backed bonding we
    would have had to cut way, way back, more or less start over. I
    mentioned in my testimony that I have multiple employees who
    have worked for me for 35, 38 years, like that. Most of those
    people would probably have had to go to other employers and we
    would have lost that experience. And that would have slowed our
    recovery even more. We had just built the building that you see
    behind me in 1998. We might have been in a position where we
    would not have been able to maintain those buildings and that
    property which helps us to function very, very well.
        Chairwoman VELAZQUEZ. Thank you, Mr. Gravel. My time has--
    --
        Mr. GRAVEL. At the very least it would have delayed our
    recovery.
        Chairwoman VELAZQUEZ. Thank you.
        And now we recognize the Ranking Member.
        Mr. LUETKEMEYER. Thank you, Madam Chair.
        Mr. Griffith, as you can imagine when I am back home
    visiting small businesses, the topic of inflation comes up
    every single conversation. It is at the top of everyone's mind.
    And with that I would like to submit statements for the record
    with regards to two of my constituents with regards to the
    comments that they made, Madam Chair.
        Chairwoman VELAZQUEZ. Without objection.
        Mr. LUETKEMEYER. Thank you very much.
        We are now running at a 41-year high with inflation.
    Wholesale inflation is double digits. Mr. Griffith, you have
    written about this extensively over the last year. Where do you
    see inflation going in this country short term and long term?
        Mr. GRIFFITH. Well, longer term, so long as we continue to
    empower the Federal Reserve to print the resources to fund our
    government, we can expect inflation to continue to be
    exacerbated. And I think it is important to keep in mind that
    even if the inflation rate comes down from the 9 and 10 percent
    rate that we are at today to say a more typical 2 or 3 percent,
    that does nothing to mitigate the fact that families have lost
    thousands of dollars over the past year. The income does not
    just recover once inflation returns to normal. All of the
    families that benefitted from the stimulus checks from all the
    benefits, they benefitted from that but now they have lost
    income in excess of what they received. And I am really hoping
    that these families are able to connect those dots.
        Mr. LUETKEMEYER. You make a great point there from the
    standpoint that a figure I just got last week is now $8,600
    more to live in this country than it was a year ago, which is
    about $165 a week that you get nothing extra for, which I
    mentioned in my opening remarks and follows along with your
    conversation there.
        When you talk about the Fed, yesterday in Politico, there
    was an article with regards to Fed Relies on Dubious Data to
    Chart the Economy's Course. And then the byline was officials
    are preparing another huge rate hike likely to convulse economy
    markets which is kind of like it blows your mind. If they do
    not have the right economic information that they are going to
    try to make a move here, it is like what in the world are we
    doing?
        One of the things that is in there is that it talks about
    going in the wrong direction here. So, we actually had, again,
    since mid-November, this is the highest level of unemployment
    claims that we have had, 251,000. We are in a recession and
    nobody seems to on the administration side to want to admit it.
        So Mr. Griffith, how would you define recession?
        Mr. GRIFFITH. Well, historically, once you have 2 quarters
    of negative economic growth, a recession has been declared.
    That has been the norm. We had negative economic growth in the
    first 3 months of this year. We are going to know very shortly
    if we saw the economy contract in the second quarter.
    Typically, that has been a recession. And the administration
    can deny the recession all they want but the bottom line is
    that American families are feeling the impact right now of this
    economic misery.
        Mr. LUETKEMEYER. It is interesting that they are trying to
    redefine recession before the numbers come out which tells you
    they know where the numbers are going to be. They know it is
    going to be bad. It is going to be recessionary numbers. And so
    they are trying to redefine this. And this is not something
    new. I sit on the Financial Services Committee and I see this
    every day, especially with the Consumer Financial Protection
    Bureau. Not only do they reinterpret laws, redefine words, make
    up words, they also issued press release one time saying it is
    a problem so suddenly they can go back and say, you know what?
    We saw on the news that this was going on so all of a sudden
    then they can go out and have authorization to go after
    somebody when they created the problem themselves. When you go
    in and redefine what is going on in the world, I think the
    American people are not going to be hoodwinked by this. They
    know things are going in the wrong direction. It is interesting
    that the administration keeps touting all the jobs they
    created. If you look at the numbers, we are still 520 some
    thousand people short than we were prior to the pandemic. So I
    know your labor participation continues to be low. How does
    this all factor into inflation, Mr. Griffith?
        Mr. GRIFFITH. Well, on the job side you are exactly right.
    We have actually more than a million people that just
    disappeared out of the labor force. You mentioned rightfully
    that our total number of people employed is about 500,000 lower
    than it was a few years ago and that is despite the fact that
    our population has grown in the meantime. And this is feeding
    into inflation because companies now are having to increase
    those labor costs, and those labor costs as they increase are
    not keeping up with the cost of living. So it really feeds in
    as a cycle.
        Mr. LUETKEMEYER. Thank you.
        Mr. Gravel, thank you for being here. You are an
    entrepreneur. You are a businessman, and we certainly
    appreciate you are willing to share some experiences. I
    congratulate you on being a survivor. I hope that you were able
    to participate in the PPP program. I hope that was able to be
    helpful to you.
        Just one quick question for you. Whenever you are bidding
    these projects now, with inflation the way it is, how do you
    continue to protect yourself against the rising inflation when
    you are bidding a project that may take several months or years
    to do?
        Mr. GRAVEL. We basically bid hard dollar projects where we
    have a hard quote from our suppliers on the major things.
    Things like pumps and generators and things like that, we will
    have a hard quote, and some quotes like electrical subcontracts
    will be hard dollar. So, once we commit our pricing, the
    supplier is committed to us.
        Mr. LUETKEMEYER. So the bond process is helpful to you in
    case something goes wrong you would be able to have a backstop;
    would that be a fair assessment?
        Mr. GRAVEL. Well, the costs that we have are fixed,
    basically, for all of the major part of the cost. Now, there
    are costs that can go up like fuel, and to some extent our
    labor costs and that is our risk. They are going to go up
    during the course of the contract. We just have to build that
    into our markup and make sure that we are prepared.
        Mr. LUETKEMEYER. Thank you. I yield back.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        The gentlelady from Pennsylvania, Ms. Houlahan, is
    recognized for 5 minutes.
        Ms. HOULAHAN. Thank you, Madam Chair.
        Just confirming that you all can hear me okay.
        Chairwoman VELAZQUEZ. Yes, we can hear you.
        Ms. HOULAHAN. Excellent. And I have a series of questions
    but I actually have a follow up to Mr. Luetkemeyer's question
    really quickly for Mr. Griffith.
        You mentioned that there are a million people that still
    have not returned to our economy inexplicably. Really briefly,
    what is your hypothesis? Who are those people? Could it be
    childcare issues? What kinds of things are keeping a million
    people from coming back to our economy?
        Mr. GRIFFITH. Part of the situation is that much of the
    childcare providers have not returned and that is being an
    impact on parents. But a big part of this, too, is the fact
    that families, a lot of people were able to earn more off the
    job than on the job. A lot of those resources were stockpiled.
        Ms. HOULAHAN. Yes, sir. But right now that is not the case
    any longer. So a million people are still not back in the
    economy and part of your hypothesis is childcare might be an
    issue. Is there anything else right now that might be the issue
    that we could be doing to be helpful to bring those people
    back?
        Mr. GRIFFITH. What we do know is that people are still
    actually drawing down on their savings. The savings rate has
    declined but families are still working through that surplus.
    That has been a drag. And then also if you look at the fact
    that wages have not come up with the cost of living, that is
    also a deterrent to those returning to the workforce.
        Ms. HOULAHAN. Well, it would seem to me that if you do not
    have any money that you would return to the workforce if you
    had the ability to return to the workforce. And thank you very
    much for that. I really, really appreciate that insight. That
    is a thing that I am also trying to unwrap.
        If it is okay, I am going to turn my questions over to Mr.
    Gravel and to Mr. Pulver as well. And again, thank you very
    much for joining us today.
        There is definitely no doubt that the passage of the
    bipartisan Infrastructure Investment and Jobs Act was historic,
    not just for the larger industry but also for smaller
    enterprises that we are focusing on today. Since its passage,
    the project has helped 342 new Pennsylvanian roadway, bridges,
    and projects this year, and infrastructure development with
    many more projects to follow during the remainder of this year
    it is anticipated. So it is clear that the IIJA is an economic
    engine that is supporting good paying, local jobs. Businesses
    and communities across our country offer manufacturing to
    construction across all other industries. And as our panelists,
    you guys included, have mentioned, the SBA plays a very key
    role in assisting our smaller businesses and enterprises in
    accessing these important opportunities.
        Mr. Gravel, first, thank you very much for your service and
    for being an entrepreneur. You and I have those things in
    common. And for sharing your story with us. Would you talk a
    little bit more about how the increased contract opportunities
    made available from legislation like the IIJA will benefit
    small firms like you?
        Mr. GRAVEL. Right now, virtually all of our work, 90
    percent of our work is private. So I do not know to what extent
    these funding programs might affect that indirectly or not but
    they are not affecting it directly.
        Ms. HOULAHAN. And that actually pivots to my next question
    which is I feel as though there is a little bit of a gap in
    terms of small business owners being aware of what sort of
    resources and opportunities are available to them through the
    IIJA program and through the SBAA.
        Mr. Pulver, you recommended in your testimony that the SBG
    program provide marketing resources and incentives. Where is
    the disconnect, Mr. Gravel and Mr. Pulver, where we could be
    able to be more forthcoming and people could be able to
    understand more what is available through IIJA and SBC for
    smaller businesses like yours. And Mr. Gravel, maybe I could
    start with you.
        Mr. GRAVEL. In our particular case, our connection with the
    SBA was through our agent. And I would support more robust sort
    of a relationship between SBA and some of the agents. And any
    way you could enhance that relationship would be good. If we go
    for bonding, we are going to go to an agent first. That is
    where we have to go first. We cannot go directly to the SBA.
    And so the relationship between the agents and the sureties is
    the most important thing and that is why in our case it worked
    out so well because our guy, our agent was very much involved
    in the SBA and knew a lot about it, and through NASB he had
    become very aware of it. And that is why it worked so well for
    us. But I think the small companies and, of course, we have
    been in business a long time now, so we do not really represent
    new companies anymore, I guess. But there are lots of
    opportunities out there. There are plenty of people who are
    advertising all the jobs that are out for bids and things like
    that. There is no shortage or anything of that sort.
        Ms. HOULAHAN. Thank you.
        Mr. GRAVEL. But these people need to know that they can
    find bonding if they find the right agent and get to know the
    right agent and develop his faith in them as far as their
    ability to perform.
        Ms. HOULAHAN. Thank you, Mr. Gravel.
        I am afraid I have run out of time. And I yield back, Madam
    Chair.
        Chairwoman VELAZQUEZ. The gentlelady yields back.
        And now we recognize the gentlelady from Texas, Ranking
    Member of the Subcommittee on Oversight, Investigations, and
    Regulations, Ms. Van Duyne, for 5 minutes.
        Ms. VAN DUYNE. Thank you very much, Madam Chair Velazquez
    and Ranking Member Luetkemeyer for holding this hearing.
        For over a year, Members of this Committee have called on
    Treasury Secretary Yellen to meet her legal and statutory
    obligation to appear before this Committee and speak on matters
    related to COVID-19 relief loans. While some may view this
    requirement to be pointless so much time later, I can assure
    you that the small businesses around this country who have
    watched their margins shrink in this volatile economy care.
    What small businesses understand, which this administration
    apparently does not, is that amidst record high inflation and
    rising costs of capital, every fraudulent dollar that went to a
    criminal pocket was a dollar taken away from a deserving small
    business. For the lifeblood of our economy, this is just
    another signal from this administration of their indifference
    to the economic standing of our smallest employers.
        While President Biden may look the other way of regarding
    this inflation-ridden economy, we simply cannot. Tomorrow, we
    will likely see the second quarter GDP report indicate that we
    have just recorded another quarter of negative growth in the
    economy, which is typically an indicator of a technical
    recession. And as if they were anticipating an abysmal report,
    the White House released a blog post Monday arguing that 2
    straight quarters of negative growth no longer indicates a
    recession. And while Secretary Yellen may not have time to
    follow the rule of law, she stated in her interview on Sunday
    that our economy was not in a recession but in a period of
    transition in which growth is slowing.
        While this administration would rather debate semantics
    than admit that their policies have devastated our economy,
    small businesses are struggling. And even if every major news
    outlet may hold the water for this administration's economic
    misdealings, let us set the record straight. As Michael Strain
    of AEI has pointed out, 10 recessions were declared the last 10
    times we have experienced a consecutive quarterly decline. That
    fact seems straightforward to most people.
        And if you needed another sign times are getting tougher,
    retail giant Walmart lowered its profit outlook Monday due to
    consumers having to redirect money usually spent on leisure
    goods to afford highly inflated food and fuel costs. Every
    administration official and Member of this Congress has seen
    the evidence that this economy is in a rough spot. Hopefully,
    they are in touch with the communities and constituents they
    represent to understand the perils consumers have faced over
    the last year. But unfortunately, based on the actions
    Democrats are planning to take, I fear they have not.
        I want to be very clear. Republicans will continue to
    combat the Democrats' plan to spend hundreds of billions on the
    new reconciliation package and they will continue to fight
    their planned increases on the small businesses which they
    claim to support.
        I appreciate all the witnesses being here today. And Mr.
    Griffith, I know you wanted to respond to the last question. In
    addition to potentially childcare not being available, what
    impact do you think forcing kids to stay home from school,
    forcing people to get vaccinated against their will or lose
    their job, and ridiculously high gas prices have affected these
    million people who have not been able to get back to work?
        Mr. GRIFFITH. Thank you for that question.
        In relation to families with children, a lot of the new
    data are actually showing that those are the individuals most
    likely to have returned to work. They need to supply resources
    to their families. They found a way to get back to work. What
    we see is that the real drawbacks now over unemployment has
    been, like I said, the families that are still drawing down on
    all the resources the federal government provided, well
    intentioned, maybe, but still, families are drawing down on
    those resources.
        And second of all, the fact that working pays less than
    before. A middle-class family right now, they are earning
    $3,000 less per year in real terms because of this inflation
    that was caused by these shutdowns and by all the money
    printing that we undertook in order to pretend that shutdowns
    do not have economic consequences.
        Ms. VAN DUYNE. How much do you think that reckless spending
    by this administration has contributed to the inflation that
    the country is experiencing today?
        Mr. GRIFFITH. Oh, it has definitely exacerbated it.
    Remember, this started several years ago when Democrats and
    some Republicans teamed up together to paper over the impact of
    the shutdowns. But this administration has doubled down on
    those mistakes. We knew this was going to be a problem. We had
    left wing and right wing economists that were saying if you
    print money to pay for massive expansion government spending,
    there will be inflationary results, and this administration
    chose to double down on those mistakes.
        Ms. VAN DUYNE. I have been talking a lot about how much
    regulations cost. Can you share with the Committee the impact
    that regulatory costs have had on small businesses, especially
    in our current economic climate?
        Mr. GRIFFITH. Regulations in general, and a lot of these
    regulations are related to the energy sector. We know that over
    the years the Green New Deal has not been able to be passed by
    Congress, and prior administrations, including the Obama
    administration and the Biden administration, they are trying to
    implement the regulatory package. They are trying to do that
    through Executive Order and through the rules making process.
    And that is driving up costs. And on the energy front, that has
    indirect cost, too, on the manufacturing sector because we are
    driving up energy costs on a lot of these smaller factories.
        Ms. VAN DUYNE. I appreciate that. Thank you very much. I
    yield back.
        Chairwoman VELAZQUEZ. Time has expired.
        And now we recognize the gentleman from Louisiana, Mr.
    Carter, for 5 minutes.
        Mr. Carter, you are muted.
        Mr. Carter, you continue to be muted.
        Mr. CARTER. Can you hear me now?
        Chairwoman VELAZQUEZ. Yes, we can hear you now.
        Mr. CARTER. Okay. Okay. Thank you very much.
        My question is for Mr. Pulver. What private or public
    resources would you recommend to small businesses for them to
    gain a better understanding of how the SBG program works?
        Mr. PULVER. Yes, thank you for the question. It refers back
    to what we were speaking earlier about with regards to the
    small business more than often does not have a board of
    directors. It has a circle of influence, be it their banker,
    their CPA, their bond professional, their insurance advisor. So
    looking to those trusted advisors, and particularly the surety
    bond professional to help them identify opportunities that
    exist within the Jobs Act or elsewhere is critical, and finding
    access to the SBA Bond Guarantee Program as well.
        Mr. CARTER. Part of the problem, I appreciate it, is small
    businesses have historically had a difficult time in getting
    bonding, period. And learning of these programs, having
    technical assistance to get ready for them continues to be a
    barrier. Any advice or suggestions you would give to a small
    business person, particularly a DVE or women-owned enterprise
    that may be watching today on how do they break through these
    barriers of, someone mentioned a while ago about not even
    having the bonding to do a basic bid. We know that that
    continues to be a problem. And as we talk to contractors,
    having the ability to contract and never getting a contract is
    two different things.
        Mr. PULVER. Yes. Again, I am going to refer back to the
    surety bond professional that understands SBA and the SBA Bond
    Guarantee Program. Those are few and far between. And getting
    that guidance from that individual to help make the appropriate
    investments into their business to prepare it to be bondable
    and perhaps using SBA as the foundation to getting there.
        Mr. CARTER. Based on your company's profile, what
    percentage of SBA guarantee bonds are for these business?
        Mr. PULVER. I am going to decline that question. I do not
    have that data.
        Mr. CARTER. You are going to decline into r you do not have
    it? Those are two different answers.
        Mr. PULVER. I do not have it.
        Mr. CARTER. If you had it, would you share it? I am not
    sure. You said decline, so I am wondering, does that mean you
    would have shared or you just do not have access today?
        Mr. PULVER. Well, I will rephrase that. Earlier I said on
    an average we have, at Travelers, I am taking the question to
    be at Travelers, we have between 85 and 100 contractors
    annually that are benefitting from the program. Some of those
    contractors move up, graduate, and become ready for bond credit
    elsewhere. Does that answer your question?
        Mr. CARTER. A little bit more. But I will draw down. I have
    your information. I will send something more specific to you
    that will get at that.
        This is a question for anyone. What changes do you think
    could be made for this program to expand bonding capacities for
    DBEs? Again, I will mention that we know that that is a major
    barrier. If you had a magic wand and you had this Committee
    being able to advance any issues that it might be able to make
    it clear and more available, what suggestion or advice would
    you give us?
        Mr. GIBBS. This is Peter Gibbs. My suggestion is the Office
    of Surety Guarantees needs the resources so they can market the
    program. A question earlier, you know, not too many people, as
    the former director of this program, we had three marketing
    personnel to market a $6 billion program. Right now I believe
    there is one marketing person to speak to organizations and
    small businesses, so I think the response is----
        Mr. CARTER. Are you saying, I am sorry, you say one
    marketing person within SBA to promote this SBG program?
        Mr. GIBBS. The Office of Surety Guarantees. Yes. We have
    one marketing person. They need the resources so that they can
    go to all these organizations, conferences, to small
    businesses, to agents, to surety companies. They just do not
    have the resources to spread the word of this program.
        Mr. CARTER. Under your leadership when you worked for the
    organization, you may or may not remember this, but tell me if
    you just had to guess, the percentage of small, disadvantaged
    enterprises being able to fully take advantage of SBG and
    bonding capacity. Is that number 20 percent, 30 percent,
    roughly?
        Mr. GIBBS. I do not know what that percentage is. I am
    sorry.
        Mr. CARTER. I mean, and I will not hold you to any science,
    but it is short. Is that a fair assumption?
        Mr. GIBBS. Yes.
        Mr. CARTER. Okay. And what changes do you think the
    program----
        Chairwoman VELAZQUEZ. Time has expired. Mr. Carter, time
    has expired.
        Mr. CARTER. My time has expired?
        Chairwoman VELAZQUEZ. Yes.
        Mr. CARTER. I am sorry. Thank you, Ma'am. I yield back.
        Chairwoman VELAZQUEZ. Now we recognize the gentleman from
    Texas, Mr. Williams, Vice Ranking Member of the Committee.
        Mr. WILLIAMS. Thank you, Madam Chair.
        There is no question that small businesses across the
    country are hurting as they try to manage the various economic
    headwinds during the Biden administration.
        I am a small business owner. I employ about 300 people back
    in Texas. I am a car dealer. I have been in business 51 years.
    I remember 1971. I remember 1981. I remember 1988. I remember
    2008. And this president is really putting it on us compared to
    what we saw in the past.
        And I recently received a letter from a constituent in my
    district, Mr. Michael Jones, who is the owner of Glen Rose
    Veterinary Clinic that I would like to share with you all
    today. Mr. Jones wrote, he said, ``The past few months have
    been particularly challenging as I have been struggling to keep
    up with the rapid price increases as a result of supply chain
    disruptions and increased gas prices.'' And on top of this he
    is having trouble keeping up his employees' wages since
    inflation is eating away at all of their hourly rates. The
    economic realities have left him with no choice but to pass
    these costs along to his customers in order to keep his
    business running.
        So before I get on with my questions, I would like to
    submit this letter, Madam Chair, for the record.
        Chairwoman VELAZQUEZ. Without objection.
        Mr. WILLIAMS. Thank you. Thank you for that.
        And unfortunately, Mr. Jones's experience in Glen Rose is
    becoming all too common for small businesses across the
    country. There again, I am a small business. I get it. I know
    what he is going through. I know it is hard to hire people.
    Supply chain is a disaster. Try that in the automobile business
    right now. So I know what he is going through and what small
    businesses have happening.
        We have an administration that has no small business
    experience, no business, making rules they have actually no
    reference to go from.
        So Mr. Griffith, what specific actions can the
    administration and Congress take to combat these economic
    challenges small businesses are facing right now?
        Mr. GRIFFITH. Well, I think one of the things Congress
    could do would be to take a second look at what has been
    proposed in the Pro Act. The Pro Act would actually apply basic
    California labor standards to the rest of the country and would
    make it very difficult for independent truckers, for instance,
    to work. And that is something that Congress right now is
    actively considering imposing. This would really put small
    businesses in a bad situation and harm a lot of independent
    workers.
        Mr. WILLIAMS. Well, and you know, 75 percent of the
    workforce, 75 percent of the payroll is small business but,
    yet, we have one party that wants to help. We have another
    party that wants to hurt.
        So it has been over 4 years since the 2017 Tax Cuts and
    Jobs Act passed Congress and was signed into law by President
    Trump. This historic tax reform ensured that American small
    businesses and workers were provided opportunities to grow and
    compete. Unfortunately, many of the important provisions in
    this bill will expire in the next few years, and rather than
    working to extend these important provisions and make it easy
    for small business and easy for main street that prove
    successful in jumpstarting main street, the Democrats continue
    to discuss new taxes on passthrough entities and S corps. What
    a time to be raising taxes; right? It is unbelievable.
        So Mr. Griffith, can you discuss how the additional 3.8
    percent tax that the Democrats keep reviving would hurt small
    business?
        Mr. GRIFFITH. Well, it is going to discourage these
    business owners from actually saving and reinvesting that
    capital. Instead, they are going to be incentivized to consume
    that capital. It is going to harm not just the business owners
    but it is going to harm those people who rely on those
    businesses to create new jobs.
        Mr. WILLIAMS. Well, they are going to have to raise prices;
    right? They are going to get in defense mode. Instead of
    spending, they are going to have to hold for taxes. So it is a
    disastrous, backwards economy. And Americans are seeing Help
    Wanted signs everywhere in the windows of businesses across the
    country. A recent survey by the NFIB found that 50 percent of
    all business owners reported job openings it could not fill.
    These overwhelming staffing shortages are hindering business
    operations and limiting owners' abilities to keep up with
    current demand while preventing business growth. We have talked
    about this.
        Why do you believe, Mr. Griffith, that there are so many
    open jobs across the country right now, and how should the
    administration encourage Americans to return to work? Before
    you answer that, we have talked a little bit about it, but they
    might be able to encourage workers to go to work if we cut
    taxes. Let people make more money. Let people understand that
    there are jobs out there and employers like me, let's hire
    people, put them back to work because we have got a generation
    of kids that think a career is a $15 minimum wage or it is an
    unemployment check. We need to fix that. So what would be your
    advice?
        Mr. GRIFFITH. Well, two of the leading factors right now of
    people not going back to work, (1) People are still drawing
    down on the savings that they accumulated with all the generous
    government benefits. But also, work pays less today because of
    all this government spending and money printing. The typical
    person is earning around 10 percent less today in real terms
    than they were just 1-1/2 years ago. Work pays less.
        Mr. WILLIAMS. Right. And they want more money because they
    are trying to stay up with inflation and small business cannot
    afford to do it. So it creates a problem.
        So I guess at the end of the day I would certainly have
    less government and I would cut taxes again because it works
    and put money in the hands of these people so they can start
    spending again.
        With that in mind, Madam Chair, I yield my time back.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        And now we recognize the gentleman from Pennsylvania, Mr.
    Meuser, Ranking Member on the Subcommittee on Economic Growth,
    Tax, and Capital Access.
        Mr. MEUSER. Well, thank you very much, Madam Chairwoman. I
    thank the Ranking Member Luetkemeyer as well. Thank you very
    much to our witnesses. And I am also pleased to say that I have
    a number of small business owners from Pennsylvania's District
    9 here attending. So thank you all as well.
        So, Mr. Griffith, you know, facts are stubborn things. I am
    appreciating the fact that you are bringing out the facts. And,
    you know, there is a saying, ``In God we Trust but everybody
    else bring their data.'' So why do we not stick to the data and
    priorities?
        Small businesses are clearly under great pressure. This
    topic of access to capital is very important but it is simply
    not the priority right now. Inflation is. And there is also a
    saying that goes, ``When you are in a ditch, the first thing
    you do is stop digging.'' But I am not so sure the Biden
    administration understands this because the things that got us
    here are part of the plan moving forward, such as continued
    spending, a continued assault on our domestic energy, continued
    regulations. The CBO puts it over $200 billion just in the last
    18 months. And no pro-growth or pro-production proposals. You
    know, pro-production would increase supply to meet demand as
    opposed to trying to diminish demand with higher taxes, which
    incredulously is being considered by the Biden administration
    and our friends in the left.
        So right now inflation is at 9.1 percent. In laymen's term,
    9.1 percent is about 1/12th of your income or revenue for a
    year; right? So, in other words, 1 month of every year, 1 month
    of this year, income and revenue will be evaporated for every
    business and every family because of inflation. That robs
    people of a lot. And it is not looking much better moving
    forward. I mean, right now we have as much as 46 percent of
    families struggling to pay bills. One year ago, according to
    surveys, it was 60 million people struggling to pay bills as
    they would denote. Now it is 90 million, right, again, with no
    end in sight.
        We are also about to be informed that we are in a
    recession, regardless of whether or not the administration
    wants to admit it or how they want to redefine it after the
    historical definition that has existed. And inflation as we all
    know plays no favorites; right? It affects construction. It
    affects farmers. It affects manufacturers, service, families,
    everyone in the U.S.
        So some of my small business constituents stated that their
    focus right now is on fighting headwinds rather than growing
    their business. Another stated that, a family farm owner,
    fertilizer is up 300 percent. It should be no wonder why food
    prices are through the roof as they are. Others state how they
    cannot hire. Projects are being delayed, construction projects
    and other, and one of my constituents informed us that the
    infrastructure bill that was passed will now provide 30 percent
    less projects because of the level of inflation that has taken
    place. So we really have some serious issues to address.
        And Mr. Griffith, let me ask you this. Will continued
    regulations, continued excessive spending, continued assault on
    our domestic energy industry, keeping gasoline prices near
    $4.80, and new taxes, again, remarkably, they are considering
    new taxes on small business, is that going to help us turn the
    corner and provide small businesses relief? Or are there better
    solutions than that?
        Mr. GRIFFITH. No, this war on production right now that you
    see with this administration will make matters far worse. And
    you mentioned something very important. Fertilizer costs. Well,
    what goes into fertilizer? It takes a lot of energy to actually
    produce that fertilizer. So when you see our administration
    declaring war on fossil fuels, declaring war on affordable
    natural gas, we are remaking ourselves in Europe's image and
    Europe is even in a far worse situation than we are in terms of
    energy costs and in terms of agricultural production. So if we
    continue down this road, declaring war on production at the
    same time that we are going to continue spending trillions of
    dollars that we do not have, we are promising to make matters
    worse. And there is an alternative, and the alternative is to
    actually incentivize production and get government spending
    under control. That will make it possible for American families
    to have a higher standard of living once again.
        Mr. MEUSER. All right. I would love to ask the other
    witnesses the same question but I am out of time.
        Madam Chair, I yield back.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        And let me take this opportunity to thank the witnesses on
    this very important topic that is the Surety Bond Guarantee.
    Maybe next time when there is a bill to cut taxes we should all
    be committed to make sure that small businesses are not an
    afterthought, sunsetting those taxes while corporate American
    runs away with the biggest cut in the history of this country.
        For small businesses to benefit as much as possible from
    this once in a lifetime infrastructure investment, they must be
    well-equipped to engage in the federal contracting process. By
    finding ways to improve and modernize the Surety Bond Guarantee
    Program, we can help more small businesses take part in this
    historic effort. I look forward to taking the insights we have
    heard today and working with my colleagues to ensure this
    program meets the needs of small firms, especially the
    disadvantaged businesses that need it the most.
        Without objection, Members have 5 legislative days to
    submit statements and supporting materials for the record.
        And if there is no further business to come before the
    Committee, without objection, we are adjourned. Thank you.
        [Whereupon, at 11:15 a.m., the committee was adjourned.]

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