[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                     
          
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                  HOUSE COMMITTEE ON SMALL BUSINESS

                 NYDIA VELAZQUEZ, New York, Chairwoman
                          JARED GOLDEN, Maine
                          JASON CROW, Colorado
                         SHARICE DAVIDS, Kansas
                         KWEISI MFUME, Maryland
                        DEAN PHILLIPS, Minnesota
                         MARIE NEWMAN, Illinois
                       CAROLYN BOURDEAUX, Georgia
                         TROY CARTER, Louisiana
                          JUDY CHU, California
                       DWIGHT EVANS, Pennsylvania
                     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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