Small Business Contracting Program Improvements Act
Floor Speech
SMALL BUSINESS CONTRACTING PROGRAM IMPROVEMENTS ACT -- (House of Representatives - October 30, 2007)
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Ms. VELÁZQUEZ. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, in recent years, the Federal marketplace has seen phenomenal growth. However, while procurement opportunities are increasing, agencies are failing to meet their small business, women, service-disabled veterans, minority and low-income contracting goals. This has not only cost small businesses billions of dollars in lost opportunities but deprives the government of a valuable supplier.
Our Nation's entrepreneurs play an important role in the procurement system, providing diversity, competition, and ensuring we get the best value for the taxpayers' dollar. To help them get a start, there is an array of contributing programs offering technical assistance, purchasing flexibility and targeted benefits. Unfortunately, due to legislative neglect, under funding and mismanagement by several administrations, the programs have fallen far short of their full potential, leaving many small businesses outside of the Federal marketplace.
The Small Business Contracting Program Improvements Act, introduced by myself and Representative Mary Fallin, will change that by making important improvements to women, minority, HUBZone and service-disabled veteran contracting programs. H.R. 3867 will immediately implement the Women's Procurement Program that has languished in the current administration's endless delays. It also updates the economic criteria for the 8(a) program, reflecting current fiscal realities. The last time Congress addressed the 8(a) program was almost 20 years ago, when a gallon of gas was 90 cents and the average cost of a home was less than $90,000. For too long we have forced minority businesses to operate under antiquated financial standards that in many cases were simply setting them up to fail.
Most importantly, this legislation will give our service-disabled veterans top priority when it comes to contracting. For those men and women returning from Iraq and Afghanistan, many with life-altering injuries, this bill will provide the tools to start a new endeavor and begin a new life. These changes would go a long way to addressing many of the program's shortcomings that have frustrated our Nation's small business owners.
Mr. Chairman, H.R. 3867 also fights fraud in the Federal marketplace. Contracting opportunities are a privilege, not a right. The Small Business Contracting Improvement Act makes that clear. For the first time, we are imposing a business code of conduct on all participants, requiring the Federal Government to verify that individuals are who they claim and empowering small firms to police their own programs. This will restore integrity to these critical programs.
Through modernizing programs and increasing accountability, H.R. 3867 brings SBA's contracting programs into the 21st century. It is for this reason that this legislation has attracted remarkably broad support, including the National Federation of Independent Business, the Associated General Contractors, the American Legion, Veterans of Foreign Wars, AMVETS, the U.S. Hispanic Chamber of Commerce, the National Black Chamber of Commerce, the U.S. Women's Chamber of Commerce, the International Franchise Association, as well as the National Defense Industrial Association and the Aerospace Industries Association.
This is a measured approach that balances the need to give program flexibility within the realities of current agency buying strategies. It is good for small business, good for the agency, and, most importantly, good for taxpayers.
I urge my colleagues to support this legislation.
Mr. Chairman, I reserve the balance of my time.
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Ms. VELÁZQUEZ. Mr. Chairman, the improvements made under H.R. 3867 are commonsense changes that would modernize and increase program accountability. Coupled with the sweeping reform the House passed earlier this year to our procurement system, this bill will have an immediate impact on every facet of the small business community, including women, minorities and service-disabled veterans.
It is for these reasons H.R. 3867 has some of the most diverse support of any bill coming out of the committee this year, ranging from small business trade groups including NFIB, the International Franchise Association and the Associated General Contractors to minority advocates such as the Black, Hispanic and Women's Chambers of Commerce. It also has the support of veterans groups, including the American Legion, VFW and AMVETS, as well as Aerospace Industries Association and the National Defense Industrial Association.
With the passage of H.R. 3867, we increase opportunities for entrepreneurs to become valuable suppliers to the Federal Government, recognizing their contribution to the economy.
I just would like to take a moment to thank the staff that worked on this legislation: from the Small Business Committee majority staff, Adam Minehardt, LeAnn Delaney and Michael Day; from the minority staff, Barry Pinclis and Kevin Fitzpatrick; and Nate Webb from Ms. Fallin's staff.
I strongly urge my colleagues to vote for H.R. 3867, Small Business Contracting Program Improvements Act.
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Ms. VELÁZQUEZ. Mr. Chairman, this amendment makes changes to the underlying bill to address outstanding issues in the bill. It ensures those veterans that are most severely disabled will have access to contracts. It also strengthens the business integrity standard and creates parameters to carry out the women's procurement program.
Probably the most critical change in this amendment is the priority created for severely disabled veterans. The underlying bill already ensures that service-disabled veterans have greater access to contracts, but this takes it a step further.
It provides that agencies who are carrying out the service-disabled veteran contracting program give special consideration to those returning entrepreneurs that have the most serious of injuries. It is simply the right thing to do for all these soldiers have given for their country.
This amendment also provides taxpayers with greater protection by making certain the SBA performs criminal background checks prior to entering a program. It provides that those with criminal convictions are presumed to lack the business integrity required for participation.
Finally, we worked with the minority to create a more workable standard for allowing the SBA to carry out the women's procurement program. This amendment specifies the industries that the Rand Corporation determined, in accordance with direction from the National Academies of Sciences, were underrepresented by women businesses.
These measures will strengthen the bill to ensure a variety of deserving small businesses have better access to Federal contracts.
I urge adoption of the amendment.
Mr. Chairman, I reserve the balance of my time.
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Ms. VELÁZQUEZ. Mr. Chairman, I would like to thank my colleague from Missouri, a member of the Small Business Committee, for offering this amendment. I share the gentleman's concern about the concentration of contracts in the 8(a) program.
In fact, these businesses are only in the program for 9 years, so it is important that they make that time count. Unfortunately, according to partial year data for 2006, the top 10 companies received 40 percent of the work; 93 percent of companies received no contracts.
The gentleman's amendment requires the SBA to conduct a study to determine how best to provide additional contracting help to these less successful 8(a) participants. I appreciate his interest in the 8(a) program and his willingness to work with us to find a solution to a long-standing program.
I agree with my colleague that, while a more successful firm is apt to receive more work than a less experienced company, the purpose of the program is business development. Given this, the SBA needs to provide increased contractual assistance to the companies that need it the most.
The gentleman's amendment would allow us additional time to work together to craft a solution to ensure that 8(a) businesses, regardless of their financial strength, will be able to earn contracts. I look forward to working with the gentleman to perfect this language, and I appreciate his cooperation.
We are prepared to accept this amendment, and I will yield to Mr. Chabot for any comments he may have.
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Ms. VELÁZQUEZ. Mr. Chairman, it is becoming increasingly concerning that companies may be receiving HUBZone contracting preferences inappropriately.
Since 2003, the SBA Inspector General has released two reports identifying the potential for contracting fraud in this program. Most recently, in 2006, the IG has found that more than 80 percent of companies are not eligible 3 years after they were approved. In nearly 20 States, we have identified multimillion dollar properties in areas designated as HUBZone. If a company located in one of these zones employed people who lived in similar conditions, they would be eligible for contracting preferences over small businesses.
The gentleman's amendment addresses the issue that some areas of the country are designated HUBZone. That should not be. At the same time, this will also require the SBA to examine why some deserving areas are not being designated appropriately. To resolve this inconsistency, the amendment requires the SBA to carry out a study that includes recommendations for alternative ways to evaluate HUBZone eligibility.
There is no rational reason why some of the most affluent areas in the country are eligible for government contracting preferences, while truly deserving areas are overlooked.
We are prepared to accept this amendment, and I will yield to Mr. Chabot for any comments he may have.
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Ms. VELÁZQUEZ. The gentleman's amendment reflects a sense of the House that laws requiring competition among only small businesses should apply to the General Services Administration's Federal supply schedules.
The GSA consistently points to nearly 80 percent of contracts under schedules going to small businesses. The reality is that as far as dollars, small firms get less than 40 percent. With the exception of the GSA schedules, every agency must ensure that small businesses are the priority for contracts valued at more than $2,500 and less than $100,000. Even when the GSA enters into a contract itself, not using the schedules, the SBA statute applies.
Recently, the GSA's general counsel has pointed to a conflict between the statute that authorizes the Federal supply schedules and the SBA statute. Because Congress has not spoken to the contradiction, GSA relies on its own interpretation.
GSA schedules represent billions of dollars in contracting opportunities that simply aren't available to small firms because of the GSA's incorrect interpretation of the statute. The gentleman's amendment will provide a direction that is missing between these conflicting statutes, an issue to be supported. Not only will small businesses see increased dollars as a result; taxpayers will receive lower costs due to the flexibility and efficiency that small firms are able to offer.
Mr. Chairman, I am prepared to accept this amendment, and I will yield to Mr. Chabot for any comments he may have.
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Ms. VELÁZQUEZ. Mr. Chairman, I would like to thank the gentleman for offering this amendment.
Certainly, frivolous litigation is a problem in any scenario. Our justice system is a valuable tool for the good-faith settling of claims, but it is costly and time consuming, and should never be used for purposes other than what was originally intended. If incumbent contractors are, in fact, using the bid process size protest mechanisms to extend the length of contracts, this problem needs to be addressed.
Small businesses face enough barriers in their efforts to enter the Federal marketplace. Having to fight frivolous lawsuits should not be one of them. If businesses, particularly mega-contractors, are using their position to prevent qualified contractors from doing Federal work by exploiting a loophole, the American taxpayer loses out.
The gentleman's amendment addresses this issue by requiring a study to determine the number of relevant protests, the financial impact on small businesses, and recommendations for solving any problems discovered.
The protest process was designed to create due process, not to create unfair advantages. This study will help to determine if there is a problem that needs to be further addressed.
I appreciate the gentleman bringing attention to this small business barrier, and although frivolous lawsuits can be devastating for anyone in the business community, it can be a particular burden for smaller companies. Adding litigation costs to an already limited cash flow is unrealistic for many small businesses, and I will be interested to see if this is what they're being forced to do.
It would allow our committee to fully understand if further changes are needed.
We are prepared to accept this amendment, Mr. Chairman, and I will yield to Mr. Chabot for any comments he may have.
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Ms. VELÁZQUEZ. Mr. Chairman, the gentleman's amendment requires the SBA to review who should be considered socially disadvantaged for entry into the 8(a) program and whether there should be any updates.
Prior to today, the last Congressional action on the 8(a) program took place in 1988. For nearly 20 years, the 8(a) program has not seen one significant change. One aspect of the program, social disadvantage, has also remained unchanged.
My colleague's amendment recognizes that our country in 2007 does not look like it did in 1988. The face of America is changing. The 8(a) program must reflect the new look of the Nation.
This amendment addresses the concern that in several years the SBA has not reviewed or expanded who is considered socially disadvantaged. Given this, deserving business owners are likely being shut out.
We also know, as members of the committee, that without definite direction the SBA is unlikely to act, let alone in a timely fashion. The gentleman's amendment will ensure that the SBA examines the issue and makes changes, as appropriate, within 6 months.
We are prepared, Mr. Chairman, to accept this amendment, and I will yield to Mr. Chabot for any comments that he might have.
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Ms. VELÁZQUEZ. Mr. Chairman, the amendment offered by Ms. Ginny Brown-Waite seeks to ensure that taxpayer dollars go to small businesses that are complying with our immigration laws and not benefiting those that are breaking these laws.
While currently the Small Business Administration's Act prohibits the use of funds to benefit or assist individuals that are not lawfully within the United States, this change would allow for greater accountability. Creating a liaison between the Small Business Administration and the Department of Homeland Security on this matter will increase oversight and ensure that the agency's budget is being spent lawfully, efficiently and responsibly.
I also am grateful to have an ally in fighting this administration's efforts to reduce resources at the Small Business Administration. The fact is that the Small Business Administration needs personnel in carrying out this provision, as well as other critical operations.
We share the goal of ensuring that no funds expended under the Small Business Contracting Programs Improvement Act are used in such a manner. Sometimes having a law on the books isn't enough, and this amendment will go a step further in making sure that someone is there at the SBA actively enforcing this important spending provision.
We are prepared to accept this amendment, Mr. Chairman, and now I will yield to Mr. Chabot for any comments he may have.
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Ms. VELÁZQUEZ. Mr. Chairman, I want to thank my colleague from New York for her amendment to ensure that Federal contractors are complying with the immigration laws of our Nation. I would like to ensure that the interpretation of the debarment provisions referenced in the gentlewoman's amendment are consistent with the debarment process as provided in the Federal Acquisition Regulation.
Mr. Chairman, small businesses face many obstacles in securing a workforce, and one of them is ensuring that their employees have the proper legal status. All of our employers are expected to comply with our immigration laws, and they should not be forced to compete in the Federal marketplace with those who are skirting these laws. Small businesses should be rewarded for ensuring that their employees are here legally.
My colleague's amendment ensures that no contractor who has a pattern of knowingly employing unauthorized workers will receive contracts under the Small Business Contracting Program Improvements Act. Furthermore, contractors found to be in violation of the employment provisions required under immigration law will face the possibility of debarment.
Participation in SBA's procurement programs is a privilege and not a right. As such, we expect participants to uphold the law. Those businesses that choose not to comply should not receive the benefits of SBA contract assistance.
I appreciate the gentlewoman's attention to this issue and commitment to ensuring that contractors who choose to violate immigration law will not benefit from it. While there may be disagreement on reforming our immigration system, we all agree that employers must comply with those laws that are on the books. This is simply a matter of fairness.
We are prepared to accept the amendment, and I will yield to Mr. Chabot for any comments he may have.
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Ms. VELÁZQUEZ. Mr. Chairman, I want to thank my colleague from Texas for his amendment.
Fiscal responsibility is a serious issue, and so is running an effective government. As we are currently operating with a budget deficit, we must do all we can to eradicate wasteful spending. Many times we focus on larger issues of waste and abuse and forget about the smaller problems that would be easier to solve. When we cut costs, even just a little, it can add up to big savings.
The SBA has consistently been asked to do more with less. Placing these restrictions on SBA funds will reduce unnecessary spending, giving the agency more money to use to truly assist small businesses. An agency already operating with less than its ideal budget should not be spending crucial funds on premium travel.
I appreciate the gentleman's attention to this issue and his effort to increase accountability in our government and require responsible spending decisions.
Mr. Chairman, I am prepared to accept this amendment, and I will yield to Mr. Chabot for any comments he may have.
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Ms. VELÁZQUEZ. Let me just say to the gentleman that I don't know why you insist this section 101 to be stricken when you clearly know that this amendment was defeated in committee, not by Democrats, but Democrats and Republicans. It is opposed by every veteran organization in America.
Again, it will take Federal contracting away from disabled veterans. You know that we have failed these veterans before, and what we are doing is making sure that they have an opportunity to get a fair share of Federal contracts.
Mr. Speaker, I yield back the balance of my time.
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