[House Hearing, 108 Congress] [From the U.S. Government Publishing Office] HEARING ON CHALLENGES THAT SMALL BUSINESSES FACE ACCESSING HOMELAND SECURITY CONTRACTS ======================================================================= HEARING before the SUBCOMMITTEE ON RURAL ENTERPRISE, AGRICULTURE & TECHNOLOGY of the COMMITTEE ON SMALL BUSINESS HOUSE OF REPRESENTATIVES ONE HUNDRED EIGHTH CONGRESS FIRST SESSION __________ WASHINGTON, DC, OCTOBER 21, 2003 __________ Serial No. 108-43 __________ Printed for the use of the Committee on Small Business Available via the World Wide Web: http://www.access.gpo.gov/congress/ house _____ U.S. GOVERNMENT PRINTING OFFICE WASHINGTON : 2004 93-005 PDF For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512-1800 Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 COMMITTEE ON SMALL BUSINESS DONALD A. MANZULLO, Illinois, Chairman ROSCOE BARTLETT, Maryland, Vice NYDIA VELAZQUEZ, New York Chairman JUANITA MILLENDER-McDONALD, SUE KELLY, New York California STEVE CHABOT, Ohio TOM UDALL, New Mexico PATRICK J. TOOMEY, Pennsylvania FRANK BALLANCE, North Carolina JIM DeMINT, South Carolina DONNA CHRISTENSEN, Virgin Islands SAM GRAVES, Missouri DANNY DAVIS, Illinois EDWARD SCHROCK, Virginia CHARLES GONZALEZ, Texas TODD AKIN, Missouri GRACE NAPOLITANO, California SHELLEY MOORE CAPITO, West Virginia ANIBAL ACEVEDO-VILA, Puerto Rico BILL SHUSTER, Pennsylvania ED CASE, Hawaii MARILYN MUSGRAVE, Colorado MADELEINE BORDALLO, Guam TRENT FRANKS, Arizona DENISE MAJETTE, Georgia JIM GERLACH, Pennsylvania JIM MARSHALL, Georgia JEB BRADLEY, New Hampshire MICHAEL MICHAUD, Maine BOB BEAUPREZ, Colorado LINDA SANCHEZ, California CHRIS CHOCOLA, Indiana ENI FALEOMAVAEGA, American Samoa STEVE KING, Iowa BRAD MILLER, North Carolina THADDEUS McCOTTER, Michigan J. Matthew Szymanski, Chief of Staff and Chief Counsel Phil Eskeland, Policy Director Michael Day, Minority Staff Director (ii) C O N T E N T S ---------- Witnesses Page Barrera, Michael, U.S. Small Business Administration............. 5 Boshears, Kevin, U.S. Department of Homeland Security............ 7 Brink, Benjamin M., Data Research Systems, Inc................... 15 May, Tim, Advanced Interactive Systems........................... 19 Driscoll, Patricia, Frontline Defense Systems, LLC............... 24 Sabety, Marian, National Small Business Association.............. 27 Appendix Opening statements: Graves, Hon. Sam............................................. 36 Shuster, Hon. Bill........................................... 38 Prepared statements: Barrera, Michael............................................. 44 Boshears, Kevin.............................................. 54 Brink, Benjamin M............................................ 58 May, Tim..................................................... 74 Driscoll, Patricia........................................... 79 Sabety, Marian............................................... 82 (iii) HEARING ON CHALLENGES THAT SMALL BUSINESSES FACE ACCESSING HOMELAND SECURITY CONTRACTS ---------- TUESDAY, OCTOBER 21, 2003 House of Representatives Subcommittee on Rural Enterprise, Agriculture and Technology Committee on Small Business Washington, D.C. The Subcommittee met, pursuant to call, at 10:05 a.m. in Room 2360, Rayburn House Office Building, Hon. Sam Graves [chairman of the Subcommittee] presiding. Chairman Graves. Good morning, everybody, and welcome to the Small Business Subcommittee hearing, the Small Business Subcommittee on Agriculture, Technology and Rural Enterprise. Today we are going to be looking at the challenges that small businesses face when it comes to accessing contracts with the Department of Homeland Security. I will go ahead and give my opening statement and then open it up to Mr. Ballance, and then we will open it up to other Members. The federal government is one of the largest markets for U.S. business. Annually, the federal government spends approximately $200 billion on goods and services purchased from the private sector. The Department of Defense alone is the largest federal marketplace for business, accounting for over $120 billion in prime contract awards, more than 60 percent of all federal procurement dollars. Congress set statutory goals for all agencies that 23 percent of all prime contracts should be given to small businesses. However, the benchmark is not always met. The Department of Defense has not succeeded in meeting this goal for the past two years, but it is not alone. Overall, the federal government has not met its small business prime contracting goal for several years. On January 24, 2003, Congress created the Department of Homeland Security and brought 22 separate agencies under one roof to account for the safety and security of the United States. It is certainly a daunting task in the wake of September 11, and in order to ensure that the new department could function Congress allowed the Department to bypass the procurement regulations that other agencies have to adhere to. Historically, small businesses have faced many barriers accessing the federal procurement marketplace. Contract bundling has been the most prevalent issue that small businesses face, bundled contracts or combined contracts too large or too complex for small businesses to handle. Additionally, small businesses frequently face the difficulty of traversing the maze of agencies or finding the procurement officer that handles the applicable technology or specific contract. Also, small business has been more productive and technologically innovative than their larger business counterparts. Additionally, small business has frequently been able to provide better goods and services at lower prices than the larger competitors. We have to find a way to ensure that small businesses receive its share of federal procurement opportunities. This is not intended, and I just want to point that out. This is not intended to be a witch hunt or anything like that. We are just simply trying to explore this issue, trying to explore the problems and see what solutions we can find and move forward in that direction. [Mr. Graves' statement may be found in the appendix.] Chairman Graves. Right now I would like to recognize Mr. Ballance, the Ranking Member, for his opening statement. Mr. Ballance. Thank you, Mr. Chairman. After listening to your opening statement, I could almost waive mine, but I will go ahead and give it. The tragedy of 9-11 served as a wake up call for this nation. With the reality of this attack on our soil, we realized that reforms were needed. Last year, we responded by creating the Department of Homeland Security, DHS, and this was the largest reorganization of the federal government since 1947. Congress understood that creating a new agency would not be an easy process, but felt that it was a necessary one. This process of creating this new department provided the opportunity to correct inherent problems. While the primary objective was to create a safer, more secure domestic front, it also offered a chance to review federal contracting practices. The procurement reforms of the 1990s have been a disappointment as the government has not saved money, and small businesses have seen their share of procurement dollars decline. The federal government has increasingly failed to provide our nation's small businesses with the opportunities to succeed within the $235 billion federal procurement system. For small businesses, accessing the federal marketplace can mean increased productivity ensuring economic viability. In an effort to ensure small businesses could fully participate in this new agency, the House last year adopted and passed certain changes. However, all of them did not make their way into the final legislation and conference. Most importantly, the legislation would have made this new department subject to the Small Business Act, which means the agency would be required to establish goals for doing business with small firms. Unfortunately, the final legislation did not include that and others. The result leaves a great deal of uncertainty as to whether small businesses will thrive or even have a chance to do business with the Department. It is unfortunate that legislation creating DHS did not provide for small businesses to be fully integrated into the Department. I am hopeful that Secretary Ridge shows a bold vision that fully incorporates entrepreneurs into DHS contracting. Sadly, what we have heard is the opposite. Secretary Ridge said that the agencies contracting would not focus on small businesses, but rather on economies of scale. This is somewhat concerning to us because it, in my opinion, refers to contract bundling. This practice robs small businesses of millions of dollars in contracting opportunities. Today we will look at what steps can be undertaken to direct the Department to work with small businesses. While the Department is telling small companies that they are important, they are not rewarding their innovation with action. The mixed message being sent is unfair to small businesses. It is important to understand that creating a new department will not happen overnight. It is going to take time to effectively combine 22 separate entities with different regulations, et cetera. As this agency evolves, an important role for our Committee must be to ensure that in combining all of these different entities into one unit, small businesses are not squeezed out of the process. I want to thank the witnesses for taking the time to attend today and look forward to hearing your insight. Chairman Graves. Mr. Shuster? Mr. Shuster. Thank you. I first want to take this opportunity to welcome our witnesses. I appreciate you being here and look forward to your testimony. I would like to begin by thanking Chairman Graves for holding this important hearing. Having been a small business owner myself, this is an issue that is very important to me. We have all heard the statistics of the critical role small business plays in our economy. Small businesses account for 99 percent of our nation's employers and are responsible for creating thousands of new jobs across this country each year. In my home state of Pennsylvania, more than 97 percent of the state's employers are small business. These businesses are also responsible for over half of the state's employment. Despite the incredible success of small businesses and the instrumental role they play in our economy, we find that too often these same businesses face many hurdles while attempting to do business with the federal government. Traveling throughout my district, I routinely have heard from many small business owners that say it is quite difficult to do business with the federal government. The process is complex, and often these firms do not have the start up resources or manpower to bring their innovations to the government. The federal government is the largest buyer of goods and services, as we have heard here this morning, yet gaining access to this market is very challenging for small businesses. Contracting with the government is often thought to be an insider's game that favors larger firms. Two of the biggest complaints that I have heard from small businesses in Pennsylvania are that it can be quite difficult to gain access to the individuals who make the decisions on awarding contracts and that paperwork can also be overwhelming. It impedes businesses with minimum manpower. Additionally, many constituents have told me that if they were successful in winning a government contract, there can often be a significant lag time between when the work is completed and when they are paid. This can create a major drain on a business with limited resources and funds. This is not to say that there are not success stories when it comes to small businesses winning government contracts. I saw in Mr. Barrera's testimony that 2002 awards to small businesses for federal government agencies increased by $3.6 billion to reach a level of $53.6 billion. This is good news and a step in the right direction. We must now focus upon building on that success and increasing opportunity for our nation's small businesses. With the creation of the Department of Homeland Security in January, we are presented with a unique opportunity to once again evaluate how successful the government is to reaching out to our small businesses. It is often our nation's small businesses that formulate new and innovative technologies, and we must ensure that these businesses have the opportunity to market these new technologies to the Department of Homeland Security and that if awarded they are paid timely and in an efficient manner. This will not only help small business success, but additionally will create jobs at home and enhance our national security. Mr. Chairman, thank you again for holding this hearing, and I look forward to the witnesses' testimony. Chairman Graves. Thanks, Mr. Shuster. [Mr. Shuster's statement may be found in the appendix.] Chairman Graves. Dr. Christensen? Ms. Christensen. Thank you. Thank you, Chairman Graves and Ranking Member Ballance, also for holding this hearing to discuss the Department of Homeland Security's federal contracting opportunities for small business. I want to take this opportunity to welcome Mr. Kevin Boshears, the director of the OSDBU Office, on his first appearance before this Subcommittee, and Mr. Michael Barrera from SBA in his new capacity, as well as the small businesses who are taking the time from their schedules to be here to offer us their insight into this matter. Both Homeland Security and small business are two issues that are of particular importance to me. At the beginning of this year, I was given the distinct honor and opportunity to be named to the House Select Committee on Homeland Security, and I sit on the Subcommittees on Emergency Preparedness and Response, and Cyber Security Science, and Research and Development. Having made a special request to remain on this Committee as well, the Small Business Committee, and I thank the chair and Ranking Member of the Committee for allowing me to do so, I have a unique opportunity I think to ensure that the needs of both are addressed. Along with my colleagues who also are on both Committees, I want to assure you that we have made the small business contracting goal of the overall agency and their several sections a standard question when assistant secretaries and directors appear before the Committee. While I will soon leave here to go to a Homeland Security hearing on first responder funding, I wanted to take this opportunity to assure you that you also have voices there and to let you know that along with Mr. Ballance and Mr. Graves you can call on us to let us know of your concerns and provide us with some guidance on how we can better accommodate the goals that are the subject of today's hearing. As has been said, bringing this new Department on board with its 22 other agencies or parts of agencies and 170,000 employees has not been an easy process. While it is a challenge which I hope we on the Homeland Security Committee are meeting, it is also an opportunity, as has been said, to show the older, more entrenched agencies how to do certain things right and how to do them better. I think it is very clear that small business contracting has to be one of those things that we can teach at Homeland Security. We can teach the Department of Defense and some of those other agencies that got Ds and Fs in our report how to do this better. I want to thank again the Chair and Ranking Member for the opportunity to give this brief statement and for holding the hearing this morning. Chairman Graves. Thank you very much. All statements by Members and witnesses will be placed in the record in their entirety, and I would now like to welcome our first panel, Kevin Boshears and Michael Barrera, for being here today. Mr. Barrera is the Acting Deputy Administrator for Small Business Contracting with the Small Business Administration. Mr. Barrera, I appreciate you for being here, and thank you for coming to Kansas City to our Small Business Expo too. I appreciate that very much. I turn the floor over to you. STATEMENT OF MICHAEL BARRERA, ASSOCIATE DEPUTY ADMINISTRATOR, GOVERNMENT CONTRACTING AND BUSINESS DEVELOPMENT, U.S. SMALL BUSINESS ADMINISTRATION Mr. Barrera. Thank you. Good morning, Chairman Graves, Ranking Member Ballance, Congressman Shuster and Congresswoman Christensen, and distinguished Members of the Subcommittee. Consistent with President George W. Bush's commitment to small business, the U.S. Small Business Administration is committed to maximizing opportunities for all of the nation's small businesses and the millions of people they employ. I am pleased to submit my written testimony for the record. Small businesses help drive this economy and are the sources of innovative ideas and solutions in support of the mission and needs of federal agencies and prime contractors. The SBA programs and initiatives are designed to provide an environment where small businesses can be competitive in federal procurement. When the President announced the establishment of the Department of Homeland Security in early 2003, Administrator Barreto sent a letter to Secretary Ridge congratulating him and offering to work with him to ensure maximum small business participation in procurements that support his mission. We believe that leadership and accountability by the senior management at the agencies make all the difference for our nation's small businesses. Reinforcing these principles, SBA has also met with the senior officials at Homeland Security to obtain their commitment to the small business programs and to achieve the government-wide small business procurement goals. In June, we assigned a procurement center representative, PCR, to work with Mr. Kevin Boshears, Director, Office of Small and Disadvantaged Business Utilization, to review procurement opportunities and establish traditional small business prime and subcontracting goals for fiscal year 2004 and fiscal year 2005. S.B.A. is pleased with the Department's commitment to achieve the statutory goals. The Department proposed an aggressive small business subcontracting goal of 40 percent, which includes a five percent subcontracting goal for women and SDBs and three percent for service disabled veterans and HUBZone firms. S.B.A. continues to use the best practices of the marketplace to improve and modernize our programs so that an environment can be created for small businesses to succeed, create jobs and support economic growth. In fiscal year 2003, we implemented the following key initiatives to increase prime and subcontracting results: The National Business Matchmaking Program. SBA held five nationwide business matchmaking sessions to introduce small business owners to potential buyers like federal agencies, corporations and state and local agencies. Over 7,500 one-on- one appointments were held between small businesses and these potential customers. A key objective was to increase women-owned business participation at these sessions. At the Orlando and Chicago sessions, we achieved 36 percent and 37 percent women-owned business participation levels respectively. These business matchmaking sessions facilitate small business access to future procurement opportunities, and we are also exploring ways to track and measure results. For information on future matchmaking sessions, small businesses can go to www.businessmatchmaking.com. Contract Bundling. In October 2002, the President announced a nine point strategy that agencies must follow to avoid unnecessary contract bundling and mitigate the effects of justified contract bundling on small businesses. When agencies bundle contracts, small businesses often cannot compete, given the size and multiple contract requirements. In January 2003, proposed changes to SBA's regulations and the Federal Acquisition Regulation were published to require, among other things, that agencies conduct bundling reviews of requirements for multiple award contracts and orders against those contracts, strengthen their compliance with subcontracting plans and improve oversight of their small business programs. Simplification of the 8(a) Program Processes. SBA is committed to implementing an Internet based application for the 8(a) and small disadvantaged business certification. This automation will reduce the paperwork burden consistent with the Small Business Paperwork Relief Act and allow small disadvantaged businesses to obtain their certification much faster. This saves small businesses time and money. Size Standard Simplification. We are developing a new approach to simplify and reduce the number of size standards by proposing employee based standards. This will streamline existing processes and procedures and make them easier to use. We are developing the proposed rule. Procurement Training Academy. At the 50th Anniversary National Conference and Exposition in September, SBA released a new CD-ROM based Procurement Academy to provide distance training to 7(j) eligible firms. This Training Academy can also be accessed at www.sba.gov/gcbd and click on the Procurement Academy. When fully implemented, these initiatives will help to create an environment where small businesses will have better access to federal procurement opportunities. This concludes my testimony, and I will be glad to respond to any questions the Subcommittee may have. Chairman Graves. Thank you, Mr. Barrera. [Mr. Barrera's statement may be found in the appendix.] Chairman Graves. Kevin Boshears is with the Department of Homeland Security and Director of Small and Underutilized Businesses. Mr. Boshears. Disadvantaged Business Utilization. Chairman Graves. I appreciate you being here very much and look forward to your testimony. STATEMENT OF KEVIN BOSHEARS, DIRECTOR, OFFICE OF SMALL AND DISADVANTAGED BUSINESS UTILIZATION, U.S. DEPARTMENT OF HOMELAND SECURITY Mr. Boshears. Thank you. Good morning Chairman Graves, Congressman Ballance and distinguished Members of the Subcommittee. I am pleased to appear before you today to discuss the Department of Homeland Security's, DHS', small business procurement program. I was designated the Director of the DHS Office of Small and Disadvantaged Business Utilization, OSDBU Office, in May 2003 in accordance with the Small Business Act. I am a career public servant, having previously served as the OSDBU Director for the Treasury Department and as a contracting officer for the Justice Department. The role of the OSDBU is to assist, counsel and advise small businesses of all types on procedures for contracting with DHS. Additionally, the OSDBU works closely with each DHS organizational element to implement the Department's small business procurement assistance program. I have had numerous discussions with Mr. Greg Rothwell, the DHS Chief Procurement Officer, and I have been impressed by his strong support for the DHS small business procurement program. He considers a strong small business program to be a significant part of building a world class acquisition program. At DHS, our plan is to make the small business program part of our budget and acquisition planning by using small business considerations to further our mission and develop a climate of small business opportunity. Since my arrival at DHS, we have undertaken numerous organizational projects to assist small businesses in overcoming the challenges involved and accessing contracts in the newly formed Department. Due to the reorganization of some agencies that transferred into DHS, we first had to designate a small business specialist in each DHS organizational element. S.B.A. asked us to establish several non-traditional goals for the remainder of fiscal year 2003. These goals, and our results, are included in my written statement. Since providing information and guidance is a cornerstone of our work, we have also been actively participating in a wide variety of educational events and seminars for small business owners. In conjunction with the Department of the Treasury, we conducted vendor outreach sessions to give small business owners the opportunity to meet one-on-one with DHS small business specialists and program managers. One of our major accomplishments was publishing, in hard copy and posting on the DHS Web site shortly after October 1, a fiscal year 2004 forecast of contract opportunities to assist Small Business's plan for upcoming contract opportunities. For us to have a baseline since of how successful small businesses are with obtaining DHS contracts, we started compiling data last week for the March 1, 2003, through June 30, 2003, timeframe. This represents the starting date that the 22 agencies were transferred from their former organizations to form DHS and the third quarter of fiscal year 2003. While this four months' worth of data provides only a brief snapshot and still requires final validation from the Federal Procurement Data Center, the overall numbers appear to be promising. Establishing this baseline set of statistics for the fiscal year 2003 DHS transition period will help strengthen the DHS small business program. As we begin the first fiscal year as a department, we plan to continue an aggressive outreach program. Local vendor outreach sessions are already scheduled for the remainder of the fiscal year, and we will be participating in the OSDBU Interagency Directors Council Annual Procurement Fair in April. We will also be teaming up with SBA for the National Matchmaking Tour around the country. We continue to receive numerous invitations to speak and participate in small business development seminars. Just in the next week, my staff will be speaking at two large scale seminars in San Diego and Chicago and at a local town hall meeting. We will continue to work with SBA to finalize our small business prime and subcontracting goals for fiscal year 2004. Our forecast of contract opportunities will be updated as new information becomes available, and we plan to publish a subcontracting opportunities directory, along with a working tour establishment of a mentor protege program. In conclusion, DHS will strive to meet or exceed our small business goals by making small business participation part of the DHS culture in support of our national mission. I would be happy to respond to any questions you might have. Chairman Graves. Thanks, Mr. Boshears. [Mr. Boshears' statement may be found in the appendix.] Chairman Graves. We will now open it up for questions for our first panel. I would just like to know, at least right now, as far as the Department of Homeland Security goes, and I understand the gravity of your mission and everything, but what do you see as the most or the toughest thing or the biggest hurdle that small business faces trying to get contracts with Homeland Security? Mr. Boshears. In speaking with small businesses regarding contracts with DHS and also in my previous work in this field, the number one hurdle that most small businesses face is access to the high quality information they need in order to participate in the program. For example, sometimes a small business has an interest in the federal marketplace because they think they might have a good or a service that might be of interest to the federal government or DHS, but sometimes they do not quite know where to start so what we have found is that if we provide high quality, meaningful information, and what I mean by that is personal points of contact for my office, small business points of contact throughout the Department, a forecast of contract opportunities which gives a listing of individual upcoming projects with a point of contact for more information. Combine that with information on how the federal procurement system works, and this begins to open the doors to access to the Department. We have found that once equipped with the right information, small businesses at that point tend to take over and lead the charge and pursue through a marketing effort those opportunities in which they have an interest. Chairman Graves. I know you have not been up and running very long, but how close do you think you are getting right now to meeting the 23 percent at least? Of course, you do not have to adhere to that at this point, but as a benchmark if nothing else. How close would you say you are getting? Mr. Boshears. Well, we have collected some data representing the month of March and the third quarter of fiscal year 2003, which would be April, May and June, a four month snapshot. As of today, we would be slightly exceeding the overall small business goal of 23 percent. Chairman Graves. Really? That is real good news. Mr. Ballance? Mr. Ballance. Thank you very much. Do you have, that is DHS, goals, first of all, for prime contracting and then for small disadvantaged businesses and then for the 8(a) program? Do you have these goals? If so, what are they? Mr. Boshears. When we first met with SBA in late May in fiscal year 2003, we did not establish numerical goals for the balance of 2003, but for fiscal years 2004 and 2005, in compliance with SBA's instructions, we proposed our goals to SBA. Now, it is my understanding that they have not quite been finalized by SBA for the entire federal government, but I would be glad to share with you what we proposed to SBA. Mr. Ballance. Yes. I would like to hear that. Mr. Boshears. Yes, sir. There are----. Mr. Ballance. If you would, when you say your proposal to SBA, can you not establish your own goals? Mr. Boshears. Well, yes, sir. The way that that process works is that SBA, and I will defer to Mr. Barrera if we have additional information needed, is that SBA is in charge of establishing the goals for the entire federal government. They start with a base of what statutory goals are, and then they work with each agency individually, and in effect we have a discussion to help establish goals for each department. We do establish our goals, but we work in concert with SBA to establish agreement on those goals. Mr. Ballance. Let me just ask Mr. Barrera. What is your position in terms of goals for DHS? Mr. Barrera. I think the way we are going to work that, first of all, I want to say that I have been with the Department for two weeks, and I am learning about all the goaling that is going on, but I think where we are working with DHS is the federal goals are 23 percent, at least getting to that. We were very impressed with DHS and the way they are being aggressive in their subcontracting goals, which is also very, very important to small businesses. Forty percent for subcontracting, and they are also committing to the five percent for small disadvantaged business, which is part of 8(a), which 8(a) is part of the 3 percent for HUBZones, 5 percent for women and 3 percent for veterans also. We are working with them. Our staff is working with them on that. When he says that we are working with them on the goals, you are right. They established their individual goals. I think what we look at is to make sure that the individual goals at least meet the government wide goals and what they have. From what I understand, some agencies may want to have lower goals, and we want to make sure that the agencies are meeting aggressive goals for small businesses. Mr. Ballance. I do not want to beat this horse too much, Mr. Boshears, but it is interesting what is being said. What I want to know is will there be a time when small businesses around the country and those of us who are here can hear from you definitively what these goals are? Mr. Boshears. Yes, sir. Mr. Ballance. And do you have any idea when that might be? Mr. Boshears. Yes, sir. I understand late October. Mr. Ballance. All right. Mr. Boshears. Congressman Ballance, I can also share with you, if you would like it in list form, what we proposed. Mr. Ballance. Yes, I would like to have that. Mr. Boshears. We established prime contracting goals and subcontracting goals. Small business prime overall, 23 percent; small disadvantaged business prime, including 8(a), five percent; women-owned small business, five percent; HUBZone small business, three percent; service disabled veteran owned small business, three percent. Changing gears to subcontracting, small business overall subcontracting, 40 percent; small disadvantaged business, five percent; women-owned small business, five percent; HUBZone small business subcontracting, three percent; and service disabled veteran owned, three percent. Mr. Ballance. Thank you. Let me move to another area before my time runs out. What do you think the Secretary meant, and I know you cannot read his mind, but by taking advantage of economies of scale? What does this mean to you? Mr. Boshears. When the Secretary addressed economies of scale, I took it to mean that part of an effort to look at strategic sourcing around the various parts of the Department. For example, if you look across the board at all of the 22 agencies that came together with us, we might have contracts previously done separately for a number of those agencies. One idea on strategic sourcing is to see if there are any economies of scale, particularly in the area of products. Now, what is important about that effort is that as part of our look at strategic sourcing to see if economies of scale can be identified, I serve as a member of the strategic sourcing group so that we can be on the lookout and have a discussion about any proposed contract bundling. That is the area of concern to small businesses. Most small businesses that I have spoken to, and I have spoken to many, many now over my years of service, seem to understand the concept of strategic sourcing from the point of view of a taxpayer, and that is the way they have explained it to me, but in terms of our efforts where federal agencies can bundle contracts, this is the area where we have to keep a watchful eye on. We believe, sir, that economies of scale do not necessarily exclude small businesses, nor should we not include small business participation as part of that in every decision. Mr. Ballance. My time is up. Thank you very much. Mr. Boshears. Sir. Chairman Graves. Mr. Shuster? Mr. Shuster. Thank you, Mr. Chairman. As I mentioned in my opening statement, I have talked to a number of small businesses that their concern and a big problem for them is that the government is slow paying. I wondered what steps you are taking not only at Homeland Security, but maybe the other agencies across the government, if you can speak to that, Mr. Barrera, where you are trying to avoid or alleviate this problem. As I said, a small business is working on a tight budget. If they are not getting paid for 120 days, it really is a tremendous strain on the business. Either one or both of you can----. Mr. Barrera. I will start. Actually, before coming over as the head of the government contracting I was national ombudsman. Many comments that we heard from small business was the problem they had with getting paid on a timely basis from the federal agencies. What we have done is actually a lot of it is going to be working with the actual agencies and finding the right contact within the agencies that we can get to them and say this is not getting paid. We have to work on this. We had a great example with the Department of Homeland Security. We had a business that when the agencies came together and formed Homeland Security we had a business contact us. They were a billing company. They were owed several hundred thousand dollars, and it fell through the cracks when we came over to Homeland Security. They contacted our agency. We got a hold of Kevin's office very quickly, and this was resolved within a couple of days. A lot of it is that we need to find out here from the companies when that is happening and then contact the SBA or Homeland Security directly, and we will go directly to them to let them know that this needs to be paid. Mr. Shuster. Is there a standard policy on how many days? When they bid the contract and are awarded it, in the contract, in all contracts, is it stating you will be paid within 60 days or 30 days upon completion of the service or the product delivery? Mr. Barrera. I cannot speak for every agency. I know every agency probably has their own policy, and it probably depends on the particular contract, so I would let Kevin answer that as far as what Homeland Security's policy is on that. Mr. Boshears. We have been using the standard Federal Acquisition Regulation procedures for payment. The most common clause they use is nicknamed----. Mr. Shuster. What is that? Mr. Boshears. It is nicknamed Net 30, the nickname of the clause. I might share one other thing about payment that is very important to us as well as small business advocates. One special thing that has happened in the government, and it is an ongoing effort, but firms that do business with the federal government now sign up electronically for payment. It is called CCR, the central contract registration database. It contains payment information, in addition to other information, where firms can be paid electronically so that their invoice payments are sent directly to their bank account. That has helped small businesses a lot in terms of getting paid. Mr. Shuster. Are there any incentives in the contract for the government to pay? I know in business many times if you do business with somebody if you pay in 15 days they will give you an extra two percent discount, 30 days you pay the bill, that type of thing. Mr. Boshears. Yes. That is available to the federal government. Now, just from being an old contracting officer, that is typically done when we procure supplies or products. Mr. Shuster. The second question I have on timelines. We had a business in my district that was dealing with DOD. Of course, we started the war with Afghanistan. The war on terrorism was going on, so I understand that some of those contracts were pushed aside and pushed back, but in this particular contract it was over a year before they awarded it, and it was dealing with supplying the military with sweatshirts. It was not a complicated piece of equipment. It just seemed to me as I talked to the Department of Defense a number of times they kept telling me next month, next month. In the procurement process or when letting bids out there, is there a timeline on that bid that says this is the product we are looking for, this is the service, if you bid it we are going to award it within six months, four months, three months, anything like that so they can have some definite idea of when something is going to be awarded? Anything like that in those contracts? Mr. Barrera. Without knowing more about that, I would have to look into it. Mr. Shuster. Right. Mr. Barrera. If that person would like to contact us, please have him do that. We will look into it for them. Mr. Shuster. My concern when you are letting a bid, companies in this case, and again there are other circumstances here, but if a small business, for instance, is trying to get a contract, is bidding on the contract, if they do not have some kind of timeline a lot of times they are either going to lay people off or keep people on, hoping that that contract gives them some certainty. In the private sector, with contracts for highways, for instance, you pretty much know 30 days or 45 days after the bids are submitted they are going to be awarded, and if something happens they are going to let them know that we are rebidding it. We are not just going to keep dragging it on. That would be something I think that would be very useful for small businesses when they are bidding a contract they know that date certain this thing is going to be awarded unless some circumstance comes up, some surprise circumstance that the government cannot control. I hope that is something you would look into because, as I said, talking to a lot of small businesses they do not seem to have a firm date in mind when the contract is going to be awarded, and that hurts them on their planning and production or manpower. Mr. Barrera. I definitely agree. Mr. Shuster. Thank you very much for being here today. Chairman Graves. Mr. Boshears, I am curious how far up the pecking order, I guess you might say, is your office? Is it located close to the Director's office? Are you in the same building? I know you guys are scattered out all over the place. Mr. Boshears. We are scattered. I am physically located in the GSA Regional Office Building in Southwest across from L'Enfant Plaza. Chairman Graves. Okay. I was curious about that. I am also curious to know what action has been taken. Mr. Barrera, I know you mentioned the President's agenda when it came to contract bundling, but has any specific action been taken at this point or things moving in that direction? Mr. Barrera. Thank you, Mr. Chairman. We actually are very excited to announce that as of yesterday we have now published rules on contract bundling in the Federal Register, and what the rules are basically going to set out is part of the President's nine point strategy to absolve and really get rid of the contract bundling that is hurting small businesses. One of the things that the proposed regulation will require now is that the agencies will now have to conduct bundling reviews of the requirements of multiple award contracts and orders against those contracts. They also need to strengthen their compliance with subcontracting plans, and the rule will also involve improving oversight of the small business programs. Again, this was published yesterday in the Federal Register. Additionally, as a result of the new rule and the attention brought to these, we also submitted another rule, a companion proposed subcontracting rule, to provide guidance for agencies to use when determining whether or not a large business and prime contractor makes a good faith effort to comply with their subcontracting plans. That is part of what the President has done, and we are going to be working with agencies a lot more on the oversight when they look at contract bundling. The multiple awards contract is a very big one for small businesses. Chairman Graves. Any other questions? Mr. Ballance. Yes, just a follow-up. Is that binding on Homeland Security? Mr. Barrera. It is on all of the agencies. Mr. Ballance. You will agree with that? Mr. Boshears. Yes, sir. Mr. Ballance. I read somewhere that maybe some of these regulations you were exempt from. Mr. Boshears. No, sir. Most of the Department of Homeland Security follows the FAR. Mr. Ballance. All right. Now, I am being told that those regs do not apply, and I want to see how specific we can be here. First for Michael. Is it your opinion that those will apply to the Homeland Security Department, the ones that you just published? Mr. Barrera. It is my understanding that they will. Mr. Ballance. Mr. Boshears, it is your understanding they will also? Mr. Boshears. Yes, sir. Mr. Ballance. The Transportation Security Department within your agency, will that be covered? Mr. Boshears. Now, that I think we will have to open for discussion. I would say likely no. It is my understanding that when the Transportation Security Administration, TSA, was first created about 18 months ago prior to the Department of Homeland Security, TSA was exempted from the FAR. Therefore, under the current guidelines they do not follow the FAR. However, the remainder of the Department does. Mr. Ballance. I do not want to take too much time, but there are quite a bit of contracts, would you both agree, in TSA? Mr. Barrera. Sure. Mr. Ballance. The bulk of the contracts, and that agency is not covered by this? Mr. Barrera. I was just informed the TSA is exempt. Mr. Ballance. It is exempt. Maybe we can work on that. Chairman Graves. Another other questions? [No response.] Chairman Graves. I thank both of you for being here. Mr. Boshears, if you have somebody that might want to stick around and listen to some of the testimony from some of the other witnesses too, I think it would be beneficial. Mr. Boshears. Yes, sir, I do. My colleague is in the back. Chairman Graves. We will go ahead and seat the second panel real quick. Mr. Boshears. Thank you. Chairman Graves. Thank you both. [Recess.] Chairman Graves. I want to thank all of you for being here today. We just got informed that we are going to have a series of votes anywhere between 11:15 and 11:30, somewhere in there. I would say it would probably be closer to 11:30, so we do not want to run over too much time on testimony. If we do happen to have to break in there sometime, it will not take us terribly long to go over and vote and come back. We will just recess for a short time, but that happens once in a while. I apologize if that does. We might be able to get through everything. We will start out with Daniel Lane, who is the CEO of the EMCOM Project from Independence, Missouri. Mr. Lane, I appreciate you being here today, and I will turn the mike over to you. STATEMENT OF DANIEL LANE, CHIEF EXECUTIVE OFFICER, EMCOM PROJECT Mr. Lane. Thank you. Mr. Chairman, Ranking Member Ballance, Members of Congress, staff, ladies and gentlemen----. Chairman Graves. You might pull the mic right over there and turn it on. Mr. Lane. Okay. Is that better? Is it on? It is on. Okay. My name is Dan Lane, and with me today is Dr. Chris Powell, who will be issuing some alerts demonstrating EMCOM while I am telling you a little bit about EMCOM and our struggle to get recognition. EMCOM is a product of Technical Legal Consulting. We are a forensic computer engineering company who develops and deploys software designed for legal, government and financial applications. EMCOM is the only existing fully integrated and immediately deployable, fully redundant all hazard emergency alert notification and integrated communication system in the world. EMCOM is completely device and network independent. EMCOM uses whatever device or network is in the hands of the public and allows the public to pick and choose how they are notified. EMCOM is simple to use from a single point of interface, and any message can be targeted by any combination of groups or geographic areas. EMCOM also provides multiple layers of encryption for message and system security. Chris has now keyed in one of the alerts on one of the devices and networks which will issue an alert received on cell phones, which we have asked the staff to keep on in the hearing room today, and on a nationwide satellite network device which we brought with us today, so things may start buzzing here in a minute. EMCOM interfaces with just about every electronic device known. It is the most pervasive and useful emergency management system in the world. EMCOM gives the public multiple ways to receive a message, and it gives emergency management directors, EM directors, multiple ways to issue alerts or coordinate relief efforts, even if their command center is destroyed. This type of redundancy allows EMCOM to send messages from its single point of interface throughout all communication channels at once, achieving immediate notification. One of the primary lessons we learned from 9-11 is not all communication methods will be operational after a disaster, and those that are operational may be overloaded. Therefore, even if a command center is destroyed an EM director can still issue an alert or direct relief efforts. Chris is going to be issuing a second alert at this point in time using a second network and a second device, so we are going to see things start going off again certainly after this. Alerts are received through our system within 30 to 45 seconds from issuance, assuming that we have--Chris is just getting the second alert now, which is anywhere from 500 to 800 times faster than the EAS. The public can receive alerts, and first responders can still be directed as long as they have any one of the communication means available, any communication means available to them. EMCOM also provides for bidirectional interactive communication from the field by text, video or audio, allowing EM directors to issue and apply limited--there is the first alert. That is the satellite device. Allowing EM directors to issue and apply limited resources effectively. Feedback loops and situation reporting are built in to allow quicker assessment in the field and for training purposes. First responders can be guided to the places they are needed most; in other words, better triage because, as we all know, where main communications are out those are the last places to get help. EMCOM is the only network with a built in volunteer organization of community coordinators who are the last mile notification network and the first on the scene to report back in a disaster. The coordinators are able through EMCOM to work with first responders. Nothing like EMCOM exists, and it would take years to develop a similar system. EMCOM began in 1997, starting with an extensive needs analysis and working with EM managers all over the U.S. In 1998, we had the first test of EMCOM with over 800 EM directors on line. Since then, extensive improvements in the system have been made, with 9/11 giving us new focus. By October 2001, the system was completed in a final deployable form. In October 2002, we were invited to present the system to the Partnership for Public Warning, an organization to which Congress has contributed $10 million to define a system. PPW issued reports, portions of which we have included, showing the need for EMCOM. We have also included several articles from media urging adoption of such a system and reporting on the policy of Homeland Security to deploy such a system. These exhibits specifically describe EMCOM. Initial attempts by EMCOM were made to contact the then Homeland Security Agency before it became a Cabinet position, particularly its Chief Technology Officer, Steve Cooper, by phone at his White House office. Ike Skelton's office hosted some governmental contracting expos, which we have attended, at which NavAir, through Admiral Crowley, became interested in the project. There has never been a presence by Homeland Security at those conferences. There is the second alert, so we all know the system works. Because of the nature and importance of the product to the nation, we continued to pursue contacts with Congress and our technology contact with Homeland Security attempting to find some inroad as a sole source provider of new technology to either a contracting route--that is the cell phone alert that goes along with everything else we have. We are attempting to find some inroad as a sole source provider of a new technology to either a contracting route or simply to make Homeland Security aware our product existed and filled an immediately articulated need by Homeland Security. Initially in 2002, we were told no money existed in any Homeland Security budget, and they had no idea when and for what money would be forthcoming. Even though we had made contact with the office, no duty assignments had been made. No one claimed responsibility for finding or deploying an alert system. Even though it was a policy objective, no one could direct us to how or where to contact the appropriate person to talk contract. We continued attempts to expand our contacts with Homeland Security by asking our congressional representatives to intervene. We continued to keep track of government contracting sites, but nowhere was there anything which could point either the legislative assistants or our staff to any policy or procedure that would allow EMCOM to be reviewed by Homeland Security or to allow EMCOM to be presented to Homeland Security for consideration. No one knew what the command structure would be and where the offices would be located. In essence, there was a face with no body or functionality. To the credit of Congressman Graves and Senator Talent, their staffs continued to call people like Mike Brown, who by sheer accident we met in Tennessee and who provided us with contact information. This was passed along to the LAs, and finally we were able to get 30 minutes with Rose Parks, the CIO of FEMA, on May 14, 2003. In that meeting she had Gordon Fullerton and Tim Putprush. By May, the organization of Homeland Security was still in progress. No one seemed to know what the responsibilities would be and where people would be physically located and what their phone numbers were. Mike Brown had just got his first administrative assistant. FEMA indicated in those meetings that we were the most advanced and comprehensive system in existence, but, very simply put, we were not a big company, were not tested over a large network and, therefore, could not be immediately considered, even though there was nothing like it in the world. Ms. Parks instructed her staff to follow up with appointments for EMCOM with NOA and the National Weather Service by the end of the summer and report back on the next steps to move forward with EMCOM. Even though we continued to call and make contact with FEMA, those appointments have never occurred. We have not been contacted by either FEMA or Homeland Security since then. We have continued to make trips to D.C., call FEMA, monitor the contracting policies and procedures of Homeland Security, but nothing has happened. Since then, there have been tornadoes all over the Midwest, flooding in the east, hurricanes, wars in Iraq causing substantial changes in the Homeland Security levels, untold lost children, chemical spills, escaped prisoners, boil orders, weather warnings and countless other emergency situations for which EMCOM would have been essential not only for warnings, but also for disaster relief and coordination. TLC is a small business with great expertise. Our main programmer developed missile systems for the U.S. His expertise is recognized worldwide. TLC cannot afford a staff just to coordinate government contracting. It cannot afford to implement large test areas, but the system has been running for over two years and issuing alerts and being accessed without failure. EMCOM is reliable. We cannot pledge the assets of a Fortune 500 company. However, neither could a Fortune 500 company have the foresight to develop and deploy EMCOM. It took the vision of a group of software designers in the Midwest who listened to what EM directors were telling them to make EMCOM a reality. Since our journey began, we have enlisted the help of state and local governments to deploy EMCOM. Some of those are Gloucester, New Jersey, Rhode Island, Mississippi, Tennessee, Juneau, Alaska, Monroe, Washington, Nevada, Texas, and just recently Summit County, Ohio, has asked for a deployment of EMCOM. They have also supported and requested deployment available for immediate test areas. We have had inquiries from companies who have not only seen the governmental, but the private utility of EMCOM. EMCOM could be privately funded, but all that does is drive up the cost of the system to the American people. EMCOM is a cost effective solution, its implementation estimated to be substantially less than anything else proposed to date. On behalf of EMCOM, I would continue to knock on the door of Homeland Security and this Congress. Congress has opened the door and is listening. Based on what I have seen of this Congress, you do not believe the American people are expendable to either natural disaster or manmade disaster. However, I have not seen a similar response from Homeland Security, either as a lack of organization or a lack of interest in its primary responsibility, which is the safety of the American people. EMCOM is a sole source contractor with new technology, and has not been able either through your efforts or the efforts of state and local government to gain the attention of Homeland Security. Our sincere desire continues to be to work with Homeland Security and bring a comprehensive and affordable alert notification system to the people. Thank you. Chairman Graves. Thank you, Mr. Lane. [Mr. Lane's statement may be found in the appendix.] Chairman Graves. That is our vote, so we are actually a little early on votes. It will take us about 20 minutes to get over and go through two votes, a previous question and a rule vote, so it should not be very long. We will recess for approximately that time until Mr. Ballance and I get back, but it should not take too terribly long so just sit tight for just a little bit. We will be right back. [Recess.] Chairman Graves. I apologize for the delay, and I thank everyone for their patience. We will now move on to Benjamin Brink. He is the CEO of Data Search Systems, Inc., out of St. Louis, Missouri. Mr. Brink, I appreciate you coming all the way out, and I look forward to your testimony. STATEMENT OF BENJAMIN M. BRINK, CHIEF EXECUTIVE OFFICER, DATA SEARCH SYSTEMS, INC., ST. LOUIS, MO Mr. Brink. Mr. Chairman, Ranking Member, distinguished Members of the Committee, thank you for inviting me to testify today. My name is Ben Brink. I am the president and chief executive officer of Data Search Systems in St. Louis. I am also a Captain in the Naval Reserve and Commanding Officer of a Naval Intelligence Unit in Memphis, Tennessee. My background includes approximately 25 years of technology company management, primarily in Silicon Valley and southern California. I began my career after my active duty Naval service and completion of a B.S. and M.S. at Stanford and an MBA at Harvard. During my career, I have had the opportunity to lead a number of technology companies from start up to $35 million in revenues during stages of turnaround, transition and growth. Several of these companies have provided products and services to the federal government, primarily to DOD, either as a contractor or subcontractor. DSSI is an early stage company commercializing technology developed by a team of four professors at Washington University in St. Louis. This technology enables very rapid searches of large, unstructured databases. We expect early applications of our technology will be relevant to intelligence, defense, homeland security and law enforcement. Later applications will address the needs of defense imagery, genomics research, medical, financial and other commercial databases. DSSI and I have not to date had specific experience attempting to gain contracts with Homeland Security. In fact, our venture funding closed about three and a half months ago, and we are just ramping up operations. We have made the strategic decision in fact not to address Homeland Security first because of some of the problems discussed here today and the fact that we have limited band width as an organization to search through an organization, a Department still in formation. We are addressing primarily the established intelligence agencies in the U.S. Government. This testimony is, therefore, more of a discussion based on my previous experience with small technology growth companies and the challenges that they have faced to do business with the federal government. Based on that experience, I will make several recommendations on how it may be done better, specifically with application to DHS. This is a key time for such a hearing, and I commend the Committee for doing this now. The President's goal to make federal contracting accessible to small business is good not only for small business, but also for our nation's security. New, innovative companies develop new, innovative technology. We are in a new security environment. We face a new threat. The DHS is a new agency with new needs. This embryonic Department's structure is still being formed and not set in stone. Now is the chance to review how the Department has done so far and in fact how other federal agencies have done and to get it right. In particular, it is important to support small, innovative businesses that can provide new, out-of-the-box solutions for our nation's security. It has always been difficult for small and growth stage businesses to contract with any very large bureaucratic organization, especially the federal government. It is a little bit like a pond trying to do business with the ocean. The pond will become salty. The mismatch in size between a large organization and a small one often causes two major problems. The large organization can swamp the small one with its demands for information, accounting, services, et cetera, at a level much greater than the small organization can handle. Going the other way, the small organization can get lost dealing with the large organization. Where is the decision maker? Where is the information provider? Again, the small organization burns its very limited band width, its very limited personnel resources, just trying to get to the right person. In the interest of time, I will just make comments on the eight recommendations I have. The full recommendations are in my written testimony. Some of the best business practices which make sense is one stop shopping. The DHS testimony says they are working on that, but, like any small entrepreneur, I decided to do a web search to prepare for this testimony to find out where I might do business with DHS if I wanted to. The page DHS took me to mentioned eight or nine agencies, gave a few links to regulations. I could not find anything about HSARPA on it, and in fact I found something about HSARPA by going to the Web site of one of your colleagues, Representative Steve Buyer, who had far better information on small businesses doing business with DHS than DHS did, and he had about 40 or 50 links. Clearly, DHS needs to do a good job, take lessons from people like fellow Members of Congress who are doing a good job to help people find how to do business with them. The second, which is a long-term complaint, and a couple Members of the Committee mentioned this, is on time payment by the federal government. Small companies do not have the cash resources, do not have the debt capacity to support 60 to 90 to 120 day payables. Clearly, there are people of good conscience in the government trying to pay sooner, but it is very hard to get early payments from the federal government. Some sort of either ombudsman arrangement or, much better, just standard procedure to pay small companies on time would make DHS much more small company friendly. Third is the federal government needs to use best business practices to be a reliable business partner and to be consistent. As an example, when I first moved back to St. Louis from California I was asked to run a small technology company, a development stage company also spun out of Washington University to see if I could save it. The company had run out of money in the post dot-com era, had done very well, however, on about $2 million worth of SBIRs and had the expectations of a couple more million dollar revenues coming in over the next few years. About four weeks before the company was pretty seriously out of money, they were asked to bid on several SBIRs. In the changeover between Administrations, there was a funding hold with the particular agencies that ran these SBIRs, and the company found itself absolutely out of revenues for eight months. We shut the company down, laid off 14 people, and I am now licensing the technology else. The government needs to be more consistent with small companies because they cannot survive those sort of revenue gaps that a larger company could. Another area is DHS should develop, if it already has not done so, and I do not know about it, a separate semi- independent funding agency as the CIA has done with In-Q-Tel. In-Q-Tel is a federally funded venture capital firm which can invest in promising technology companies as a venture capital fund and is a strategic fund which seeks out and invests in technologies that are useful to the CIA. It also provides a link between those companies and the often hard to navigate paths of the intelligence community. Very good concept, and it should be adopted elsewhere in DHS, especially with its current confusion of going from 22 agencies to one Department. This would be a real beacon of hope for small companies. The next area is the first time that corporations try to get on the GSA list it is very hard, and it is very hard for companies to sell standard, commercial, off-the-shelf products without being on that list. It would be interesting to discuss the possibility of creating not just for DHS, but perhaps for the whole government for technology products sort of a baby COTS list, a baby GSA list that could be opened with small companies which would have a lesser set of requirements or a set of requirements tailored for small business, as opposed to large business. You talked a bit about contract bundling. Efforts should be looked at for perhaps separate bidding for subs along with the prime that may manage that so that small companies tend not to be quite so squeezed as often happens by their primes. There is probably a lot of work to do there because clearly the government wants to get value for its money, but if more than just a set aside for small business you enable them to bid separately, that could protect their profitability, which they need to survive. The SBIR policy for DHS needs to be clear. It needs to be clear for other agencies as well. I have an example in my written testimony of where a decision was made that venture funded companies that were owned more than 51 percent by venture firms were no longer considered small business. What that did essentially with that SBIR money pot is it said if you are good enough to be invested in, the government does not want to support you, and so it tends to force that kind of money to the losers instead of the winners. It is not good for the companies. It is not good for the government. Finally, since small businesses find it easier to work with small organizations, decomposing the DHS organization into smaller pilots makes sense to introduce small companies to doing business with the government, and also local pilots give companies like my colleagues to the right here a chance to prove himself in a smaller scale and not have to get over that hurdle that the acquisition officer might have to have him be acceptable to applying his technology to the whole country. There is a pilot in St. Louis to do joint intelligence fusion centers. There is a small St. Louis company called Talisen Technologies, about a $20 million company in St. Louis, which is partnered with Boeing to address that. It is a good model, and that should be looked to being used elsewhere. Thank you. Chairman Graves. Thank you. [Mr. Brink's statement may be found in the appendix.] Chairman Graves. We will now move on to Tim May, who is the CEO of Advanced Interactive Systems in Seattle, Washington. I appreciate you coming all the way out, Mr. May. Thank you. STATEMENT OF TIM MAY, CHIEF EXECUTIVE OFFICER, ADVANCED INTERACTIVE SYSTEMS, SEATTLE, WA Mr. May. Mr. Chairman, Members of the Committee, I wish to thank you for the privilege and opportunity to appear before you, the Subcommittee, today. I want to address the challenges facing small companies such as ours when attempting to secure or do business with the Department of Homeland Security. Let me begin by introducing you to our company. My name is Tim May, and I am president and CEO of Advanced Interactive Systems. AIS is a privately held company headquartered in Seattle, Washington. We employ more than 125 people in seven facilities in the U.S. and abroad. Our company designs and manufactures high tech simulation systems, virtual reality systems and training facilities worldwide. It provides anti-terrorism training, including behavior pattern recognition. Using technology, we provide comprehensive training solutions when lives are on the line. When the Office of Homeland Security was created, we were eager to bring these comprehensive solutions for training to this new branch of the federal government. The question was how. How do we get technology in front of the right people? Who are the right people? If we were fortunate enough to land a large contract, what was the best approach to managing it? An analysis of the market led us to conclude that all roads led to teaming with large contractors if we were to have any real chance at securing business in this new arena, so we did just that. In June of 2002, AIS was selected by Boeing to conduct the operator training for up to 30,000 baggage screeners at airports throughout the United States in connection with a contract installing explosive detection devices and explosive trace detection equipment for the Transportation Security Administration. The project required us to train more than 1,700 instructors and enabled them to deliver the curriculum provided by the government at more than 160 locations, all in less than six months. While this was a tremendous opportunity for AIS, it was fraught with challenges, many of which were unrelated to the basic task. The difficulties AIS faced in this contract were typical of those that any subcontractor faces when it is teamed with a large contractor. We did not have direct access or contact with the ultimate customer, and there was too much time spent in managing the relationship with the prime contractor, as I think has been mentioned earlier, trying to determine particularly with the Transportation Security Administration which FARs were applicable and which were not. We were keenly aware that this contract was AIS' chance for entry into a new market and the opportunities it could afford. However, since we were a subcontractor, success in this particular contract did not ensure us future success with the Department of Homeland Security. As a result, when the contract ended we found ourselves back marketing to DHS as if we were the new kid on the block. That task is further complicated with the difficulties presented by ever changing personnel at the Department of Homeland Security. With the experience of having successfully completed this contract, our business approach now has a dual focus--securing further business directly from the federal government and marketing directly to emergency responders. While we are making process, we are confronting some difficulties that were not faced in our other business sectors. In the emergency responder community, we face the normal challenges one expects when marketing to state and local agencies. They are fragmented and require us to prioritize. AIS cannot easily and economically reach all potential customers, so we have opted to concentrate our marketing efforts on states and larger cities. Virtually every law enforcement agency or firefighter agency we have demonstrated our technology and services to have been excited about our solution and are willing to contract with us, but they have a surprising dilemma. Despite all the media reports of the new and expanded federal funding being made available to first responders, we have found that even in major cities front line agencies do not know how to access those funds within their own states. As a result, we have necessarily become a resource for them on how they can locate those funds. This is a difficult burden for a small business' shoulder inasmuch as it stretches our marketing and manpower budget and increases the sales cycle of our customer purchase. Additionally, we have found that many in the first responder community are unsure of the procedures involved in contracting, so we are faced with having to learn the rules and procedures and even the identity of a myriad of state and federal contracting agencies. As you can well imagine, it is time consuming and places a costly burden on AIS and others in our position. We have been in numerous meetings and discussions with the Department of Homeland Security about these issues and others related to doing business with DHS, and we sincerely appreciate the support and assistance they have given us. We are very aware, for example, that the DHS and other government agencies face a difficult task in taking a chance on awarding contracts, especially of a critical nature to small business. However, ignoring the benefits these smaller firms might bring simply because of perceived risks is an unfair and indeed an unwise policy. I would like to offer some suggestions and solutions to assist small business. AIS would propose creation of a small business advisory board as part of the Department of Homeland Security with the intent being that this board will mirror, but not duplicate, what the Department of Defense does with small business; for instance, creation of a mentoring program, small business advocates and incentives for larger companies to work with small businesses and a program such as the DOD SBIR program. My company and I are willing to assist in any way possible to make such programs a reality, and once again I thank you for your time and the privilege of addressing you. Chairman Graves. Thank you, Mr. May. [Mr. May's statement may be found in the appendix.] Chairman Graves. We will now hear from Patricia Driscoll with Frontline Defense Systems here in Washington, D.C. Is that right? Ms. Driscoll. Correct. STATEMENT OF PATRICIA DRISCOLL, FRONTLINE DEFENSE SYSTEMS, LLC, WASHINGTON, DC Ms. Driscoll. Thank you very much. I would like to first say I am extremely disappointed in the Administration by disappearing when all of us came here and took time off of our busy schedules, and you guys are still sitting here to listen to what we have to say and what suggestions we really think the Department can use to make things better for us, but I would like to say thank you to the Department of Energy for showing up here today. Mr. Chairman, Members of the Committee, I appreciate this opportunity to come before you and tell you about my experiences as a small business. My name is Patricia Driscoll, and I am the CEO of Frontline Defense Systems. Frontline Defense Systems, a Nevada based corporation, is a certified woman-owned small business. The company works with government agencies to develop and implement security programs and solutions for the borders, ports and federal facilities. FDS provides a complete package of unique security solutions and services. We do threat assessment and penetration of armed facilities, policy, planning and procedures, security development planning, hard and software. We are some of the best in sensors, biometric solutions, infrared cameras, multi-spectral thermal imagers, wireless devices, network security solutions, X-ray and gamma ray high density cargo inspection, chemical and biological sniffing devices, license plate recognition systems, facility access control, signals, intelligence and temporary facilities. We also deal in integration, management training, systems support and operational and maintenance support of our equipment. Frontline Defense Systems' companies have locations nationally and worldwide. FDS either owns or has an interest in over 25 small businesses that are the best in their field to provide services and products to the customer. Most of these companies have been in business for over 20 years. Our team is made up of technologies with a proven past performance history with the government. Our customers include the White House Military Office of this current Administration, U.S. State Department, Department of Defense, classified sites of U.S. intelligence community, TSA, SOCOM, NRO, DTRA, Department of Energy, DIA, U.S. Army ECBC, DPG Life Sciences, DARPA, U.S. Customs, FAA, Department of the Interior, U.S. Coast Guard, Salt Lake City Olympics Operations Center, Centers for Disease Control, Ports of Baltimore, Charleston, Savannah, Honolulu and Guam, Johns Hopkins University, Los Alamos National Labs and Governments of Canada, Spain, Germany, the U.K., New Zealand, France, Taiwan and South Korea. After seeing a list of customers like that, one might ask what do you have to complain about? Well, I am really not here to complain, but I am here to educate. If you notice, we do not do a whole lot of work with the Department of Homeland Security, but after looking at our qualifications you see that we should. When it comes to chem/bio, we are the best, and we secure and are the referee system for the National Chemical Warfare Center. When it comes time to do covert operations or to go to war, who does the Special Forces community get their equipment from? Us. When Customs wants to inspect densely packed cargo or is looking for people in the back of a truck, instead of sending the truck trough a deadly radiation blasting device, who do they trust? Our system. When the White House believed that it was very important to have a second set of eyes look at their security, who did they ask? They asked our team to come in. When people's lives are at stake or when the situation is critical, the government has called on us. Do our ports, borders and airports not deserve the same level of protection? Let us get down to the problem as we see it. When the Transportation Security Administration was stood up, UNYSIS was brought in to handle the majority of the procurement. Instead of dealing with government officials, we had to pitch to a very large corporation who wanted to see all of our proprietary material. This is death to a small, innovative company. In the past, we have been burned by the large integrators because they have used us to get qualified on a contract, abused us when they won by telling us that they wanted us to work for a price that we could not afford and then created a half-baked version of our solution for the customer. For this reason, we need the ability to procure on our own and not leave our livelihood in the hands of the big boys. We also need a better standard for measuring the size of a business, the ability to update the changes and better oversight on contracting. The GAO report of March 18, 2003, stated that there is very little oversight in large contracts on true small business activity. The oversight is generally left to the integrator to tell the SBA their version of the truth. I agree with the GAO that we should stop overwhelming our SBA people with tasks that have nothing to do with their job and allow them to go back to fighting for small businesses and have on-site reviews of these contracts. The GAO also reported in May of 2003 that over $460 million in contracts were awarded to five large corporations posing as small businesses due to the lack of records on current business status and oversight by the government. How can I compete against big integrators when they are still posing as small businesses that they acquired 10 years ago? Recently, the Bureau of Citizenship and Immigration Services let out a BPA, blank purchase agreement, worth $500 million citing the Paperwork Reduction Act. This statement of work was only one and a half pages long and included anything IT that BCIS intends to buy over the next few years. The way the BPA is currently written up, it will exclude any small business from getting a part, which is a great acquisition vehicle for small businesses to do business with the government easily. This BPA was put on the street after the CIO of Homeland Security, Steve Cooper, said that he did not want the BPA to go out. Mr. Cooper and Undersecretary for Management, Janet Hale, said this BPA did not fit the new departmental guidelines' investment plan for IT or strategy for acquisitions that the Department has set up and would severely hurt the small business initiative put forward by the White House. What is the point of having a CIO if he is not given budget control over the Department's IT? Giving him control of the IT money is the only way that we are going to see the Department start behaving differently and the only way we are going to see some real initiatives on sharing of resources. Steve Cooper came in with the solid plan on doing business with small businesses. Mr. Cooper and Ms. Hale understand that small businesses are innovative, reasonable and get the job done quickly. I am asking you today what are you going to do to give people like this a really big stick to make a change in the Department of Homeland Security? I can tell you from personal experience I have not seen anything change within these agencies over the last two years except for their name. Since there has been so much chaos in the last two years bringing these 22 groups together, you have not seen the amount of money that has been wasted or procured improperly. Today, our ports and borders are no safer than they were two years ago. By having this hearing today, I feel that you have an understanding that things need to change, and I am encouraged that this Committee is taking the initiative to make a difference. I hope that you will strongly encourage the Department of Homeland Security to follow in the footsteps of the Diversity and Small Business Offices of Department of Energy, HUD, who is procuring 51 percent of all their contracts to small business, and the Department of Transportation, who is doing 42 percent. They have shown true progress in helping small businesses obtain contracts and keeping an eye on contract bundling. I hope that you will work to give the control of the money to agencies that follow good business practices and take it away from those who have repeatedly shown they have no interest in small business. Thank you. Chairman Graves. Thank you, Ms. Driscoll. [Ms. Driscoll's statement may be found in the appendix.] Chairman Graves. Marian Sabety with the Flywheel Group here in Washington. We look forward to your testimony. STATEMENT OF MARIAN SABETY, PRESIDENT, FLYWHEEL GROUP, WASHINGTON, DC, REPRESENTING THE NATIONAL SMALL BUSINESS ASSOCIATION Ms. Sabety. Thank you, Chairman Graves and Ranking Member Ballance and Representative Shuster. I appreciate the opportunity to be here. My name is Marian Sabety, and I am here on behalf of the National Small Business Association, the nation's oldest nonpartisan small business advocacy group representing more than 150,000 small businesses across the country. I am the president and CEO of the Flywheel Group, a small, woman-owned firm engaged in homeland security consulting. We conduct vulnerability assessments, threat scenario planning, risk quantification and technology evaluation. We work with organizations in both the private and public sector to plan programs and implement technologies that protect people, operations and assets in the event of a catastrophic event. Our particular area of technical expertise is document security and wireless technology. I have been in the telecommunications and high tech sectors for over 20 years and made the leap to business owner with Flywheel Group in 2000, after working for such firms as AT&T, Sprint, AMS, American Management Systems, SAIC and Stanford Research Institute. Though I am proud to report that my company has been profitable each year of operation, I know our growth rate could be much higher. Last year I successfully negotiated our IT schedule status, which took us I think 18 months of negotiating to meet those hurdles. Several months ago, we responded to the call for technologies by the TSA for a solution that will compile actual event data from around the country and model the data against predictive indicators in order to track, preview, defend and plan response to potential disasters. We submitted a combination of proven patented technologies, one of which was already funded through several Department of Homeland Security and Department of Defense contracts. Our solution included proven software that automates inventorying of assets through a simulated 3-D program for any type of threat so that prevention, protection and evacuation planning can be optimized with an integrated 911 computer dispatch system. What I mean by this is by simulating scenarios using 3-D modeling, you can actually help to evaluate how you might respond if the actual event occurred so that when the 911 call center gets a set of indicators based on calls that occur, they can go back to that scenario and make sure to pull together the right resources, and that is actually the value of this kind of modeling. Not only would this solution provide more accurate planning and training, but it would enable municipalities to manage risk responsibly and coordinate with DHS, but not necessarily at the same threat levels commanded by DHS. We all know that this is a key factor today in the municipalities relative to budget control. We proposed this program because portions of the solution were already in operation in the New York-New Jersey Port Authority and in the City of Tampa in Florida. It has been several months since we submitted this proposal. We have heard nothing. I can assure you, we have had the same intense follow- up on business development you have already heard in testimony this morning. While I recognize that other firms may have submitted similar solutions, it is disappointing that our submission has not gotten any airtime at all. It meets the requirements head on and at a competitively lower price. We have now turned our energies to organizations that are on the first responder front line to try to get a pilot for this proposed solution underway. For a $300,000 pilot, we are hoping to coalesce resources and partners to bring up the system by the end of the year. This pilot alone would guarantee creation of 25 permanent jobs. As an expert in the field of risk management and security, I can tell you that the security of our nation is paramount, but it must be done with small businesses to ensure that economic growth that we so badly need. Small businesses do well by the government. Our margins are lower. We are creative. We deliver. Yet, not all federal agencies are held to the same standards for meeting small business goals as established and promulgated by this very Committee. The TSA, as we all know, is an integral part of the newly organized Department of Homeland Security. In preparing for my testimony, I did some on-line research into TSA. According to their Web site, TSA is non-regulatory in nature, meaning that they are exempted from the FAR, the Federal Acquisition Regulations, regulations that nearly every other government agency is expected to abide by. The head of acquisition for TSA has stated that while TSA uses FAR and FAA procurement guidelines, they are only used as benchmarks. For small business owners like me, benchmarks and guidelines do not translate to real business. It is important that DHS and TSA live up to the government-wide accepted rules for small entity procurement. First of all, it is the right thing to do. The people in this room are here because we are either small business owners or we care about small business. It is only fair that small businesses have equal access to opportunity for lucrative contracts within the federal government. You cannot say on one hand that a small business is a pathway to economic recovery and on the other hand allow TSA to operate outside that purview. Secondly, small business procurement is important in creating jobs, and in the case of this one pilot alone I just described 25 jobs, permanent jobs. DHS was just approved for fiscal year 2004 a $29.4 billion budget. Certainly small businesses should be a part of those contracts, yet with no compete bids and huge corporations taking on massive responsibilities, small business is being forgotten. You have heard testimony this morning that I can attest to as well, but will not take the time. Early in the year, Ranking Member Velazquez unveiled her Scorecard IV to evaluate federal agencies on small business procurement. Though DHS could not be included on that report, it is worth noting that more than half of those evaluated got a D or an F. Keep in mind, these are agencies that must abide by FAR. I suspect that those outside the legal realm of FAR would leave much to be desired. Successful contracting with the government is difficult. It takes inordinate energy and overhead, and you have heard some of that this morning, to successfully clear all of the hurdles that come with pursuing and winning government opportunities. Quality performance of government contracts is also challenging, but something I used to do for large corporations in my previous life. I assure you, it is an entirely different ball game, though, for a small business. Getting your foot in the door is a challenge, and, frankly, even getting a call back is a challenge. There are government rules and regulations in place to help small businesses. When agencies are exempted from following those rules, it not only stunts the growth of small business, but it sets a dangerous precedent. I thank you, Mr. Chairman and Ranking Member and the Committee, for your time, and I welcome any questions you have. [Ms. Sabety's statement may be found in the appendix.] Chairman Graves. Thank you, Ms. Sabety. You have not heard a thing? Yes? No? Ms. Sabety. No. Chairman Graves. Looking? Nothing like that? Ms. Sabety. No. Chairman Graves. Also, I am curious too with each one of you. How many employees? I will start with you, Ms. Sabety. How many employees approximately? Ms. Sabety. I have nine employees. Chairman Graves. Nine. Ms. Driscoll. Our information is classified. We are still small. Mr. May. We have 125 employees. Mr. Brink. We are a start-up with 12. Mr. Lane. We are under 10. Chairman Graves. I am curious too, Mr. May, and we will start out with you. You got a contract to train baggage screeners with TSA, which obviously you have to be one of the very first businesses to get any sort of a contract. I was curious how that has worked out, what they were like to work with, the problems you faced. Was it different than other contracts you have had with the government? I would be very curious to know how that all worked out. Mr. May. Well, yes. It has been extremely challenging. Obviously you have two issues, one in dealing with the TSA, who you mentioned earlier is not required to follow the FARs, and then from a small business in learning the nuances in dealing with all of the requirements of a large company like Boeing. We have spent an extraordinary amount of time managing the relationship and managing how we do business with our prime contractor, in some cases more time than we spent delivering the products and services to the customer. I think that is a learning process that small businesses need to go through, but I think it is a sensitivity issue that needs to be addressed with the prime contractors. If the Department of TSA and DHS is going to bundle contracts and give all of the major work, if you will, to the large integrators, I think there needs to be a lot more time emphasizing with those integrators that they need to spend time and effort on how to deal with small contractors and bring them into the process. It was a very interesting experience, and in fact even though that work was completed on December 31 of this past year, we are still in the process of trying to collect our final payments on that contract in excess of $5 million----. Chairman Graves. How long ago? Mr. May.--which is an extensive amount of money for a small business like hours. Chairman Graves. How long have you been waiting? Mr. May. We have been waiting since March. Ms. Sabety. That is criminal. Chairman Graves. Mr. Lane, when you have new technology, and in fact anybody can answer this because you all have new technologies you are developing, but are you having just a tremendous amount of trouble getting an audience to demonstrate your technology? Mr. Lane. Absolutely. I have had----. Chairman Graves. Go ahead. Mr. Lane. I have had lots of success with Members of Congress and Members of the Senate demonstrating the technology. We have had no success at all other than the one 30-minute meeting with FEMA, which they have not followed up on. They just do not seem interested in the technology because we are not big enough for them to take a chance on. That is basically the problem we are having. Chairman Graves. Anybody else? Mr. Brink. We have not had particular difficulties in getting an audience. Since our technology has been developed by four professors at a major university that have long-term relationships with these research agencies, that is fine. Where I expect we will have the difficulty is when we want to cross that hurdle from research contracts to develop to actual contracts to supply, and I am prepared to partner with a prime to do that, but clearly the difficulty that small companies have when they actually want to sell product rather than do research is do we have the credibility and the size to be viewed as a supplier of a large agency. Ms. Driscoll. I have had a very difficult time, especially with our border inspection units, our cargo inspection units. Customs has rated us as the highest and best performing machine, and I am competing against SAIC. Every time I get a contract, SAIC takes it personally and thinks that it is one more that they are not getting, so I have had an incredibly hard time getting anybody to pay attention to Customs' own reports about how good our stuff is. Chairman Graves. Mr. Ballance? Mr. Ballance. Thank you, Mr. Chairman. Let me first say I find it a little bit amazing. From your testimonies you seem to be strong businesses, and you have so much difficulty getting an audience. I do agree that I wish the other witnesses could have stayed around a bit to hear your testimony. Maybe they will get it in writing or something. Ms. Sabety, since TSA is exempt from most of these requirements--I believe we finally got that concession--do you think that that is an issue? Will they do business because they want to or because they have to? Ms. Sabety. I have two comments. One is that I think it is a bad precedent that they are exempted because within the Department of Homeland Security for those who are defining the contract requirements and the potential bidders that the contract might be opened up to, you can make an argument that says it invites the ability for some contracts to naturally be put underneath the aegis of TSA so that in fact they can control how the bidding proceeds. I think that is a bad precedent. The second I would say is that I think that unfortunately unless the law applies to force equality across the board, it is unfortunate when you ask for guidelines and benchmarks it is not strong enough to establish policy. You really do have to establish from a strict budgeting and procedural point of view. You have to establish the rules and regulations by which everyone has to govern the way procurement proceeds. It is the only way to create equality, and we all know this from history. Mr. Ballance. I am not a businessperson, but I guess I am an attorney. How do you find out about these contracts, Ms. Driscoll, and then what is your normal process? Ms. Driscoll. Well, how we normally find out about the contracts is I hang out at the Capitol Hill Club sometimes, and there are some people hanging out down there talking about what is going on. I find out more stuff down there than I do ever attending any meeting, in any department anywhere else, or hanging out at the Capitol Grill. Unfortunately, I find out about them in a bar. We do go after like for the border port security. We push and say look, this is really what we need to do. We have an initiative out there that Congress has said we are going to inspect our ports, and we are only doing two percent inspection across the board and so we go and push our equipment. We have had it tested and evaluated over the last five years, and Customs says it is great. Then we hear this initiative is coming out, and it is coming out, and it is coming out, and it is coming out. It never does. Actually, Customs offered us a contract to purchase an unlimited quantity of our equipment, and they have yet to fill any of those orders, even though they are taking down one of our machines in Miami to go use it in El Paso, Texas, for a test that is going on out there, but they are not putting anything back in the Port of Miami. The cargo that comes in, we can see through about 95 percent of most of the container ships that come through. BACKIS, which is the SAIC equipment, can only inspect about 40 percent of all the cargo, so I am asking you. You know, what are we supposed to do? When we are at the finish line, how do we cross? We have done everything we think we can possibly do. Mr. Ballance. I think you all heard the testimony of the earlier panel, and it is seemingly the President wants this to happen. They say they want it to happen, but, listening to the panel here, it is not happening. Mr. Lane, I was particularly interested in your testimony that you seem to have done everything you could do. What are you doing now? Is anything else left? Mr. Lane. We are continuing to make our phone calls. We are continuing to check the contracting Web sites on a day-to-day basis. The problem is there is no RFP out there. There is nothing out there that specifically indicates that they want an alert notification system. We are essentially a sole source contractor. We cannot even get an evaluation of the technology done by FEMA and by the people assigned to evaluate the technology, so we are kind of at a black hole. All we can do is continue to ask for your help, ask for the help of the people in FEMA, continue to make the phone calls, continue to write letters. Again, we are right at the finish line with no way to cross. Mr. Ballance. Yes, sir? Mr. Brink. This is a fundamental problem that companies developing new technologies have is they are essentially developing new technologies for applications which have not been conceived yet and so they are not going to be in RFQs, and they are probably not going to be developed in large organizations that just naturally have the access into the contracting offices, the development offices. The key is obviously to get in early. The problem with an organization like DHS is it is so disorganized. You do not know where to get in early. There is no mechanism to get in early to influence the RFQ, which is the way you win them. Ms. Driscoll. One of the things I also wanted to mention is that the majority of our business is done by me pushing our technologies on people. I have yet to win many contracts responding to an RFP. We give them a good idea and say we really think this is going to work, and we really think you have a need for it. I convince them until they believe they have a need for it to get most of my business. Mr. Ballance. What about this economies of scale issue? Does anybody have any comments on what that means? Yes, sir, Mr. May? Mr. May. Well, I think what that means is that particularly the Department of Homeland Security and TSA has been relying a tremendous amount on the large scale systems integrators, and I guess they are the economies of scale. If you are going to have an opportunity to do business there, you have to deal with those folks rather than directly with the federal government in order to get business. Ms. Sabety. But regarding the economies of scale, I tried desperately--I am in the same boat here as all of us on the panel--doing everything we can to kind of push the capability that we know is needed and has already been defined notionally out there. I have actually approached the large integrators, these economies of scale, and their comment back to me is we have so many small businesses on our list. We do not have enough business for them, so you will have to get to the back of the line. That is one comment. The second is that we find that these shall we call them the large economies of scale are already contracted in TSA and in DHS, and they are giving advice and counsel on how contracts should be defined, how requirements should be defined, who are the likely types of technologies that should be short listed. We all understand how that system works because if they are the ones who are whispering in the ears it makes it a lot harder for folks like us to be able to come in with either a fresh idea or a new technology that they may not have thought of, so there are really two aspects of this large economy of scale that is running against the opportunities for small business. Mr. Brink. Also, I think clearly that is what is going on, but looking at it from the other point of view the problem with the traditional suppliers supplying technology to DHS is that we are dealing with a new and different kind of threat, and if those people who have been thinking about how to deal with the old threat are the suppliers and the only ones thinking the problem, new and innovative solutions dealing with terrorism and these new threats are not going to be brought to bear, and it will affect the security of the nation. Mr. Ballance. Well, I think someone said, and I can tell you, that you will find this Committee and our Subcommittee chairman here and our full Committee chairman and all of us very concerned about this issue. I will give up here and quit, but if there is any one suggestion that anyone has left, I would be glad to hear that. Chairman Graves. Do we have anybody here from Mr. Boshears' office representing Mr. Boshears' office or Mr. Barrera? [Responds Yes.] Chairman Graves. Thank you. I do have one final question out of curiosity. Many of us as Members of Congress conduct procurement conferences. Have any of you ever participated in any of those? I would be curious as to how effective they are. I would love to hear from each of you on that too because we are always trying to make ours better, make it work in trying to bring people or businesses in contact with those who are hopefully looking for technology or making those decisions, but in many cases we do not know if it is effective. We need guidance and suggestions on how far we need to go too, so all of you who have participated, and, Ms. Driscoll, we will go ahead and start with you. Ms. Driscoll. I really hate to tell you this, but they are not effective. We are tired to going to a lot of these conferences, and we are tired of going and showing our goods because I think the integrators come into appease you. They smile and they politely nod, and then that is the last we ever hear of them ever again. We do not need any more conferences. What we need really is we need what is going on at the Department of Energy where the Small Business Office is actually looking at the big bundled contracts, and they identify the small businesses here that are capable to do part of that contract. They go and fight to break it out. That has been how we have been best helped, and I really think that you should push the Departments to start doing that and start having conferences of your own where you invite the offices, and you get them to start fighting for us at the Department level. That is what would be most effective for me. Mr. Lane. Unfortunately, I would agree. Mr. Brink. I would agree. Mr. Lane. They simply pat you on the head and say this is nice. How do you do it so we can steal it. Ms. Driscoll. Yes. Mr. Brink. Although congressional intervention has clearly caused things to happen. Ms. Driscoll. Yes. Mr. Brink. The pilot program that I mentioned in St. Louis was caused by our two Missouri Senators and by Representative Akin, and that is what made it get started. Clearly, your intervention makes a difference. Now, it should not have to be that way, but it does make a big difference. Ms. Sabety. I was only going to add one other point, which is that I am used to a businesslike way of doing business. I am not used to having to go through all of these hurdles to try and get an audience before a good idea is given any airtime, and then by the time it is given airtime it is either taken by a large company or it is too late. I am used to businesslike ways and business processes, so to Patricia's point if the IT organization recognizes that there is a need then the IT organization ought to be given the opportunity to look at any new technologies that come their way and be able to set up pilots so that if the only hurdle is that you are a small company and you are unproven then they ought to be given the opportunity to set up pilots so that the technology or the company can be proven. That is how corporations work. Mr. Lane. I would agree. I have a list of at least 10 different local governments who are dying to have this technology implemented immediately. They want the technology. They have looked at the technology. They are willing to take the chance. They do not have the funds, and the block grants that are coming down there nobody knows how to access, and they are not necessarily designed for new technology. They are designed for things, for products. They do not know how to access them with the block grants, and they do not know how to implement this technology using their contacts. I think we could have several pilot programs up and running immediately if we they were given some sort of funding to do it. Chairman Graves. Thank you all. I appreciate you being here. I want to encourage you to add in your book of resources the Small Business Committee because I know Ranking Member Velazquez and Chairman Manzullo, as well as the Subcommittees, Ranking Member Ballance and myself, are very committed to making sure that small businesses can compete and trying to level this playing field. Please use the Small Business Committee whenever you can and use it as a resource because this is an important issue to all of us or we would not be on this Committee. I thank you all for coming in and your testimony. It was very, very enlightening. We obviously have a lot of work to do. Thank you. 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