[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
DOING BUSINESS WITH THE GOVERNMENT: THE RECORD AND GOALS FOR SMALL,
MINORITY, AND DISADVANTAGED BUSINESSES
=======================================================================
(110-105)
HEARING
BEFORE THE
SUBCOMMITTEE ON
ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
MARCH 6, 2008
__________
Printed for the use of the
Committee on Transportation and Infrastructure
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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
JAMES L. OBERSTAR, Minnesota, Chairman
NICK J. RAHALL, II, West Virginia, JOHN L. MICA, Florida
Vice Chair DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of JOHN J. DUNCAN, Jr., Tennessee
Columbia WAYNE T. GILCHREST, Maryland
JERROLD NADLER, New York VERNON J. EHLERS, Michigan
CORRINE BROWN, Florida STEVEN C. LaTOURETTE, Ohio
BOB FILNER, California FRANK A. LoBIONDO, New Jersey
EDDIE BERNICE JOHNSON, Texas JERRY MORAN, Kansas
GENE TAYLOR, Mississippi GARY G. MILLER, California
ELIJAH E. CUMMINGS, Maryland ROBIN HAYES, North Carolina
ELLEN O. TAUSCHER, California HENRY E. BROWN, Jr., South
LEONARD L. BOSWELL, Iowa Carolina
TIM HOLDEN, Pennsylvania TIMOTHY V. JOHNSON, Illinois
BRIAN BAIRD, Washington TODD RUSSELL PLATTS, Pennsylvania
RICK LARSEN, Washington SAM GRAVES, Missouri
MICHAEL E. CAPUANO, Massachusetts BILL SHUSTER, Pennsylvania
TIMOTHY H. BISHOP, New York JOHN BOOZMAN, Arkansas
MICHAEL H. MICHAUD, Maine SHELLEY MOORE CAPITO, West
BRIAN HIGGINS, New York Virginia
RUSS CARNAHAN, Missouri JIM GERLACH, Pennsylvania
JOHN T. SALAZAR, Colorado MARIO DIAZ-BALART, Florida
GRACE F. NAPOLITANO, California CHARLES W. DENT, Pennsylvania
DANIEL LIPINSKI, Illinois TED POE, Texas
DORIS O. MATSUI, California DAVID G. REICHERT, Washington
NICK LAMPSON, Texas CONNIE MACK, Florida
ZACHARY T. SPACE, Ohio JOHN R. `RANDY' KUHL, Jr., New
MAZIE K. HIRONO, Hawaii York
BRUCE L. BRALEY, Iowa LYNN A WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania CHARLES W. BOUSTANY, Jr.,
TIMOTHY J. WALZ, Minnesota Louisiana
HEATH SHULER, North Carolina JEAN SCHMIDT, Ohio
MICHAEL A. ARCURI, New York CANDICE S. MILLER, Michigan
HARRY E. MITCHELL, Arizona THELMA D. DRAKE, Virginia
CHRISTOPHER P. CARNEY, Pennsylvania MARY FALLIN, Oklahoma
JOHN J. HALL, New York VERN BUCHANAN, Florida
STEVE KAGEN, Wisconsin ROBERT E. LATTA, Ohio
STEVE COHEN, Tennessee
JERRY McNERNEY, California
LAURA A. RICHARDSON, California
VACANCY
(ii)
Subcommittee on Economic Development, Public Buildings, and Emergency
Management
ELEANOR HOLMES NORTON, District of Columbia, Chairwoman
MICHAEL H. MICHAUD, Maine SAM GRAVES, Missouri
JASON ALTMIRE, Pennsylvania BILL SHUSTER, Pennsylvania
MICHAEL A. ARCURI, New York SHELLEY MOORE CAPITO, West
CHRISTOPHER P. CARNEY, Virginia
Pennsylvania, Vice Chair CHARLES W. DENT, Pennsylvania
TIMOTHY J. WALZ, Minnesota JOHN R. `RANDY' KUHL, Jr., New
STEVE COHEN, Tennessee York
JAMES L. OBERSTAR, Minnesota JOHN L. MICA, Florida
(Ex Officio) (Ex Officio)
(iii)
CONTENTS
Page
Summary of Subject Matter........................................ vi
TESTIMONY
Ayers, Stephen, Acting Architect of the Capitol.................. 3
Giordano, Catherine, President/CEO, Knowledge Information
Solutions, Inc................................................. 3
Marshall, Era, Director, Office of Equal Employment and Minority
Affairs, Smithsonian Institution............................... 3
Mosier, Roger, Vice President, John F. Kennedy Center for the
Performing Arts................................................ 3
Rigas, Michael J., Deputy Associate Administrator, Office of
Small Business Utilization, General Services Administration.... 3
Rouse, Terrie, Chief Executive Officer for Visitor Services,
Capitol Visitor Center......................................... 3
Sligh, Albert, Director, Office of Management, Federal Emergency
Management Agency.............................................. 3
Smith, Dennis C., Small Business Coordinator, Capitol City
Associates, Inc................................................ 3
Stephenwoof, Rosalind Styles, President, National Association of
Minority Contractors, Washington, D.C. Metro Chapter........... 3
Zingeser, Joel, Associated General Contractors of America........ 3
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Altmire, Hon. Jason, of Pennsylvania............................. 42
Oberstar, Hon. James L., of Minnesota............................ 43
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Ayers, Stephen T................................................. 44
Giordano, Catherine.............................................. 48
Kaiser, Michael.................................................. 54
Marshall, Era.................................................... 57
Rigas, Michael J................................................. 62
Rouse, Terrie S.................................................. 67
Sligh, Al........................................................ 69
Smith, Dennis C.................................................. 86
Stephenwoof, Rosalind Styles..................................... 90
Zingeser, Joel P................................................. 93
SUBMISSIONS FOR THE RECORD
Sligh, Albert, Director, Office of Management, Federal Emergency
Management Agency, responses to questions from the Subcommittee 83
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
HEARING ON DOING BUSINESS WITH THE GOVERNMENT: THE RECORD AND GOALS FOR
SMALL, MINORITY, AND DISADVANTAGED BUSINESSES
----------
Thursday, March 6, 2008
House of Representatives
Committee on Transportation and Infrastructure,
Subcommittee on Economic Development, Public Buildings, and
Emergency Management,
Washington, DC.
The Subcommittee met, pursuant to call, at 11:06 a.m., in
Room 2253, Rayburn House Office Building, the Honorable Eleanor
Holmes Norton [Chairwoman of the Subcommittee] presiding.
Ms. Norton. We were waiting for the Ranking Member, but he
graciously indicated that we should go ahead. We will be
pleased to hear his opening statement when he comes.
The Subcommittee is very pleased to welcome our witnesses
today. We look forward to learning from the testimony about
small business participants concerning their experience in
contracting with the Federal Government and equally from the
testimony of agencies within the jurisdiction of this
Subcommittee about their goals and accomplishments for small
business and for minority, women-owned, and disadvantaged
businesses.
Small businesses are central to today's economy. The
Federal Government is the largest small business contractor
and, therefore, has a special obligation to this indispensable
economic sector. The roughly 25 million small businesses in the
United States account for fully 50 percent of the Nation's
private non-farm national product; however, they receive only
20 percent of Federal contracts. Women make up 30 percent of
the small business owners nationally, but receive only 3.4
percent of Federal contracts. Minorities are 18 percent of
small business owners nationally, but receive only 6.8 percent
of Federal contracts. Service-impaired veterans face the worst
odds of all, with only .87 percent of Federal dollars going to
their firms.
I do not suggest that all of these small businesses should,
would even desire, or would be qualified to do business with
the Federal Government, or that rigid statistical parity is the
goal. However, the Government fell $12 billion short of meeting
its own modest contracting goals for small businesses. Yet,
small businesses are responsible for the lion's share of new
jobs. Because most of the jobs created by small businesses
remain in this Country, their formidable job creation power has
premium value for our economy and the American people.
Moreover, considering increasing predictions for recession
today, Federal procurement and contracting become even more
important for small businesses.
For almost 50 years, it has been the policy of the Federal
Government to encourage the participation of small businesses
in Federal procurement and contracting. The Small Business Act
requires an affirmative Federal policy of doing business with
small businesses--and I am quoting--``in order to preserve free
competitive enterprise, ensure that a fair portion of the total
purchases and contracts for supplies and services for the
Government is placed with small businesses, and maintain and
strengthen the overall economy of the Nation.''
For minority-and women-owned businesses, there is an
additional 14th Amendment constitutional obligation carried out
in Federal law by Title VI of the 1964 Civil Rights Act. In
Fullilove v. Klutz, the Supreme Court found that Congress had
the authority to remediate historic discrimination in
contracting through--and I am quoting from the decision by
Justice Berger--``prospective elimination of ... barriers ...
to public contracting opportunities.'' These statutes have been
carried out in several ways, including targeting Federal
procurement contracts and subcontracts for small businesses,
management and technical grants, educational and training
support, and surety bond assistance.
It may be that insufficient agency-by-agency oversight
contributes to the deficiencies in Federal small business
contracting and procurement. The Small Business Administration
does do oversight, but there has been little Congressional
oversight to hold individual agencies accountable in
implementing the small business practices of the Federal
Government.
At this hearing, we are trying to do our due diligence and
help provide that accountability as a Subcommittee. The
agencies before us today have submitted information to our
Subcommittee that indicates that they have endeavored to meet
the mandate required by Federal law. Three of the agencies--the
Architect of the Capitol, the Smithsonian Institution, and the
John F. Kennedy Performing Arts Center--technically are not
covered by the Small Business Act but have voluntarily chosen
to abide by the law.
We look forward to hearing from all the Federal agencies
for which we perform oversight: the General Services
Administration, the Federal Emergency Management Agency, the
Architect of the Capitol, the Capitol Visitors Center, the
Smithsonian, and the John F. Kennedy Performing Arts Center. We
thank our small business representatives as well: the National
Association of Minority Contractors; Capital City Associates;
the Associated General Contractors of America; and Catherine
Giordano, CEO of Knowledge Information Solutions.
We are prepared to hear from the first witness. I suppose
we should go from left to right. It doesn't matter. But I will
remind everyone to please turn off your phones and BlackBerries
during a hearing in the House of Representatives.
Ms. Stephenwoof, would you like to begin?
TESTIMONY OF ROSALIND STYLES STEPHENWOOF, PRESIDENT, NATIONAL
ASSOCIATION OF MINORITY CONTRACTORS, WASHINGTON, D.C. METRO
CHAPTER; DENNIS C. SMITH, SMALL BUSINESS COORDINATOR, CAPITOL
CITY ASSOCIATES, INC.; JOEL ZINGESER, ASSOCIATED GENERAL
CONTRACTORS OF AMERICA; CATHERINE GIORDANO, PRESIDENT/CEO,
KNOWLEDGE INFORMATION SOLUTIONS, INC.; ALBERT SLIGH, DIRECTOR,
OFFICE OF MANAGEMENT, FEDERAL EMERGENCY MANAGEMENT AGENCY;
MICHAEL J. RIGAS, DEPUTY ASSOCIATE ADMINISTRATOR, OFFICE OF
SMALL BUSINESS UTILIZATION, GENERAL SERVICES ADMINISTRATION;
ERA MARSHALL, DIRECTOR, OFFICE OF EQUAL EMPLOYMENT AND MINORITY
AFFAIRS, SMITHSONIAN INSTITUTION; ROGER MOSIER, VICE PRESIDENT,
JOHN F. KENNEDY CENTER FOR THE PERFORMING ARTS; STEPHEN AYERS,
ACTING ARCHITECT OF THE CAPITOL; AND TERRIE ROUSE, CHIEF
EXECUTIVE OFFICER FOR VISITOR SERVICES, CAPITOL VISITOR CENTER
Ms. Stephenwoof. Congresswoman Norton and esteemed Members
of the Subcommittee on Economic Development, Public Buildings,
and Emergency Management----
Ms. Norton. Could I just indicate to you that your entire--
to all of you who are testifying, your entire statement will be
received in the record, so you should try to keep that in mind
when giving your testimony so we will have time for everyone.
We do our have our very important witnesses, as well, from the
agencies.
Ms. Stephenwoof?
Ms. Stephenwoof. I wish to express my sincere appreciation
for the opportunity to appear before you today to discuss Doing
Business with the Government: The Record and Goals for Small,
Minority and Disadvantaged Businesses. I currently serve as the
President of the Washington, D.C. Chapter and member of the
National Board of Directors of the National Association of
Minority Contractors.
NAMC was established in 1959 to address the needs and
concerns of minority contractors and to create parity in the
construction industry. We have aggressively pursued equity and
contracting for small, minority, and disadvantaged businesses,
and attempted to create venues to review the procedures in
place with the Federal Government, local governments, and
private sector. One of our primary objectives is to
continuously seek legislative action of minority business
issues to advocate for change in laws that hinder minority
businesses access to, or prevent minority business growth in
the Nation's $400+ billion a year construction industry.
In March 2006, the Washington, D.C. chapter hosted the Base
Realignment and Closure Tri-Service Industry Outreach Forum to
provide information to small and minority businesses for
bidding on the 5-year $7 billion military construction workload
contracts for the United States Army Corps of Engineers, the
Navy, and the Air Force. The forum created a venue for small
businesses, minority businesses, 8(a), HubZone, women-owned,
and veteran-owned businesses to identify opportunities for
joint ventures, partnerships, contracting and subcontracting
prior to bidding period. These venues have created
opportunities for non-traditional dialogue between the Federal
Government, prime contractors and subcontractors exclusively
for recruiting small and minority businesses for inclusion on
teams for bidding. We propose and recommend similar forums to
be conducted throughout the Federal Government to increase the
level of small and minority business participation.
NAMC has also met with the U.S. Department of commerce's
Minority Business Development Agency, whose mission statement
includes that it was designed to empower minority business
enterprises for the purpose of wealth creation; to achieve
entrepreneurial parity for MBEs by actively promoting their
ability to grow and compete in the global economy and
challenges faced by MBEs for developing programs that provide
the keys to entrepreneurial success.
However, the measurable success of its programs and
services are not available. The State of Minority Business
Enterprises Report issued in 2006, an overview of the 2002
survey of business owners, indicated a great disparity of the
average gross receipts of minority firms, which was $162,000,
considerably lower than the $448,000 average gross receipts of
non-minority firms. It also indicated that during the reporting
period gross receipts of MBEs decreased by 16 percent, and over
the same period of time the average gross receipts of non-
minority firms remained level. Again, it is imperative that a
recent measure of the success of MBE programs should be
tantamount to the Federal Government agencies dedicated to
servicing MBEs and should include economic indicators of MBE
business success with the Federal Government itself.
NAMC is also working in partnership with the Associated
General Contractors of America and with the U.S. Department of
Transportation to create a Disadvantaged Business Enterprise
Contractors' Tool Kit, which is meant to be a practical guide
in establishing a contractor's DBE compliance program as
implemented by the State and local governments where they work.
The Tool Kit provides information ranging from getting started
to assessing one's performance in meeting its own program. NAMC
recommends this Committee review the model and consideration
for expansion to its oversight agencies.
NAMC sits on the MBE Advisory Committee established by the
Washington Area Sanitation Commission to review proposed
legislation by the State of Maryland for the establishment of a
minority business utilization program. The Committee prepared
and submitted comments on the proposed legislation and
Commission's proposed Standard Operating Procedures for the MBE
Program. Again, NAMC suggests the establishment of an SBE/MBE
Advisory Committee which can assist in the assessment of
existing programs and recommendations for improvement or
implementation of an MBE program within your agency.
In conclusion, NAMC recommends the Subcommittee on Economic
Development, Public Buildings, and Emergency Management
consider the following: establishment of an MBE Advisory
Committee to review the existing MBE program, its effectiveness
and measure of its success; two, conduct a study of the
existing MBE programs by each Federal agencies and its
effectiveness; three, host targeted forums created by Federal
agencies to reach the small and minority community, and follow
up with reports of their success; and, lastly, conduct
extensive monitoring and reporting of small and minority
business participation and publish its findings which include
recommendations for penalties for non-compliance.
NAMC stands ready to assist with the further pursuit of
your desire to increase the level of participation of small and
minority businesses with the Federal Government. And that ends
my presentation.
Ms. Norton. Ms. Stephenwoof, we will reserve questions
until the end of all four of the panelists.
We go to the next person to your right, Mr. Dennis Smith,
Small Business Coordinator, Capitol City Associates, Inc.
Mr. Smith. Thank you, Madam Chair. It is indeed a pleasure
for me to be here this morning.
In Capitol City I am a small business outreach coordinator.
There, I work with the BRAC project in finding small
businesses. I make this introduction to say to that as a result
of being out in the community, working with many of the
different businesses, they oftentimes call me with respect to
small business issues. So what I am conveying to you today is
oftentimes some of the comments that I receive from businesses;
and conveying some of the advice that I oftentimes give to
businesses with respect to some of the issues that they find.
Ms. Norton. And that is where our interest lies.
Mr. Smith. That is right, yes. So I would like to move
directly, then, to, once again, my background. I just recently
left the Missile Defense Agency, program manager at their small
business office. They moved to Huntsville, Alabama as a result
of BRAC, and I decided to stay here in the Washington, D.C.
area.
There, at the Missile Defense Agency, there is about a $4.2
billion procurement budget. Of that procurement budget, 85 to
90 percent of that went to five companies; and I find that that
rate there is in fact a trend that you kind of see in Federal
Government procurement today. And I want to move from there
right to my points that I am making.
Let's take, for instance, a current solicitation that is on
the street now with AOC, the Architect of the Capitol. It is
currently advertising in solicitation notice RFP060085 facility
support services. AOC is soliciting for housekeeping,
landscaping, snow removal, pest control, elevator, lift
maintenance, and other services as necessary. The solicitation
says the resulting firm fixed price contract will be awarded to
one contractor.
In FAR 2.101, bundling is described as the consolidation of
two or more requirement previously provided or performed under
separate small contracts into a solicitation of offers for a
single contract that is unlikely to be suitable for award to a
small business concern. There is a need here to challenge the
acquisition plan. I would be very curious to see the
acquisition plan prepared by the contracting officer. Each
contracting officer should prepare an acquisition plan in
accordance with FAR 7.105.
This is just one example of what we, as small businesses,
are up against. Were there alternative strategies that would
reduce or minimize the scope of bundling here, or what was the
rationale for not choosing alternatives? This right here, this
question is asked during the acquisition plan and FAR 7.107,
the contracting officer should have asked himself or herself
this question.
As a business person, should I complain as I look at this
particular solicitation out on the street? Should I complain as
a landscaping company to say, I cannot get a part of this
solicitation? Well, the complaint really should be at the PCR,
the Procurement Center Representative. I heard you say
something about SBA doing its job.
Ms. Norton. I said they did some oversight, unlike the rest
of the committees.
Mr. Smith. Section 125 of 13 C.F.R. states that the duties
of the PCR, the PCR should be coordinating with the small
business specialists on anticipated bundled contracts. Are they
performing their duties? The PCR should ensure that they are
necessary and unjustified bundling of contracts is avoided;
assess impediments to small business primes.
AOC's current acquisition is not an isolated bundled
solicitation. I would compliment AOC in sending out their
forecasts and sending out their notices, because everyone knows
the Fed Bus Op is a farce. So AOC does a good job in sending
out their notices to businesses if you subscribe there. But
this is just one of many bundled contracts that I have seen
come out of AOC this year or over the past year, say, fiscal
year.
Another small business impediment is subcontracting. One of
the procurement vehicles that the government personnel
recommends to small businesses, they say, oh, you should go and
subcontract. Go talk to Boeing, go talk to Northrop Grumman.
That is a nightmare by itself. But without going there, being a
subcontractor to one of the large contractors is a very
challenging task, but in the construction arena it is even that
more difficult. And I want to talk about the construction arena
because I am working on a BRAC project and I want to be
specific to that.
In accordance with FAR 19.7, a solicitation offer that is
expected to exceed, in the case of construction, $1 million--in
the case of non-construction it is $550,000--must present a
subcontracting plan. In construction, the plan is too often a
generic reiteration of a good faith effort that is verbatimly
coming out of FAR itself. A prime contractor, when responding
to a solicitation, often details their team. When they submit
their solicitation, their proposal, they submit a proposal that
will highlight who their mechanical is, who their electrical
company is.
But they should also include in there who their minority
prime is. Not all, but some. I am not asking them to buy down
the entire job at that time, but describing the way to do this,
they should be encouraged by way of evaluation criteria. So to
specifically identify two or more small business partners in
the submittal of their solicitation.
I can detail that and walk any of your staff through that
point, if I could. I was a director of a small business in
Prince George's County, minority business office. I have worked
as outreach manager at EPA and, as I said, I worked at the
Missile Defense Agency. So I have been through the gamut of all
of these different institutions or government entities, so I
know specifically that it is possible to happen.
Once the plan is submitted, the Government then tells the
prime contractor that they should report twice a year. So, in
construction, they report twice a year in what is called a 294
and a 295. The 294 and 295 is currently being replaced by the
electronic subcontracting reporting system. It is the
individual subcontracting plan and the summary subcontracting
plan. And in reporting twice a year in construction is just
grossly inadequate.
No one should report twice a year. Under 49 C.F.R. Part 26,
what DOT says to the States is that there should be a monthly
report. So in the State jurisdiction we have a monthly report
that we have to do. In construction, if you make a guy have to
report once every six months, between Division 01 work and
Division 04 work, it has all been done. So from setting up the
fence to temporary electrical work under Division 01 to
Division 04 masonry work, it has all been completed by then. So
there needs to be some accountability and some understanding as
to how the industry operates. So this right here is impractical
if we have a reporting method twice a year in construction.
Very much so impractical.
The Office of Small Disadvantaged Business Utilization
offers many remedies to small business concerns in order to do
business with the Government. One of the remedies that you will
hear from some of the OSDBU offices is that, well, small
businesses, they need to do intelligence, they need to gather
information. There is nothing more hostile than trying to go
into a government office and to try to find some information.
The thing is, though, is that what you have--and you have,
in FAR Part 10 describes how the contracting officer should be
conducting market research. So you have this information
already. If the contracting officer did the market research,
then you would wind up having information that would be going
out to the small businesses. But let me be more specific, go
back a little.
In the OSDBU office, the director of the OSDBU office
should have a direct relationship with the secretary of the
agency or the under secretary. If that right there was
enforced, then the OSDBU director would be saying to the agency
heads, I want you, on a monthly basis, to come and to give the
public a pronouncement as to what you were doing. If the public
understood what the agency was doing, where they were going,
the small business would in fact receive intelligence, would be
able to do their research and have an understanding as to what
the government agency was going to procure or what the
government agency's mission was and where it was in fact going
over the next fiscal year or two.
The small businesses have an uphill battle when trying to
do business with the Federal Government, even when they are
awarded a contract. I had a contractor call me about a
contract. This was an 8(a) firm who won an award, so they
thought. The firm was told by ATEC, the U.S. Army Test and
Evaluation Command, they had been awarded, via GSA e-Buy--which
I am not as familiar with--a contract for $1.1 million. This
was an award to establish an asset management system. This was
in January of 2008.
Then they were told, the next day, oh, no, they had not won
the award. After they had been sent an e-mail and information,
the firm was saying to me that--firms are very scared to in
fact--or very afraid to complain, because they are afraid that
they in fact may be stopped the next time they go after a
solicitation. The award was made to Hewlett Packard instead.
The small business was intimidated by the tone and reference to
what they should do by the contracting officer or the COTAR.
In summary, it is declared policy of the Congress that the
Government should aid, counsel, assist, and protect insofar as
possible, the interest of small business concerns in order to
preserve free competitive enterprise, to ensure a fair
proportion of total purchases and contracts or subcontracts for
property and services for the Government, including, but not
limited to, contracts or subcontracts for maintenance, repair,
and construction, be placed with small business enterprises, to
ensure a fair proportion of the total sales of Government
property be made to such enterprises, and to maintain and
strengthen the overall economy of the Nation.
In accordance with Public Law 95-507, that stipulated that
it is the policy of Government to provide maximum practical
opportunities in its acquisitions to small businesses, small
disadvantaged businesses, and women-owned businesses. This
stipulation also extends to having the maximum practical
opportunity to participate as subcontractors in contracts
awarded by an executive agency. Let's make this legislation,
Public Law 95-507, a reality. Thank you.
Ms. Norton. Thank you, Mr. Smith.
Our Ranking Member, Mr. Graves, has come, and I would like
to ask if he has any opening remarks he would like to make.
Mr. Graves. Thank you, Madam Chair. I want to say that I
appreciate your holding this hearing today. I am looking
forward to hearing the rest of the testimony this morning on
small business contracting opportunities within the agencies.
This is a very important issue to me. As a Member of the
Small Business Committee also, I have been dedicated to
fighting for the rights of small business owners. Small
businesses play an essential role in our economy. In fact, they
represent more than 99 percent of all employers, employing 51
percent of private sector workers. Additionally, small
businesses are indispensable for job creation: they produce 60
percent to 80 percent of all new jobs.
Because of the vital role small businesses play in the
United States economy, it is important that we ensure that
small businesses can navigate the Federal bureaucracy. The
Federal Government should not discriminate against businesses
because of their size but, instead, should encourage
entrepreneurship. The Small Business Act directs the Federal
Government to protect the interest of small businesses in order
to preserve free and competitive enterprise, ensure that a fair
portion of Federal Government contracts are placed with small
businesses, and maintain and strengthen the overall economy of
this Nation.
However, many Government agencies are not achieving their
goal for contracting with small businesses, particularly as
prime contractors. I look forward to hearing whether the
agencies represented here today are meeting those contracting
goals and what programs they have in place to ensure that small
businesses have the opportunity to compete for Federal
Government contracts.
Additionally, I am concerned about the practice of
consolidating contracts, or contract bundling. This practice
limits the ability of small businesses to compete and
ultimately hurts the American taxpayer. Therefore, I ask for
all of our witnesses today to help our Nation's small
businesses by limiting within their agencies the bundling of
contracts for larger companies. Also, I strongly encourage all
of you to work to level the playing field for small businesses
by continuing efforts to increase small business
subcontracting, reduce contract bundling, obviously increase
transparency in contracting data, and approve access to Federal
procurement opportunities.
Again, Madam Chair, I appreciate the opportunity to give my
statement as a result of votes, and I very much appreciate this
hearing. This is something I have been interested in for a long
time.
Ms. Norton. Thank you very much. I am sure that your
background in the Small Business Committee will be central and
important to this hearing.
Mr. Joel Zingeser, Associated General Contractors of
America.
Mr. Zingeser. Thank you, Madam Chair and Mr. Graves,
Members of the Subcommittee. My name is Joel Zingeser, of
Grunley Construction, a local construction company here in the
Greater Washington area, where I lead the firm's strategic
planning, business development, and new technology programs,
including our efforts in sustainable design and construction,
and integrated project delivery opportunities.
For over 50 years, our firm has specialized in renovations,
restorations, and modernization of large-scale government and
commercial buildings, including office, laboratory, and
educational facilities. We have had the good fortune of working
in this building and appreciate all the opportunities we have
to work with the Federal Government. In addition, we have
constructed new facilities in addition to existing buildings
for both public and private sector clients.
On behalf of the Associated General Contractors of America,
we strongly support full and open competition for the many
contracts necessary to construct improvements to real property.
This includes competition among general contractors, specialty
contractors, suppliers, and service providers. Over the years,
it has been established that such competition energizes and
improves the construction industry to the benefit of the
industry as a whole and the Nation as a whole. As the
Subcommittee considers the changing Federal procurement
landscape, AGC offers the following points for consideration.
At this point, I would like to stand on the submitted
statement, discussing information about construction inflation,
reprogramming authority, and agency consistency. Given your
focus on small business and the involvement of small business,
I would like to highlight three particular areas in my written
statement.
Contract bundling. Contract bundling has been a concern in
the construction industry for several years. While there is no
definition of bundling, it appears that the consolidation of
various projects is occurring more frequently. Small contracts
are being bundled to result in large dollar solicitations that
small businesses are not able to compete for unless they
partner with large firms. While on the surface this may not
seem harmful, this practice can undermine the intent of the
small business program by allowing large business to obtain
work normally set aside for smaller firms. This confluence of
pressure is leaving many small firms with fewer opportunities
to grow in their own prime business area.
Rather than creating additional set-asides or goals, the
Congress should instead focus on how the existing programs can
be improved to increase opportunities for small firms. We
believe construction, as an industry, should be included in any
revised definitions of contract bundling, to ensure that these
consolidations are reviewed for potential negative impact on
existing small businesses.
A second point related to small business activity in our
industry is the Alaska Native contracting program. Over the
last few years, the volume of complaints AGC has received from
its members about the growing reliance of the use of Alaska
Native Corporations by Federal agencies as a contracting
vehicle to easily attain small business contracting goals
continues to increase. The fact of the matter is that, in
today's Federal contracting market, ANCs have extraordinary
special preferences that significantly reduce Federal
contracting opportunities for traditional small businesses.
Some ANCs have taken excessive advantage of their special
benefits to obtain multi-million dollar sole-source government
contracts. In April of 2006, the General Accountability Office
issued a report demonstrating how ANCs have been using the SBA
program, reporting that awards to ANCs went from $265 million
in fiscal year 2000 to $1.1 billion in fiscal year 2004; by
2005, ANC contracting dollars had more than doubled to $2.4
billion; and between fiscal year 2000 and 2004, 77 percent of
ANC contracts were sole-source awards.
The SBA must better track the growth of ANCs. While the GAO
report states that this program is fulfilling its purpose, it
is clear that the Government must improve its management and
oversight of the program. Congress should encourage agencies to
examine the impact that these preferences have had on other
disadvantaged groups and the overall effect of these awards to
the Federal market.
The third point I would like to touch upon is one that,
actually, I personally have been very, very committed to within
the AGC organization. Another major challenge that prime
contractors continue to face is the inability to report the
real total dollar amount of small business participation on
contracts. Currently, prime contractors are not allowed to
report subcontractor participation beyond the first tier
subcontractor. Allowing prime contractors to report the dollars
associated with small business participation below the first
tier is critical data not only to demonstrate a full
calculation of total subcontractor participation, but also to
provide additional incentive to those prime contractors that
achieve their subcontracting goals.
I would like to add to this that we do have the movement
away from the 294 and 295 forms to this electronic data system.
That system holds the promise of being able to dig down and get
in more real time real information about those second-and
third-tier subcontracts. Now, the reason that is important is
that it is critical to understand the construction industry
operates differently than many other industries. In fact, a
large contract for, say, $100 million, will go to
subcontractors in packages that in many cases a small business
cannot do at that first tier. But the real work, when you dig
down, you will find who is doing the work, and it is the
second-and third-tier subs under that contractor that is doing
the work.
For example, a large renovation project of $100 million
might have $30 million in mechanical work. When you look to see
who is really doing the mechanical work, you will find that the
second-and third-tier subs are small businesses. So the flow of
Federal dollars in the construction industry gets down to small
businesses much deeper than it is recorded and reported, and it
is because of this limitation of only being able to report at
the first tier level. I hope that registers.
In conclusion, thank you for the opportunity to provide our
views on working with the Federal market. We believe this
market offers tremendous opportunities for both construction
contractors and the Federal Government. AGC looks forward to
working with the Subcommittee on balancing the needs of the
Government and creating an environment in which construction
contractors can continue to work to improve the quality of
construction delivered to the owner, the Federal Government,
and ultimately the American taxpayer.
I would be happy to answer questions about any of the other
parts that I skipped over.
Ms. Norton. Thank you very much, Mr. .Zingeser.
We want to hear now from Catherine Giordano, who is the
President and CEO of Knowledge Information Solutions, Inc.
Ms. Giordano. Good morning, Chair Holmes Norton, Ranking
Member Graves, and other Members of the Subcommittee. My name
is Catherine Giordano. I am the CEO of Knowledge Information
Solutions, located in Virginia Beach, Virginia. I am a value-
added network integrator with a full range of products and
services to create, manage, and secure networks. We are an 8(a)
woman-owned firm.
I am appearing today on behalf of Women Impacting Public
Policy, a national bipartisan public policy organization
representing well over a half a million women and minorities in
business, including 45 associations that partner with us. Thank
you for holding this hearing and for inviting me to testify.
I would like to spend some time this morning talking about
my own experience with Federal contracting and then touch on
policies that affect all small businesses as they seek Federal
contracts. Let me say at the outset that while I have been very
successful in the Federal contracting arena, it has not been
without challenges.
In 2002, when I bought this company, its revenue was
roughly $9 million, and almost all of that was in the
commercial arena. I made a conscious decision to expand my
business by making a major component of that revenue Government
business. Since that time, my business has grown 20 percent
each year, with 90 percent of that revenue attributable to
government contracting.
One of the first steps we took was to get a GSA IT 70
schedule contract. We submitted our paperwork in October of
2002 and were awarded the contract in December of 2003. This
year-long delay cost millions of dollars of lost revenue to
KIS. We spent approximately $50,000 to get on the IT 70
schedule, on internal and external resources. This is not just
a problem specific to my company; many small businesses spend
significant dollars preparing the paperwork for getting on
schedule. I know Administrator Doan has made a big push to get
contracts awarded 30 days after businesses submit their
paperwork, and I applaud that effort.
It is important to note that a small business must also
maintain their schedule contract. We have spent approximately
$20,000 for contract updates for each Multiple Award Schedule
we hold. On that note, the time and effort for small businesses
spending on implementing changes to their schedule contracts
can be long and laborious: in some cases over a year.
KIS has found GSA Multiple Award Schedules redundant and
overlapping in categories of information technology delivery
services. Each Multiple Award Schedule holder, such as KIS,
must bid for each contract opportunity under the schedule,
which adds to the cost of bidding and proposal costs. In other
words, if you were awarded an 8(a) STARS contract, it only
means you can bid on opportunities that are assigned to that
contract; no business comes with the award. We estimate that we
have spent $850,000 on competitive bids on these schedules.
Needless to say, that is out of the reach of most small
businesses.
On a positive note, the 8(a) STARS contract has been good
for KIS. It is run by a professional team in Kansas City,
Missouri that practices rapid response and skilled contract
officers. My only regret is that it is not utilized as the
preferred GSA Multiple Award Schedule for small businesses.
Redundant GSA schedules offering the same services and products
force small businesses to participate in a number of schedules
rather than just one. Redundancy is not exclusive to GSA; every
agency has its own information technology services contract,
for which we must also compete.
Now let me turn to some policy issues that affect small
women-owned businesses. The most pressing issue is the SBA's
proposed rule on the women's procurement program, whose comment
period ends March 31 of 2008. Public Law 106-554, passed in
2000, established a women's procurement program because Federal
agencies did not meet their 5 percent women-owned contracting
goal. In fact, the Federal Government has never met the goal;
the highest number it has ever achieved is 3.4 percent.
The SBA studied the data for seven long years, only to
publish, on December 27 of 2007, an unsatisfactory proposed
rule: Women-Owned Small Business Federal Contract Assistance
Procedures.
The SBA chose the narrowest method of data analysis and
identified only four NAICS codes that will be subject to
restricted competition: cabinetmaking, engraving, other motor
vehicle dealers, and national security and international
affairs.
But there is another hurdle to clear before these limited
four categories can be eligible for set asides. An agency must
perform an internal audit of its past contracting actions to
show that it is rectifying past discriminatory contracting
practices before any contract can qualify for a set aside. By
requiring this additional finding of past discriminatory
practices by agency, we believe this proposed rule sets forth a
new legal standard which will be damaging not only to this
program, but potentially every women business enterprise in the
Country. Women Impacting Public Policy and its coalition
partners are asking the SBA to withdraw this rule. In addition,
many Members of the House and Senate have urged the SBA to
withdraw the rule, and we are grateful for their support.
There are other policies which affect the ability of women-
owned businesses to do business with the Government.
Consolidated contracts, also known as bundled contracts, hurt
small businesses. OMB reported in 2002 that for every $100
awarded on a bundled contract, there is a $33 decrease to small
businesses. A 2004 GAO report shows that Federal agencies are
confused over what constitutes contract bundling. We urge the
Subcommittee to clear up the confusion for the agencies.
WIPP continues to believe that if you list us, it is
important principle in subcontracting you must use us. Small
businesses spend thousands of dollars in staff resources to be
part of the subcontracting plan on a prime contractor's bid. We
believe prime contractors should utilize the small businesses
they include in their subcontracting plan unless the small
business could no longer meet the requirements. There should be
penalties assessed for violating the subcontracting plan.
The Federal Government's ability to meet small business
goals is far from impressive. According to SBA, fiscal year
2006 Federal contracting numbers show that only 7 of 24 Federal
agencies met the 23 percent small business goal. Additionally,
only 10 major agencies met 5 percent women-owned contracting
goals of 5 percent.
In conclusion, it is not impossible for small women-owned
businesses to be successful in Federal contracting. But our
success does not rest solely on the quality of our products and
services; Federal acquisition policy largely dictates if and
when we will be successful. The Congress and the Federal
agencies must work together to ensure that the policies they
enact and the paperwork they create do not shut out the ability
of women-owned businesses to succeed in the Federal
marketplace.
Thank you for your time.
Ms. Norton. Thank you, Ms. Giordano.
I want to thank all four of you. We had you come before our
agency witnesses. Sometimes the protocol for the opposite
because we would like them to respond to some of what they have
heard here. Could I just ask, across the panel, what agencies
have you personally or do you know personally of doing business
with the Federal Government? What agencies?
Ms. Stephenwoof. You mean that we work with specifically?
Right now we are working with, under the BRAC we are working
with the--I am sorry--okay, I am working with the U.S. Army
Corps of Engineers specifically at this time.
Ms. Norton. Mr. Smith, you mentioned the Missile Defense
agencies?
Mr. Smith. I was contracted as a program manager in their
small business office.
Ms. Norton. What other agencies in the Federal Government
are you familiar with?
Mr. Smith. That I work with? I work with EPA. As a
consultant, I have written proposals, successful proposals for
AOC.
Ms. Norton. Architect of the Capitol?
Mr. Smith. Yes. EPA. I work with the Army. I work with HUD.
I work with many of these agencies.
Ms. Norton. Mr. Zingeser, if you have done work in this
building, what agency were you working with to do that?
Mr. Zingeser. We are very, very fortunate to be working for
the Architect of the Capitol, the General Services
Administration, the Corps of Engineers, the NAFAC, and some
work for some other three-letter agencies.
Ms. Norton. I just want to put on the record your
experience across the board.
Ms. Giordano?
Ms. Giordano. We are privileged to hold a number of
contracts: GSA, NIH, all agencies within DOD. We also have the
FBI, Department of Justice, the Securities and Exchange
Commission, and several others.
Ms. Norton. So we have heard from witnesses that run the
gamut from construction to high tech, so we have a good cross
section here.
Ms. Stephenwoof, you indicated a forum, that a forum was
held by your organization.
Ms. Stephenwoof. Yes.
Ms. Norton. You say that you recommend targeted forums
created by Federal agencies to reach the small and minority
business community. I want to know if any of you have had any
experience with such forums or meetings that were called for
small businesses by any Federal agency.
Ms. Stephenwoof. I can start. This past fall----
Ms. Norton. I am not talking about--I am speaking largely
to the notion of intelligence, to the notions that Mr. Smith
raised about notices to business. I am trying to understand how
the small business community knows, except through in the
ordinary course of business like every business person, about
what kinds of business is available.
Mr. Zingeser. I can just say that, in our industry, all of
the agencies that I mentioned, perhaps with the exception of
AOC--I am not sure that they do or do not do this, but, in
general, GSA, the Corps of Engineers, NAFAC, they routinely
hold programs for small businesses to attend and we, as a large
business, attend those because it is very useful and helpful to
us to meet new small business representatives. An awful lot of
business cards get passed around; people get to know each
other. And then within the Greater Washington Area, which is
where we work, a number of the trade associations, in addition
to agency, but the real estate trade associations and so forth,
again, hold various meetings which encourage small business
participation.
Ms. Norton. So do you find that this leads to the kind of
information that helps various small businesses get work with
the Federal Government?
Mr. Zingeser. I would think so. The only other point I
would make is that most large general contractors themselves
have their own outreach programs, which are really required as
part of the FAR.
Ms. Norton. Yes, but you criticized at least the way in
which some records are kept. On page 4 of your testimony, Mr.
Zingeser, you say that prime contractors aren't allow to report
subcontractor participation beyond the first tier. The
implication is that some of the work beyond the immediate or
first tier subcontractor is in turn subcontracted. Is that what
you are saying?
Mr. Zingeser. Well, I definitely do not want to be
misunderstood. I believe that the SBA regulations that the
agencies must follow in scoring their small business programs
will not allow those agencies to reach down to the----
Ms. Norton. I am trying to find out--if in fact you think
that some of the business gets further subbed, as it were, what
is the reason that you believe the Government wouldn't want to
know that?
Mr. Zingeser. My point--let me make sure that I am clear.
My point is real simple. I think that the agencies that are
procuring construction are not doing all that bad a job in
trying to meet these goals. I think the issue is that, in
general, there are many more dollars that are truly flowing to
small businesses----
Ms. Norton. Mr. Zingeser, okay, I will take that point. Mr.
Smith says that twice a year--and you understand the
construction business the way he does--they have got to report
twice a year. I can't imagine, in these twice a year reports,
why they wouldn't want the Government to know, and by the way,
beyond the subcontracts that we have, we want you to know about
this, that, and the other and that the Government wouldn't want
to record those.
Ms. Stephenwoof. Well, if I could, I could speak to follow
up on what he was saying. The Government, under the FAR, when
they count the small business dollars, they only count the
first tier.
Ms. Norton. Well, that is what I know. I am trying to
understand if there is a lot more work going on out there, you
would think everybody would want that to be known.
Ms. Stephenwoof. Exactly.
Ms. Norton. So I know what you are testifying to. I am
trying to understand, from your point of view, assuming Mr.
Zingeser, who is in the business, is correct, why this wouldn't
come out and why the Government, who is always criticized for
its small business contracting work, wouldn't want to shout it
to the hilltops. I mean, I am really perplexed here.
Ms. Stephenwoof. That is a question we would like to have
an answer to.
Ms. Norton. Well, I can understand that in order to get the
contract you may have to indicate what your small businesses
are.
Are you saying, Mr. Zingeser, that perhaps they won't know
at that time that there are other subs that they will be using,
or would a good contractor know, by the time she submitted a
bid, that kind of information?
Mr. Zingeser. No, I think it is two different things you
are asking. When a job is bid is one thing, but when the job is
underway there were these forms that were paper forms that have
now been replaced by an electronic system. The potential of
that electronic system is that it will not be that difficult to
flush out and report up where those dollars are flowing below
the first tier.
Ms. Norton. Mr. Zingeser, I am asking you a question. I
don't know enough about the business. Should the contractor
know or should be required to indicate that she will be using
subs beyond the contractor or the subcontractor that is
reported initially to the Government, the first tier, as you
call them? Would the contractor already know that information?
Mr. Zingeser. The contractor will know, at the time of
award of a subcontract, generally where the dollars are going,
and can report that information. Your question is why isn't the
Government seeking that, and the answer is I believe that they
are not allowed to score that. They only are allowed to get the
information----
Ms. Norton. That is not the why; that is the what.
Mr. Zingeser. Okay.
Ms. Norton. And, you know, these figures become
controversial and they are really better than we know, then,
again, that is something that I will have to try to find out.
Before I do more questions, I want to ask Mr. Graves
whether he--so that is one of the things I am going to have to
find out, because if they are better than we know, we want to
know it.
Ms. Giordano, you have got to make me understand this new
rule, the narrowness of the rule and the choosing of cabinet--
identified four codes, cabinetmaking, engraving, motor vehicle
dealers, and national security and international affairs--and
these are codes to improve----
Ms. Giordano. That there are----
Ms. Norton.--to help to meet the 5 percent goal that they
have habitually----
Ms. Giordano. That is the narrowest----
Ms. Norton. What do you think is at work here choosing
these particular sectors or areas?
Ms. Giordano. My belief is that they chose the narrowest
form for the reluctance to implement the program from the
outset, and by selecting----
Ms. Norton. Well, why these particular areas--
cabinetmaking, engraving? Are there a lot of women in that that
help you meet the 5 percent goal? That is a lot of work that
the Government does there, is that it, and they need these
people?
Ms. Giordano. That is probably their rationale.
Ms. Norton. Motor vehicle dealers?
Ms. Giordano. Madam Chair, I can't speak to their
rationale. Oh, it is other motor vehicle dealers, which means
it is ATVs.
Ms. Norton. All right, well, we will have to try to discern
that too.
Ms. Giordano. I would appreciate your asking the question
to SBA, to be perfectly honest.
Ms. Norton. I thought maybe in the course of doing business
with them, in frustration with them----
Ms. Giordano. We are a certified----
Ms. Norton. Or that they had perhaps come forward at the
time of the rule with a rationale, since they are not before us
today.
Ms. Giordano. We have yet to see that rationale in an
explainable way.
Ms. Norton. Okay.
Mr. Smith, you indicate that 80 to 90 percent of the
Missile Defense contracts went to five companies. Couldn't this
be the nature of the work? I mean, it is pretty specialized
work, isn't it?
Mr. Smith. Oh, yes, it is specialized work, but 80----
Ms. Norton. Those were major companies. That doesn't go to
small--you are not speaking about small businesses, are you?
Mr. Smith. No. Major companies: Northrop Grumman, Boeing,
Lockheed.
Ms. Norton. Well, that is the nature of the work. How about
their record in small businesses, minority-and women-owned
businesses and the like? Once they get this, once these five
companies have the work, do they show, in your experience, were
they able, then, to have----
Mr. Smith. Subcontracting?
Ms. Norton. Yes, to meet subcontracting responsibilities.
Mr. Smith. Under DoD they have a comprehensive
subcontracting plan. It is a test program that DoD has that is
managed by DCMA, and under that particular plan it is very
difficult to decipher whether or not they have in fact met some
subcontracting codes.
Ms. Norton. Part of this is, you know, it is hard to even
find out what is happening, it seems to me, but let me ask you
about the AOC contract. That is pretty easy to figure out.
Mr. Smith. Yes, it is.
Ms. Norton. Now, here we have this new Visitors Center,
right? We are talking about the new Visitors Center, I suspect.
And they are looking for various support services. I got some
of them down: pest control. What else?
Mr. Smith. Housekeeping, landscaping, elevator, lift
maintenance. These are all under one contract. And they are
asking for a company to come in to manage the building and to,
in fact, have all of these services under their umbrella.
Ms. Norton. So you believe that the overall company that is
managing the business is going to have all of these services.
Do you believe these services, in turn, will be subcontracted
to small businesses?
Mr. Smith. No. I mean, the thing is----
Ms. Norton. Or do you think this is just a case of massive
bundling?
Mr. Smith. This is a case of massive bundling. I mean, the
thing is, ideally, I would not want to be a subcontractor. If I
am a landscape company, I want to come in and I want to have a
direct contract with you as the prime.
Ms. Norton. Why?
Mr. Smith. Why? Because I would rather negotiate with the
owner directly. That way I will have my 15 percent markup with
the owner. If I go in and negotiate with the prime contractor,
my markup is going to be brought down because he wants his
markup as well.
Ms. Norton. And, of course, that is the whole bundling
issue. Well, let me put it this way. One would assume that the
rationale for bundling would have been that the Government
thought it was going to save money by putting all these
contracts together. You know, the whole notion of putting
things together is always about the more you can put them
together, the less the cost in overhead to the Government,
perhaps; the less in the cost in the kind of bookkeeping that
the Government would have to do dealing landscaper by
landscaper, housekeeper by housekeeper. These things seem to me
to be very much unrelated.
Mr. Smith. Very much so.
Ms. Norton. Whether or not the Government could save a few
cents by putting them together, my question really goes to the
good faith of wanting to do contracting with the kinds of
businesses who would do this kind of business. Let's look at
the kind of business who would do it. Pest control. These are
small businesses. Sometimes they are minority-owned and women-
owned businesses, but we know that they are small businesses of
various kinds, unless you get some great big company that does
it. But you already have the big company because that is who
the prime is. In your view, does the bundling law contemplate
that the services will be related?
Mr. Smith. No, it does not. No. In this particular, the
Architect of the Capitol is seeking a building management
company that has experience in managing a facility itself, and
they have a particular software that they want this company to
in fact use. I am just suggesting that, fine, find your
building management company and the software, but you, AOC,
submit solicitations out for your landscape, for snow removal,
for housekeeping, janitorial service, for elevator and lift
maintenance service. Do that separately and place those
companies in under the general management of the facilities
management company. Don't have the facilities management
company go out and get these people and bring them in.
If I am going to negotiate, I would rather negotiate with
you, the Government. I know I can get paid in a relatively
reasonable time period. I know who I am working with. That is
who I want to go to.
Ms. Norton. What kinds of people are likely to end up, you
think, getting these pest control, housekeeping, etc.?
Mr. Smith. Well, the thing is what you wind up doing is in
terms of this resulting firm, firm fixed price will be awarded
to one contractor. This particular contractor is a large
property management firm that oftentimes they themselves may
perform some of this work themselves on some other private
facilities that they have. They have relationships with firms
in the private sector where they do this.
I have attempted, at one time--I think it was the Thurgood
Marshall Building, and they had a very similar solicitation
last year or the year before last, when it came out bundled as
such--to pull a team together to respond to this, where I went
to one of the large property management firms and said can I
pull a team together with you, and the property management firm
said, oh, we have looked at that before. And AOC uses a
particular firm that they generally use and they weren't
interested in putting forth the effort to go after
solicitations. But the small business firms then have to team
or find themselves with a large building management firm.
Ms. Norton. Ms. Giordano, your description of the Multiple
Award Schedule made me wonder the advantage of being on the
schedule in the first place. How has being on the schedule
helped you?
Ms. Giordano. Madam Chair, it is a license to hunt.
Ms. Norton. Well, it must save you something. You know, you
don't have to start from scratch, do you?
Ms. Giordano. It is a vehicle that the Government agencies
can utilize. Unfortunately, a number of DoD agencies will not
utilize the GSA schedule.
Ms. Norton. What do they use, then?
Ms. Giordano. They have their own. And I had to compete for
those as well, which are the exact same categories as all of
the IT schedules, or information technology products and
services schedules within GSA.
Ms. Norton. The Multiple Award Schedule should at least
limit the competition.
Ms. Giordano. It limits the competition to those schedule
holders. However, when a task----
Ms. Norton. And what number would that usually be?
Ms. Giordano. Thousands. And then what happens is those
thousands or multiples of thousands compete with that RFP that
has been issued under that particular Multiple Award Schedule,
so you are constantly doing bid and proposal preparation.
Ms. Norton. Ms. Stephenwoof, on page 2 of your testimony
you indicated what you say is a great disparity of the average
gross receipts of minority firms, $162,000, compared to
$448,000 of the average of non-minority firms. Would this have
something to do with the areas where minority firms are doing
business? What are the areas in which these minority firms
chiefly do business? Are they broad enough so that they could
be fairly compared to the non-minority firms? And what would
enable them to perhaps be broader?
Ms. Stephenwoof. Well, these statistics were reported by
the Department of Commerce's Minority Business Development
Agency, and I do have here the statistical breakdown by trade
and by jurisdiction. I do have that available.
Ms. Norton. What are the major trades or areas in which
these firms operate?
And for Ms. Giordano I would ask the same question. Are the
women-owned firms operating in a fairly narrow sphere or how
across-the-board have they become? When you see this huge
disparity between the 3.4 or whatever it is, they never even
come close to making the goal in the 5 percent.
Ms. Giordano. Our membership, Madam Chair, runs the gamut
from people who manufacture products for commercial and
Government use to the manufacturing of a nuclear fuse or
nuclear batteries to be utilized in sending missiles off,
ignition of missiles. There are a number of us who are
information technology-related corporations and, of course,
professional services. We run the gamut.
Now, if I may, the Rand study said that--that was the study
that was done for the SBA--that you could cut the data in any
way they chose from 87 percent of under-represented industries
or women-owned to zero, and they could be found under-
represented, so the SBA chose the four categories that were the
narrowest. They gave them options of how they would utilize
their information.
Ms. Norton. Could I know from you whether or not your
experience has been that the Federal Government has been
generally timely in processing and paying out invoices?
Ms. Giordano. I am 120 days in arrears with several
agencies within the Federal Government as we speak, Madam
Chair, which means----
Ms. Norton. I think the law says you people have to be paid
in 30 days, doesn't it?
Ms. Giordano. Yes, ma'am, that is correct. I am limited to
interest payment and----
Ms. Norton. What do you mean you are limited to interest
payment?
Ms. Giordano. Well, there is one, I believe it is 1.5
percent that I am only allowed to charge for late fee. We
usually charge 3 percent in the commercial environment. That is
the Federal late fee. I rarely get paid a late fee.
Ms. Norton. So you don't get the late fee.
Ms. Giordano. No, ma'am. It has been very, very rare. At
one point, three years ago, the Federal Government owed me--in
particular, the Department of Navy owed me--$4.3 million. It
took me nine months to collect. Being a small business in
business, providing services and products to the Government, my
products were deployed into the war zone, being utilized by the
military and, in fact, nine months later I got paid for it.
Mr. Graves. Owed you that in late fees or in products?
Ms. Giordano. Product delivered being utilized, whether it
was on ships or on the war fighters themselves. I was carrying
the payment for the Government; therefore, they were utilizing
the products that I had to pay for on my back.
Mr. Graves. How late was it?
Ms. Giordano. Nine months.
Mr. Graves. Nine months.
Ms. Stephenwoof. Okay, I do have the response available
now.
Ms. Norton. This is close to criminal. I don't know how
people stay in business. How do people stay in business? You
can understand how large companies. What do you do, borrow
because if you have a contract, they know that somehow the
Federal Government will one day pay it? How does that work?
Ms. Giordano. I am fortunate enough that I have a
commercial business sector that has been capable of sustaining
us, and we have very good customers----
Ms. Norton. But I thought you said 80 percent of your
contracts were Federal contracts.
Ms. Giordano. That is correct. I also have a banker who
believes in my company, and my home has been utilized as
collateral more than once and has secured the loan
requirements.
Ms. Norton. That is not a good thing these days, is it?
Ms. Giordano. But I still pay my employees.
Ms. Norton. Ms. Stephenwoof?
Ms. Stephenwoof. Yes. The first note that I wanted to make
sure that was made on the record is that I just found that
there is no current information about the report. It was
amazing to me that a Federal Government agency is still using
data from a 2002 survey and published the results in 2006, and
there is no new information that we can use as minority and
small businesses in terms of tracking and forecasting and
planning for our economic development initiatives. But in this
report it stated--you asked about the locations. The ranking
areas where there is a high percentage of minority firms. Our
Washington Metropolitan Area is not included.
Ms. Norton. No, I wasn't interested in, sorry, areas of the
Country; I was just trying to find sectors. These figures don't
mean much across the board. They will give us a starting point,
but unless we know that we are gradually seeing small
businesses in a number of areas where the Federal Government
does business, which, by the way, is a whole lot of areas--it
is almost every area, I guess, that the private sector does
business--then it is hard to know how to hold the particular
agency accountable.
Ms. Stephenwoof. But it is also reported by sector. But as
you are experiencing your frustration, we also experience our
frustration with getting information from the Government sector
in terms of, number one, their goals and the deliverables. We
can't find data that measures the success of the small business
contracting plan. They always talk about the goals, but the
data that gives you the statistical reporting of the success of
the goals and the listing of those companies that participated
is also our frustration, because, again, this report also
reports by sector, by trade, and where the minorities across
the board are participating and flourishing, and construction,
again, is one of the highest trades that is in the competitive
marketplace statistically, and the second being second only by
real estate, rental leasing, and the retail trade.
So the concern that we experience is the same thing that
you experience. We try to grasp where is the market, where are
the jobs, where is the business opportunity, and then it is
like quick silver; they say we have a 51 percent goal on this
project. And then you say, how do you propose to achieve it,
what is your measure of success. And they will say, well, we
try. And then you say, well, tell me what companies are you
using that have satisfied your requirements, and they say,
well, we don't have to report that. But then how do you measure
your success? You know, you can't be a stated measurement. They
can't be a statistical chart. It has to be some compliance.
Follow the dollars. Like he said, how many dollars are actually
paid to those businesses that have been identified as fitting
within those categories--small, disadvantaged, women-owned,
HubZone--those requirements. And those are the data that we try
to capture so, if there is a hole in that process, then we can
help to fill that void by creating some new opportunities or
some new measures for fitting those businesses within that
area. That is the frustration that we----
Ms. Norton. Thank you. I think the hole is not that they
don't know how to get it----
Ms. Stephenwoof. They don't want to report the activities
that they do when they don't----
Ms. Norton. Well, again, I don't think that the way in
which--if I could sort of close this panel, unless Mr. Graves,
our Ranking Member has--it is apparent to me that you can't
leave it to the Small Business Administration alone to look
agency-by-agency; it is too many agencies. It is too much
difference with agencies. The agencies under our jurisdiction
certainly engage in construction, on the one hand; and if you
look at FEMA, those contract are across the board in very
diverse areas of life.
But unless the Subcommittee takes an interest in the area,
I don't see how any umbrella Committee, which has overall
responsibility is going to keep track of--I don't know how many
Federal agencies there are who do work contract with small
businesses, but virtually every Federal agency does. So what we
are going to do is to take what we have heard from you and try
to use it to enable us to deal with the agencies over whom we
have some oversight.
I want to thank each of you for being our lead witnesses so
that we would have some understanding of how to move forward
and question the witnesses who come after you who are the
agency witnesses. Thank you very much for coming.
Panel two is Michael Rigas, Deputy Associtate Administrator
of the General Services Administration Office of Small Business
Utilization; Al Sligh, who is the Director of the Office of
Management at FEMA. We will be pleased to hear your testimony
at this time.
Welcome to both of you. Mr. Sligh, am I pronouncing your
name right?
Mr. Sligh. Yes, you are.
Ms. Norton. From GSA. Would you like to go first?
Mr. Sligh. Chairwoman Norton, Members of the Subcommittee,
thank you for the opportunity to appear before you today. My
written statement goes into great detail on how FEMA is
incorporating small, minority, and disadvantaged businesses in
its acquisition strategy, meeting its social economic
contracting goals, and engaging in the private sector across
FEMA'S critical mission areas: preparedness, protection,
response, recovery, and mitigation.
As you know, the first priority of FEMA during the initial
phase of a major disaster is and has always been to provide
relief to the victims in the most efficient and effective way
possible in order to save lives and property. FEMA'S goal is to
use competitive strategies while also providing local and
social economic businesses contracting opportunities whenever
possible.
I am proud to report that FEMA competed 81 percent of its
procurement dollars in fiscal year 2007. FEMA went from last
place within DHS for its competitive dollars in fiscal year
2006 to first place in fiscal year 2007.
Now let me address some our achievements in meeting social
economic goals. First and foremost, FEMA has recently dedicated
a full-time small business specialist whose primary
responsibility is to increase contracting opportunities for
small, minority, and disadvantaged businesses. This assignment
will further help institutionalize our small and minority
contracting efforts and help maintain a level playing field.
To date, FEMA has achieved exceptional results in meeting
and exceeding most of its social economic goals. From 2006 to
the present, FEMA has awarded $2.4 billion to small businesses.
In fiscal year 2006, FEMA awarded $1.8 billion to small
businesses. This amount represents approximately 27 percent of
the total procurement dollars awarded. In fiscal year 2007,
FEMA awarded $485 million to small businesses. This amount
represents approximately 33 percent of the agency's total
procurement dollar awarded that fiscal year, thus exceeding our
small business goal of 30 percent. Additionally, in fiscal year
2007, the agency exceeded the small, disadvantaged business
goal by approximately 12 percent, the 8(a) goal by
approximately 7 percent, and the HubZone goal by approximately
4 percent. During the same fiscal period, FEMA also exceeded
the women-owned business goal of 5 percent.
So far, in fiscal year 2008, FEMA is on target and has
awarded $83 million to small businesses. This represents
approximately 29 percent of the total procurement dollars
awarded so far this fiscal year.
The only category where FEMA needs improvement is service-
disabled veteran-owned small businesses. In fiscal year 2007,
FEMA was 1.1 percent below its goal. This shortfall is not
unique to the agency, but, rather, a common challenge that runs
across the Federal Government. The service-disabled veterans-
owned small business program is relatively new and is not yet
well known.
Nonetheless, it is worth noting that the small, minority,
and disadvantaged business investments made in fiscal year
2007, approximately 14 percent were for professional,
administrative, and management support services; approximately
13 percent were for utility and housekeeping services; and
approximately 10 percent were for information technology
services. Another 18 percent covers both maintenance, repair,
and alterations to real property, and the lease or rental of
facilities.
As the Committee considers how FEMA is working with small,
minority, and disadvantaged businesses in procurement, we urge
you to also take note of how we are engaging the private
sector, small and large, across the homeland security
landscape. With FEMA'S new structure and vision now in place,
the agency is aggressively pursuing new inroads with the
private sector and business community on various fronts to
build a stronger emergency management system such as: one,
standing up a new FEMA Private Sector Office; two, building new
and enhancing existing preparedness partnerships; three,
soliciting private sector participation in the development and
refinement of the National Response Framework and national
preparedness systems; four, creating stronger and more vibrant
public-private partnerships through programs and initiatives,
namely, Citizen Corps, Ready Business, and FEMA Aid Matrix, and
other national, regional, State, and local planning exercises
and training efforts. These efforts help to foster open lines
of communication with our homeland security partners in the
business and non-profit communities.
Increasingly, we are leveraging the resources and expertise
of our partners in the private and non-profit sectors, even
above and beyond the important roles they have always played in
the past. It is important, however, to give perspective on the
opportunity and challenge involved in effectively engaging the
private sector in emergency management. The magnitude and
complexity of business opportunities--with its varying needs,
capabilities, capacity--make coordination a daunting challenge
and will require a long-term effort.
FEMA, in any event, is up to the challenge. Through its
Private Sector Office, the agency is building a network with
non-government organizations, business and trade associations,
local, regional, and national chambers of commerce, and looking
to make significant progress in integrating the private sector
as a full partner in incident management.
We know the worst time to build relationships is during a
disaster. We are building them today. We are committed to
making the vision a reality. Thank you for the opportunity you
have afforded us today to speak about the new FEMA.
Ms. Norton. Thank you very much, Mr. Sligh.
Mr. Rigas, am I--Rigas?
Mr. Rigas. Rigas, yes.
Ms. Norton. Of GSA.
Mr. Rigas. Good morning. Thank you for the opportunity to
appear before you today to discuss doing business with the
Government and the General Services Administration's record and
goals for small, minority, and disadvantaged businesses. I am
Michael Rigas, Deputy Associate Administrator for Small
Business Utilization at the General Services Administration,
and I am pleased to be here this morning.
As the premier acquisition agency of the Federal
Government, GSA's mission is to help Federal agencies better
serve the public by offering, at best value, superior
workplaces, expert solutions, acquisition services, and
management policies.
GSA works hard to ensure that small businesses have ample
opportunities to compete in GSA procurements. We know that
small businesses are the engine of our national economy and
that they bring new and innovative solutions to Government
challenges, and that a successful and strong small business
community is integral to job creation, community empowerment,
and economic revitalization.
GSA works hard so that small businesses--including
disadvantaged, women-owned, HubZone, veteran-owned, and
service-disabled veteran-owned small businesses--have every
opportunity to participate in the Federal procurement process.
And as an agency we actually exceed the goals Congress has set.
The Small Business Act establishes, for Federal executive
agencies, an annual goal of awarding 23 percent of prime
contract dollars to small businesses. For GSA, this equated to
$1.25 billion in fiscal year 2006. In fiscal year 2006, GSA
spent over $1.7 billion, or 32 percent, of all prime contract
procurement dollars on small business. That impressive result
is 40 percent higher than the statutory goal and an increase of
13 percent over fiscal year 2005 level of $1.5 billion. We are
proud that we have surpassed the statutory goal.
Washington, D.C., being the home of our Federal Government,
is also home to many Federal buildings, of which GSA is the
steward. Our Public Building Service contracts for a wide
variety of services to support their mission of providing
superior workplaces for Federal customer agencies at good
economies to the American taxpayer. In fiscal year 2007, of the
more than $1.8 billion spent in these areas, over $692 million,
or 38 percent, were spent on contracts with small businesses.
In the National Capital Region of Washington, D.C., over $244
million has been spent by the Public Building Service on small
business, equaling a percentage of over 45 percent of all
procurement dollars spent by the Public Building Service going
to small businesses.
GSA has developed a number of outreach programs to heighten
awareness within the small business community of GSA
contracting opportunities. This includes small business fairs,
trade group seminars, targeted informational and educational
seminars, pre-award and post-award small business opportunity
fairs. These efforts have helped GSA to exceed its statutory
small business goals.
But the story of GSA's support for small business doesn't
end with our direct GSA contracting. GSA has a strong record of
supporting small business contracting through the Government-
wide acquisition contracts and through GSA's Multiple Award
Schedules Program.
The Schedules Program provides ordering activities with a
simplified procurement process whereby GSA establishes
contracts with firms for commercial products and services. It
offers Federal agencies a broad range of products and services
from private sector vendors and suppliers at fair and
reasonable prices that have been negotiated by GSA.
And I am happy to report that 80 percent of the companies
which hold GSA Schedules contracts are small businesses. In
fiscal year 2005, through the GSA Schedules Program, Federal
agencies awarded over $12 billion in Schedule orders to small
businesses. That amount increased to over $13 billion for
fiscal year 2006, which is approximately 37 percent of all
prime contracting Schedule spending Government-wide going to
small businesses.
The ordering procedures applicable to the Schedules Program
encourage ordering activities to consider and, where
applicable, give preference to small businesses. GSA's online
buying tool promotes increased access to the small business
community by allowing customers to tailor their searches
specifically for products and services provided by small,
minority, veteran-, and women-owned businesses. Contracting
officers ordering via the Schedules may make socioeconomic
status a primary evaluation factor when making a best value
determination.
Madam Chairwoman, as an agency, GSA's focus on small
business starts at the top. As one of the few Government agency
heads who was an entrepreneur, a former small and minority
business owner, and a Federal Government contractor,
Administrator Doan is our agency's biggest advocate for small
business. She knows from experience that starting a business is
hard, and that sustaining and growing a business is even
harder. She is the agency's biggest advocate for ensuring that
doing business with GSA is not one of those hardships.
Our Office of Small Business Utilization conducts hundreds
of outreach events a year across the Country for small
businesses to open doors to Federal contracting opportunities
for them. We conduct one-on-one counseling sessions to help
companies in understanding and participating in the Federal
procurement process; we attend procurement conferences to
conduct workshops that provide important information to small
business owners on how to do business with GSA; and we consult
with small businesses in person, over the phone, and by
answering the many questions that are submitted in e-mail and
letters.
Madam Chairwoman, GSA has a strong record of supporting
small businesses and small business contracting, and we pledge
to continually work to improve on our already impressive
performance record with regard to small business contracting. I
thank you for the opportunity to appear before you today, and I
would be happy to answer any questions you and other Members of
the Committee may have. Thank you.
Ms. Norton. Thank you very much.
Mr. Rigas, you or Mr. Sligh can perhaps clear up this issue
that I asked the panel about when it was alleged that there
were contractors who weren't being counted because you can't
count below the first tier. I am sure there must be a good
reason for that. And apparently the Post-Katrina Emergency
Management Act of 2006 places limitations on tiering on
subcontracts. What is the Government getting at there, please?
Mr. Rigas. Well, it is my understanding that, for
subcontracting, SBA rates the agencies on their prime
contracting small business dollars and on their subcontracting
dollars----
Ms. Norton. Say that again. I am sorry.
Mr. Rigas. SBA rates agencies on their prime contracting
dollars that go to small business, as well as the
subcontracting dollars that they spend on small business. And
with regards to subcontracting, they only allow agencies to
count first tier.
Ms. Norton. Yes, that I know.
Mr. Sligh is, I guess, who has this in his statute, which
apparently explicitly places a limit on tiering beyond the
tiering of subcontractors? I am simply trying to find out what
is the policy goal here, what is the reason, if there is a
complaint from some that some are not being counted. That, of
course, came from a contractor that said some of the
subcontractors were in fact not being counted and, therefore,
the figures are not accurate.
Mr. Sligh. It is my understanding that the requirement is
that we report to the first tier level and that, at FEMA, we
have been doing that. And the difficulty for us may be a
systems issue, that our systems may not be, at this point,
robust enough to collect the data for below the first level.
Ms. Norton. Well, I can understand that, but at least if
they say--and each of you will have to explain to me how the
Government can justify, in construction contracts, monitoring
twice a year, going in twice a year. But at least at that time
you would think that you would know whether or not there were
small business contractors, minority, women-owned,
disadvantaged business contractors. Do you monitor these
contracts?
Mr. Sligh. Yes, we monitor the performance under our
contracts, yes.
Mr. Rigas. Yes, we conduct subcontract----
Ms. Norton. What is your response to Mr. Smith's criticism
that twice a year monitoring of a construction contract
misapprehends the construction business, that the business
proceeds rapidly, is done, and, therefore, your monitoring
misses the point? What is your response to that?
Mr. Rigas. There is a difference between knowing and
reporting. The electronic subcontracting reporting system can
capture subcontracting levels down to the second, third, and
fourth levels. However----
Ms. Norton. Was that reported? Do you get credit for that
in your report?
Mr. Rigas. No, we don't. And you might want to ask SBA
about that, because we would love to be able to----
Ms. Norton. You don't have any idea? Is it possible to
abuse it? There has got to be a reason why nobody wants to even
know whether or not a sub-sub, or whatever the sector calls it,
may involve one of the very groups that you are trying to
target. You don't have any idea? I mean, I just can't believe
that each Government agency carries out whatever SBA says
without reading and understanding the policy reason for a
particular goal. So I am left here knowing--see, when I hear
something like that, my first response is these people are
crazy. It's never my response. Far more analytical about it. I
am saying they had something in mind. Our goal is to find out
what they had in mind before I can criticize it. And if you
don't know, but you are carrying it out--indeed, we put it in a
statute and I don't know, because it looks like FEMA may not
have been absorbing these tiers. So obviously there is
something at work here; it may be abuses of one kind or the
other. But even if that is the case, if in fact contractors and
subs below the small business reported are being used, one
would wonder why--since you say that it does show up--why that
isn't reported.
Let me ask you both about bundling. You heard the criticism
of bundling. That is the kind of criticism we hear constantly,
that essentially what you are doing is crippling opportunities
for small businesses by grabbing up in a bundle services that
would otherwise be available to small businesses, thus
virtually at odds with the policy of increasing representation
of these various--has either of you, would you give me the
number of contracts that you bundle in each agency, whether it
increases or not?
Mr. Sligh. At FEMA, we have a competition advocate who has
a specific responsibility of looking at contractual actions to
identify and eliminate bundling where it occurs.
Ms. Norton. Say that again.
Mr. Sligh. Within FEMA, we have a designated competition
advocate who has a responsibility to look at procurement
actions specifically for bundling type activity and look for
alternatives to bundling procurement actions so that
procurements----
Ms. Norton. And what has been the result of having a
special advocate of that kind?
Mr. Sligh. We get another look, other than the contracting
officer, other than the normal process of putting together an
acquisition strategy and moving forward with the procurement.
We have someone going in looking specifically for any type
bundling type activity. In addition to that, our small business
specialist is looking for bundling type activity on behalf of
the small business community.
Ms. Norton. So are you saying that your agencies in fact
are not doing much bundling, because you have got somebody
there monitoring, saying you can't bundle this; these things
are not related, there is no reason to bundle them? So you are
just not doing it, you are not one of the agencies that are
doing it?
Mr. Sligh. I can only speak for FEMA currently. Currently--
--
Ms. Norton. How long have you had this advocate trying to
keep bundling from occurring at FEMA?
Mr. Sligh. At least a year, maybe two.
Ms. Norton. Would you repeat to this Subcommittee how many
contracts have been bundled in each of your agencies over the
last five years?
Mr. Rigas, what are you all doing about bundling?
Mr. Rigas. We have a similar process in place where our
procurement plans are reviewed by our small business technical
advisors in each region, and I know in Central Office, where we
are located, in Washington, D.C., we have not had any bundled
contracts. But there are 11 regions throughout the Country, and
I would be happy to question each of them as to any----
Ms. Norton. I want agency-wide, obviously. I would like to
know for the last five years how many contracts have been
bundled. We would like that in 30 days, please.
I am informed by staff that the tiering prohibition is
related to liability because only the prime contractor can sue
or be sued by the Government. That doesn't answer my question
about why you wouldn't get credit for it if in fact, in the
course of doing business, you did--unless you are not even
supposed to do sub-subs. But I can't believe that is the case.
Mr. Rigas. I don't know. If I could build on that. Perhaps
it may be that because the contract is between the prime
contractor and the Federal Government, and within that contract
is a subcontracting plan for them to subcontract out so much of
their work to small businesses, and it could be that because
the contractual agreement does not go beyond the Government and
the prime, that we can't hold----
Ms. Norton. Well, but even if you couldn't hold, you could
get credit for it if in fact that occurred. I am only going by
one contract, so I am not here to day that this is happening
government-wide, but apparently it is the case that it is not
being reported. You say the information is captured, though. Is
it?
Mr. Rigas. Yes. Actually, I just had someone send me some
information here that it is not--apparently, the acquisition
counsel has not approved the electronic subcontracting
reporting system to collect any data below the first tier,
although presumably it is capable of collecting such data.
Ms. Norton. Well, we will just have to find out.
Constant complaints ever since there have been goals about
not meeting women-owned goals. Have your agencies been meeting
its goal for women-owned businesses?
Mr. Sligh. Madam Chairman, FEMA has met its goal for women.
Ms. Norton. Typically or recently or what?
Mr. Sligh. Typically.
Ms. Norton. Congratulations.
Mr. Rigas. Yes, we have actually--GSA has exceeded its
women-owned goal for the last fiscal year 2005 and fiscal year
2006.
Ms. Norton. Your statistics were very impressive, but I do
note that the National Small Business Association says that up
to a third of SBA's list of top 100 small business contractors
in 2005 were actually large businesses. The National Small
Business Association is recommending that the size of the
business be re-certified every three years, using a rolling
average during this time. They say that this approach would not
overburden small business. But this is quite an accusation.
They don't report who they are, but I would--this was reported
by the Eagle Eye Publishers, objective observers here, and I
would like to ask each of you to look at the size of the small
businesses you are reporting in these statistics and to look at
them in the way SBA recommend over the last three years.
Mr. Rigas. I know a lot has been done to address the issue
that was raised by Eagle Eye, and I believe OFPP Administrator
Dennett sent a memo to all chief acquisition officers to review
their data because some of those businesses had either been
acquired, they were small businesses that were acquired by
large businesses or had simply outgrown their size standard.
But that had not been reflected because I guess the period of
time that folks went back to look back to review size standards
had not been----
Ms. Norton. That is a pretty large number. You know, the
women-owned and minority-owned businesses have to graduate once
they reach a certain level. I can't understand why it wouldn't
apply across the board to small businesses. We are trying to
help small businesses, really small businesses.
What about this late payment? That was very distressing. I
had, Mr. Sligh, a very distressing experience with FEMA where
Federal Protective Service contractors were not paid on time,
and scandalous results of not being paid on time. These are
people who are security officers. I worked very closely,
though, with Federal Protective Service and with ICE, and we
were able to get those payments in fact done. They set up a
whole system for making sure that they did not in fact
encounter this problem, and, yet, the Small Business
Association reports 30 percent of those that they surveyed
reported experiencing extreme delays. Do you each pay within 30
days, as the law requires? And if not, do you pay the 3
percent, I think it is? Well, that is the private sector. We go
cheap on that and say a percent and a half, apparently. Do you
pay on time these small businesses?
Mr. Sligh. As a rule, we pay on time. There are those rare
occasions where we don't pay on time, and when those occasions
occur, we pay the interest payments in accordance with the law.
Mr. Rigas. I am not aware of any instances where GSA has
been late paying, but I would be happy to----
Ms. Norton. I wish you would check that. It seems almost
criminal. Small businesses have a very hard time staying in
business. The Federal Protective Service experience involved
somebody who, because he had a Federal contract, he could
borrow in order to pay his people, and that is what he did,
just kept borrowing to pay his people in order to keep the
contract. You might expect that of some failing business; you
wouldn't expect it of the--so I really would like to make
certain. We are, I alert you, we are going to be following very
significantly this work. We don't believe, as you heard me say
to the prior panel, we don't believe that SBA can take all of
these agencies and do the kind of work we are trying to do here
today. Therefore, we are going to be doing this work. Your
statistics are impressive to us. We don't know whether or not
the problems we heard about even apply to you, but we will know
simply by the way we are going to keep in touch with you.
What savings do you believe the Government is getting from
bundling? Make me understand why the Government would bundle.
What are the savings, overhead savings? What does the
Government seek?
Mr. Rigas. Well, as a small business advocate, we take a
very critical look at proposed contracts that are bundled and
as far as I know, in our office, we have not approved any. I
believe the threshold standard--and I don't know if it is
regulatory or if it is just a rule of thumb, that the savings
to the Government have to be 10 percent or greater in order to
justify a contract being bundled.
Ms. Norton. And you believe you are complying with that, of
course?
Mr. Rigas. Yes.
Ms. Norton. Well, the wholesale bundling that is going on
leads us to believe that if not you, somebody is not. Could I
ask what kind of small business contracts do your agencies
have? Are they completely across the board? For example, there
is concern that services can easily get stereotyped, by
minority, by women. Do you perform small business--what are the
major areas of small business contracts you perform?
Mr. Sligh. Within FEMA, it pretty much runs the gamut: IT
services, building maintenance, professional support services.
I think generally in all areas we look for opportunities for
small business participation and with that, once we identify an
area where we have sufficient number of small business
interests, then we target that as a small business opportunity.
Ms. Norton. Now, GSA, you are just everywhere; you are all
across the board. You do it for all these agencies.
Could I ask you, Mr. Rigas, you heard the testimony of Ms.
Giordano about the cost of getting on and staying on the
Schedule, which made me wonder what in the world is the point,
and I said, well, maybe you have limited competition, and she
said, yeah, by the thousands, apparently. She also described
the cost of getting on, spending the amounts of money one
spends afterwards. One understands that for large contractors.
It seems out of keeping with the Government policy of
encouraging small business contracting. I say that to both of
you, but particular GSA. Is there any way to cut down the cost
of the GSA Schedule, which people die to get on and then find
they are still spending lots of money to get on and stay one?
Mr. Rigas. Well, I mean, there is no charge to get on to
the GSA Schedule----
Ms. Norton. We are not talking about a fee to get on.
Mr. Rigas. Right.
Ms. Norton. Mr. Rigas, give me a break. We are talking
about what an agency has to do in order to, shall I say,
qualify to get on the Schedule, which is supposedly the gold
standard.
Mr. Rigas. Right. I mean, getting on Schedule, I guess you
can say it is akin to doing your taxes. You can do them
yourself at some investment of time and energy, or you can hire
an accountant to do your taxes for you, in which case it costs
you money to do your taxes. But our office and our regional
offices across the Country conduct regular sessions, training
seminars on how to get on GSA Schedule, and once on GSA
Schedule, how to market your Schedule, because as Ms. Giordano
correctly said, it is a license to hunt, it is your ability to
go out and generate----
Ms. Norton. And I can speak specifically to your very
helpful forums that help people get on. I think you may even do
them weekly here. You do a lot of work that way. Again, it is a
license to hunt. I am now speaking to the expense. Have you cut
down what looked to be a kind of very difficult technical
processes to get on in the first place, just the technical
underpinning of what it takes to get on, then the costs related
to that, and then the costs of staying on? And what would you
say are the advantages to being on?
Mr. Rigas. Right. Well, since Administrator Doan came to
GSA, one of her top priorities was reducing the amount of time
it took to get on GSA's Schedule, and within a year of her
being here we reduced the amount of time through the MAS
express program, the Multiple Award Schedule Express Program
from 152 days to 30 days.
Ms. Norton. I think that is the one Ms. Giordano was on.
Mr. Rigas. Well, she was on, I think she mentioned, the IT
Schedule 70, which is our IT hardware/software, and I am sure
probably a few other Schedules as well. But the benefit to
being on the GSA Schedule is for the investment of time and
energy into getting this one contract vehicle, you are able to
sell to every agency in the Federal Government. You are able to
sell to the City of Washington, D.C. and certain other non-
profits. So you have access to the entire Federal Government.
And as for other contract vehicles that are out there, that
is actually something Ms. Doan has also spoken out against, the
proliferation of other agencies developing their own contract
vehicles, and it goes against what the purpose of GSA--GSA is
here to take care of that work for the rest of the Government.
Ms. Norton. Do most agencies use your Schedule?
Do you use it, Mr. Sligh?
Mr. Sligh. Yes, ma'am, we do.
Ms. Norton. Okay.
Mr. Sligh. And when we use them, one of the advantages I
see to us is that we have a--I would call it a set of vendors
that have already signed up to typical Government terms and
conditions that will allow us to expedite the procurement, as
opposed to someone who may not have dealt with----
Ms. Norton. I would think everybody would want to have
these kind of pre-screened folks. How many agencies don't use
it, or do they use it sometimes and not other times? And why
wouldn't an agency use it all the time?
Mr. Rigas. It is my understanding every----
Ms. Norton. Well, you said--no, I am responding to your own
testimony.
Mr. Rigas. Right. Yes. What I mean is some agencies make,
in addition to GSA contract vehicles, create their own contract
vehicles.
Ms. Norton. And why would they do that is my question.
Mr. Rigas. That is a good question.
Ms. Norton. Well, maybe because everybody can't get on the
GSA Schedule.
Mr. Rigas. One example I know the Administrator has spoken
about has been the NASA SEWP contract, which is a contract
vehicle that NASA has to sell high-tech computers, hardware,
software to the Federal Government, which is something which is
in direct competition and provides the same kinds of goods and
services that IT Schedule 70, which Ms. Giordano is on, GSA's
contract vehicle sells and provides the same kinds of goods and
services to the Federal Government that you can get from NASA
SEWP. So all of the time and energy and Federal taxpayer
dollars that are put into creating and maintaining this
separate contract vehicle, in our opinion, doesn't need to be
done.
Ms. Norton. The staff said that if they are commercially
available, generally commercially available, the law requires
them to use a GSA schedule, and what you just described are
what are commercially available, I believe. These are not
specialized products.
Mr. Rigas. Right.
Ms. Norton. Well, that is something we have to enquire
about.
I want to thank both of you. You are the largest agencies
among those that come under our jurisdiction and we want to
keep in touch with you and encourage you on what is working,
and particularly encourage you to have--and I noticed that both
of you were here when the small business participants were
here--to encourage you to take their testimony to heart. Thank
you both for appearing.
Now I want to call our last witnesses.
Oh, excuse me, I am sorry. The Ranking Member.
Mr. Sligh, would you come back? The last thing I want to do
is the Ranking Member rattled on, but he had a very good
question that I would like to hear the answer to.
Mr. Graves. During a natural disaster, I am just curious
how you reach out to small business, because there are a lot of
opportunities and, obviously, with what happened down in New
Orleans and Hurricane Katrina and Rita, there was a lot of
small businesses participated, but it was as a result of the
tiering and everything else. But I am just curious, when you
have a disaster, if you have a tornado that comes in, or
hurricane or whatever the case may be, a flood, what do you do?
How does FEMA reach out and try to find those small businesses
to do the actual work that is involved, or do you just leave
that to someone else?
Mr. Sligh. Actually, our outreach starts long before----
Mr. Graves. You mentioned that in your testimony and I am
curious about that.
Mr. Sligh. We have undertaken a fairly extensive program to
put pre-positioned contracts in place. What I am saying is we
are putting contracts in place that we would use during a
disaster situation. We are putting them in place in a
competitive environment long before any disasters actually
occur. When the disasters occur, we use the contracts that we
need to use that are in our portfolio of contracts that are in
place already. During the course of a disaster, we would start
to look for small local businesses that might be able to
support us as we start to get the disaster under control, and
we would pull some contracts out and bring in other small local
companies that could do this work. We are starting to build our
arsenal for being able to do this through what we call a
disaster registry. We are actually going out seeking,
identifying small contractors in areas that are prone for
floods, disasters, and pre-registering them so that, should a
disaster occur, we can reach out and start to utilize those
immediately.
Mr. Graves. How do you determine where--I mean, it has got
to be an awful tough job to try to pre-determine where
disasters are going to be, but my question is, too--and it has
got to be a horrendous task trying to update that, because, as
was pointed out, companies get bought out, they get absorbed,
they no longer meet the criteria of what a small business is,
whatever the case may be.
Mr. Sligh. We started to create this database and it will
be a challenge to keep it up to date. It will be a challenge to
definitely keep it current. And what we are looking at is
basically, across the Country, identifying sources that could
possibly help us in a disaster type situation.
Mr. Graves. I know in Missouri, with the possibility of the
new Madrid Fault and the earthquake there, I know you guys, or
I assume you are pre-positioning. Kansas City is supposed to be
one of the refuge cities, whatever the case may be. So what
opportunities are out there right now? What sort of thing are
you doing, for instance, in Kansas City to get ready for that?
Mr. Sligh. I am not prepared to speak to those specific
initiatives that we have in place, but I can get that
information and provide it back.
Mr. Graves. If you would, yes.
Ms. Norton. Thank you very much, Mr. Sligh.
Could I ask the last four witnesses from Architect of the
Capitol, Capitol Visitor Center, John F. Kennedy Center, and
Smithsonian to come forward now?
I have this note that they are saying we could have
Committee as a whole votes around 1:30. Even I vote in
Committee as a whole. I vote on the House Floor in Committee as
a whole, so I would have to go.
I am going to ask you each to summarize your testimony,
therefore, in about five minutes, if you can, because we want
to hear from everyone. And if that bell rings, I don't have
control over that. Let's start with Ms. Marshall of the Office
of Equal Employment and Minority Affairs at the Smithsonian.
Summarize your testimony, please.
Ms. Marshall. Good afternoon, Madam Chair. I am the
Director of the Smithsonian's Office of Equal Employment and
Minority Affairs, and we really appreciate having this
opportunity to testify this afternoon so we can tell you a
little bit about our program and what we are doing to promote
and utilize small and disadvantaged businesses.
To summarize our efforts, I just want to say that the
Smithsonian has a very effective and successful Supply
Diversity Program. Our record, if you had an opportunity to
look at it, would show that we have done a lot of things to
support small businesses. Particularly, over the past two
years, we have actually achieve double the Government-wide
small business goals and quadrupled the disadvantaged business
goals. We do this and we are very successful, and the reason we
are so successful is that we have a cooperative working
relationship among the Supply Diversity Program, the Office of
Contracting, and procurement officials in our unit, and
everyone enthusiastically supports it.
Supplier Diversity at the Smithsonian is the way we do
business at the Smithsonian. It is outlined in two of our
Smithsonian directives; it is a part of our management
excellence goals; it is in the Smithsonian strategic and annual
performance goals. It really is the way we do business, and
Supplier Diversity is a requirement in every manager's and
procurement official's performance plan.
I report to the head of the agency, so I think that speaks
volumes about the commitment that the Smithsonian has for this
program. I am responsible for providing leadership, direction,
and management for the Supply Diversity Program, as well as the
Equal Employment Opportunity program.
Let me speak quickly, because I understand you do have to
move quickly and leave here. So here are some practices that we
employ to promote Supplier Diversity.
At the beginning of each fiscal year, we work with the
procurement officials in our top 10 spending units to identify
projects that are suitable for small business. We require prime
contractors to develop subcontracting plans, to identify
opportunities for small businesses, and we have a cadre of
Supplier Diversity zones in our museums, our research centers,
and offices who advocate for the use of small business along
with us. We provide diversity training; we participate in
conferences, procurement fairs, and meetings; and we conduct
vendor fairs and on-site capability assessments for firms who
would work with us for our facility related projects.
In the past year we provided advice and assistance to more
than 650 small businesses. We create and operate a Supplier
Diversity online database that allows businesses to set
register, and we now have more than 1500 small businesses
registered on that database. And that database is used by our
managers and our procurement officials to look for the small
businesses to meet their procurement needs.
Finally, we are using information technology in a way that
we feel is most effective. It helps us to ensure procurement
information. Procurement officials enter their data into the
Federal procurement data system Next Generation and our
contractors are now registering themselves on the Central
Contract Registration System. These practices have increased
our ability to promote and use small business in our
contracting and procurement activities.
I want to close my remarks by saying once again that the
Smithsonian is committed to Supplier Diversity and that
contracting with small business and small disadvantaged
business is not only our policy, it is the way we do business.
Ms. Norton. Thank you very much. I am sorry to rush you
like this, but you certainly gave us a lot of information. We
have your chart, which is very impressive. May I ask you and
all of the witnesses to look to make sure that your small
businesses that you report are not on the top 100, the list of
the Small Business Association which reports that one-third of
those small businesses are in fact not small businesses? Would
you please to do a three-year look at whether or not these are
in fact small businesses? Because some of this reporting could
be inadvertent.
May I go to Roger Mosier, Vice President, John F. Kennedy
Center for the Performing Arts? Would you summarize your
testimony in five minutes, please?
Mr. Mosier. Thank you. My name is Roger Mosier. I am the
Vice President of Facilities for the Kennedy Center. Michael
Kaiser, the President of the Kennedy Center, is out of the
Country right now, so he has asked me to appear to read his
testimony.
We appreciate the Committee's interest in the promotion of
small businesses, and I will provide an overview of the
Center's efforts to promote the use of small, minority, and
disadvantaged businesses in its contracting process.
In fiscal year 2007, the Center received direct Federal
funding of $17.5 million for the operations and maintenance of
the presidential memorial and $12.8 million for capital repair.
While our contracting activities are quite small in comparison
with the other agencies appearing today, the Center is
committed to awarding a fair portion of its Government
purchases to small, minority, and disadvantaged business
enterprises.
The Center continually looks for opportunities to offer
contracts to small businesses. Given the Center's relatively
small budge, the opportunities for such awards are limited;
however, each contracting action is evaluated as to its
suitability for a small, minority, and disadvantaged business
opportunity. In general, the Center's Chief of Contracting
serves as our small business advocate. In addition, project
managers and other contracting officer's representatives are
also advocates for the program due to our track record of
successful work with small businesses.
Many basic services and minor repair contracts are awarded
to small, minority, and disadvantaged firms. These operations
and maintenance contracts range in size from around $2,000 for
power lift repair services to just under $2 million for
housekeeping services. On an ongoing basis, the Center utilizes
small businesses for services as varied as fire extinguisher
maintenance; elevator inspections; door repair; asbestos
abatement; chiller and other equipment inspection, repair, and
maintenance; pest control; moving services; and brass and
bronze maintenance. Additionally, supplies such as carpet and
flooring, lighting fixtures, safety shoes, uniforms, and
condenser pumps are regularly purchased from small businesses.
For construction projects, from capital projects to major
maintenance, the Center utilizes small businesses for both
consulting and contracted services. In the realm of
professional services, the Center has contracted with small
businesses for architectural and engineering services, cost
estimating, and construction scheduling review.
For general construction work, the Center has awarded a
number of mid-sized contracts to small businesses. These have
included the recently completed Roof Terrace Doors Replacement
project, Motor Lobby Life Safety Upgrades project as well. Both
of these projects were successfully completed within budget and
on schedule by small businesses. Most recently, the Center
awarded its Roof Terrace Life Safety project to a small
business. This contract award was just under $3 million. In
fact, in August 2005, the Center established a pre-qualified
bidders list that includes six small businesses for general
construction services and the Center solicited qualifications
exclusively from small businesses to form this list.
Beyond this arrangement, which typically provides a
contracting vehicle for mid-sized projects that are often over
$1 million, the Center has also established open contracts with
small, disadvantaged general contracting businesses
participating in the 8(a) program. These contracts are utilized
for minor repair and significant maintenance projects that
typically cost less than $250,000. The Center has worked with
8(a) firms for many years and currently has four 8(a) firms
under Indefinite Delivery Indefinite Quality contracts, with
one set to graduate from the program after working with the
Center for their entire 8-year tenure in the program.
Based on the size and scope of the contract to be awarded,
the contracting office will avail itself of the option to go
directly to the Small Business Administration for set aside or
may limit competition to only small, minority, and
disadvantaged businesses. This method proved successful in the
award of our housekeeping contract, which is in the third year
of a four-year contract.
While not every contract can be awarded utilizing these
small business vehicles, many of the capital projects outlined
in the Center's five-year comprehensive building plan will be
of a size and complexity that will fit well with services we
obtain through our small business relationships. In fact, with
the majority of our large construction projects nearing
completion and the focus of the Center's capital plan shifting
to relatively smaller infrastructure projects, the Center
expects to be able to further award contracts to small
businesses in the future.
In summary, our experiences with small, minority, and
disadvantaged businesses have proven to deliver a successful
outcome in a variety of areas, including services, supplies,
consulting, and construction. As a result, we are proactive in
seeking out opportunities for the appropriate award of small
business contracts.
We appreciate the Subcommittee's interest in this program
and for including the Kennedy Center in this discussion this
morning. Thank you.
Ms. Norton. Thank you very much, Mr. Mosier.
We will move to the Acting Architect of the Capitol, Mr.
Stephen Ayers. Please summarize in five minutes your testimony.
Mr. Ayers. Madam Chair, Congressman Graves, thank you for
inviting me here today to discuss AOC's efforts to increase
procurement opportunities for small businesses.
I am happy to report that AOC is actively committed and
making great strides in developing a program that enables and
encourages small, disadvantaged, and women-owned businesses to
effectively compete for contracts. As you know, the Legislative
Branch agencies are not subject to the Small Business Act and,
therefore, do not have authority to set aside procurements for
small businesses. AOC procurement statutes require that all of
our procurements over $100,000 be competed on a full and open
basis.
Nonetheless, we recognize the importance of encouraging and
working with small businesses, and are implementing the
following initiatives: first, the Small Business Subcontracting
Program for construction contracts greater than $1 million;
second, a Small Business Outreach Program; and, third, a Small
Business set-aside program for procurements between $5,000 and
$100,000.
Last August, we launched our Small Business Subcontracting
Program, requiring large businesses that are awarded
construction contracts exceeding $1 million to submit and
adhere to a small business subcontracting plan. This plan
includes goals for the prime contractor for recruiting small
businesses as subcontractors.
The AOC awarded its first contract under this new program_
worth nearly $4 million_in late 2007. We require each large
business to submit a semi-annual progress report detailing how
well they are achieving the proscribed goals.
A small business outreach program also has been launched to
identify small businesses that are currently working with the
AOC or interested in competing for work. As we expand our
current vendor database to include small business information,
our procurement staff continues to communicate business
opportunities with diverse audiences through workshops,
business fairs, and small business conferences.
For example, last September, our staff participated in the
Minority Procurement Workshop sponsored by the Committee On
House Administration. We also plan to participate in the Small
Business Administration's National Small Business Week in April
of this year. In addition, we will soon enter into negotiations
with SBA to solicit their assistance in establishing our small
business program.
Although our small business outreach program is relatively
new, we can identify several contracts that were awarded in
fiscal years 2007 and 2008 to small businesses that
successfully competed against large businesses. Eleven
contracts were identified totaling more than $10 million.
In addition to the two earlier initiatives, we have begun
implementation of a Small Business Set-Aside Program for our
small business purchases between $5,000 and $100,000, when
adequate competition exists.
Recently, I formalized the AOC's Small Business Program by
issuing a policy memo directing our staff to fully implement
the directives I outlined previously. We have a strong interest
in encouraging small and disadvantaged businesses to
successfully compete for AOC contracts. This increased
competition ensures we receive the best value for taxpayers'
dollars while supporting employment opportunities and
businesses in our community.
Madam Chair, that concludes my statement, and I would be
happy to answer any questions you may have.
Ms. Norton. Thank you, Mr. Ayers.
And, of course, we now hear the bell you were alerted would
go off, and I am going to have to go to the Floor, as, of
course, will the Ranking Member.
Our final witness is Terrie Rouse, CEO for the Visitor
Center.
Ms. Rouse. Thank you. Thank you, Madam Chair and
Congressman Graves for inviting me to participate in today's
hearing. I would like to begin by thanking the Architect of the
Capitol and Congress for giving me the opportunity to be part
of history: in opening the doors to the largest expansion of
the Capitol that is devoted to the citizens of the United
States. I believe that the Capitol Visitor Center, CVC, is a
symbolic door to Congress, a portal that will become an
inviting place to remind visitors of their roles as citizens.
As an extension of the Capitol, it will provide a fitting
welcome and introduction to the People's House so all may
witness the workings of our legislative process. Our mission is
to inform, involve, and inspire generations of Americans.
To provide the Subcommittee with a bit of background about
myself, I am originally from----
Ms. Norton. I would appreciate, Ms. Rouse, if you would go
on.
Ms. Rouse. I will skip that.
Ms. Norton. We have that. Go on to your operations, because
even though I don't have to go to the Floor, I do have to move
out of here shortly.
Ms. Rouse. Okay.
Ms. Norton. So would you go to what you are doing on the
subject matter of this hearing?
Ms. Rouse. Sure. I have been serving as the AOC's Chief
Executive Officer for Visitor Services for six months, and one
of my top priorities has been to hire a diverse and
professional staff to help prepare the CVC to receive visitors.
We are planning a job fair in April and we are actively
reaching out to Members of Congressional caucuses, including
the Congressional Black Caucus, Congressional Asian Pacific
American Caucus, Congressional Hispanic Caucus, and
Congressional Native American Caucus to help inform potential
candidates of job opportunities with the CVC.
My goals for the CVC mirror those of the AOC: to
aggressively work to hire personnel and award contracts to
individuals and companies that reflect the diversity of our
Country. I believe such efforts enhance our ability to serve
Congress and all who will visit our Nation's Capitol.
For our procurements, the Capitol Visitor Center team
follows the same statutes and policies as the AOC. Over the
past several months, three contracts of note have been awarded
to support the new Office of Visitor Services. The first one
awarded last spring provides food services in the CVC
restaurant; another was awarded last fall to a small business
to develop an advanced reservation system; and a third was
awarded to a woman-owned small business for designing the CVC
Web site.
As we move forward, we are following the same small
business program which Mr. Ayers discussed in his testimony.
For example, we will soon be seeking small business suppliers
for our gift shop to provide materials that are related to our
mission. We agree that we have a vested interest in supporting
small businesses because the use of small businesses helps
facilitate competition and lowers prices by providing
additional sources for our requirements and improves our
relationship with the local community.
Madam Chair, you have my commitment as CEO for Visitor
Services for the CVC to work on ensuring that we continue to do
business with small, minority, and disadvantaged businesses.
Thank you.
Ms. Norton. Thank you very much, Ms. Rouse.
In all fairness, I think I should go to Mr. Ayers first,
because, if he was in the room, he heard his agency called out,
as they say, as a kind of textbook case in bundling that could
perhaps have gone to small businesses, bundling of landscaping,
housekeeping, and the like. If one is serious about small,
minority, women-owned business, even though we are trying to
make sure that they don't get stereotyped and that we also are
mindful of professional and other services, I will have to ask
you to explain why such services would have been funded.
Mr. Ayers. I am happy to answer that, Madam Chair. I think
there is a little confusion. I did hear an RFP number quoted
and, with the great use of technology, was able to track down
that RFP number, which was 060085, I believe I heard. And that
06 means it is a fiscal year 2006 procurement, so it is not
something that could be advertised today.
Ms. Norton. So, in other words, it didn't happen today, but
it did happen in 2006. So I have to ask why.
Mr. Ayers. No, I don't think so. I looked up that 06
procurement. It is for professional landscape services and it
was awarded to a small business.
I do believe that the one we are speaking of now is--and I
think the gentleman brought up two examples. There was one that
we did a few years ago for Thurgood Marshall Federal Judiciary
Building. In a building like that, a standalone building, we
will typically go out and award a contract to a single building
management company to do all of the building management
services in that building. They will then potentially sub out
construction work, architect/engineer work, pest services,
custodial, and the like.
Ms. Norton. Do you then monitor to see whether or not small
and disadvantaged businesses are subcontractors in such
buildings? I mean, you say it is because it is a single
building. Does that mean----
Mr. Ayers. That particular example it is. I can give you
another example. We have recently competed for facilities
management services for our police buildings, and we have maybe
20 police kiosks throughout the campus. We are going to bundle
all of those little police kiosks together.
Ms. Norton. What do you mean police buildings?
Mr. Ayers. Police guard stations where you would see----
Ms. Norton. Oh my goodness. Nobody would expect those each
little guard station--please, Mr. Ayers, we are talking about--
I am not sure anybody would----
Mr. Ayers. That is out on the street.
Ms. Norton. Well, but I don't think anybody would bid to do
one of the guard stations as you come into the house and
somebody else do another guard----
Mr. Ayers. That is exactly why we pooled them all together.
Ms. Norton. We recognize that--you know what we are talking
about. I shouldn't have to talk about whether a 2-by-4 guard
station is what we are talking about, Mr. Ayers. Do you do
bundling in the general course of business? At the Visitors
Center, for example, would any of those services--because here
is a clean slate to write on--be bundled, or would the services
provided there be open to small business contractors?
Mr. Ayers. That particular building we are managing
ourselves. We are not turning that over to a building
management company. So we are going out individually to
purchase custodial services and purchase some building repair
services.
Ms. Norton. And are you using small businesses on that? Are
you able to use small businesses?
Mr. Ayers. We are able to use small businesses between
$5,000 and $100,000. We are able to set aside for small
businesses. Above $100,000, our procurement statutes require us
to have full and open competition.
Ms. Norton. With full and open competition, are you able to
use small businesses?
Mr. Ayers. Oh, absolutely.
Ms. Norton. Because those things are not necessarily
inconsistent or inimitable.
I think it is you, Mr. Mosier, gave us no statistics, no
overall statistics for the Kennedy Center. I recognize you are
smaller than others. For that reason, it should be easy to know
what your overall small business utilization, minority-owned,
etc.
Mr. Mosier. Well, we receive our appropriation in two basic
categories, O&M and capital, and the O&M is fairly steady. In
fiscal year 2007, it was about 25 percent utilization of small
businesses, and in fiscal year 2008, so far, it is about 22
percent. If you take utilities out of that, the numbers go up
significantly, to 40 and 36 percent.
Ms. Norton. So you are fairly small agencies. I have a very
specific rundown for the Smithsonian, thank you. Does the
Smithsonian use bundling?
Ms. Marshall. We have had no problems with bundling, but a
couple of years ago we did bundle, I believe,--well, not a
couple, it has been about five years--we were bundling for
supplies, and that no longer is being done. The way we are
doing it now is since we have been able to go to the people
soft system and what have you, we really aren't doing bundling.
Ms. Norton. It occurs to me that precisely because of your
size, there are many opportunities for smaller business
contracts, because you don't let these mammoth contracts the
way GSA does. I applaud the fact that the Legislative Branch
agencies are using the same methodology. If you weren't, then,
of course, it would be incumbent upon me to make sure that you
were legislated into using it. But I think that you have
understood that the difference is purely technical, the
separation of powers branch not in fact intended to draw a
distinction between you and Executive Branch agencies
If I may so, I think, if anything, we in the Legislative
Branch should be held to a higher standard. As I say, we are
policing all those contractors in the private sector out there;
we are telling all these agencies that are Executive agencies
that we are monitoring you and what you should do. Well, I just
want to say here for the record that I think that the
Legislative Branch agencies should be held to an even higher
standard, should set the example. I am not saying you aren't,
but I am putting you on notice that this Subcommittee does
intend to follow this issue. You heard me say that the SBA just
can't possibly do it all. They can't do it at all for you
because you are a Legislative Branch agency, so I want to say
how much I appreciate your testimony, your work, and, with
that, with the bell ringing in my ears, I think I should let
you go and I should probably run to the Floor. Thank you very
much.
[Whereupon, at 1:33 p.m., the Subcommittee was adjourned.]
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