[Senate Hearing 115-272] [From the U.S. Government Publishing Office] S. Hrg. 115-272 NOMINATIONS OF DAVID C. TRYON TO BE CHIEF COUNSEL FOR ADVOCACY OF THE SMALL BUSINESS ADMINISTRATION AND HANNIBAL M. WARE TO BE INSPECTOR GENERAL OF THE SMALL BUSINESS ADMINISTRATION ======================================================================= HEARING BEFORE THE COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP UNITED STATES SENATE ONE HUNDRED FIFTEENTH CONGRESS SECOND SESSION __________ FEBRUARY 14, 2018 __________ Printed for the Committee on Small Business and Entrepreneurship [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Available via the World Wide Web: http://www.govinfo.gov _________ U.S. GOVERNMENT PUBLISHING OFFICE 30-221 PDF WASHINGTON : 2018 COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP ONE HUNDRED FIFTEENTH CONGRESS ---------- JAMES E. RISCH, Idaho, Chairman BENJAMIN L. CARDIN, Maryland, Ranking Member MARCO RUBIO, Florida MARIA CANTWELL, Washington RAND PAUL, Kentucky JEANNE SHAHEEN, New Hampshire TIM SCOTT, South Carolina HEIDI HEITKAMP, North Dakota JONI ERNST, Iowa EDWARD J. MARKEY, Massachusetts JAMES M. INHOFE, Oklahoma CORY A. BOOKER, New Jersey TODD YOUNG, Indiana CHRISTOPHER A. COONS, Delaware MICHAEL B. ENZI, Wyoming MAZIE K. HIRONO, Hawaii MIKE ROUNDS, South Dakota TAMMY DUCKWORTH, Illinois JOHN KENNEDY, Louisiana Skiffington E. Holderness, Republican Staff Director Sean Moore, Democratic Staff Director C O N T E N T S ---------- Opening Statements Page Risch, Hon. James E., Chairman, and a U.S. Senator from Idaho.... 1 Chabot, Hon. Steve, a U.S. Representative from the State of Ohio. 1 Cardin, Hon. Benjamin L., Ranking Member, and a U.S. Senator from Maryland....................................................... 3 Witnesses Tryon, David C., Nominee to be Chief Counsel for Advocacy of the Small Business Administration.................................. 5 Ware, Hannibal M., Nominee to be Inspector General of the Small Business Administration........................................ 10 Alphabetical Listing Cardin, Hon. Benjamin L. Opening statement............................................ 3 Chabot, Hon. Steve Opening statement............................................ 1 Risch, Hon. James E. Opening statement............................................ 1 Tryon, David C. Testimony.................................................... 5 Prepared statement........................................... 8 Responses to questions submitted by Ranking Member Cardin, Senators Shaheen, Cantwell, Hirono, Booker, Heitkamp, and Duckworth.................................................. 26 Ware, Hannibal M. Testimony.................................................... 10 Prepared statement........................................... 12 Responses to questions submitted by Ranking Member Cardin, Senators Cantwell, Hirono and Heitkamp..................... 49 NOMINATIONS OF DAVID C. TRYON TO BE CHIEF COUNSEL FOR ADVOCACY OF THE SMALL BUSINESS ADMINISTRATION AND HANNIBAL M. WARE TO BE INSPECTOR GENERAL OF THE SMALL BUSINESS ADMINISTRATION ---------- THURSDAY, FEBRUARY 14, 2018 United States Senate, Committee on Small Business and Entrepreneurship, Washington, DC. The Committee met, pursuant to notice, at 3:30 p.m., in Room 428A, Russell Senate Office Building, Hon. James Risch, Chairman of the Committee, presiding. Present: Senators Risch, Ernst, Young, Kennedy, Cardin, Cantwell, Shaheen, Heitkamp, and Duckworth. OPENING STATEMENT OF HON. JAMES E. RISCH, CHAIRMAN, AND A U.S. SENATOR FROM IDAHO Chairman Risch. The Committee will come to order. I thank all of you for coming today. And we are here to consider President Trump's nominee to be Chief Counsel of the Office of Advocacy of the United States Small Business Administration, David Tryon, and the nominee to be Inspector General at SBA, Mike Ware. So, gentlemen, we want to thank you for being here. We want to thank you for coming forward for public service. We always appreciate that. What I am going to do is I am going to make a brief opening statement and then we are going to have an opening statement from Senator Cardin. That will be followed by a statement from our witnesses and questions from the Members of the Committee. First, I would like to recognize Chairman Chabot of the House Small Business Committee to introduce a fellow Ohioan. Congressman, thank you. STATEMENT OF HON. STEVE CHABOT, A U.S. REPRESENTATIVE FROM THE STATE OF OHIO Mr. Chabot. Thank you very much Chairman Risch, Ranking Member Cardin, for the opportunity to appear before you today. I know it is a great privilege to work together in Congress on behalf of our Nation's small businesses, and that is one of the reasons that we are here to join you this afternoon. I have the pleasure of introducing a fellow Ohioan, David Tryon, who I have enjoyed getting to know during his confirmation process to be the next Small Business Administration, or SBA's, Chief Counsel for Advocacy. As this Committee knows, the SBA Office of Advocacy is the independent voice for small business within the Federal Government, the watchdog for regulatory flexibility act and the source of essential data and small business statistics. The Chief Counsel leads this important office and ensures that Federal agencies are considering how their proposed regulations will affect small businesses. Mr. Tryon brings more than 30 years of legal experience to the position on a broad range of complex civil cases. He has handled disputes over contracts, construction, intellectual property, real estate, foreclosure, eminent domain, and U.S. constitutional issues, and, in many cases, he has advocated for the interests of small businesses. In addition, he has handled public interest matters on a pro bono basis. As a result of his extensive legal experience, he has first-hand knowledge of the many problems that small businesses face and how important they are to America's economy. If confirmed, Mr. Tryon would be assuming the position at a time when Congress has been working to provide regulatory relief to the Nation's small businesses, which continue to experience a crushing weight of Federal regulations on a daily basis. The Office of Advocacy has actively assisted with regulatory reform efforts by holding regional regulatory roundtables across the country, to hear from small businesses facing regulatory burdens. However, if the Office of Advocacy had a chief counsel in place, these efforts would be enhanced by providing clear direction on regulatory reform and appointing regional advocates who will assist in outreach efforts in the field. I believe Mr. Tryon's experience will serve America's small businesses well. I encourage this Committee and the full Senate to move swiftly to approve him as the next Chief Counsel for Advocacy. By doing so, we can ensure that America's small businesses have a powerful voice in the Federal Government during the regulatory rulemaking process. And again, I want to thank you for giving us the opportunity to speak here this afternoon. Chairman Risch. Thank you, Chairman Chabot. You are welcome to stay if you want. I know how busy you are---- [Off microphone.] Mr. Chabot. Yeah. Thank you very much, Senator. Chairman Risch. Thank you. Mr. Chabot. Thank you, Senators. Thanks. OPENING STATEMENT OF CHAIRMAN RISCH Chairman Risch. Again, welcome, Mr. Tryon. We all know that the SBA Office of Advocacy is independent from the SBA but is vital for helping the agency achieve its mission. Advocacy is charged with advancing the views, concerns, and interests of small businesses in government, and we all know how important that is when a small business is dealing with the giant Federal Government. Advocacy oversees the Regulatory Flexibility Act and related executive orders that require regulators to consider the impact of regulations on small businesses. Advocacy also produces research on small business and monitors regulatory activity across the country with 10 regional advocates. I am confident that Mr. Tryon would serve the office well as its Chief Counsel and I look forward to supporting his confirmation. Mr. Tryon graduated from BYU--for those of you who are not from our neck of the woods, that is Brigham Young University-- in 1981, and from the University of Michigan Law School in 1984. After a brief stint at Chapman and Cutler in Chicago he returned home to Ohio where has been practicing at Porter Wright Morris & Arthur since 1987. I would also like to welcome his wife, Sandy, and daughter, Lindsay, who have come here today to support him. Welcome. We also welcome Mr. Ware. Mr. Ware, your lengthy experience in government oversight, particularly your time at the SBA, will serve you well in this post, and I believe that you will be a great addition to the agency. The SBA Office of Inspector General is charged with overseeing the agency to prevent and weed out waste, fraud, and abuse. Congress must ensure that taxpayer dollars are spent effectively and that the SBA can fill the needs of the entrepreneurs and small businesses it exists to serve. I am confident that Mike Ware is the right person to manage the audits and investigations of the Office of Inspector General, and I look forward to supporting his confirmation. Mr. Ware graduated from the University of the Virgin Islands in 1991 with a bachelor's degree in accounting. He began working for the Department of Interior's Office of Inspector General while still in college, and served there in different capacities for 26 years. He has been Acting Inspector General at the SBA since 2016. I would also like to welcome his wife, Elise, his mother, Barbara, his son, Zion, and his pastor, Dr. George Phillips, here to support him. Before we turn to our nominees I would like to recognize my distinguished Ranking Member, Senator Cardin, for his opening statement. OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, RANKING MEMBER, AND A U.S. SENATOR FROM MARYLAND Senator Cardin. Well, Chairman Risch, first let me tell you what a pleasure it is to join you on the Small Business Committee as the Ranking Member to work with you, in the tradition of this Committee, on a bipartisan basis, to advance the interest of small business. Chairman Risch. Senator Cardin, I can tell you it has been very bipartisan. To your right are two people that I have served with in a management capacity on this, and we have--I have enjoyed just an outstanding relationship with them. In fact, the press does not cover us because it is so boring. We do not fight with each other. We try to pull the wagon together. Senator Cardin. Well, I agree with you, but I would like to make it less boring. [Laughter.] Chairman Risch. Do not go overboard. Senator Cardin. I do want to acknowledge how proud our caucus is, and I think the entire United States Senate, of Senator Shaheen's service on this Committee as Ranking Member. She did an incredible job. You know, the work that she did in regards to the women's economic empowerment, tackling the gender gap with women entrepreneurs' need to thrive, to me that is a blueprint on what we need to do as a Nation to close the gender gap, and it is very important work of this Committee. But Senator Shaheen, also, I think, was responsible for bringing a lot of us together to get some good legislation done and oversight that is important. I personally thank her for some legislation that I worked on, that she found a path forward so that we could get that accomplished. I know she is very proud of the Invest in Rural Small Business legislation that is now law, that she worked on and was able to get accomplished. So under Senator Shaheen's leadership, the Democratic members are very proud of the way that we were able to work with our Republican colleagues in the best interest of small business, and I am very pleased that she is going to be right here on this Committee, but I want her to know that her leadership on small business issues is always welcomed, and we are going to be relying a great deal on what she was able to develop in this Committee. Senator Shaheen. Thank you, Mr. Chairman. If I could, thank you very much, Senator Cardin. I really appreciate those nice words. And let me recognize the minority staff of the Small Business Committee, without whom all of that work would not have happened. So thank you to everybody. Senator Cardin. And I agree. A lot of times our staffs go unappreciated for the incredible work that they do, and we come up with, we think, simple ways to get things done and then they have to deliver. So I thank them very much. Mr. Chairman, we do have a lot of work to do in this Committee. There are still a lot of issues ahead of us. The regulatory issues are there, access to capital to make sure that the government procurement is done in the way that we intended under statute to the protected groups. So we have work ahead of us to do, and I look forward to working with all the Members of this Committee in order to achieve that agenda. Today we have two very important positions in which we are holding nomination hearings, the Chief Counsel for Advocacy for the Small Business Administration and the Inspector General of the Small Business Administration. So, Mr. Tryon, I welcome you and your family. Mr. Ware, I welcome you and your family. We thank you very much for your willingness to serve your country. We know that this is a shared sacrifice with your family, so we thank you, the family members, for being willing to allow your spouses and family members to serve our country. The Inspector General is an important position to hold the SBA accountable. Billions of dollars are appropriated in the SBA. We want to make sure those funds are going to the intended purpose that Congress desires, and we will talk a little bit about different issues including whether the disaster relief is going as intended, we have had mistake rates, are we doing the best that we can. But we rely on the Inspector General to be that independent voice working with us, the Congress, with the right oversight to make sure taxpayer dollars are going for their purpose, so that we can do what is right. Mr. Ware, I am telling you, I am very impressed with your background on this area, so you bring a wealth of talent to that position. The Chief Counsel of the Office of Advocacy also needs to be an independent voice, an independent voice. The cost of regulation on small business is challenging to small business owners, and we want to make sure that we have that type of advocate at the Small Business Administration. And it must go beyond partisan politics. That is not easy in today's environment, but we need to make sure that this position is filled with someone who is going to be an advocate for small businesses in a nonpartisan manner. So will you help issues such as net neutrality, which is certainly an important issue? But there clearly is a small business interest on access to the high-speed internet services at reasonable price. And we hope that we would see, from the Chief Counsel, that type of interest, to make sure that small businesses are treated fairly. So during the question-and-answer format I will have a chance to ask you some questions in this regard, but again, welcome and I look forward to our hearing. Chairman Risch. Thank you, Senator Cardin. Gentleman, Mr. Tryon and Mr. Ware, would you stand and raise your right hand, please? Do you solemnly swear to tell the truth, the whole truth, and nothing but the truth, so help you God? Mr. Tryon. I do. Mr. Ware. I do. Chairman Risch. Thank you very much. Mr. Tryon, the floor is yours. TESTIMONY OF DAVID C. TRYON, OF OHIO, TO BE CHIEF COUNSEL FOR ADVOCACY OF THE SMALL BUSINESS ADMINISTRATION Mr. Tryon. Good afternoon, Chairman Risch, Ranking Member Cardin, and Members of the Committee. Thank you for the opportunity to appear before you today. I would like to introduce my wife, Sandy, my daughter, Lindsay, and thank them for being with me today and for their support during the nomination process. I am honored to receive your consideration to serve as Chief Counsel for Advocacy of the Small Business Administration. I want to thank Chairman Chabot for his kind introduction. I also want to thank President Trump for the trust and confidence he has placed in me with this nomination. I have had the privilege of meeting with many of you and your staff. I hope that I will have the opportunity to work with you in the future. About 15 months ago I was home alone and looking at my dad's picture and his veteran's flag given to me about a year earlier at his graveside. As I thought back on his life I thought about his patriotic service during World War II. I thought about the fact that he had encouraged me to go to law school and I was reminded of my commitment to him to use my law degree to help others. I said to his picture, ``Dad, I have not done what I came here to do.'' That day I decided to do more in public service to honor my dad. So, when I received a call from the White House and was asked if I would be interested in serving as Chief Counsel for Advocacy, I immediately said yes. I have personally experienced some of the struggles that small entities represented by the Office of Advocacy encounter. For 10 years, as part of my church volunteer work, I helped manage a small not-for-profit apple and strawberry farm with one full-time manager. We harvested about 500,000 pounds of apples and up to 80,000 pounds of strawberries every year. The fruit was used to feed the poor and needy. I, along with two others, was in charge of farm oversight, which included recruiting over 30,000 hours of volunteer time every year and training these volunteers on safety and government regulation compliance. I know from first-hand experience the challenges of small farmers. I am also familiar with small government entities, which are within the jurisdiction of Advocacy. As school board president, I learned the impact of State and Federal regulations on the school district. It was often difficult to understand those regulatory requirements and it was unclear if they were mandatory and what the consequences were if we failed to comply. These mandates often imposed additional costs, which sometimes forced the school board to cut back on other important programs. During my tenure, the State and the Federal regulators never sought input from us on these issues. Many of my relatives have owned small businesses. My sister, Carol, was a realtor and she and her husband, Kim, owned and ran a small Ford dealership in New Mexico. Another brother-in-law, Rusty, had a home repair and remodeling business in Cleveland, and even my daughter, Lindsay, started a business. I have experienced with them their respective challenges. From these and other personal experiences, I have learned some of the struggles which small entities face every day. I am a member of the Ohio Advisory Committee to the United States Civil Rights Commission. In 2014 and 2015, we issued a report titled ``Civil Rights Issues Regarding Barriers to Entrepreneurship in Ohio.'' We learned from minority-owned small businesses of the struggles they face, especially with respect to access to capital and government regulations. In my 32-year legal career I have advocated on behalf of business clients and individuals. My most rewarding experiences were representing small businesses such as a locksmith with one employee, a masonry company with 30 employees, a small electrical contractor, a small export company, an independent sales representative, and a bank services entrepreneur. I have also filed with the Ohio Supreme Court ``Friend of the Court'' briefs on behalf of the National Federation of Independent Businesses and I have provided free representation to other small, non-profit organizations. Sometimes my representation involved disputes with other entities and other times it involved addressing government rules, regulations, permits, or programs. Always, they involved the trials and tribulations of a small business that needed help. If I am honored to be confirmed as the Chief Counsel for Advocacy, I will take the lessons I have learned over the past 32 years and apply them to advocating for all small businesses. I will zealously advocate for veteran-owned, minority-owned, and women-owned small businesses. I will collaborate with this Committee, the SBA, and other organizations and government agencies to help American small businesses thrive and prosper. Thank you for your time. I look forward to answering your questions. [The prepared statement of Mr. Tryon follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Chairman Risch. Thank you very much, Mr. Tryon. Mr. Ware, the floor is yours. TESTIMONY OF HANNIBAL M. WARE, OF THE VIRGIN ISLANDS, TO BE INSPECTOR GENERAL OF THE SMALL BUSINESS ADMINISTRATION Mr. Ware. Thank you, Chairman Risch, Ranking Member Cardin, and Members of the Committee. I am deeply honored to appear before you today and to have your consideration to serve as the Inspector General of the U.S. Small Business Administration. I would like to thank the President for nominating me to this position. I can assure you when I began my Federal career as a student intern at the Department of Interior's Virgin Islands IG field office in 1990, the opportunity to serve as an Inspector General was not imagined. I also would like to thank the professional staff of the Committee for their time and assistance in the confirmation process. It has been an honor to serve taxpayers within the Inspector General community these 28 years. I am very excited about the opportunity to serve as the permanent IG within SBA. I would like to take the next few minutes to introduce myself to you and to explain why I believe my career in the IG community has prepared me to take on the role of Inspector General at SBA. If I may, I also want to thank my wife, Elise, my mother, Barbara, and my children for their love and their support. Elise, my mom, my son, Zion, and my pastor, Dr. Phillips, are able to be with me here today and have been a source of inspiration and pride in my life. I also want to thank my other family members, friends, and colleagues for their unwavering support of me in my life's endeavors. I was born and raised in the U.S. Virgin Islands by a strong woman who guided and shaped me into the individual who appears before you today. She instilled a sense of right and justice within me that propels me in my work every day. As a native of the Virgin Islands, I have lived through major hurricanes and their aftermath. I offer this to you with a profound understanding of SBA's vital role in providing low- interest loans as a form of disaster assistance to homeowners and business owners alike. In terms of education and experience, I am a career auditor and have served at all levels within an OIG. I hold a bachelor of arts degree in accounting from the University of the Virgin Islands and I am a graduate of the Senior Executive Service Career Development Program. I joined DOI OIG's Virgin Islands field office as an auditor in 1990 and later became the Field Office Supervisor, leading the very office where I was initially hired as a junior in college. Throughout my oversight career, I performed increasingly challenging and vital roles within the IG community, culminating with my appointment to the Senior Executive Service as SBA OIG's Deputy Inspector General. I have served as the Acting Inspector General since January 9, 2017. As Deputy Inspector General and now Acting Inspector General, I have seized the opportunity to promote integrity and efficiency within the SBA. In this capacity, I have led an investigative and audit staff of over 100 employees, and we have provided effective oversight over SBA's programs, which encompass more than $100 billion in guaranteed loans and nearly $100 billion in Federal contracting dollars. During my tenure, we have continued to provide a significant return on investment to the taxpayer and issued impactful reports and conducted complex fraud investigations. The men and women of SBA OIG are dedicated professionals, and I will support, lead, and champion their efforts to achieve these positive outcomes. I believe I have distinguished myself in leading OIG through decisive action to improve internal processes and to manage our resources. It also has been a priority and will continue to be so to strengthen our relationship with our oversight and appropriations committees. To this end, I appeared as a witness at four congressional hearings in 2017, on topics ranging from SBA's disaster assistance program to SBA's execution of VERA and VSIP authority in 2014. To further distinguish myself as a leader, I have executed our budget in a manner that has revitalized our disaster assistance oversight and bolstered our oversight of SBA internal management. Finally, I am proud to share with you results of the 2017 Federal Employee Viewpoint Survey as it pertains to our office and corresponds directly to my tenure. We had 55 strength areas out of a possible total of 71, with only 2 challenge areas noted. When the results were presented to me, the SBA Office of Human Resources Solutions official indicated they had to double-check the figures given the unprecedented, single-year increases noted across the key OPM indexes. I believe I am leading the office in the right direction, and, if confirmed, I will continue to focus on the impact of our work and the value of our staff. As an auditor, I am driven by criteria to make assessments and identify risk. If confirmed, I will continue to focus resources on the areas of highest risk to SBA and also against areas identified as top management challenges. I also will make it a priority to maintain a good working relationship with this Committee, Congress as a whole, the Administrator, and others, but I also intend to exercise complete independence in regards to choosing and pursuing audits and investigations. I believe that I have the demonstrated integrity, skills, knowledge, judgment, demeanor, and overall track record to serve as the SBA Inspector General. Thank you for your consideration, and I look forward to your questions. [The prepared statement of Mr. Ware follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Chairman Risch. Thank you very much. We are going to proceed to a round of five-minute questioning. We will do it on order of appearance. I am going to reserve my time and I am going to call on Senator Cardin. Senator Cardin. Thank you, Mr. Chairman. Once again, I thank both of our nominees. The reason why we have a Committee on Small Business is because of the importance of small business to our country. It is where job growth is. That is where innovation takes place. And the Office of Chief Counsel for Advocacy is to be the advocate for small business. So there are a lot of subjects in which there will be some challenges but they are not going to be deep challenges of conflicts between different interests. But in some areas there is going to be conflict, and I mentioned net neutrality in my opening statement. I have traveled to all parts of Maryland. I can tell you, particularly in our rural areas in western Maryland, Eastern Shore, we are dominated by small businesses. That is where the jobs are, small businesses. The access to broadband is absolutely essential. Access to affordable, high-speed internet service is critically important to be competitive. And we know there is building conflict between the large entities and access by small companies to the internet. So, Mr. Tryon, I want to know how you will approach that issue, recognizing there is going to be controversy within the Trump administration and that there is a small business interest here that may be different than the position within the Administration itself. How do you see your role in this position in representing the interests of small business in America? Mr. Tryon. Thank you, Senator Cardin, for that question. I would say first of all you have mentioned the importance of independence, and I agree that the Chief Counsel needs to be an independent position. Indeed, when President Trump nominated me for this position he nominated me to be an independent voice for small businesses and to advocate on their behalf. And as an advocate, a trained advocate for the past 30-some years, that is exactly what I will do, and act independently on behalf of the small businesses. As to net neutrality, that is a difficult issue, I understand, and I would, if confirmed, want to--it sounds like your staff is--has become well versed in it. I would hope to have the opportunity to meet with you and/or your staff to understand your viewpoint on this, and then to work with other small business groups, small businesses themselves, to try and understand the impact of those complex rules and that complex conversation. And then once I determine what that interest of small businesses, advocate for those small businesses to help them in any way that I can. Senator Cardin. And I will be glad to share with you my views, and my staff will certainly work with you. But I think it is more urgent to understand the needs of the small business community. We will help you understand those issues that are brought to our attention. But I just need your commitment that you are going to be guided by the role of your position and exercise that independence, regardless of whether it is popular or not within the politics of the issue with the Administration. Mr. Tryon. Yes, Senator, I appreciate that, and if I can just illustrate my intention to be independent through something in my law practice, if I may. And that is sometimes in your law practice you are representing a client, but it is funded by someone else. For example, an insurance claim. You may be representing an individual funded by an insurance--the representation is funded by an insurance company. The insurance company may say, we want you to do something that you do not agree that it is good for your client. You represent the client. You tell the insurance company, ``No, this is who I represent. I appreciate that you are funding this but I have a legal and fiduciary obligation to represent my client.'' Senator Cardin. Let me point out, in the last Administration, the person that held that position, at times, was very much against the Obama administration's regulatory policies, and we appreciated that independence and we expect that from this position. Let me mention a second issue which may not become so apparent but after you think about it, and that deals with the decision made by the Secretary of Interior on opening up drilling off the Atlantic coast. Go down to Ocean City, Maryland, and you are going to see 95 percent of the businesses are small businesses. They are put out of business if there is an oil spill on the East Coast of the United States--out of business. They will not return. We need someone in your position who is going to understand the sensitivity to small businesses, what happened in the 2010 disaster, but what could happen again if we do not protect the vulnerabilities of small businesses. Are you prepared to do that? Mr. Tryon. Senator, thank you. I will commit to working with those small businesses, trying to understand their interests, and then advocating for their business--for their position. Senator Cardin. Thank you. Thank you, Mr. Chairman. Chairman Risch. Thank you very much. Senator Kennedy, I think you were first on our side. You are up. Senator Kennedy. Thank you, Mr. Chairman. Mr. Ware, could you walk me through, one more time, about the--I think it was in terms of the audit or the auditor, the 77 criteria and the 55 that you scored high on. I was a little confused there. Mr. Ware. Yeah. I could definitely do that. So in these indices they really are about employee engagement. Senator Kennedy. Yes, sir. Mr. Ware. So that is what they are about. So there are 71 different ways in which they break this out, in terms of determining whether your employees are happy in a productive and safe environment. Senator Kennedy. Mm-hmm. Mr. Ware. And 55 of those were strength areas, which I believe mean that you score above 60 percent in those. We only had two challenge areas. Those two challenge areas, I could tell you right now, they were the ability to move up in the job, so promotion capability, and salaries, I believe, was the other one, two things that are---- Senator Kennedy. You mean somebody was unhappy with his salary? [Laughter.] Mr. Ware. Two things that are very tough when you are in a small organization. But even that we have been working on, in terms of--well, the salary is what the salary is, but in terms of providing opportunities for--at least to have an opportunity to be promoted. Senator Kennedy. And these high marks were under your leadership? Mr. Ware. They were definitely under my leadership---- Senator Kennedy. Right. Mr. Ware [continuing]. And the leadership of my executive staff. Senator Kennedy. And you have been Acting for, what, over a year? Mr. Ware. Yes. Yes, sir. Senator Kennedy. Have they been paying you like you were there permanently, I hope? [Laughter.] Mr. Ware. No, sir. No, sir. Senator Kennedy. We need to do something now. Mr. Ware. Yes, sir. Senator Kennedy. That would seem fair to me. Well, congratulations. Mr. Ware. Thank you very much. Senator Kennedy. I am a little more familiar with that than I am letting on. That is quite an honor. Mr. Ware. Thank you. Senator Kennedy. You and your team ought to be very proud of that. Mr. Ware. Thank you very much. I appreciate it. Senator Kennedy. Mr. Tryon--is it Tryon? Am I saying that right? Mr. Tryon. Yes, Senator. That is correct. Senator Kennedy. I read your resume. You have a very impressive resume. There were some allegations made way back when, when I believe you were a poll-watcher. I have read everything about that. Tell me about them, in your own words, and what happened, or what allegedly happened. Mr. Tryon. Senator, thank you for the opportunity to respond to that. So, in 2004, I was acting as an official poll observer, appointed by the Cuyahoga County Board of Elections. Senator Kennedy. Yes, sir. Mr. Tryon. At that time, they were seeking both Democrat and Republic poll observers. Senator Kennedy. Mm-hmm. Mr. Tryon. And I volunteered to do that---- Senator Kennedy. Mm-hmm. Mr. Tryon [continuing]. As I had done four years earlier, and visited the polls that I had been assigned to visit, and everything went fairly well, as far as I was concerned. And then, subsequently, I heard someone make an accusation that I had tried to prevent people from voting, and---- Senator Kennedy. Mr. Chandra--is that his name? Mr. Tryon. That is a person who conveyed the accusation. Senator Kennedy. Oh, okay. Mr. Tryon. And it simply did not happen. I am not sure how the information came about or why it was believed that happened, but it simply did not happen, and I can say, unequivocally, that it not only did not happen but I would never do anything like that. I have a very strong reputation in the community, with the legal community and the civic community, that of integrity and honesty, and I would never do anything like that. Senator Kennedy. I understand our staff has looked into it, have they not, Mr. Chairman? Chairman Risch. Senator Kennedy, the staff has looked into it, both the minority and the majority, and this happens. People get accused of things and it is--it sticks sometimes when it should not stick. In Mr. Tryon's case, I can tell you, that it was found to be absolutely baseless, and it is unfortunate that these accusations have been made, but we have found absolutely nothing. Senator Shaheen and I have been poll- watchers before, in Georgia, and we know how these false accusations go at the polls. This was a county in Georgia, by the way. Anyway, thank you. Thank you for the question, and Mr. Tryon, I can tell you, unequivocally, that there was absolutely nothing found there at all, so thank you. Senator Kennedy. That is certainly good enough for me. Mr. Tryon. Thank you, Senator. Senator Kennedy. Thank you both, gentlemen. I think you will both do an extraordinary job, I am sure, and I hope they pay you correctly now. [Laughter.] Chairman Risch. Senator Shaheen. Senator Shaheen. Thank you, Mr. Chairman, and congratulations to both of you on your nominations. I would like to follow up, Mr. Tryon, with an issue that Senator Cardin raised with respect to offshore drilling. An alliance of more than 41,000 businesses and 500,000 fishing families, from New Hampshire to Florida, has weighed in opposing oil and natural gas drilling in their communities. And this is a particular concern to us in New Hampshire, where we have an 18-mile coastline, the shortest coastline in the country, but very important to us. But we have a lot of small businesses along that coast that depend on the outdoor economy, and just today the Department of Commerce released a report pointing out that the outdoor economy is as large as the oil and gas sector, that it contributes nearly 2 percent of the gross domestic product and employs more than 4 million people in the United States. And so I believe that it is very important that the Department of Interior listens to those small businesses along the coast with respect to whether they believe it is in their interest to drill offshore, and I wonder if you can tell me if you think the Department of Interior should keep the interests of small businesses in mind when it comes to the risks of offshore drilling. That is a gimme question, so---- [Laughter.] Mr. Tryon. Senator Shaheen, thank you. I believe that we should always take into consideration those things in the office. If I am confirmed as Chief Counsel I would certainly advocate on behalf of those small businesses that are impacted by any of those decisions. Senator Shaheen. Thank you. You talked, in your opening statement, about your experience working with small businesses that have been harmed by regulations. Do you have any experience working with small businesses who believe that regulatory rollbacks will hurt them, especially by tilting the playing field in favor of large corporations? And I raise this because one of the businesses that we have in New Hampshire is a farm enterprise called Pete and Gerry's Organic Eggs. You may have seen those eggs in the grocery store. They sell at more than 9,600 locations across the country. And they were very concerned when, in December, the USDA overturned a rule that strengthened the organic label, because according to Jesse, the owner of Pete and Gerry's, this decision is a tragedy for small farmers like those we work with every day, who will continue to have to try to absorb the actual costs of responsible farming while their giant competitors ignore those costs. So he is very concerned that what that rule does is change the level playing field for organic farms like his. So have you experienced small businesses who are concerned about that rollback of regulations? Mr. Tryon. Senator, thank you. I have not experienced that, but it sounds like your office, you and your office have experienced that with your constituents. And it would certainly be my intention, if confirmed as Chief Counsel, to explore those types of issues that might be impacted by any deregulations, both with your constituents, that one in particular, I suppose, and then any others that have those concerns. And after I have the opportunity to learn from small businesses on those issues, then I would certainly advocate on behalf of their position. Senator Shaheen. Good. I appreciate that. I think what we have found in New Hampshire, where 99 percent of our employers are small businesses, is that regulations can work both ways, and that it is important for us to recognize when they are harmful and when they are helpful. Mr. Ware, the Office of Advocacy recently awarded a Federal contract to a company called Interaction Analytics, whose past work has been criticized for using unreliable methodology and flawed data. The firm's previous study on the relative burden of Federal regulations on small businesses included criticism that they failed to accurately transfer OMB data on environmental regulatory costs, that they potentially doubled counting the cost of regulations, that they used the highest cost estimate from OMB reports, and that they misinterpreted and misused data from the World Bank's regulatory index. So, if confirmed as Inspector General, will you investigate the process that was used to award this taxpayer-funded study and hopefully improve upon how that award is made in the future? Mr. Ware. As Inspector General, or Acting Inspector General now, and if confirmed to be Inspector General, I could tell you this, that we are very attentive to the requests that come from this Committee or from the individual Members, and if we get a request to do so, I would certainly take it under very heavy consideration. As a matter of fact, we have created, within-- that was part of shifting of some resources--created, within our audit division, a team that is set up to do those type of quick dives, based on your requests, and have also added a little bit more into our 19 requests, to bolster that up, so we should be able to handle requests such as those. Senator Shaheen. Thank you very much. Thank you both. Chairman Risch. Thank you. Senator Ernst. Senator Ernst. Thank you, Mr. Chair, and Mr. Tryon, I really believe our small businesses, what they need to get going is a favorable regulatory environment. And we have heard a few examples here today where agencies are impacting small business, and, boy, have I got legislation for everybody on the Committee. I have introduced legislation that would give small businesses a stronger voice in the regulatory process, and it is called the Prove It Act. And in the event that there is a difference of opinion between an agency and the Office of Advocacy on the economic impact of a rule on small businesses, like we saw in the Waters of the U.S. rule and others, the Prove It Act would give the Office of Advocacy the opportunity to request that that other agency take a second look at its analysis. So it would give relief to some of these businesses, and opportunity to go back and push on those regulatory agencies, such as EPA, USDA, Interior, whatever it is, and so they would have to take a look and prove that their analysis is right. This is a good government bill that would encourage Federal agencies to carefully consider the impacts of the rules on small businesses. And as Chief Counsel for Advocacy, would having this tool at your disposal be helpful to you? Mr. Tryon. Senator, thank you for that question. I am aware of the Prove It Act, and multiple other pieces of litigation designed to assist the Office of Advocacy, and I would certainly be anxious to review those with you and your office, as well as, if confirmed, my office, to go through those things and assist you and the Committee in strengthening that--those tools. Senator Ernst. Mm-hmm. I think it would be a very, very helpful tool out there, so I hope that we can take a look at that together. I am happy to work with you on language and so forth. But beyond the Prove It Act, what are some of the other ways Congress then could be helpful to empower the Office of Advocacy so that it can better protect our small businesses? Have you thought about other ways that you could protect those businesses from harmful and excessive regulation? Mr. Tryon. Senator, thank you. As I said, I know that there are multiple bills out there. Frankly, my last count was, I think, it is up to 17. And there are a lot of great ideas in those, and I would love to work with you and other members of the Committee to try and find the best way, not only which particular mechanisms would be most effective but which ones are most likely to get through Congress and get a signature from the President. So I would really look forward to the opportunity to work on that with you, and it sounds like this is top of your mind, and so I hope I can. Senator Ernst. Yeah. I definitely think we want to look at it through the lens of small business. And, Mr. Ware, in your testimony you described some of your accomplishments, and I know that Senator Kennedy had touched upon some of those. But can you go into further detail and just describe, maybe, the environment that you created within your workspace? Mr. Ware. Right. I am on. Thank you, Senator. Thank you very much. One of the things that--well, one of the first things I did when I came to SBA OIG as the Deputy was that I said we should have an internal survey. We were having some, well, quite a bit of turnover in one of our divisions, and I wanted to find out what was the reason behind it. And that internal survey was very informing. Coming on the heels of that, what I decided to do was to start an employee engagement council, and started it. So we started from the grassroots up, working with leadership to get at the root causes of what the morale issues were and everything like that. And we did--that group, along with the leadership, did an incredible job in turning things around. So in terms of specifics, we came up with a more collaborative approach to our work, the way that we were doing things. We cross-pollinated, cross-collaborated, changed the way we were hiring, started to bring in some lower grades--that is the way to put that--lower-graded employees, train them up. We started to really beef up our training efforts. Put forward--set forward quite a bit of new procedures, internal, that were missing, procedures that dealt with telework, modernizing our workplace, putting a really critical look at how we were dealing with our technology, moved our--I think we became the first IG and the first platform within SBA to move our audit work paper system, TeamMate, into the cloud. So those were some of the things that were done, and folks latched onto it. Senator Ernst. That is very helpful, and the way you described that, it almost sounds like you are very much a servant leader, someone who is striving to better his employees as well. And I very much appreciate that leadership style. Thank you, gentlemen, both, for being here today. Thank you, Mr. Chairman. Mr. Ware. Thank you, Senator Ernst. Chairman Risch. Senator Duckworth. Senator Duckworth. Thank you, Mr. Chairman. I would like to thank you and the Ranking Member for convening today's hearing, and thanks to the nominees for coming before this Committee. Mr. Tryon, you have extensive experience advocating for large corporate interests, and you have touched on that and some of my colleagues have as well, whether successfully defending corporations in matters such as wrongful death cases or helping corporate clients prevail in contract disputes. No one can deny your effectiveness in championing industry interests. And this really matters because the key to serving as a successful leader of this Office of Advocacy is possessing either deep expertise in small business law or real-world experience complying with regulations as a small business owner. I am somewhat concerned that you do not have those experiences from the small business perspective. Can you simply confirm that you have devoted your career to being a successful corporate lawyer and do not have the expertise or experience either serving with SBA or running a small business yourself? Mr. Tryon. Senator---- Senator Duckworth. It gets better than this. This is the tough first question. [Laughter.] Do not get too nervous. It gets better. I just want to establish that you do not have the experience. Mr. Tryon. No, Senator Duckworth, I feel that I do have experience. Senator Duckworth. Okay. Mr. Tryon. I have, as I indicated in my opening statement, that I have many family members that have run small businesses, and they have consulted with me in how to deal with issues. I have had many of my clients that were small businesses, a small masonry contractor with about 30 employees, a small locksmith contractor. Many of my employees have also been smaller folks, smaller businesses. And some of my personal experience, one of the organizations that is covered by the Office of Advocacy is small government organizations. I was the president of the school board. We handled a lot of regulatory issues there. And as running a small farm, I dealt with issue handling the small rural farmers would be dealing with. So I have had many of those experiences. Senator Duckworth. What percentage of your professional experience do you think has been serving to the benefit of small businesses? Mr. Tryon. My guess would be 30 percent. Senator Duckworth. Thirty percent. Okay. You know, we should be looking for common-sense solutions to help small businesses without benefiting large corporations or endangering workers in environment or public health in the Office of Advocacy. When regulations do not make sense, I am the first to sign up to fix it. In fact, last spring, I authored a bipartisan bill that repealed a well-intended yet flawed Obama administration regulation that was bad for infrastructure development. I would like to see if you, in that spirit, could identify types of small business relief that you would champion if you were confirmed to this office. Could you identify a few specific Federal regulations that Congress could repeal or amend to help small businesses, without jeopardizing vital consumer protections or benefiting giant corporations? Mr. Tryon. Thank you, Senator Duckworth. I am not prepared, at this moment, to identify any specific regulations. I think that would be unfair to me--of me to do that without first consulting with the small business community and finding out their views on this particular--on these particular issues and specific regulations and consulting with the staff of the Office of Advocacy, as well as perhaps your staff may have some sense, as well, as what should be--how those things should be handled. So I commit to you that I will investigate those things and work with you and your office in trying to accomplish that. Senator Duckworth. Okay. Thank you. Mr. Ware, the NDA, the National Defense Authorization Act, signed into last this past December, included one of my amendments, making it easier for small businesses to get Department of Defense contracts. My proposal amends a small business act that required that SBA commercial marketing representatives are empowered to guide and advocate for small business owners within the Department of Defense and its prime contractors. If confirmed, will you commit to working with my office to support congressional oversight of the implementation of this new law and keep my office informed if implementation efforts are delayed or ineffective? Mr. Ware. Thank you for that question, Senator Duckworth, and just as I said before, we have a process in place that if you make this request from your office or from the Committee, we take them very, very seriously, and we are confirmed to making sure that the Small Business Administration is following those laws as Congress has intended. So I would definitely be committed to doing so. Senator Duckworth. Thank you so much. I yield back, Mr. Chairman. Chairman Risch. Thank you very much, Senator. Well, thank you both for your appearance and testimony today. I want to thank everyone who attended, and I think this was a productive hearing and certainly aired our ability to judge your qualifications, and I certainly look forward to supporting your nominations. We will move those as rapidly as we can. The deadline for questions for the record is close of business Friday, February 16th. The record will also be kept open for two weeks to edit statements, submit letters, and any other relevant materials. With that, if there is nothing else for the good of the order, the hearing is adjourned. [Whereupon, at 4:25 p.m., the Committee was adjourned.] APPENDIX MATERIAL SUBMITTED [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]