[House Hearing, 116 Congress] [From the U.S. Government Publishing Office] NATIVE 8(A) CONTRACTING: EMERGING ISSUES ======================================================================= HEARING BEFORE THE SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT, AND REGULATIONS OF THE COMMITTEE ON SMALL BUSINESS UNITED STATES HOUSE OF REPRESENTATIVES ONE HUNDRED SIXTEENTH CONGRESS FIRST SESSION __________ HEARING HELD OCTOBER 22, 2019 __________ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Small Business Committee Document Number 116-053 Available via the GPO Website: www.govinfo.gov __________ U.S. GOVERNMENT PUBLISHING OFFICE 38-060 WASHINGTON : 2020 -------------------------------------------------------------------------------------- HOUSE COMMITTEE ON SMALL BUSINESS NYDIA VELAZQUEZ, New York, Chairwoman ABBY FINKENAUER, Iowa JARED GOLDEN, Maine ANDY KIM, New Jersey JASON CROW, Colorado SHARICE DAVIDS, Kansas JUDY CHU, California MARC VEASEY, Texas DWIGHT EVANS, Pennsylvania BRAD SCHNEIDER, Illinois ADRIANO ESPAILLAT, New York ANTONIO DELGADO, New York CHRISSY HOULAHAN, Pennsylvania ANGIE CRAIG, Minnesota STEVE CHABOT, Ohio, Ranking Member AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member TROY BALDERSON, Ohio KEVIN HERN, Oklahoma JIM HAGEDORN, Minnesota PETE STAUBER, Minnesota TIM BURCHETT, Tennessee ROSS SPANO, Florida JOHN JOYCE, Pennsylvania DAN BISHOP, North Carolina Melissa Jung, Majority Staff Director Justin Pelletier, Majority Deputy Staff Director and Chief Counsel Kevin Fitzpatrick, Staff Director C O N T E N T S OPENING STATEMENTS Page Hon. Judy Chu.................................................... 1 Hon. Ross Spano.................................................. 3 WITNESSES Mr. Seto Bagdoyan, Director, Forensic Audits and Investigative Service, United States Government Accountability Office, Washington, DC................................................. 5 Mr. Joe Valandra, Executive Director, Native American Contractors Association, Washington, DC.................................... 17 Ms. Annette Hamilton, Chief Operating Officer, Ho-Chunk Inc., Winnebago, NE.................................................. 19 Mr. Edwin A. (Skip) Vincent, Chairman and Founder, The Hawaii Pacific Foundation, Honolulu, HI, testifying in his role as board member of the Native Hawaiian Organization Association (NHOA)......................................................... 21 Ms. Jana Turvey, President and CEO, Leisnoi, Anchorage, AK, testifying on behalf of the Alaska Native Village Corporation Association.................................................... 23 Ms. Christine V. Williams, Managing Partner, Outlook Law LLC, Anchorage, AK.................................................. 24 APPENDIX Prepared Statements: Mr. Seto Bagdoyan, Director, Forensic Audits and Investigative Service, United States Government Accountability Office, Washington, DC...................... 35 Mr. Joe Valandra, Executive Director, Native American Contractors Association, Washington, DC.................... 52 Ms. Annette Hamilton, Chief Operating Officer, Ho-Chunk Inc., Winnebago, NE.............................................. 63 Mr. Edwin A. (Skip) Vincent, Chairman and Founder, The Hawaii Pacific Foundation, Honolulu, HI, testifying in his role as board member of the Native Hawaiian Organization Association (NHOA)......................................... 72 Ms. Jana Turvey, President and CEO, Leisnoi, Anchorage, AK, testifying on behalf of the Alaska Native Village Corporation Association.................................... 86 Ms. Christine V. Williams, Managing Partner, Outlook Law LLC, Anchorage, AK.............................................. 94 Questions and Answers for the Record: Questions from Hon. Don Young to Mr. Joe Valandra and Answers from Mr. Joe Valandra...................................... 106 Questions from Hon. Don Young to Ms. Annette Hamilton and Answers from Ms. Annette Hamilton.......................... 122 Questions from Hon. Don Young to Mr. Edwin A. (Skip) Vincent and Answers from Mr. Edwin A. (Skip) Vincent............... 126 Questions from Hon. Don Young to Ms. Jana Turvey and Answers from Ms. Jana Turvey....................................... 169 Questions from Hon. Don Young to Ms. Christine V. Williams and Answers from Ms. Christine V. Williams................. 187 Additional Material for the Record: 2018 Economic Impact Study of Ho-Chunk Incorporated.......... 193 2019 Economic Contributions of Ho-Chunk, Inc. to the Winnebago Indian Reservation, Iowa, Nebraska, South Dakota and the U.S................................................ 206 Statement of Katherine Carlton, President, Chugach Education Services, Inc.............................................. 262 Statement of Tiffany Flowers, Assistant to the President, Chugach Government Solutions, LLC.......................... 266 Statement of Carl H. Marrs, Chief Executive Officer, Old Harbor Native Corporation.................................. 270 Statement of Kim Reitmeier, Executive Director of ANCSA Regional Association....................................... 289 NATIVE 8(A) CONTRACTING: EMERGING ISSUES ---------- TUESDAY, OCTOBER 22, 2019 House of Representatives, Committee on Small Business, Subcommittee on Investigations, Oversight, and Regulations, Washington, DC. The Subcommittee met, pursuant to call, at 10:04 a.m., in Room 2360, Rayburn House Office Building, Hon. Judy Chu [chairwoman of the Subcommittee] presiding. Present: Representatives Chu, Craig, Spano, and Burchett. Also Present: Representatives Kim, Davids, Chabot, and Young. Chairwoman CHU. Good morning. The Committee will come to order. I am pleased to be chairing this hearing today to discuss the 8(a) business development program as it applies to Native 8(a) contractors. And I would like to thank everyone for joining us this morning, especially the witnesses. In the 116th Congress, this Committee has been committed to taking a closer look at the various SBA contracting programs. Earlier this year, we held an oversight hearing on the women- owned small business program, followed by a hearing where we discussed the contracting programs that help veterans bridge the gap between military service and entrepreneurship. Most recently, we examined the 8(a) business development program, which had not been the subject of a hearing for more than a decade. Today's hearing is a continuation of those efforts in which we will be discussing the 8(a) business development program as it applies to 8(a) Native contractors. Last year alone, the Federal Government awarded more than $550 billion in contracts for goods and services, with nearly $18 billion going to firms participating in the 8(a) business development program. The 8(a) program has helped to level the playing field for small businesses owned by at least 51 percent socially and economically disadvantaged individuals. Moreover, it provides increased access to the Federal marketplace and business development assistance to thousands of small firms each year. In the 1980s, the 8(a) program was expanded to include small businesses owned by three disadvantaged groups: Indian Tribes, Alaska Native Corporations, or ANCs, and Native Hawaiian Organizations, or NHOs. By including these groups in the 8(a) program, Congress sought to harness the purchasing power of the Federal Government to address the disproportionate levels of economic hardship experienced by indigenous communities. In fact, one in four American Indians and Alaska Natives were living in poverty in 2012. By including Tribes, ANCs, and NHOs in the 8(a) program, Congress helped to foster economic development and help Native communities achieve self-sufficiency. Today, there are approximately 1,000 firms owned by Indian Tribes, ANCs and NHOs participating in the 8(a) program. This hearing will focus on the 8(a) program as it relates to group-owned Native contracting firms, which differs in some ways to how individually owned firms interact with the program. For example, while individual owners and their firms can only participate once in the program, there is no limit as to the number of times Indian Tribes, ANCs, and NHOs can participate. Consequently, they can confer program eligibility to small businesses for up to 9 years each. And unlike individually owned businesses, group-owned 8(a) contractors that are Native may receive sole source contracts in any dollar amount. These differing requirements and additional benefits are a reflection of the social responsibility borne by these groups. Native 8(a) contractors, unlike individually owned firms, use their profits to directly benefit entire communities or of hundreds or thousands of disadvantaged individuals. The success of group-owned Native 8(a) firms is directly connected to the provision of much needed services to each and every member of the community. The important objectives and worthwhile purposes of the Native 8(a) program is not in question. However, there are longstanding problems with SBA's oversight and implementation of the program which this Committee intends to address. For instance, SBA revised its regulations regarding the 8(a) program in 2011, which included changes applicable to Native contractors. Among them, SBA prohibited the award of sole source contracts to Native 8(a) contractors if the contract was previously and immediately performed by a sister company. Additionally, it made technical updates to prevent sister companies with same NAICS code, N-A-I-C-S code, from participating in the 8(a) program simultaneously. Following the issuance of these regulations, GAO conducted two reports focused on Native 8(a) contracting, one in 2012 and another in 2016. Troublingly, these reports found that SBA did not have the adequate resources and lacked critical data to enforce these regulations. Moreover, the 2016 GAO report found that there are systemic issues that impede SBA's Alaska district office from providing proper oversight, including weaknesses in SBA's data collection, supervisory review, staffing, and guidance that restrict the agency's ability to determine whether the program is achieving its objectives. In addition to the GAO's findings, this summer, the Los Angeles Times published reports of business owners misrepresenting themselves as Native American in order to benefit from the program. SBA has stated that it did not violate rules in certifying these contractors and attributes their eligibility to the regulations that were in place prior to 2011 when individual contractors were not required to be enrolled members of a federally or State-recognized Indian Tribe in order to participate. We know from our recent hearing that certification of 8(a) firms has been a longstanding issue for the SBA, but it is our responsibility to conduct thorough oversight of these allegations, and this hearing will help us follow the facts and ensure that SBA is responding to these allegations adequately. We owe all businesses in the 8(a) program, including those from Native communities, the certainty that the program is operating as Congress intended. It is also our job to ensure that the successes of Native 8(a) contractors, which empower and help communities become self-sufficient, are not overshadowed by the inability of SBA to properly manage the program. Today's hearing will provide us with the opportunity to hear about the oversight issues from GAO. We will also learn from program participants about the importance of the 8(a) program, its performance, and what it means for Native communities. It is through this oversight that we will gain the tools we need to strengthen the 8(a) program. I had hoped to hear from all of you in person, but because of a markup of the prescription drug bill in the Ways and Means Committee, I will unfortunately need to depart early, but I will stay as long as I possibly can. And I want to thank all of our witnesses for their attendance and insights into this important topic. And I would now like to yield to the Ranking Member, Mr. Spano, for his opening statements. Mr. SPANO. Thank you, Madam Chairwoman, for holding this important oversight hearing today that will examine the specially recognized groups operating within the SBA's 8(a) program. I would like also to take a moment to thank Congressman Don Young, the dean of our House here, for his attendance and interest in our committee's exploration of the 8(a) program, which is a program vital to his home State of Alaska. Since this is the SBA's longest running and most well-established business development program, it is critical that we take the time to assess whether the program is operating efficiently and effectively as Congress intended. In the 1980s and in the 1990s, Congress determined that certain disadvantaged groups should be given special consideration within the 8(a) program. These groups include Native American Tribes, Alaskan Native Corporations, Native Hawaiian Corporations, and Community Development Corporations. In addition, the 8(a) program requirements were modified or relaxed to a certain degree for these groups in comparison to the requirements for individuals participating in the 8(a) program. Given that there are significant differences in the way that the 8(a) groups utilize the program compared to 8(a) individuals, it is important for this Committee to understand the distinction between them and the unique responsibilities 8(a) groups are required to undertake. For instance, the relaxed rules allow federally recognized groups to form multiple 8(a) small subsidiaries in multiple industries, while 8(a) individuals and respective firms may only participate in the program once, as the Chair mentioned a moment ago. Also, while 8(a) individuals are responsible for the growth and development of their own business, 8(a) groups are responsible for providing a wide variety of benefits to their members, such as shareholder dividends, employment assistance programs, scholarships and internship opportunities, cultural preservation initiatives, and other benefits. A number of shareholders belonging to an 8(a) group can range from a hundred to over a thousand, and the benefits provided to them may vary depending upon the specific needs of the shareholders in those regions. Thus, contract awards made to 8(a) groups may have a direct and compelling effect on the broader communities in which these groups serve. In addition to understanding the differences between 8(a) groups and 8(a) individuals, it is also important for this Committee to assess whether the SBA is conducting adequate oversight to ensure taxpayer dollars are being spent wisely and within the bounds that are established by law and regulation. Utilization of the 8(a) program by these specially recognized groups has risen exponentially over the last several decades, prompting the Government Accountable Office to undertake a series of reviews spanning from 2006 to 2016. The GAO has historically found weaknesses limiting the SBA's ability to monitor compliance with 8(a) program requirements, which raises questions as to whether all program participants, individually owned or group owned, are in full compliance with all laws and regulations governing the program. So while the SBA has taken some steps toward improving its monitoring processes over the years, the GAO still found deficiencies in SBA oversight in its 2016 report, which raises questions as to whether some 8(a) groups may be operating outside of regulation. While there are certain complexities and details unique to the 8(a) program's application to these federally recognized special groups, it is crucial to keep in mind the original congressional intent of the 8(a) program as a business development program intended to provide full and fair opportunity for full participation by socially and economically disadvantaged persons in our free enterprise system. It is in the best interest of our Nation's economy to ensure that this program yields high quality, productive, and successful small businesses and entrepreneurs. I look forward to hearing the testimony of all our witnesses today. Thank you, Madam Chairwoman. I yield back. Chairwoman CHU. Thank you, Mr. Spano. The gentleman yields back. And if Committee members have an opening statement prepared, we would ask that they be submitted for the record. I would like to just take a minute to explain the timing rules. Each witness gets 5 minutes to testify and each member gets 5 minutes for questioning. There is a lighting system to assist you. The green light will be on when you begin, and the yellow light will come on when you have 1 minute remaining. The red light will come on when you are out of time, and we ask that you stay within that timeframe to the best of your ability. Today, we will have two panels of witnesses. I would now like to introduce the witness for our first panel, Mr. Seto Bagdoyan. Mr. Bagdoyan is currently the director for audit services in GAO's Forensic Audits and Investigative Service mission team. During his GAO career, Mr. Bagdoyan has served in a variety of positions, including as legislative advisor in GAO's Office of Congressional Relations and as assistant director for Homeland Security and Justice. He has also served on congressional details with the Senate Finance Committee and House Committee on Homeland Security. In his private sector career, Mr. Bagdoyan has held a number of senior positions in consultancies. He earned a BA degree in international relations and economics from Claremont McKenna College, located in my district, and an MBA in strategy from Pepperdine University. Mr. Bagdoyan. STATEMENT OF SETO BAGDOYAN, DIRECTOR, FORENSIC AUDITS AND INVESTIGATIVE SERVICE, UNITED STATES GOVERNMENT ACCOUNTABILITY OFFICE, WASHINGTON, DC Mr. BAGDOYAN. Thank you, Chairwoman Chu, Ranking Member Spano, Mr. Young, members of the Subcommittee. First, I am grateful for some additional time, if I may, to deliver my full remarks, and I will try to stay within 5 minutes as you suggested. I am pleased to appear before you today to discuss, at a high level, three past GAO reports that address control weaknesses and compliance risks involving SBA's monitoring and oversight of its 8(a) program for certain disadvantaged firms that you described earlier, such as those owned by Native businesses, namely ANCs, NHOs, and Indian Tribes. The 8(a) program is one of the Federal Government's primary vehicles for helping develop socially and economically disadvantaged small businesses. One of its key aspects is the ability for Native firms to receive Federal contract awards noncompetitively for any amount. As such, the 8(a) program represents a substantial investment by the Federal Government in the form of contract awards by procuring agencies. For example, in fiscal year 2019, such investment entailed about $10.9 billion in obligations for sole-source and competed contracts awarded under SBA's business development program, including about $4 billion for Native firms. Over the years, the 8(a) program has incorporated many complex rules, which, and I cannot emphasize this enough, render effective oversight of regulatory compliance, a significant long-term challenge for SBA. In essence, as I will describe below, its controls are not tailored to deal with the program's complexities. With that in mind, I will now summarize four key control weaknesses described in our three reports that, collectively, undermine SBA's monitoring and oversight of the Native 8(a) program and exacerbate a number of compliance risks. First, incomplete, inconsistent, or missing documentation and other evidence in relevant contract files, such as offer and acceptance letters to gauge ANC-owned firms' adherence to regulatory requirements. Second, limitations in the ability to obtain and track and share across geographical locations key program data needed to enforce its own important revenue and other rules. Third, insufficient staffing and relatedly atypical workloads in the Alaska District Office to carry out necessary and critical monitoring and oversight tasks in timely fashion. And, fourth, inadequate or vague program guidance and procedures that otherwise would clearly articulate to staff how to interpret new regulations and review complex financial documentation. As I mentioned, these weaknesses collectively pose significant compliance risks, which are of particular interest to this Subcommittee, such as, one, the award of sole-source follow-on contracts to Native 8(a) firms, even though a contract was performed immediately prior by other firms of the same parent companies; and, two, sister subsidiary firms generating the bulk of the revenue in the same primary line of business using a secondary code. This practice circumvents the intent of regulations that prohibit sister subsidiaries from earning most of their revenue in the same industry. In our three reports, we made 21 recommendations to SBA. To date, the agency has implemented 15 recommendations, and 6 have not been implemented, including those related to tracking or sharing revenue NAICS code data. For example, unimplemented recommendations include establishing a fundamental control, i.e., collecting and analyzing revenue and other important data from procuring agencies and Native 8(a) firms to track and ensure that subsidiaries are not generating the majority of their own revenue in the same primary industry by using a secondary code. Implementing this recommendation as intended could help mitigate one of the program's principal compliance risks. I would note that since we have not performed any new work since our 2016 report, we don't know the extent to which, if any, SBA's implementation of some of our recommendations has helped mitigate the various oversight and monitoring weaknesses we have identified. However, I would note that separate reports since that time by other GAO teams and SBA's Office of Inspector General suggest that the weaknesses persist. The control weaknesses I have described today are systemic to the program and longstanding and have appeared consistently across multiple GAO reports, as SBA has struggled to articulate and execute an effective oversight and monitoring strategy to ensure compliance. Accordingly, it is imperative that SBA devote full attention to its oversight responsibilities and redouble its efforts to address the control weaknesses we have identified by expeditiously implementing our remaining recommendations as intended, while taking into consideration the many complexities of the program. Chairwoman Chu, this concludes my remarks. I look forward to the Subcommittee's questions. Chairwoman CHU. Thank you. We appreciate all that you have shared with us, and I will begin by recognizing myself for 5 minutes. On June 26, 2019, the Los Angeles Times published a report saying that more than $300 million in Federal and State contracts reserved for Native Americans had been awarded since 2000 to companies whose owners made unsubstantiated claims of being Native American. These allegations concern individual business owners who participated in the 8(a) program as opposed to businesses owned by Native Tribes, ANCs, or NHOs. Now, SBA has stated that it did not violate rules in certifying contractors for the 8(a) program and attributed their eligibility to the regulations that were in place prior to 2011, when a contractor seeking minority status as Native American was required to have held himself or herself out as Native American and be recognized by others as a member of a Native American community. The regulations did change in 2011, and SBA now requires an individual to be an enrolled member of a federally or State-recognized Indian Tribe in order to be considered an American Indian for the purpose of being determined socially disadvantaged. So, Mr. Bagdoyan, has the GAO studied these concerns within the context of the SBA's 8(a) program? Mr. BAGDOYAN. Madam Chairwoman, we have not. In fact, the last relevant work we performed was about 9 to 10 years ago. So it is probably overdue that we take a look here. So I would be happy to work with Committee staff to arrive at a request that we can implement for you. Chairwoman CHU. Yes, we would certainly like to put forth that request for that to be studied. Mr. BAGDOYAN. Sure. But I would note that it is, obviously--certification determines eligibility into the program and is a fundamental part of a control system to make sure that only those who are intended to participate should participate, so--and I am familiar with the LA Times stories. Chairwoman CHU. Do you believe that there are deficiencies with regard to SBA's determination as to whether a contractor is indeed a member of a federally recognized Tribe? Mr. BAGDOYAN. All I have to go by is what was referred to in the LA Times articles, but I would note that the SBA Inspector General has noted in recent reports that determining eligibility is an ongoing concern for the agency, as well as identifying those who have snuck through and removing those entities. So it is a related issue, and it is basically a fundamental controls issue from the front to the end. Chairwoman CHU. Let me ask this. The regulations changed in 2011, and both of your GAO reports, the 2012 report and the 2016 report, both found that SBA did not have the adequate resources and lacked critical data to enforce the regulations. And, in fact, you found quite large systemic issues pertaining to the Alaska office, where you found that there were problems with everything from data collection and supervisory review, staffing and guidance, and basically many problems. This has been ongoing now. The changes occurred in 2011. So now this is 8 years. Why has this not been remedied? Mr. BAGDOYAN. Well, it is hard to say. As I mentioned, we haven't done any work since 2016 to see whether the recommendations have had any impact, but I would say that these problems are not unique to SBA, and the fact that they are longstanding shows that there is a fundamental issue with, potentially, management priority and oversight of the implementation of the recommendations. Again, I would say that these are longstanding. They have been corroborated varyingly by other GAO teams and the OIG. And just a note on the 2011 regulation that you mentioned. It is our understanding that the guidance to help SBA staff implement that regulation was not available until sometime in 2016. So it basically took about 5 years to finalize the guidance and make it available for their own staff. So that is an issue as well. Chairwoman CHU. The guidance to implement the regulations took that long? Mr. BAGDOYAN. That is correct. That is right. Chairwoman CHU. Is this normal? Mr. BAGDOYAN. I am not sure if it is normal, but it certainly should not happen, certainly for that duration. I realize that the program is complex, as I mentioned, and that guidance might reflect that complexity, but, you know, the expeditious implementation of guidance, which we recognized in our reporting--that was lacking at the time. So there was much confusion about what to do and how to do it. And I would note, if I may, not just by SBA staff, but also procuring agency staff, including contracting officers. So that is an important tip-of-the-spear type of proposition that, if the agency people who are letting the contracts don't know exactly what they are supposed to do, is a problem. Chairwoman CHU. Thank you. My time has now expired. The Ranking Member, Mr. Spano, is now recognized for 5 minutes. Mr. SPANO. Thank you, Madam Chairwoman. Thank you, Mr. Bagdoyan. One recommendation that you note is to significantly advance SBA's oversight in improving its ability to track and share revenue information for ANC-owned firms. And as of your 2016 report, you indicated that the SBA still had not implemented such a system. There was no such system in place to track that information. Can you help the Committee understand the implication of this lack of framework by describing in more detail the harm or risk associated or that is imposed to the program due to the lack of SBA's oversight as it relates to tracking that information about revenue? Mr. BAGDOYAN. Thank you for your question, Mr. Spano. Yes, I would note that that information is vital. Again, it is embedded in the control system. Everything revolves around information and data. Especially in this case, tracking revenues plays directly into the same industry participation by multiple subsidiaries of one parent company, which is one of the, I think, the compliance risks that is of principal importance to this Subcommittee. So at the time of our work, SBA had actually committed to standing up such a system, but after some time elapsed, we found that the system was--or the proposed system was-- incompatible with existing SBA systems. So, right now, it is my understanding that SBA essentially has a spreadsheet system that takes information from FPDS, Federal Procurement Data System, and that is essentially a patchwork approach. FPDS only has obligation data in its purview, and what we are looking for is actual revenue data. Obligations can understate or overstate the extent of the sales angle, if you will. Actual revenue data would be important. So I would leave it at that, and that the entire control system would revolve around making sure that SBA has revenue data to inform its decisionmaking. Mr. SPANO. So just to summarize, the entire intent and guidance with respect to the law that was passed with respect to the ANCs is completely thwarted by SBA's inability to track this information. Mr. BAGDOYAN. Yes. I mean, revenue information is at the heart of the matter. Mr. SPANO. Got it. Mr. BAGDOYAN. Without that, you can't really enforce the regulation as intended. Mr. SPANO. Yeah. It is concerning to me, I am sure as well to the other Committee members, that the SBA doesn't have accurate numbers on even basic information, such as the number of ANC-owned firms in the 8(a) program. How can you not know what that number is? It is a pretty basic number, I would think. Has the SBA, in its response to your 2016 report, indicated that it would improve in this regard, and have you seen any evidence of such improvement? Mr. BAGDOYAN. Well, I would say that the agency at the time agreed with five of our six recommendations. And, again, since we haven't followed up with in-depth audit work, we don't know what, beyond the paper trail that was provided to us from the agency telling us what they intended to do, actually translated into useful, sustainable action. That is the key. You have a plan. You have got to execute it and then see if it is working. Mr. SPANO. Sure. So they may have done something, but there is no way to tell whether what they have done potentially has had any positive impact? Mr. BAGDOYAN. That is right. I mean, give them at least some credit that things may have turned around in some areas, but, lacking audit work, I just can't tell you definitively. Mr. SPANO. Yeah. Thank you. Mr. Chair, I yield. Mr. KIM. [Presiding] Great. Thank you. Good morning, Mr. Bagdoyan. Mr. BAGDOYAN. Good morning, Mr. Kim. Mr. KIM. I am Congressman Kim just taking over the chair here. I just wanted to ask a question or two before I hand it off to my colleagues, and I may follow up at the end. But one of the issues highlighted by both GAO reports was about the lack of necessary resources and data to be able to enforce regulations. For example, there are regulations that prohibit the award of follow-on sole source contracts, if that contract was previously performed by a sister company. However, both reports found instances where agencies were not providing the information needed to enforce this regulations and that SBA was not following up to obtain the information. GAO made several recommendations to improve this process. Could you please expand on your findings, and tell us why SBA is having so much difficulty collecting this information? Mr. BAGDOYAN. Sure. Thank you for your question, Mr. Chairman. Yes, it is problematic. We did find, in our file reviews, that key information such as the acquisition history, for example, of certain contracts was either missing or incomplete. The offer letters, acceptance letters that are also part of the file, in some instances failed to shed information in that regard. I think what you mentioned about the follow-on, that is the key. I think it is, at best, based on our experience, uneven. At the time of our report, there was one individual business opportunity specialist who had actually started to do this at the Alaska District Office, but once more, I will invoke the lack of follow-on work that we have done since 2016 to say that we don't really know whether this setup was expanded within the district office and other district offices. Mind you, there are about five dozen or so--don't quote me on that--district offices around the country. So the key is follow-on. If you don't have information, data, or the data are incomplete or silent on certain things, you have got to go out there and follow on and follow up, and put the onus on the agencies that are letting these contracts to respond and respond completely. Mr. KIM. I appreciate that. Another issue that may very much require that type of follow-on. In the 2012 GAO report, it describes practices such as capitalizing on common corporate resources that allow sister companies to effectively operate as large firms in the small business program. This is something I just wanted to hear a little bit more from you on. If you can just expand on this concern, and help me understand, help us understand the significance of that finding. Mr. BAGDOYAN. Right. So, I'm trying to find the right answer for you in my notes. Let me get back to you on that one, if I may, rather than give you an incomplete answer. Mr. KIM. I would appreciate that. Mr. BAGDOYAN. I have got a lot on my binder here, and it is kind of tough to follow up. Mr. KIM. Yeah, not a problem. Mr. BAGDOYAN. My apologies. Mr. KIM. What we will do is we will get back to that one. We will go through some of my other findings. Mr. BAGDOYAN. Sure. Mr. KIM. And then at the end, if you feel like you can find it, at that point---- Mr. BAGDOYAN. Absolutely. Mr. KIM. One last thing before I hand it over. When it comes to Native 8(a) contractors, affiliates are not considered in size determinations unless it is determined that a small business will or is likely to obtain a substantial unfair competitive advantage. However, according to the 2012 report, SBA did not have a process to make such determinations. So I guess I want to understand is, does GAO know if SBA has created this process, and what is the importance of determining whether there is a substantial unfair competitive advantage? Mr. BAGDOYAN. Sure. Thank you for that question. Yes, we are aware that SBA has an approach to deal with the unfair competitive advantage process. I believe, again, based on the information we have, which isn't much, it involves using NAICS codes and FPDS in some sort of combination, but the agency has not provided us with any detail as to how this system is put together, how it is to function in its intended purpose. But, again, I would note that relying on FPDS, which only deals with obligation information, is probably an incomplete way to go in this regard. Mr. KIM. Okay. I appreciate that. Well, my time has run out, so why don't we just keep going forward. And we will try to return to that question if you have it. I am just going turn it over to my colleague, Representative Burchett, for his questions. Mr. BURCHETT. Thank you, Mr. Chairman. Pronounce your name for me, Brother. I am sorry. Everyone messes up my name, but---- Mr. BAGDOYAN. No worries, sir. Last name is pronounced Bagdoyan. Mr. BURCHETT. Bagdoyan. All right. I got it right, but I won't ever say it again. I got it right that time. Mr. BAGDOYAN. Quit while you are ahead, right? Mr. BURCHETT. Yes, sir. Your testimony, my question partially has been answered, but I'd like to dig gown through it if I could. Your testimony mentions 21 recommendations that the GAO has for the SBA. And what would you think would be the most difficult thing in implementing this? Of course, you pretty much answered that. But do you think that Congress should be more assertive in making sure those concur, and what are we doing to make sure that you succeed? Mr. BAGDOYAN. Well, that is a great question. I think a hearing such as this is one of the better venues to certainly frame the control weakness and compliance issues that we have found. Again, this dates back to at least 2006. I would like to point that out. These are persistent issues that do need sustained congressional attention. I will be perfectly candid. We can only take it so far with our audit work, as can the OIG, but I think this type of hearing with the type of questions that you are asking are absolutely imperative to keep the soft pressure on the agency, any agency for that matter, to respond to the many findings that we have, and our recommendations as well. Mr. BURCHETT. Do you feel like we are doing what we need to do to bear the fruit, I guess, as we should say? Mr. BAGDOYAN. I think--again, I will say that a hearing like this one is very important, and I appreciate being here. Certainly, everybody can do more and create a roadmap for strong controls and oversight and compliance. That is what this is all about; make sure that the program is functioning as intended. I think that is our mutual goal. Mr. BURCHETT. All right. Thank you, Mr. Chairman. I will yield back the 2 minutes and 50 seconds of my questioning back to you, if you would like to further--I know you had some more questions. Mr. KIM. Well, I will pass that forward just so that we can give some of our colleagues the time. Mr. BURCHETT. All right. Thank you, Brother. Mr. KIM. I appreciate that. I am going to turn it over to Congresswoman Davids for her line of questioning. You are recognized for 5 minutes. Ms. DAVIDS. Thank you, Chairman. And I just want to say thank you to Chairwoman Chu for allowing me to sit on this panel today. I am not a member of the Subcommittee on Investigations, Oversight, and Regulations. So I appreciate my colleagues allowing me to be a guest here. So you just said that one of the goals of the GAO report is to help ensure that the 8(a) program is functioning as intended. And I am curious, if you could talk a little bit about--after reading through your testimony, I am wondering if the lack of investment in human capital, which we have seen as an issue at SBA--last week or the week before, there was an IG report that we heard about in the hearing that noted the lack of human--investment in human capital at SBA and it causing management issues, in addition to the inability of SBA to track the number of 8(a)-certified firms and the fact that we have got clear indications that there are probably firms that are claiming to be Native that are not. I am curious if, in your examination, if you found or determined that there were any risks of the Federal Government violating its trust responsibility to Tribes. And when we think about functioning as intended, surely the inclusion of Native Hawaiian, Native American, and Alaska Native Corporations in this is part of that trust responsibility. Can you talk a little bit about that? Because I didn't see it in your report. Mr. BAGDOYAN. Sure. Well, you didn't see it because it wasn't really part of our scope of the audit. That is certainly a policy and intent question. Our proxy is intent--work as intended, and we build up from the controls, the processes and procedures, to make sure that whatever Congress has directed actually happens. And if I may touch on the human-capital aspect of your remarks. We did find various issues about the level of staffing, the atypically heavy workloads that personnel in the district office, especially in Alaska, encountered, but also the fact that, as with most agencies, there would be people who would be retiring and taking all that knowledge with them, without that knowledge necessarily being institutionalized to begin with and then being passed on to those who succeed them. And then, of course, the expertise that is needed. Knowledge and expertise are complementary, obviously, to ensure effective compliance. So as SBA tries to address that particular issue, I think it will probably be challenging for them to find the right people who know and do the right things and actually keep them. So I will leave it at that. Ms. DAVIDS. Thank you. So I would just encourage you--the SBA, clearly, for this specific program and many others, is responsible for the federal trust responsibility, but I would encourage the GAO in your reporting to also make sure that that is actually a part of foundational findings that you should be looking for. The second thing I wanted to ask about is just, in terms of the oversight process, I know there have been multiple reports that have come out. How do you--how--I guess, how would you say the effort to address the oversight concerns has been, and what do we need to do to make sure that SBA is addressing that and progressing toward meeting those oversight recommendations? Mr. BAGDOYAN. Sure. I will take the latter part of your question first. I mean, again, I will refer to this Subcommittee hearing as one great venue. I know SBA is not involved in this hearing, but whenever they are up here, it would be a good idea to resurface the issues that we have discussed and get from them what they are doing. I mean, we are dealing with--the program requirements are up here. The controls, as we find them, are down here. The gap between my two hands is the compliance risk, and the recommendations are designed to bring that more in balance. Now, we made 21 recommendations, as I mentioned, in the three reports that I mentioned earlier, and SBA has implemented 15 of them. However, since we haven't performed any follow-on work since then, it is difficult to know exactly how effective those--the implementation of those--recommendations has been. I just can't comment on that. But, again, you are trying to narrow the gap of compliance, the risk of compliance by adhering to the recommendations and implementing them as intended. Ms. DAVIDS. So really quickly, do you think that the SBA has been consistent in trying to address oversight concerns? Mr. BAGDOYAN. I would say, candidly, it is mixed, from my experience. They have disagreed in the past with some recommendations we have made or they have partially agreed, and then they have turned around and probably thought better of it and come back and said, look, we implemented your recommendation, even though we didn't agree with it originally. So something happens there, they may take another look and decide that, hey, you know, GAO was right after all, so we will do something about it. Ms. DAVIDS. Thank you. I yield back. Mr. KIM. Thank you. I am going to recognize my colleague from Alaska, Congressman Young. Over to you for 5 minutes. Mr. YOUNG. Thank you, Mr. Chairman. And I want to thank you and the Chairman, although she is not here, and the Ranking Member for letting me sit on the Committee today. This is crucially important to the State of Alaska and especially my Alaskan Natives. I was involved in making Alaska Natives eligible for the 8(a) programs, and it is been a great success. And I think every 8(a) participant in Alaska would actually cherish the fact that they would like to make sure they are doing everything right. They have actually set up a small unit of their own, and any new 8(a) is reviewed by Alaska Natives. This has been a successful program. And the Chairman mentioned the effect of the 8(a) program in Alaska to the Alaska Natives; it is for a large group of people, and each organization applies for it. I was very excited because I don't think there has been one complaint--and we have to look at the end result--from any agency that the 8(a)s did work with. That is something that the people have to think about. There has been some complaints from how it was set up but not from the work they did, and we have to think about it. This program is to help Alaska Natives, American Indians, Hawaiian Natives. That is what it is set up for, and it has been a success. The only thing about the witness today, I would like to make sure the Committee thinks about SBA being on the panel. And we talk about some of the problem they haven't done. You have submitted why they haven't done it. If it is a lack of personnel and money, then we as a Congress should supply it for them. We can't expect an agency to do the work if they don't have the whereforeall to do it. But I am very excited about this. I am excited about the witnesses that will come up later. And, Mr. Chairman, this is a very important issue, as I said, to my State and my Alaska Natives, and I will be bird- dogging this real close. And I thank you for your work. You have done a pretty good job. I won't agree with everything, but a pretty good job. We will review the rest of it together. With that, I yield back. Mr. BAGDOYAN. Thank you, Mr. Young. I appreciate the compliment. Mr. KIM. Thank you, Congressman. I am going to turn it over to Congresswoman Angie Craig. Over to you for 5 minutes. Ms. CRAIG. Thank you so much, Mr. Chairman. I want to just dig into a little bit of the 2016 report that found staffing challenges at the Alaska district office, and maybe just a little broader, that limited that office's ability to perform oversight. You recommended that SBA develop a comprehensive approach to staffing this office, and, of course, the SBA rejected, stating it had already mitigated the potential for reoccurrence. Can you tell me a little bit about that recommendation and why the steps taken by SBA were insufficient? And as a former head of HR for a major Fortune 500 company, I am just particularly interested in your recommendation versus what was done. Mr. BAGDOYAN. Sure. Thank you for your question. Well, you know, the staffing issue at that particular DO has been longstanding, and, as I mentioned before, there are some atypical workload issues involved there. Heavy workload creates a backlog, and backlog, for oversight purposes, is, you know, not fatal but it is very significant. So you are correct in that originally SBA mentioned that they had a handle on the situation and essentially disagreed with the recommendation, but then, again, as I mentioned earlier, they went back and looked at it again and they ended up hiring five additional business opportunity specialists. And they had a plan at the time. Again, this is 3 years-plus, and the audit work was actually done in 2015. So, unfortunately, we are dealing with some dated information. And so they also wanted to hire an attorney with ANC expertise to do some mentoring and guidance for staff to oversee their oversight, focusing on compliance. So they have done a number of things, but as I have mentioned before, it is all in the execution of the recommendation and the plan that drives that from the agency, in this case SBA, and actually sustaining any positive results that you get. I think staff turnover has been an issue. That is why the longstanding problem has been having adequate people in place with the right knowledge and expertise to perform these oversight functions. Ms. CRAIG. How often do you see this in the district offices where there is--there are staffing and turnover issues that lead to, you know, less than optimum performance? Mr. BAGDOYAN. Sure. Again, our focus was, in this case, the Alaska District Office. I am not sure. It may be as intense in other district offices. I mean, they are dealing with quite a bit of a workload. So--yes. So they are dealing with 400 or 500 ANCs, whereas other district offices, their workload is far less. So we didn't look at it specifically. So I would--I wouldn't really want to speculate. Ms. CRAIG. Great. Mr. Chairman, I have no further questions, and I yield back. Mr. KIM. Okay. Great. Thank you. Well, look, I appreciate everyone's questions here. Mr. Bagdoyan, thank you so much for your time here. Oh, great. I was prepared to request as a QFR, but I am happy---- Mr. BAGDOYAN. You are welcome to do so, but---- Mr. KIM. So why don't you, since we have you, just take a minute---- Mr. BAGDOYAN. Yes, let me see what I can make of this for you. You are right that SBA has repeatedly emphasized business development, obviously, to make the businesses mature, self- sustaining, and those kinds of things. We did find practices that actually undermine this intent--the use of sister subsidiaries for subcontracting purposes. Again, up here it is the holding company. You have all the subsidiaries under here. Collectively, the holding company assists the subsidiaries. You put them all together, you basically have a large business functioning in a small-business space. And also, past performance is a key to show for future awards that, yes, we have delivered before, so do consider us as well. So that is how I would frame this answer for you. Mr. KIM. Well, I appreciate that. And I think just from across the board the different questions and your detailed responses, it does seem like there is a lot of important followup that needs to happen. So as the Chairwoman said before she had to leave---- Mr. BAGDOYAN. Right. Mr. KIM.--we will work as a Committee here to determine the scope of that and the right way to move forward. Mr. BAGDOYAN. Yes. Mr. KIM. I am sure we will be in touch with that. Mr. BAGDOYAN. Absolutely. Mr. KIM. In the meantime, we do appreciate your time today---- Mr. BAGDOYAN. Thank you. Mr. KIM.--to be able to come on out and talk with us. Mr. BAGDOYAN. Yes. Mr. KIM. We will be transitioning to the second panel, so why don't we just take a very quick break just to be able to set that up and then jump right in. Mr. BAGDOYAN. Thank you very much, Mr. Chairman. I appreciate the time. [Recess.] Mr. KIM. Hi, everyone. We are going to get started again here on the second panel. Thank you so much for taking the time to join us here today and to be able to talk through these issues. I wanted to just first yield to my esteemed colleague from Alaska, Congressman Young, to introduce one of our witnesses, and then I will move into the rest. Mr. YOUNG. Thank you, Mr. Chairman. It is my honor today to introduce the Alaskan witness. It is Ms. Christine Williams. She is a managing partner of Outlook Law, LLC, a legal expert in government contracting law. Ms. Williams has been recognized by a national peer review group as being the top 5 percent of government contract attorneys in the Nation. Ms. Williams represents clients participating in all SBA various contracting programs, including the 8(a) program. In addition to her responsibilities as attorney, she also serves as an adjunct law professor teaching government contracts law, and collaborations on her own time with the Small Business Administration's General Counsel's Office, training various groups on SBA regulations and operational context. Ms. Williams is a lifetime resident of the State of Alaska and has significant depth and breadth of experience with 8(a) Alaska Native Corporations. I want to thank you for participating, Ms. Williams. I look forward to hearing your testimony. I probably won't hear it because I have to go to another meeting, but I will know what it says; later on I will read it. So just thank you for being here. And the rest of the witnesses, thank you. I think it is crucially important on this issue you can testify on how good the 8(a) program is going. Mr. Chairman. Mr. KIM. Thank you. Thank you for joining us here today. You are welcome back anytime. I appreciate it. Mr. YOUNG. Don't tempt me. Mr. KIM. I am going to just continue on with some of the other witnesses here. Again, just grateful for your time. Mr. Joe Valandra is the executive director of the Native American Contractors Association. He is a member of the Rosebud Sioux Tribe of South Dakota, and has over 30 years of business experience. Mr. Valandra is the managing director of VAdvisors, LLC, a specialty advisory firm in D.C. that provides consulting services and advice in areas related to business and American Indian policy. Welcome. Another witness we have is Ms. Annette Hamilton, who is the vice president and chief operating officer of Ho-Chunk, Inc., a corporation owned by the Winnebago Tribe of Alaska. In this position, she overseas the daily operations of Ho-Chunk's multiple subsidiary companies and is responsible for strategic planning, budgeting, forecasting, and corporate business plans. Welcome, Ms. Hamilton. Ms. HAMILTON. You meant Nebraska. Mr. KIM. I meant Nebraska, yeah. I was just testing you to make sure that you were on top of it. Good. No, thank you for that. Mr. Vincent is the Chairman and founder of The Hawaii Pacific Foundation, a Native Hawaiian organization foundation. In 2010, he retired with the rank of brigadier general after 37 years of military service as an Active Duty member of the Hawaii Air National Guard. Thank you for your service, sir. Served five combat tours and held various command and staff positions at the Pentagon, Hawaii State headquarters, as well as in the field. Today, he serves on the board of several organizations, including the Asia-Pacific Economic Cooperations Disaster Response Risk Reduction Subcommittee. Welcome, Mr. Vincent. Appreciate it. And our final witness to introduce is Ms. Jana Turvey. She is the president and CEO of Leisnoi, Inc., an Alaska Native Village Corporation with roots on Woody Island in the Kodiak Island Archipelago. She has extensive experience in the private sector, and served as the vice president of legal affairs and general counsel at Ahtna, Inc., and as vice president of corporate affairs at the Afognak--is that correct? Ms. TURVEY. Afognak. Mr. KIM.--Afognak Native Corporation. Welcome. Thank you so much for coming out here. So why don't we just start. We will just start from this side and head on over. So, Mr. Valandra, over to you. You are recognized for 5 minutes. STATEMENTS OF JOE VALANDRA, EXECUTIVE DIRECTOR, NATIVE AMERICAN CONTRACTORS ASSOCIATION, WASHINGTON, DC; ANNETTE HAMILTON, CHIEF OPERATING OFFICER, HO-CHUNK INC., WINNEBAGO, NE; EDWIN A. (SKIP) VINCENT, CHAIRMAN AND FOUNDER, THE HAWAII PACIFIC FOUNDATION, HONOLULU, HI, TESTIFYING IN HIS ROLE AS BOARD MEMBER OF THE NATIVE HAWAIIAN ORGANIZATION ASSOCIATION (NHOA); JANA TURVEY, PRESIDENT AND CEO, LEISNOI, ANCHORAGE, AK, TESTIFYING ON BEHALF OF THE ALASKA NATIVE VILLAGE CORPORATION ASSOCIATION; AND CHRISTINE V. WILLIAMS, MANAGING PARTNER, OUTLOOK LAW LLC, ANCHORAGE, AK STATEMENT OF JOE VALANDRA Mr. VALANDRA. Thank you, Mr. Chairman. Good morning, members of the Committee. I want to express our sincere appreciation from the Native American contractors for giving us this opportunity to express our views and concerns and recommendations related to the 8(a) program. Please let me tell you just a little bit about myself, although the introduction did well. Thank you, Mr. Chairman. I have been the executive director for exactly 2 weeks of NACA, and I am very pleased to be here. I am a member of the Rosebud Sioux Tribe. I am a graduate of the University of South Dakota Business School and the University of Minnesota Law School, and I welcome the opportunity to champion the mission of NACA and to continue to be a vigorous advocate for travel sovereignty and economic justice in Indian Country. NACA was established in 2003 as a 501(c)(6) trade association with the purpose of advocating on behalf of Native community-owned Alaska Native Corporations, Native Hawaiian Organizations, and Tribal enterprises engaged in Federal contracting. NACA's mission is to protect the rights of Native American communities to create economic development through government contracting. Our members consist only of companies owned by their Native communities. NACA member enterprises impact the lives of hundreds of thousands of Natives. Effective, transformative, powerful. These are not descriptions often associated with Federal Indian policy. NACA is pleased to say that the 8(a) program has become one of the most effective, transformative, and powerful economic tools for Indian Country. The 8(a) program works. It helps provide economic opportunity for Native communities. No doubt much more needs to be done, but the 8(a) program is helping our Native communities in many significant ways. The 8(a) program also recognizes the Federal Government's trust responsibilities to Native people and the government-to-government relationship with Native governments. Native-owned 8(a) businesses invest heavily in their communities. No other 8(a) participant exists solely for the benefit of entire at-risk communities. Unlike other Federal contractors, community-owned Native enterprises in the 8(a) program are required to provide annual benefit reports. These reports detail benefits provided to Native communities. The following are a few examples of how NACA members benefit their communities. Community-owned Native enterprises are mandated to return, invest part of their profits in their communities. As noted, these benefits are vital to the stability and survival of Native communities. While the 8(a) program is an economic development program, not a jobs program, NACA members have created thousands of jobs directly and indirectly. These jobs provide significant career pathways for community members. NACA members also provide resources to their Native communities to invest in the youth, including Head Start and early childhood education, education including Native language revitalization and scholarships for post-secondary education, vocational and job training programs, Native history and cultural preservation, infrastructure, housing, elder care, healthcare, and many other community priorities. None of this investment would be possible without Native access to the 8(a) program. NACA strongly supports the Small Business Act and related programs because of the hope and opportunity it brings to historically disadvantaged Native communities. The 8(a) program is functioning as Congress intended, by promoting the economic well-being of Native Americans. However, we believe the reauthorization of the Small Business Act provides an opportunity to strengthen and reinforce Congress' intent to empower Native communities to build strong, sustainable communities. In our written testimony, we make several recommendations when considering the reauthorization of the Small Business Act. NACA stresses that any legislation that may be considered must strongly bear in mind the impacts to Indian Country. In all cases, consultation with Indian Country must be pursued before taking any action. It is imperative to consider how efforts to modernize, streamline, and improve the SBA programs, however well intended, may have unintended negative impacts on NACA member entities and Native communities that depend upon them. No other economically disadvantaged communities rely on the SBA program the way Native communities do. I must repeat. Any proposed changes to the 8(a) program must involve extensive, meaningful consultation with impacted Native communities. In conclusion, clearly when qualified entities participate in the 8(a) program, economies improve, communities and participants become more self-sufficient, and this is especially true for Native communities. The focus and effort afforded the Native enterprises participating in the 8(a) program is a crucial step to ensure that the Federal Government meets its unique obligations and interests in providing for the self-determination of Native Americans. Thank you for giving NACA the opportunity to provide this testimony on this vitally important matter. Mr. KIM. Appreciate that you took the time to come on out here. Thank you so much, sir. Mr. VALANDRA. You are welcome. Mr. KIM. Ms. Hamilton, over to you for 5 minutes. STATEMENT OF ANNETTE HAMILTON Ms. HAMILTON. Good morning, Chairman Kim, Ranking Member Spano, and members of the Subcommittee, and Congresswomen and - men. I am Annette Hamilton, vice president and chief operating officer of Ho-Chunk, Inc., a tribally owned corporation of the Winnebago Tribe. The Native 8(a) contracting program has become a critical component of economic development for world tribes like the Winnebago Tribe. Winnebago's history is similar to the history of many Tribal nations. Originally a woodlands tribe, the Winnebagos, traditionally known as Ho-Chunk, lived on lands in what is present-day Kentucky. After a series of removals, the surviving members of the Winnebago Tribe were required to purchase a small reservation in northeast Nebraska. By 1913, however, two-thirds of the reservation was lost due to the Federal Dawes Act, which divided up parcels of land that were taken out of Tribal jurisdiction and placed into individual ownership for both Indians and non-Indians. It wasn't until the 1970s, following more than 150 years of failed Federal policies focused on assimilation and termination, that the government realized the better policy towards Indians was one of self-determination and self-governance. The relationship between the Federal Government and Tribal nations became more government to government, which meant that Tribal governments became the entity responsible for developing a local economy, providing for public safety, and promoting the welfare of its citizens. When Ho-Chunk, Inc., started in 1994 with one employee on the Winnebago Indian reservation, there was no business infrastructure or human resources in place. The Tribe had to figure out how to start an economy from scratch, a difficult task. In the early 2000s, Ho-Chunk, Inc., started successfully participating in the 8(a) small business development program with five employees. Today, Ho-Chunk, Inc., has over 1,200 employees with three Federal contracting divisions, serving a wide variety of Federal agencies. These divisions have received numerous awards, including just last week we received the Secretary's Award for Excellence in Small Business Contracting by the U.S. State Department. Because of our participation in the SBA 8(a) contracting program, Ho-Chunk, Inc., has grown into one of the region's major economic drivers on the reservation and for the tristate area of Nebraska, Iowa, and South Dakota. Unlike privately owned businesses, Native 8(a) corporations exist to enhance the conditions of Tribal nations who own the corporations, not just the single owner or small number of owners. My proudest accomplishments are derived from the impacts of the Winnebago community that we have made in a short 25 years, as referenced in my written testimony from our economic impact study. These impacts include reducing poverty rates, increasing household incomes and home ownership, and increasing Tribal members earning a bachelor's degree. We are building pathways for a positive future and allowing our Tribal community to fulfill dreams. My daughter is a perfect example of how this program fulfilled dreams. My grandmother grew up poor, living on an Indian reservation, with limited opportunities for education and work. During the termination era of the 1950s, my mother was forced off the reservations into schools in the city. She was kicked out of school at a young age primarily because of her race. I am the first in my family to receive a college education, and my career has advanced because of the opportunity to work for a tribally owned business. My daughter, a member of the Winnebago Tribe, is now a senior attending Harvard University, and she interned at Ho- Chunk, Inc., last summer. This is just one example of why the Native 8(a) program is vital to our Native communities and consistent with Congress and the administration's unique government-to-government relationship with Tribal governments. There are several administrative and policy issues I would like to raise with you today, all of which are outlined in detail, with proposed recommendations, in my written testimony. First, the SBA certify system was designed for individual applicants, not entity-owned applicants such as Tribal 8(a) corporations. Second, we have seen the devastating impacts of category management. We believe its effects are contrary to the purpose of the 8(a) program. Third, Ho-Chunk, Inc., is also concerned with proposed legislation to level the playing field for all 8(a) companies. And fourth, we have concerns that the benefits and great work of small businesses were excluded from the recommendations of the section 809 panel. While Ho-Chunk, Inc., is doing well, I do want to caution that 25 years of existence will need several more decades of success in order to mitigate the harms that were inflicted upon the Winnebago community through the previous generations of failed Federal policy and actions to terminate the Tribe. The Tribe, through Ho-Chunk, Inc., has started to reverse the 150 years of poverty on the reservation, but the work is not done. The Native 8(a) program must be protected and encouraged to grow in order to continue to build the capacity and infrastructure that tribally owned entities now have so that the gains of the corporation can return to the Tribal nation. [Speaking Native language.] Mr. KIM. Thank you for your testimony there, and very powerful words there. It is a beautiful story hearing about everything from your mother to now you being a proud mother of a very successful daughter. So congratulations on that personal side, and thank you for sharing that. Ms. HAMILTON. And she is here today. Mr. KIM. Oh, is she really? Where? Nice to meet you. Congratulations. Mr. Vincent, we are going to turn it over to you for 5 minutes now. Over to you. STATEMENT OF EDWIN A. (SKIP) VINCENT Mr. VINCENT. Good morning, Chairman Kim, Ranking Member Spano. And I want to acknowledge Chairwoman Chu and the members of the Subcommittee. I am here on behalf of the Native Hawaiian Organization Association, where I served as a member of the board of directors since 2012. I am very excited to be here to talk about the SBA 8(a)'s business development program and the positive effect the resulting NHO program and your support has been to the Native Hawaiian community. Our NHOA is a trade association founded in 2007 to provide a unified voice for our small but growing NHO community. We are the new kids on the block. Our first NHO was started in 2004. We now have 24 NHOs--or 24 members on our association, 10 of which are newer and getting their certification, and many are just developing their 8(a) firms now. Small businesses owned by NHOs can participate in the NHO 8(a) program. Like individual owned businesses, to qualify, an NHO-owned firm must be a small business that demonstrates ethics and potential for success. Unlike individual owned NHOs, NHO 8(a)s must be owned and controlled by a Native Hawaiian organization defined as a nonprofit entity chartered in the State of Hawaii, controlled by Native Hawaiians, whose activities principally support and benefit Native Hawaiians in the communities. In addition to providing needed assistance and contracting opportunities, NHO 8(a) firms are provided additional attributes, as you know, designed to better support the NHO community and beneficiaries rather than individual owners. NHO firms can receive awards in excess of sole source thresholds from the Department of Defense, and second, they are allowed to have multiple firms in the 8(a) program, provided certain criteria are met, as detailed in my written testimony. NHO 8(a) program has enabled 14 active NHOA members to support Federal agencies across the country while creating jobs, economic ventures, and support the Native Hawaiian community. There is a saying: To fulfill a vision, you need to have a vision. Each NHO comes in with a unique, nonprofit mission and vision driven by their own passions, perspectives, and abilities to serve and elevate the Native Hawaiian community. In addition, accepted studies such as U.S. Census and so forth define the Native Hawaiian community as economically disadvantaged. These studies include historical and cultural background information, socioeconomic data, and anecdotes, all of which tell a more comprehensive story about the condition of Native Hawaiians. As NHOs, we fulfill our missions by developing community programs, by gap funding-establish programs, funding other Native Hawaiians serving organizations, and developing our own. This includes financial literacy education and job training, entrepreneurial programs, leadership, STEM and arts programs, training, cultural engagement, post-secondary scholarships, senior assistance, at-risk youth, health, so on and so on. These programs and the jobs created contribute to self- sufficiency and self-determination that may not have otherwise been possible, and this is what fuels each NHOA mission and their vision and their motivation. Regarding the SBA, the NHOA does not have significant issues with the administration of the 8(a) program. It is well established with rigorous application and sees stringent ongoing compliance processes. However, NHOA members would like to see an increase in the training of SBA personnel with respect to their knowledge of NHOs. Regarding the adoption of category management, the NHOA supports an exemption for all SBA small businesses contracting programs from category management. Category management fails to consider small business attributes and would be considered harmful to small business by way of procurement opportunities. We ask you consider to work with the small business community regarding this matter. Also, as Congress considers the reauthorization of the Small Business Act, we encourage you to uphold Native 8(a) program's ability of Tribes, ANCs, and NHOs to grow and support communities and reject provisions that inhibit such abilities. NHOA ardently supports the 8(a) program. NHO 8(a) program provides progress toward economic growth, self-sufficiency, and hope for Native Hawaiians. You know, actions are definitely stronger than words, and the actions of this Committee and Congress has been tremendous, and it is telling our community that you haven't forgotten us. We commend the Committee's commitment to small business and for providing Native communities with the means to support and promote enduring economic growth and self-determination. So on behalf of the Native Hawaiian community, thank you for your continued support, the opportunity to present and speak before you, and remembering us. So aloha to you all. Thank you. Mr. KIM. Aloha to you too. Thank you so much for coming. We are going to turn it over to Ms. Turvey. Over to you for 5 minutes now. STATEMENT OF JANA TURVEY Ms. TURVEY. Thank you, Chairman Kim, Ranking Member Spano, other members of the Committee. Good morning and cama'i; hello. It is my privilege, honor, and with humility that I testify before you today discussing Native 8(a) contracting and the impacts of this program to Alaska Native villages. My name is Jana Turvey, and I am the president and CEO of Leisnoi, Incorporated, an Alaska Native village corporation, and I am a shareholder. I am an Alaska Native and Alutiiq. I am also a board member of the Alaska Native Village Corporation Association. ANVCA is primarily comprised of 177 Alaska Native village corporations. Although we call them and you hear corporations, this truly translates to communities, remote communities throughout the vast State of Alaska, which many are only accessible by boat or small aircraft. Translating those communities into people, ANVCA represents thousands, not hundreds, but thousands of Alaska Natives. These are traditional, cultural, honorable people who love their villages, respect their resources and their historical way of life. As Alaska Native people, we do not think about I or me. We think us and our. We think community, which encompasses much more than just geographical boundaries. Community is us as a people. We think seven generations forward, having learned from the generations of the past. As I work in my capacity as CEO, the work is not for me and not just for the 450 stakeholders I represent in my village corporation. It is for future generations to come that have not yet been born. Along with that mindset comes the responsibilities written into the Alaska Native Claims Settlement Act of 1971. ANCSA was passed with the goal of providing a fair and just settlement of aboriginal land claims by Native groups of Alaska. The intent of Congress was that the Alaska Native corporations would be the economic foundation that would build business and provide benefits. However, ANCSA did not provide any sort of business development or economic engine. The SBA's 8(a) program is the missing piece that affords this opportunity. Only 20 to 30 of the ANVCA members are currently active in the 8(a) program. Of those participating, 12 were named in the 2018 Top 49ers of Alaska businesses generating revenue, employing more than 12,000 people globally, more than 600 of those in the State of Alaska. At least 85 percent of the net income from ANCs is donated back to the community in the form of benefits. As an example, recently, ANVCA was contacted by a distraught Alaska Native individual who had lost a sibling in the last 24 hours due to suicide. I cannot imagine the unbearable pain this person was experiencing. ANVCA was able to put them in contact with their village and regional corporations. Both corporations provided immediate assistance, not only with burial benefits, but also in the traditional way, the Native way, supporting the shareholder and their family. Recently, a national morning news program was in the Village of Iliamna and provided visual footage of gas prices at $4.99 a gallon and $13.49 for a half gallon of milk. The cost of living remotely in Alaska can be grotesquely high, and the Village of Iliamna is only 200 air miles from Anchorage. Today, honey buckets and inadequate sewer systems remain throughout remote Alaska. There are areas that do not have internet access, or the access is so poor, it will be out for days and weeks at a time. Costs of electricity are 12 times the national average. However, as a result of ANCs participating in the 8(a) program, benefits are provided to well over 150,000 shareholders and their families. Homes are heated, lights are on, meals are fed because dividends are being distributed. Higher education opportunities and degrees have been achieved as a result of thousands of dollars in educational scholarships. A personal side note. My daughter recently received her undergraduate degree from Gonzaga University, graduating magna cum laude, partially because of these types of scholarships. Donations support sports teams and youth participation at events like the AFN annual convention. To say that our stakeholders are counting on the success of our Native community-owned organizations would be an understatement. There is room for growth within the Native 8(a) contracting program, and I do have two thoughts to offer. First, the regulations guiding and safeguarding the program are complex. The reporting requirements are lengthy and often cumbersome. More training and education entering into and working through the program will help all contractors have faith and confidence in their compliance. Second, during the September 18 hearing of the House Small Business Committee, comments were made about the 9-year participation clock being too short. I support this comment and feel the stress at Leisnoi as we have just completed our second year. I don't expect the SBA to berain our firm with contracts. It is our job to secure that work. I would offer that the 9- year clock does not start until the first contract is awarded, allowing participants to do the necessary groundwork that will eventually secure those precious contracts. Members of the Committee, thank you for giving me the opportunity to speak with you today. I am happy to answer any questions. [Speaking Native language.] Thank you very much. Mr. KIM. Thank you very much for your insights as well as your recommendations on that front. I am sure we will get into those in some of the questioning. But first, I would like to turn it over to Ms. Williams for your comments here in the beginning. Over to you for 5 minutes. STATEMENT OF CHRISTINE V. WILLIAMS Ms. WILLIAMS. Thank you for inviting me to testify here today. My written testimony contains studies, case studies, statistics, as well as reference to the Constitution, treaties, and applicable jurisprudence. I will not be able to cover all of it today, of course, but I memorialized it for you, and this goes directly to the trust responsibility due to the Alaska Native people, the Native Americans, and the Native Hawaiians. I am a woman-owned small law firm. Like most small businesses, I hustle. I have to. I have worked extensively with SBA program participants, including Tribal and ANC-owned firms as well as individually owned firms. Every program participant I have represented in the SBA. In my experiences, small businesses often work together in partnership to get the job and then get the job done. Native- owned community benefiting firms are no exception in the respective reach-out to other small businesses. The SBA regulations also encourage and reward small businesses to work together. Firms owned by Native groups are different in that they directly provide benefits to shareholders, members, or citizens, and the communities in which they live. Federal law, as we have seen in the Constitution, Article I, section 8, clause 3 reserves the right to Congress to engage in commerce with Native Americans. Congress has a special and unique trust relationship with Native Americans. This has been reinforced by treaties and enunciated multiple times in jurisprudence. As such, economic development programs participated in by Native Americans is mandated by the trust responsibility the U.S. Government established and as various courts have held, including the U.S. Supreme Court. Courts have examined and reaffirmed the right of Native Americans to be in the 8(a) program in furtherance of the U.S. trust obligations and to fulfill its commitment to Native Americans' self-determination and economic benefits. The relationship between Native Americans and the U.S. is, quote, perhaps unlike that of any other two people in existence, marked by peculiar and cardinal distinctions where exist nowhere else. Cherokee Nation case 1831. Another case simply stated, quote, by the 1870s, the government had successfully placed Native Americans in a state of coerced dependency. This relationship of dependency between the U.S. and the Indian people was forcibly established. This forced dependency decimated Native Americans in ways too numerous to count. In the history of the United States, only Native Americans had their aboriginal and indigenous lands, cultures, economies, rights, institution, and sovereignty appropriated, converted, and/or extinguished. Federal procurement and the right of Native Americans to participate in the 8(a) program have long been recognized as a bright light to fulfilling the U.S. trust responsibility and furthering the economic interests of Native Americans. Numerous hearings by Congress, including last year, have established that this is one of the brightest lights for Native American communities. As recently as last summer, the SBA reaffirmed this very fact. Native American and infrastructure. Most Native American groups cannot afford and should not be forced further into coerced dependency by heaving onto them a burden not rightfully theirs. This includes a supply of clean drinking water, roads, sewer systems so the honey bucket system is eliminated, and basic infrastructure. Congress did not enunciate this as a burden as it tries to fulfill its trust obligations of economic self-determination of Native Americans. Had it been so, it could have said so, and it did not. Veterans and Native Americans. I have worked extensively with veterans and service-disabled veterans. The VA has the toughest set of regulations I have ever dealt with. And when you marry SBA regulations with the VA regs, you have got a problem. And when we speak about veterans, we are necessarily and without exception speaking about Native Americans and Alaska Natives. They have the single largest cohort and have since the Veteran Administration has kept statistics as being in the military. My time here orally is limited, but my written testimony contains history, facts, and modern circumstances demonstrating the points I have made here today, as well as other points. I would also note that I do go with the SBA to train on various regulations. And on the questions on the contracting shops for various offices, they are hungry for them. I would encourage-- that was the first time when the GAO testified today that I actually heard that they were going to hire somebody, because I have done it on my own time and dime. So pick me. I will help. That is all I have, and then I am open for questions. Mr. KIM. Well, I appreciate each of the five of you bringing real important insights and perspectives to this, so we will certainly have some questions for you, I am sure. I wanted to just start by recognizing myself for a couple minutes here, then I will turn it over to my colleagues. Mr. Valandra, I wanted to start with you. First off, I would like for you to just briefly explain how the individual and group-owned rules differ within the 8(a) program and why it exists. Just help us kind of start off with that framework. Mr. VALANDRA. Sure. I think it is important to distinguish between a group of Native Americans and a Tribe or an ANC or a Native Hawaiian organization. The members of NACA are all businesses owned by Tribes, by federally recognized or State- recognized Tribes, which means that they are owned by a government, a community of people as opposed to just a group of individuals. I mean, I think that is a--it may seem obvious, but I think that is a very important distinction to be made, and that is the primary distinction within the SBA program. The Native American program within 8(a) are tribally owned, that is, community-owned entities, businesses, enterprises as separate and distinct from an individual. An individual, there are rules that I don't want to take up too much time with just in terms of differences of the 9-year time horizon for individuals. All of the entities have to qualify under the 8(a) program with ethics, background, financial qualifications, those things, but Natives have that distinction of being--go ahead. Mr. KIM. Well, one other aspect of this that I wanted your thoughts on, as the Chairwoman mentioned beforehand about this L.A. Times story, which mentioned--had reported that on contractors who receive millions of dollars reserved for minorities set aside by claiming to be Native American, one other aspect to just help bring out here is can you please explain the main differences between individually owned small businesses that claim to be Native American and small firms owned by Native American groups such as Indian Tribes? Mr. VALANDRA. Well, since the adoption of the 2011 regs, there really is not that much difference in terms of declaring. Prior to 2011, you could self-declare that you were Native or fit one of the categories to be an SBA participant, but since the passage of that--or the adoption of that regulation, sorry, you can't just self-declare. You have to provide documentation that you are a member of a federally recognized Tribe or State- recognized Tribe, and there is documentation to do that. So the problem, as I understand it, or as reported by the L.A. Times, really was a regulation issue and an SBA lack of attention issue prior to 2011. Mr. KIM. Building off that, then, you know, how can Congress ensure that only small firms owned by individuals with genuine claims of being Native American get certified into the program? Mr. VALANDRA. Well, again, I think the adoption of the regulations in 2011 that did away with self-declaration, that you have to--that individuals have to provide documentation that they are, in fact, members of a disadvantaged group or a Native American Tribe, federally recognized or State-recognized Tribe, was an important step. And I think so long as Congress is satisfied that the SBA are following their own regulations, that you have taken that step. Mr. KIM. Great. Ms. Hamilton, I wanted to just kind of continue this thread a little bit with you. Still regarding that L.A. Times story, their investigation found $300 million in contracts were awarded to small businesses making unsubstantiated claims of being Native American. Could this situation potentially happen within the context of group-owned Native American firms? Ms. HAMILTON. So, first of all, I would like to address the article was just a tad bit confusing because it confused State contracting, local contracting, and Federal contracting all mixed up, and it didn't clarify that. And they are all different rules and different jurisdictions. So addressing the Federal contracting, Native Americans can participate in the 8(a) program as an individual. But if you are a Native 8(a) and you are owned by a Tribe, an ANC, or an NHO, then you have community responsibilities and a higher level--you have a different application. You have an entity application, which I kind of addressed in my testimony, but also, from personal experience, when we submit our applications, we are required to download the Federal Register to prove that we are a federal-recognized Tribe. We also have to prove that we are controlled by the Tribe and tribally owned, and I don't think it applies to the ANCs and the NHOs, but we have to prove as a Tribe that our management has Tribal members and those Tribal members are from an economically disadvantaged Tribe. So to answer your question, I think that the SBA did. From my experience in 2011, we also have to recertify that every year in our annual review with the SBA. And I know that it takes a while for them to verify that and the certification and the review process. So I do--I have seen the impacts of the 2011 SBA implementation of that. So hopefully that answers your question. Mr. KIM. That is. No, it is helpful to just unpack this. I have another question too, but I am going to reserve it to the end here. But I wanted to turn it over to Ranking Member Spano for his line of questions. You are recognized for 5 minutes. Mr. SPANO. Thank you, Mr. Chairman. You have to excuse me, I am battling a cold here so my voice is a little bit out of sorts. But just a question for anyone who wants to respond on the panel. One of the unique requirements for 8(a) groups is the requirement they must submit information to the SBA showing how the 8(a) program benefits their communities. You have got to show it benefits your community. Is there any uniformity in the way that the SBA captures this information, number one, uniformity in the way the SBA captures that information? Number two, what proportion of 8(a) dollars goes directly back into your communities? Is that information captured and relayed to the SBA? Anybody want to answer that, those questions? So number one, any uniformity in the way SBA captures the information. I guess three things. So that is number one. Number two, what proportion of 8(a) dollars goes directly back to your communities. And number three, is that information about what goes back to the communities captured and relayed to SBA. Ms. Williams, you are aggressively shaking your head, so I'm going to go to you. Ms. WILLIAMS. So, yeah. There is some form of uniformity, but it is also open for narrative because it varies on the corporation. So such as Leisnoi, it has one 8(a) in the company, and it has very few--well, I would imagine it has very few things to report. You have other firms that have been in the program longer that are going to have more to report, so they report different. The community is going to depend on what it needs differently. So if you are an Arctic community, you may need things very different than you are on the southeast coast of Alaska. One region is the size of Oregon, for instance. It is very different. So you have some uniformity. You also have a narrative requirement. The SBA has allowed some flexibility, because people need things differently. Their shareholders are asking for things differently, and so they give reports differently, but there is some uniformity there. There is a required reporting form. The community owners are the only ones that are required to do that. So there is some. In terms of reporting directly back, so if you have a subsidiary, it is actually an indirect reporting mechanism in the first place, so they do sweeps of the subsidiary. So not only do they give directly to the shareholders in the forms of dividends, which is trackable, but they usually give it--and you will see it. I submitted the testimony of one smaller Old Harbor Native Corporation, and they gave a graphic of what they give and how they give it, because they give it in different forms. So as you can imagine, the poverty in Alaska is second to none. Mr. SPANO. Yeah. Ms. WILLIAMS. Especially in rural Alaska. The social ills that accompany that come with it. So not only do they give to their shareholders themselves, but they give to programs that benefit their shareholders, such as alcohol and addiction recovery services, health services, things that if a shareholder dies that is out of the village, they can't afford to fly them back. They have to provide that benefit. Mr. SPANO. Does anybody else want to answer those questions? Ms. Hamilton? Ms. HAMILTON. So there is a form in the annual reviews for the SBA, and it has five categories. And I don't know if I am going to recall them off the top of my head, so I would have to get back to you on those categories. But they are general categories and you can fill those in, and those are required of the SBA annual review. And it is pretty open because you are covering Alaska Natives, Tribes, and NHO, and it is self- determination and self-governance. So each Tribe--so I will use the Winnebago Tribe. So the Tribe set up our Tribal corporation, and we have a 25 percent dividend back to the Tribe on an annual basis per our audit. The Tribe then uses that for governmental services. Sometimes, and in addition, we have taken it as our work hobby to create Ho-Chunk Village, and it really was our passion. So we earned the money, and outside of that, we have given scholarships. Outside of the 25 percent dividend, we have given scholarships. We are building a village, which is outlined in our economic impact study. We have been able to help. So the money going into this program directly impacts positively the communities that it is meant to. Mr. SPANO. So really quickly, I only have 15 seconds left, you said 25 percent is paid back in dividends, in your specific organization's instance. What is the dollar amount, if you can share that with me, represented typically by that 25 percent dividend? Ms. HAMILTON. I will have to get back to you on that. Mr. SPANO. Yeah, I would appreciate that, because for us, you know, and Ranking Member--or, Mr. Chairman, I don't have any more time, but I would love to--you know, I understand the difficulties and the exigencies as it relates to the different Tribes being treated differently and all that, but from an oversight regulatory perspective, it is our responsibility to make sure that the program is effective, and it has its intended purpose, which is for the beneficiaries of the Tribes and so forth, Native American groups to benefit. And so with all due respect to every one of you, I am absolutely certain you are doing your best to make sure that your moneys--that these benefits are going back to the persons intended. But to me, it is important that, to the extent possible, we are able to quantify what those benefits are, and that helps us as overseers to make sure that the intent of the legislation is being effectuated. I yield back. Ms. HAMILTON. If I may, then, ask my economic impact study be submitted to the record. Mr. SPANO. Great. Ms. HAMILTON. That helps quantify it. Mr. SPANO. Thank you so much. Ms. WILLIAMS. And if I may, just for--I am sorry if I am out of order, but the ANCs have done a series of regional associations, which is one of the only associations that can afford to do such a study, and they quantify that 75 to 85 percent per annum goes directly back, net profits go directly back into their communities. Mr. KIM. Well, I appreciate that. And I share the sentiment of the Ranking Member that, you know, we certainly want to make sure that we understand the impact is being felt, that we understand, you know, what is working, what is not, what can be improved going forward, so we will continue to do that within this Committee. I want to recognize my colleague, Congresswoman Davids, now, for 5 minutes. Over to you. Ms. DAVIDS. Thank you, Chairman. So, first, I want to thank all of the panelists and folks who came here, and I know some of you traveled great distances to come testify before this Committee today. And again, I want to thank the Committee--the Subcommittee for allowing me to be a guest in this hearing today because I don't sit on this Subcommittee. So I want to start off by following on some of the trust responsibility questions that I had the chance to ask after we heard from the GAO earlier and based on the report that they provided. First, I would like to ask, Ms. Hamilton, you mentioned that sometimes the annual certification review takes a little while to come back. I am curious whether or not that recertification process or the annual review process and the lag that happens hinders at all your ability to continue to function and operate, and I don't just mean in terms of continuing to get contracts. I also mean the time and resources that your organization puts into that certification process, and whether or not, in your view, that cuts against the policy of promoting self-sufficiency and the Federal Government's trust responsibility. And then if anyone, after Ms. Hamilton answers, has something to add, I would like to hear that. Ms. HAMILTON. Thank you, Congresswoman Davids. So the certification process has taken over a year to get back with many touch points with the SBA and our staff. We have two full- time staff that just deal with working through the certifications and the annual reviews with the SBA, so we have many touch points with the SBA. And in my experience, the SBA is diligent in our local SBA office of pushing back and making sure we have all the information. I am sorry, what was the second half of your question? Ms. DAVIDS. Well, I was wondering about whether or not the policy of promoting self-sufficiency and the Federal trust responsibility, in your view, whether or not the way that the SBA has been running this program as it relates to annual review and certification, whether it seems as though they are meeting that mark of the trust responsibility or not. And I just want to note that you said you have two staff dedicated to the certification process, and we have, from a GAO report, that there is 1.5 full-time employees working in the Alaska regional office. Ms. WILLIAMS. No, not anymore. Ms. TURVEY. The data that the GAO testified to was based on--I think 2014 was the ending point, and so the Alaska district office staff has increased a bit since that time and has become more robust. Ms. DAVIDS. Oh, okay. Okay. Well, that is good to hear. So if you want to speak to the trust responsibility, and then any others. Ms. HAMILTON. So I find that the SBA, dealing with--so there is an education component of the difference of the individual 8(a) and the entity-owned 8(a)s and that trust responsibility. Once we have been able to educate--and I know that the SBA has done some education programs. I do think they acknowledge that. I do think that they are limited in staffing, and like I mentioned I think in my testimony, I know that a lot of the processes are really geared to the individual 8(a)s and not entity owned. So the application and the certify system, the new SBA system, is really individually owned. So we have to kind of load up, let's say, our proof of our Federal recognition just in places. There is not a set area for that in that system. So helping with that definitely would help us with our self- determination and self-governance. Ms. TURVEY. Chairwoman, if I could--excuse me. Congresswoman, if I could add to that. So I have one person dedicated on my staff to compliance, and Ms. Williams said I have one 8(a). I actually have two now, but one person for just that small number dedicated to compliance, which includes the certified process as well as all of the other processes required when you participate in this program, as I mentioned in my testimony, is cumbersome and can be exhausting and extremely taxing on any staff member. And so as a Native group representing here today, we are singled out in all of the requirements of reporting that we are subject to. There is no other group that participates in the small business program that is required to report as extensively as we are, which means that we have to pull resources in order to meet that mandate. So directly to your question, does it impact our self- sufficiency? Absolutely. Ms. DAVIDS. Thank you. And again, I appreciate you all providing testimony and being here today. And I yield back. Mr. KIM. Great. Thank you. We are just going to do a quick second round here, just a couple lingering questions we just wanted to make sure we get forward. Mr. Vincent, I just wanted to direct a question to you. We share your concerns. This Committee shares your concerns about impact category management and, you know, it is something that you raise in your written testimony, and you spoke very powerfully about it in your oral testimony. I would like for you to just expand on this for us, to be able to help us get an understanding here. Can you please expand on how the Native 8(a) contractor has been impacted by category management? And what are some of the potential steps this Committee should take regarding the matter? Mr. VINCENT. Well, thank you for asking that question. First of all, I can attest to how we think NHOs will be impacted. Our large dollar contracts come from Department of Defense, and moving the 8(a) program from--or 8(a) contracts into category management would limit NHOs and NHO 8(a) firms from competing and getting that foothold that we need in sole source contracting. One example that happened at one of the member firms is that they were just about to finish an 8(a) contract that they had competed for as a set aside, and the customer really wanted them. However, that contract was moved into a vehicle, a contract management vehicle, and eliminated them from being able to compete for it. So what has happened was it eliminated not only a competent individual, a competent firm that had good CPARS, good ratings, and had the experience of working that, moved it to a category to where only a few--even though it was assured that an 8(a) would get it, but to a few 8(a)s that are on that vehicle that may or may not have the experience and may or may not be able to provide some of the capability like the others did. So what it does, in my mind, is it substantially reduces the amount of 8(a) opportunities to the general community and affords those 8(a) opportunities to small amounts of 8(a)s or small businesses that happen to be on that particular contract. Mr. KIM. Okay. Well, I appreciate that expanded explanation there. It is helpful for me. Ms. Turvey, I wanted to direct my final question to you. This Committee has heard concerns from some sectors of Native 8(a) community regarding congressional efforts that seek to increase the sole source thresholds in other small business contracting programs. So I wanted to see if you could elaborate on those concerns, you know, so we can have a better understanding how to proceed here. Ms. TURVEY. Thank you, Mr. Chairman, for that question. I want to be real clear in answering this that I am wearing my ANVCA hat, and there have been discussions within our organization about those thresholds. We don't view this and the opportunity to review the individual thresholds as competition. We actually acknowledge that it is time that those thresholds be reviewed. I think it has been a couple of decades. 1985 is coming to mind as to the last time those thresholds were evaluated. But in doing that, it will be reasonable that they are evaluated on parity, meaning those are individually owned firms that are being looked at. And we, again, are representing thousands of shareholders in our Native entity-owned firms. We believe that a reasonable increase is favorable, and we don't take any issue with the current proposal, I believe, of doubling those limits. We would, however, pause and take a moment of issue if we are looking at increasing those levels to 10 times or more. That is not on parity with what we believe would be consistent with the intent of the small business program. Mr. KIM. Okay. Thank you. That is very helpful. I am going to close my questions on that front, turn it over to the Ranking Member if he has anything further he would like to ask. Mr. SPANO. Thank you, Mr. Chairman. Just a couple questions, if I may, directed towards Ms. Williams, if I can. On average, if you have a number or if you just have a general idea, what is the percentage of sole source contracts that is awarded to 8(a) groups annually? In other words, of an 8(a) group's portfolio of business, what percentage are typically sole source contracts? Ms. WILLIAMS. I don't have that number. I know that less or five were awarded during the years of 2012 to 2014 when the GAO did its study and probably their most recent numbers. But to Native-owned 8(a) firms, that is a hard distinction, and I don't have those numbers. Mr. SPANO. Okay. Ms. WILLIAMS. But the sole source in and of itself and the follow-on rule, if you would like to ask follow-up questions on what the GAO testified to, I would be happy to answer those questions as well. Mr. SPANO. Ms. Turvey, as it relates to the ANC, your ANC specifically, or other ANC groups, do you have that number, what the typical percentage of your portfolio is that is represented by sole source contracts? Ms. TURVEY. I do not have the number in regards to the Alaska Native Village Corporation Association. I can tell you that Leisnoi has received one very small sole source contract. Mr. SPANO. So not much? Ms. TURVEY. Not much. Mr. SPANO. Not many. It would just be interesting, as I understand--if we are operating under that assumption, maybe my next question is moot, okay. Ms. TURVEY. Okay. Mr. SPANO. But I am going to ask it anyway because I would like to get a feel for your opinions on this. Should 8(a) groups be shifting their focus or attempting to diversify their portfolios to include other types of awards, including full open contracts? I mean, is that the end game? Should it be the end game? I understand it is required through the 8(a) program. And I will just throw that open to anyone who wants to answer it. Mr. VINCENT. I would like to answer it. First, let me give you a little insight of your original question, is that in the beginning, companies normally are almost--at least my experience at my organization, have been almost totally sole source just to get established. And you are right, we are driving toward being able to graduate and go on to competition. So those first few years is a foundational establishment. And how long does it take before revenue comes in? It depends on a whole lot of things. The community, the type of products, the skill of the management and so forth and so on. Because it does take--on the average, it took about 3 to 5 years for any of our companies to start making a profit, which kind of answers a little bit of your question in the beginning, you know, how much goes back to the community. So basically, yes, the end goal is to make it a competitive, viable organization. And one of mine that graduated, and it is already mentoring the other companies that are still in the program. Mr. SPANO. That is great. Mr. VINCENT. So I would like to see--this is what we are trying to achieve. Mr. SPANO. Okay. Anyone else like to answer that? Ms. Hamilton. Ms. HAMILTON. So I think, like Mr. Vincent said in the beginning, it is a lot of sole source. I also think we are ignoring that there are 8(a) competitive contracts, and a lot of contracts come out as 8(a) competitive. So just to count contracts that are in the 8(a) program as completely sole source is inaccurate. Mr. SPANO. I guess that is why---- Ms. HAMILTON. We do a lot of 8(a) competitive contracts. And then there is also a lot of IDIQs or GWAC contracts that are in the 8(a) program that you win the overall contract and then you bid for the task orders. So there is a lot of that, so I wanted to clarify. Mr. SPANO. Yeah. And I am glad you did. I did specify sole source contracts, though, but I appreciate you making that clarification. And is one of the reasons why we have this 9-year period, right, so that is kind of the launch. That is the on-ramp, so to speak, right, to competitiveness, is that 9-year period? That is what I understand, anyway. Can you confirm that for me? Ms. WILLIAMS. That is true. And then by the--but you have to start building a non-8(a) revenue. So you have your first years that are--you can have all 8(a) revenue. I don't know anybody that does. By the fifth year, you have to build in non- 8(a) revenue. You are out of compliance if you do not. Six months, a year, and you are done. So it is an on-ramp, but for me, I can be a woman-owned small business. I walked away from international law firms to do that. I can be that forever. I don't have to go full and open like that. 8(a) being a subset of a small disadvantaged business, that would be considered to me full and open. Mr. SPANO. I see. Thank you so much. I yield back, Mr. Chairman. Mr. KIM. Great. Thank you. Look, I just wanted to take a second again to thank all of you for coming out here today and sharing your perspectives and answering some of our questions. I wanted to end with actually a line that comes to my mind from what Mr. Vincent said. If I remember this correctly, he said to fulfill a vision, you need to have a vision. Is that right, sir? Mr. VINCENT. Correct. Mr. KIM. You know, I think that that is something that really just guides a lot of what we are trying to do here. You know, the 8(a) program has been the hallmark of contracting programs managed by SBA, the vision of it to be able to help develop the capabilities of individual businesses, but also as we have seen today, to uplift and create opportunities for our entire communities. And as we try to fulfill that vision, we need to think about what is it that we need to be able to do to be able to understand whether we are moving in the right directions and really trying to stay true to what it is that our predecessors thought to put forward to be able to help you out. Due to its importance, this Committee takes very seriously any concerns or deficiencies, and will work to strengthen the program as needed. On that note, we look forward to working with GAO and the SBA OIG and Native 8(a) contractors alike to make the necessary reforms. I would like to just at this point ask unanimous consent that members have 5 legislative days to submit statements and supporting material for the record. And without objection, so ordered. And if there is no further business to come before the Committee, we are adjourned. Thank you so much. [Whereupon, at 12:00 p.m., the Subcommittee was adjourned.] A P P E N D I X [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [all]