[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                   LEVELING THE PLAYING FIELD: THE STATE OF 
                        SMALL BUSINESS CONTRACTING

=======================================================================

                                HEARING

                               BEFORE THE

                        SUBCOMMITTEE ON CONTRACTING AND 
                                INNOVATION

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                              MAY 11, 2023

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                            
                               

            Small Business Committee Document Number 118-012
             Available via the GPO Website: www.govinfo.gov
             
                              __________

                                
                    U.S. GOVERNMENT PUBLISHING OFFICE                    
52-169                       WASHINGTON : 2023                    
          
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                 HOUSE COMMITTEE ON SMALL BUSINESS

                    ROGER WILLIAMS, Texas, Chairman
                      BLAINE LUETKEMEYER, Missouri
                        PETE STAUBER, Minnesota
                        DAN MEUSER, Pennsylvania
                         BETH VAN DUYNE, Texas
                         MARIA SALAZAR, Florida
                          TRACEY MANN, Kansas
                           JAKE ELLZEY, Texas
                        MARC MOLINARO, New York
                         MARK ALFORD, Missouri
                           ELI CRANE, Arizona
                          AARON BEAN, Florida
                           WESLEY HUNT, Texas
                         NICK LALOTA, New York
               NYDIA VELAZQUEZ, New York, Ranking Member
                          JARED GOLDEN, Maine
                         KWEISI MFUME, Maryland
                        DEAN PHILLIPS, Minnesota
                          GREG LANDSMAN, Ohio
                       MORGAN MCGARVEY, Kentucky
                  MARIE GLUESENKAMP PEREZ, Washington
                       HILLARY SCHOLTEN, Michigan
                        SHRI THANEDAR, Michigan
                          JUDY CHU, California
                         SHARICE DAVIDS, Kansas
                      CHRIS PAPPAS, New Hampshire

                  Ben Johnson, Majority Staff Director
                 Melissa Jung, Minority Staff Director
                           
                           
                           C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Nick Lalota.................................................     1
Hon. Hillary Scholten............................................     2

                               WITNESSES

Mr. Robert Schroder, Founder and Managing Partner, SteerBridge, 
  Vienna, VA.....................................................     5
Ms. Jackie Ferrari, Founder and Chief Executive Officer, American 
  Fashion Network, East Syracuse, NY.............................     7
Ms. Jacqueline K. Lopez, President, Premier Enterprise Solutions, 
  Upper Marlboro, MD.............................................     8

                                APPENDIX

Prepared Statements:
    Mr. Robert Schroder, Founder and Managing Partner, 
      SteerBridge, Vienna, VA....................................    24
    Ms. Jackie Ferrari, Founder and Chief Executive Officer, 
      American Fashion Network, East Syracuse, NY................    29
    Ms. Jacqueline K. Lopez, President, Premier Enterprise 
      Solutions, Upper Marlboro, MD..............................    34
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    GovEvolve....................................................    38
    GovSmart, Inc................................................    46
    Ho-Chunk Incorporated........................................    51
    HUBZone Contractors National Council.........................    55
    The Montgomery County Chamber of Commerce (MCCC).............    60

 
  LEVELING THE PLAYING FIELD: THE STATE OF SMALL BUSINESS CONTRACTING

                              ----------                              


                         THURSDAY, MAY 11, 2023

              House of Representatives,    
               Committee on Small Business,
    Subcommittee on Contracting and Infrastructure,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 2:00 p.m., in 
Room 2360 of the Rayburn House Office Building, Hon. Nick 
LaLota [chairman of the Subcommittee] presiding.
    Present: Representatives LaLota, Molinaro, Bean, McGarvey, 
Scholten, and Thanedar.
    Also Present: Representative Williams.
    Chairman LALOTA. Good afternoon, everyone. I now call the 
Subcommittee on Contracting and Infrastructure to order.
    Without objection, the Chair is authorized to declare a 
recess of the Committee at any time.
    The Committee is here today to hear testimony from three 
small business owners engaged in federal procurement. And
    I now recognize myself for my opening statement.
    Good afternoon, again, and welcome to today's hearing. 
First, I want to thank our witnesses for being here today and 
joining us. Your time here is very much appreciated and I look 
forward to hearing your testimonies.
    Today, the Subcommittee on Contracting and Infrastructure 
will focus on several critical issues facing Main Street 
America. We must address the alarming decline in small business 
federal procurement. Small businesses eligible to contract with 
the federal government declined by nearly 40 percent from 2010 
to 2019 and new businesses entering the procurement marketplace 
declined by 79 percent from 2005 through 2019. Members of this 
Committee from both sides of the aisle understand the crucial 
role small businesses play in increasing competition, 
innovation, and stimulating our economy, and yet, they have 
been systematically squeezed out of our federal contracting for 
decades.
    This decline is exacerbated by the Biden administration 
steering our economy and national security in the wrong 
direction. At a time when the country needs a robust defense 
industrial base, small businesses are getting pushed out of 
government contracts in this space.
    It is also crucial that we ensure small business 
contracting goals are accurately reported by the government. As 
we have seen in countless cases, the government does not have a 
true representation of small businesses in contracting. For 
example, contracting methods like the SBA's SCORE card portray 
inaccurate assessments by allowing things like double counting 
which leads to inflated numbers.
    Finally, we must examine the effects of ineligible firms by 
reevaluating issues such as self-certification. Just like any 
small business program across the federal government, we must 
ensure structure and guidance is in place to ensure firms are 
accurately represented. Fraud is rampant in these self-
certification problems, and yet, the Biden administration seeks 
to expand rather than correct these actions. Our goal on this 
Committee is to create a pathway for small businesses to 
succeed. We understand the value and substance that make up 
each of these businesses in our hometowns and vow to continue 
to advocate for their successes.
    In my district, Long Island is home to so many incredible 
small businesses and hardworking entrepreneurs who serve our 
community and provide exceptional goods and services. When 
traveling around the district, I hear each of these small 
businesses about the issues they are facing and the actions we 
can take in Congress to provide a better future for main 
street.
    Small business contractors play a vital role in America's 
industrial base and national security apparatus. Your real 
world experiences will help the Committee work to make 
meaningful improvements to ensure small businesses are fully 
utilized in the federal procurement marketplace. It is my fear 
that the decline of small business contracting will continue 
until steps are taken to improve competition and accuracy, and 
accurately report on the true status of the state of small 
businesses in federal procurement.
    Thanks again for joining us today. And I am looking forward 
to the conversation ahead.
    With that, I yield to my distinguished colleague, the 
Ranking Member from Michigan, Ms. Scholten for her opening 
remarks.
    Ms. SCHOLTEN. Thank you, Mr. Chairman, for holding today's 
important hearing. Thank you so much to our witnesses for 
taking time out of your busy days to come and share your 
experience.
    The federal government is spending almost half a trillion 
dollars annually on the purchase of goods and services for its 
needed daily operation. In Fiscal Year 2021, 6.5 billion in 
defense contracting dollars were spent in Michigan alone. At 
least 359 million of those dollars were spent in my district. 
This money brings well-paying jobs to West Michigan and 
stimulates local economies.
    The U.S. Government remains a consistent and reliable 
client. Yet, the federal marketplace is a hard space to break 
into, especially for small businesses. Recognizing the need for 
a diverse market, Congress included goals for small business 
participation in federal procurement and created a variety of 
contracting programs to help small firms compete in that 
marketplace. The SBA plays a vital role in this process.
    The SBA works with agencies to help them meet the small 
business goals. It also implements and oversees programs used 
by many small firms to start contracting with the federal 
government, and they have been successful in these tasks.
    In recent years, the government has consistently surpassed 
the small business goal, allowing the government to receive 
quality goods and services at competitive prices and strengthen 
its industrial base. The SBA also plays an important role in 
ensuring that small businesses owned by women, veterans, and 
economically disadvantaged individuals are able to compete in 
the federal procurement space.
    However, there is always room for improvement, and it is 
the role of this Committee to make sure that the SBA is doing 
the best it can. Oversight is a critical component of this and 
the hearing today will help us to help the SBA do the best job 
that it can.
    The government as a whole and some agencies have failed to 
meet all of the small business participation and several 
individual goals, such as women-owned small business. These 
failures deprived small businesses of billions in contracting 
dollars. Additionally, the Committee has seen the average 
contract size increasing. On first take, this appears to be 
promising as larger contracts may be more profitable for small 
business companies. However, it might suggest that more 
contracts are being consolidated, resulting in fewer 
opportunities for small businesses.
    I am particularly interested in the witnesses' perspective 
today on this issue. The ability of small businesses to compete 
in the federal marketplace has also been adversely affected by 
the lack of staff in critical roles.
    Sadly, there are openings in the roles of procuring center 
representatives and commercial marketplace representatives 
overseeing millions of contracting actions. Small businesses 
cannot be adequately advocated for with such few Members 
promoting their use and ensuring that agencies are following 
the small business set-side procedures.
    Lastly, the government steps, such as developing and 
implementing category management to deliver savings to federal 
agencies and eliminating unnecessary redundancies. Yet, the 
approach has also contributed to a decrease in the small 
business industrial base. I welcome discussion like today so we 
can identify the many factors challenging our small business 
contractors and develop thoughtful actions together.
    What is important for this Committee to keep in mind is 
that these developments are part of a bigger picture, which is 
that the federal procurement marketplace is always evolving. 
Small firms bring new ideas to the table which in turn generate 
new jobs and even new industries. We must take steps to ensure 
that they can access the federal marketplace. I thank all of 
the witnesses for being here today, and I yield back the 
remainder of my time.
    Chairman LALOTA. Thank you.
    I now yield to the Chairman of the Full Committee, the 
gentleman from Texas, Mr. Williams, for his brief opening 
remarks.
    Mr. WILLIAMS. Thank you very much. And you heard him say 
brief, so they will be brief, Chairman.
    I want to say again thanks to our witnesses. It is good to 
be able to say hello to you and visit with you. And I want to 
thank my colleague, Chairman LaLota for holding today's 
Subcommittee hearing that will highlight the current state of 
small business contracting, and as I have said earlier, I am a 
small business also and very familiar with some of these 
problems.
    Small business plays a vital role in America's industrial 
base and national security apparatus. As we saw during the 
pandemic, it is detrimental when our country is too relied on 
other nations to source goods that keep America moving. The 
government contracting system helps solve this problem. The 
sides for the small businesses keep key opportunities available 
to build out our industrial base and diversify our supply 
chains. Unfortunately, the number of small businesses 
contracting with the federal government has been decreasing for 
the last decade, and this is not a missed opportunity for small 
businesses to expand their business operations but also 
weakening the overall economy. I hope that this hearing will 
begin to shine light on these problems and will help guide us 
to find solutions to strengthen or solve business contractors.
    So with that, Mr. Chairman, I appreciate, again, you 
calling this hearing and I yield back.
    Chairman LALOTA. Thank you, Chairman. I will now introduce 
our witnesses.
    Our first witness here today with us is Mr. Rob Schroder. 
Mr. Schroder is a 1993 graduate of the finest of our nation's 
service academies, the Naval Academy in Annapolis and he is a 
retired Marine Corps harrier pilot. After the Marines, Mr. 
Schroder founded SteerBridge, a veteran-run company that 
provides technological and professional run services to the 
U.S. Government and private entities. Mr. Schroder prides 
himself on having a special emphasis on elevating the stature 
of veterans in the private sector by integrating their 
experience into federal projects. Rob lends his operational, 
congressional, and acquisition expertise developed in the 
Marine Corps with his management success while at the U.S. 
Chamber of Commerce to deliver effective results for 
SteerBridge customers. Mr. Schroder also holds master's degrees 
from the Industrial College of the Armed Forces, the Marine 
Corps University, and the Indiana University Kelly School of 
Business. Mr. Schroder, sir, thank you for your service to our 
country and for being here today. We look forward to the 
conversation ahead.
    Our next witness is Ms. Jackie Ferrari. Ms. Ferrari is the 
founder and CEO of American Fashion Network located in 
Syracuse, New York. In 2005, Ms. Ferrari built AFN to be a 
trusted apparel supplier to major retail brands and small 
businesses across the country. AFN serves their partners with 
trend right apparel from manufacturers across the globe and 
prides themselves on being a reliable federal contractor. Ms. 
Ferrari graduated from the University of Arizona where she 
studied journalism and then went into apparel design and 
manufacturing. Ms. Ferrari, thank you for being here today and 
we look forward to the conversation ahead.
    I now recognize my colleague, Representative Scholten to 
briefly introduce their constituent who is before us today.
    Ms. SCHOLTEN. Sadly, not a constituent though. I wish that 
we could claim her. We are happy to have our witness, Ms. 
Jackie Lopez with us here today. Thank you, Mr. Chairman.
    It is my pleasure to introduce our final witness, Jackie 
Lopez. Ms. Lopez is the president of Premier Enterprise 
Solutions, a company specializing in cybersecurity, information 
technology, and program management. Premier is a service-
disabled, veteran-owned, and women-owned small business 
participating in the SBA 8(a) development program. She 
cofounded Premier in 2012 after serving in the Air Force. And 
we thank you for your service. Prior to her time in the 
military, Ms. Lopez served as the director of Defense 
Department programs at the GSA Federal Systems and Integration 
Center where she oversaw the acquisition and management of 
large-scale enterprise information technology contracts. Jackie 
received her BS from the University of Southern Missouri and 
studied business administration as a post-graduate at Embry 
Riddle Aeronautical University. She is a graduate of the VA 
Women, Veteran-Owned Small Business Initiative, an ACTIAC 
fellow, and an active Member of the Women Impacting Public 
Policy. Ms. Lopez is also a graduate of the Veterans Institute 
for Procurement, Grow, and VIP Advanced Programs and he SBA's 
Emerging Leaders program. I am thrilled to have you here today, 
Ms. Lopez, and look forward to your testimony. Thank you so 
much for being here.
    Chairman LALOTA. And once again, thank you to all of our 
witnesses for being here today.
    I now recognize Mr. Rob Schroder for his 5-minute opening 
remarks.

   STATEMENTS OF ROB SCHRODER, FOUNDER AND MANAGING PARTNER, 
 STEERBRIDGE; JACKIE FERRARI, FOUNDER & CEO, AMERICAN FASHION 
  NETWORK; JACQUELINE K. LOPEZ; PRESIDENT,PREMIER ENTERPRISE 
                           SOLUTIONS.

                   STATEMENT OF ROB SCHRODER

    Mr. SCHRODER. Chairman LaLota, Ranking Member Scholten, 
Chairman Williams who recently just left, and distinguished 
Members of the Subcommittee. Thank you for inviting me to 
appear before you to discuss the importance of small business 
in the federal procurement, a system and how this legislative 
body can help to secure government agencies are fully engaging 
and utilizing these vital partners.
    My name is Rob Schroder. As mentioned, I am the founder of 
SteerBridge, a government services provider and a Service-
Disabled, Veteran-Owned Small Business. Our company specializes 
in delivering best in class solutions to the federal 
government.
    As mentioned, I graduated from the Naval Academy. I had a 
career with the Marine Corps, where I also served not only as a 
harrier pilot but as an acquisition professional. So I got to 
see this from the government side.
    Following that career, I spent time at the U.S. Chamber of 
Commerce as the vice president of International where it is 
there that I learned the true value that the private sector can 
provide to the federal government.
    I launched SteerBridge with two goals in mind. One, 
supporting the veteran community, while providing top tier 
technology solutions for the federal government. I knew from my 
career that the best and most underutilized talent in the 
country can be found right here in our veteran community. I 
wanted to showcase and leverage that talent, acknowledge, and 
expertise that is largely underutilized.
    Secondly, I had a deep personal knowledge of the critical 
need to modernize and make private sector solutions available 
for the federal government. Being part of the solution to these 
issues for the government is the focus of SteerBridge.
    Currently, I am very proud of our work to help modernize 
the GI bill at the VA.
    Alongside our VA partners and as a subcontractor to 
Accenture, we have taken a 30-day GI bill approval process and 
turned it into a 3 second button click. This has been a huge 
win for the VA, but more importantly it has been a big win for 
our veterans. And more importantly, it also shows what a small 
business is able to do working alongside our government 
partners. Speed, agility, and mission focuses, our advantages 
of not just SteerBridge but our small business peers in the 
industry.
    We recently are working on an innovative solution and 
groundbreaking work utilizing artificial intelligence and 
machine learning for the Marine Corps. This shows the vital 
advantages that we can provide to one of our best customers. We 
are applying these advanced techniques to better supply the F35 
on deployments. We have been successful in this contract 
because we are agile, we are flexible, and we are innovative at 
a speed only a company of our size, absent a big bureaucracy 
can accomplish.
    While the federal government, including Congress, has spent 
a lot of time advocating or small businesses, those efforts 
many times come up short. Even though Congress sets well-
intentioned goals for agencies to hire small businesses, the 
fact is that it has not resulted in more small businesses 
winning the government's businesses. For goals and good 
intentions to be effective, they must have teeth to them.
    Instead of the government creating small business goals, I 
would implore this Subcommittee to consider legislation that 
outlines specific requirements for small business contracting. 
Taking this route will be more effective than advocacy and 
ultimately, less costly for the government.
    SteerBridge deep values the partnerships we have cultivated 
with large businesses and the expertise we have gained by 
working as subcontractors is invaluable. And let's be clear; 
there is an absolute need for the value that big business 
brings to the federal government. But as I look forward to 
discussing with you further today, it is in the best interest 
of the United States Government and the industrial base to have 
more small businesses engaging with the government and 
delivering be spoke and ``best in class'' solutions that are 
difficult to find at a large company.
    For Congress to truly level the playing field I would 
implore you to consider the following:
    Completely eliminate the Mentor-Protege Joint Ventures 
(MPJV) program. The program was created with all the best 
intentions but has been warped into simply being a path for big 
business to drive revenue under a small business banner. 
Additionally, MPJVs result in never-ending protests, confusion, 
and hampering the government's ability to modernize.
    Second, require a specific certification process for 
subcontracting. While eliminating self-certification for SBA 
set-aside programs, but not reporting, was addressed in the 
most recent NDAA. There continue to be loopholes and delays 
that allow companies to misrepresent their ownership.
    Third, clean up SBA's government-wide contract reporting. 
Congress should consider passing a policy that allows agencies 
to only count their contract spending against one category for 
a small business.
    By bringing smaller and innovative companies further into 
the federal government, we will ensure the United States is 
leveraging the best of what small businesses have to offer. 
While increasing competition for contracts, which will lead to 
better prices for the American taxpayer.
    Thank you, and I look forward to taking your questions and 
discussing the importance of small business in the federal 
government.
    Chairman LALOTA. Thank you.
    I now recognize Ms. Jackie Ferrari for her 5-minute opening 
remarks.

                  STATEMENT OF JACKIE FERRARI

    Ms. FERRARI. Chair LaLota, Ranking Member Scholten, and 
Members of the Subcommittee, it is an honor to appear before 
you today.
    My name is Jackie Ferrari, and I am the founder and CEO of 
American Fashion Network, a women-owned small business based in 
Syracuse, New York. I am also a Member of the Women's 
Procurement Circle, which advocates for policies that 
strengthen women-owned companies that do business with the 
federal government.
    Over the last decade, I have seen first-hand how 
congressional and presidential attention to domestic 
manufacturing policies can significantly benefit small 
businesses like mine. I am particularly pleased that this seems 
to be, at least from where I am sitting, a bipartisan effort.
    It has always been my goal to keep manufacturing in the 
United States. Born and raised in Los Angeles County, 
California, I was able to experience the glory of American made 
products in the 1970s and 1980s before many of the jobs moved 
overseas.
    Together with the U.S. Government, I believe we can keep 
American manufacturing alive. I founded AFN in 2005 and we have 
since grown into a full manufacturing enterprise providing 
clothing, fabric, and promotional specialty products to the 
world's most prestigious retailers, corporations, and now the 
federal government, which happens to be my favorite customer.
    At the beginning of the COVID-19 pandemic, AFN made the 
decision to pursue federal work as we watched the retail 
industry suffer under economic strain of lockdowns. When 
millions of dollars in sales were canceled, I knew I had to 
pivot to keep my business and employees afloat. We began 
producing masks, COVID-19 protection from design to shipping in 
just 5 days.
    Policies like Buy American encouraged domestic preferences 
and small business participation that allow my business to 
thrive. Federal contracting opportunities give small businesses 
the prospect for security and long-term stability which is 
important in the apparel industry where there is a constant ebb 
and flow of business.
    In 2021, AFN won a $52 million contract to produce a new 
line of fitness training uniforms for service members. I cannot 
express enough how grateful and proud I am for the opportunity 
to provide garments for the U.S. military personnel. This gave 
me the ability to hire five additional employees at our 
headquarters, keep 70 workers in California and 56 workers in 
Mississippi employed with a workforce of 76 women waiting to 
work there if we have the business to give them, largely single 
mothers.
    This contract does not come without its challenges. We 
anxiously wait for the contract to kick in after 2 years of 
delays. Speaking to my peers across industry, I know delays are 
commonplace. As a small business, they are also difficult to 
manage. To date, we have provided two wear tests and a total of 
300 samples, all using AFN's resources. For apparel designers 
and manufacturers, delays disrupt our supply chain because we 
cannot hire or keep employees without a promise of work.
    For example, a 5-year IDIQ contract like the one I won 
provides greater opportunity, but since there are no guaranteed 
orders or ship dates, it is challenging to finance. When we 
receive an order typically with a 6 month lead time delivery 
issue, it is difficult to find a financial partner that can 
accommodate the need for such significant capital in such a 
short amount of time. Since you do not know what to expect from 
delivery to delivery, it makes planning capital and employee 
retention challenging.
    From my point of view, there are a number of changes 
Congress can make that would help small companies thrive in the 
federal market. Better utilization of all small business 
federal contracting programs is top of our list. According to 
the SBA, the government has only met its women-owned 
contracting goals which was established in 1996 two times and 
has never met its HUBZone goals.
    If the government is serious about doing business with 
small companies, firms should no longer be allowed to self-
certify their socioeconomic status, instead, requiring an SBA 
certification. Additionally, the overall small business goals 
should be increased as well as the goals for SBA's contracting 
assistance programs. And finally, sole source thresholds must 
be raised and SBA's procurement resources for small businesses 
adequately funded.
    Broad bipartisan support for increasing small business 
participation dictates changes are needed to bolster these 
businesses. I applaud the Committee's effort to address these 
issues and look forward to providing further input on ways 
Congress can support small manufacturers.
    Thank you, and I look forward to answering your questions.
    Chairman LALOTA. Thank you.
    I now recognize Ms. Jacqueline Lopez for her 5-minute 
opening statement.

                STATEMENT OF JACQUELINE K. LOPEZ

    Ms. LOPEZ. Thank you, Chairman LaLota, Ranking Member 
Scholten, and distinguished Members of the House Small Business 
Committee on Contracting and Infrastructure. Thank you for the 
opportunity to testify today on federal contracting programs 
important to the small business ecosystem and strategies to 
improve those programs.
    I am Jacqueline Lopez, president and owner of Premier 
Enterprise Solutions, a company specializing in cybersecurity, 
information technology, and program management services in the 
federal sector. Premier is a service-disabled veteran and 
women-owned small business participating in the SBA 8(a) 
development program.
    Premier has grown into a successful firm employing 
personnel in six states and the District of Columbia. Much of 
my success is directed attributable to the 8(a) women-owned 
small business and service-disabled, veteran-owned small 
business programs, as well as many of the free resources for 
socioeconomic programs, the government owns or supports.
    These programs are not perfect but crucial to removing 
barriers, creating growth opportunities, and bringing together 
stakeholders with private sector innovators. I believe there 
are challenges to the socioeconomic programs. One of the 
challenges is category management which conflicts with the 
government's goal to increase the industrial base. While well-
intended, the net effect has been a shrinking of the small 
business industrial base.
    Best in class vehicles (BICs) play a key part in category 
management but it is very difficult for small businesses 
generating less than $10 million annually and new entrants to 
win an award on many the BICs. Very few small businesses can 
compete for an award on several of the BICs without a large or 
mid-size joint venture partner. As BICs are recompeted or new 
vehicles created, they should take into account businesses that 
have $10 million in revenue or less and new entrants. We need 
more vehicles, especially GWACs, like 8(a) Stars which has a 
simple and inclusive bid process and the criteria is designed 
to get more businesses on the vehicle rather than keep them 
off. We also need more vehicles to include a GWAC available for 
women-owned small businesses. The 8(a) and service-disabled, 
veteran-owned programs have access to GWACs. Having such a 
vehicle for the women-owned small business program would help 
more women-owned small businesses pursue larger contracts and 
help federal agencies achieve their contracting goals.
    The 8(a) development program has been the catalyst for many 
small businesses entering the federal market. However, 
anecdotal data has shown it takes several years for 8(a) firms 
to actually gain traction and win contracts. An extension of 
the 8(a) program from 9 to 12 years would allow 8(a)s more time 
to understand the complexities of the federal procurement 
process, increase their working capital, and sharpen 
competitive skills, ensuring a sustainable business upon 
exiting the program.
    Lastly, the whole source threshold for 8(a) firms currently 
stands at 4.5 million except for Native American tribes and 
Hawaiians in which case the sole source threshold for civilian 
agencies is $25 million without justification, and DoD, $100 
million without justification. Ideally, the threshold would be 
equal across all 8(a)s. But even a modest increase to the 
threshold for non-Native and Hawaiian firms, 10 to 12 million 
or more would be impactful. An increase to the threshold would 
promote larger awards which means more revenue for the company 
and subsequent job creation.
    Despite these barriers, success is attainable. With these 
programs, my business has been successful. Without them, my 
ability to grow and create jobs would have been significantly 
decreased. These programs provide invaluable opportunities for 
the businesses that are able to successfully navigate them and 
can be significantly more impactful with improvements. I want 
to see small businesses have an opportunity to be engines of 
job creation and economic growth.
    Once again, I wish to express my deepest gratitude to this 
Subcommittee and the Full House Small Business Committee for 
its continued efforts to support America's women-owned 
businesses and for inviting me to share my story and thoughts.
    Chairman LALOTA. Thank you. And thank you to all of our 
witnesses for your opening remarks.
    We will now move to the Member questions under the 5-minute 
rule, and I recognize myself for 5 minutes.
    Mr. Schroder, the first question is going to be for you, 
sir. Small businesses are vital to America's industrial base, 
especially when it comes to providing goods and services for 
our military. Unfortunately, fewer small businesses are 
choosing to do business with the government, resulting in a 79 
percent decline in new businesses entering the federal 
procurement space from 2005 through 2019.
    My question is, what did you do that helped prepare you for 
the federal government contracting space knowing that fewer 
entrepreneurs were getting involved?
    Mr. SCHRODER. Thank you, Mr. Chairman.
    I did it by small steps. And that would be my advice to any 
entrepreneur or small business that is looking to start work 
with the federal government. The barriers are so high and the 
process is so lengthy that you cannot go full into it in one 
step. It is an incremental approach.
    And, so, that would be my advice is that you start slowly, 
pick any customer that you have some expertise with and go at 
it that way in terms of your initial start.
    Chairman LALOTA. Were there dialogues that you had with the 
SBA, websites that you referenced, other ways that you learned 
tricks of the trade to get you off the ground the right way?
    Mr. SCHRODER. So I did not find the SBA particularly 
helpful. I went straight to the agencies and started working 
directly with the programs as opposed to an advocacy. Every 
time I went to a particular advocacy group or, you know, a 
vendor management or any sort of, you know, technology path or 
innovation path or vendor path, none of those proved useful at 
all. The only thing that mattered was the program entity, the 
end user, the customer, if you will, and what they needed and 
what their requirements were. It was not that it could be 
pushed on to them.
    Chairman LALOTA. Thanks. And if any of the witnesses want 
to add in some of their experiences I think we have a moment or 
two for that.
    Ms. FERRARI. Sure. I would love to. Thank you.
    We read a book. We decided during COVID to jump into the 
contracting space because we were a women-owned business and we 
knew that in the federal contracting arena that that was 
important. So we actually read a book called Government 
Contracts Made Easy and took a 15-minute consultation with the 
woman who wrote it. So we did a lot of homework and we looked 
at the landscape. And then we went to the DOD and presented 
some product that we thought that they would like and that 
really started our path. So we aggressively pursued the 
process.
    Chairman LALOTA. Thank you.
    And Ms. Lopez, did you want to add anything?
    Ms. LOPEZ. Absolutely. I was fortunate enough to have an 
understanding, some understanding of government contracting so 
that was very helpful. But quite frankly, what I learned even 
though I was a very experienced government contractor. If you 
are a new entrant into the government space there is still a 
lot you have to do. For instance, you have no access to 
``vehicles,'' right? Because you do not have past performance, 
though I could run $100 million projects, it did not matter to 
the government when it comes to actually doing them because I 
did not have that past experience, past performance.
    One of the things though that honestly I have seen--I 
mentor a lot--in government contracting is that a lot of 
individuals cannot get started because the government is a very 
complex thing to navigate. I know CIOs, individuals who have 
been CIOs in industry, they tried and they said ``forget it''; 
right? Because of all the procurement rules.
    So one of the things that really worked for me and works 
for others is having programs, like the Veterans Institute of 
Procurement, Emerging Leaders, things like that that give 
significant, substantive information for free. Those programs 
are free but they give you every detail you need to really 
begin to understand and grow in the federal space.
    Chairman LALOTA. Thank you.
    I want to change gears for a second about self-
certification and Ms. Ferrari, I want to direct the initial 
question to you.
    The Committee is concerned about self-certification of 
firms and the potential for fraud or misrepresentation. And I 
would like for you to take a first shot at this. But what are 
your views on self-certification of firms?
    Ms. FERRARI. Thank you, Chairman.
    I think that it needs to go away. There is rampant fraud 
across so many areas of contracting in general, but to self-
certify, there are so many companies that, you know, will list 
their wife as the owner of the company and that person not 
being involved in the day-to-day business. It happens full stop 
so much. So we really think that that would be a very big step 
in helping small businesses to actually thrive in this space by 
having the program where you have to be certified by the SBA 
with a stringent certification process. That really is a 
critical move.
    Chairman LALOTA. Thank you. And if the Ranking Member will 
indulge me for 30 more seconds, Mr. Schroder, if you would not 
mind, the same question.
    Mr. SCHRODER. Sure. And thank you for the question.
    I would say that there are two reasons not to certify. 
Number one, you are not capable of certifying because you do 
not have the ownership structure and so you should be 
ineligible.
    The second reason, you are just lazy. You do not want to go 
through the process. And I would say either one of those 
reasons are enough to require the certification process. We 
have encountered it multiple times and, you know, there is 
nothing worse than losing to someone that is misrepresenting 
themselves.
    Chairman LALOTA. Thank you. I appreciate your feedback. My 
time is well expired.
    I recognize Ranking Member Scholten from Michigan for 5 
minutes.
    Ms. SCHOLTEN. Thank you so much, Mr. Chair. And thanks 
again to our witnesses.
    As you all know, last week was National Small Business 
Week, and I had the opportunity to be out and about in the 
district visiting a number of small businesses, one of them was 
R&R Mechanical, a Latino-owned HVAC business. R&R Mechanical 
started like so many other small businesses that grow into 
great businesses in Grand Rapids in a garage. It has now grown 
to a thriving 42 employee operation and is continuing to grow. 
As they grow, they have expressed interest in breaking into the 
federal contract's space.
    As the Ranking Member of this Subcommittee, it is a top 
priority of mine to ensure that minority-owned businesses like 
R&R Mechanical are able to enter and navigate the federal 
contracting marketplace. As such, I am committed to protecting 
and strengthening the 8(a) program.
    Ms. Lopez, you participate in the 8(a) program, as well as 
the women-owned small business program. Have these contracting 
programs helped your small business compete in the federal 
procurement space?
    Ms. LOPEZ. They have. One of the things that is really good 
about the 8(a) program is because, again, even though you do 
not have significant past performance, if you can convince the 
customers that you can do the work you can get sole source 
awards. So my first multimillion dollar sole source award was 
critical in providing me capital that helped me to compete. So, 
I mean, I am proud to say most of my work is not 8(a), it is 
not direct, it is competed, but yes, it was very valuable.
    Women-owned small business, honestly, I do have some women-
owned small business work, but I would really like to see more 
vehicles and more efforts for sole sources for women-owned 
small businesses.
    Ms. SCHOLTEN. Thank you.
    And in your view, what would you say if there is anything 
missing or additional elements that could help the program, 
what would those be?
    Ms. LOPEZ. For 8(a), I think you really need to raise the 
ceiling on 8(a) programs and you need to extend the number of 
years. Unfortunately, because there is, it takes a while to 
really get to know the federal sector begin to ramp up. And a 
program, even like myself, you know, I have done pretty well in 
it but I am really just at a place where I could do 
exceptionally well. With women-owned small business, again, I 
think a GWAC would be amazing. That is missing for us, a 
vehicle that is dedicated to women-owned small business for 
women-owned small businesses.
    Ms. SCHOLTEN. Thank you.
    Another issue that I consistently hear about as an 
impediment to small business contracting is category management 
which is a procurement initiative, as we know, led by the 
Office of Management and Budget. Category management poses a 
barrier for many small businesses in making federal contracts 
too big for a small business to handle.
    Ms. Ferrari, if you could talk a little bit more about how 
consolidation and bundling of contracts through category 
management has impacted your business, and talk just a little 
bit more in detail about what you found in terms of the lack of 
women-owned business small set-asides in your industry.
    Ms. FERRARI. Well, thank you for the opportunity to talk 
about it.
    A vehicle like that, category management, I am frightened 
to death of this coming. And when you talk about the 
manufacturing base shrinking, that might send me running the 
other direction when I have spent the last 2-1/2 years of my 
life advocating for small business and federal contracting. I 
do not believe that it works in the apparel industry because 
there are so many different things that our warfighters need 
for their safety and their security and their comfort, and I 
just do not think it works, number one, from a high level.
    From not so high a level in so many of the agencies under 
these contract vehicles, they are not meeting the set-asides. 
They have lists and lists of set-asides that they are supposed 
to meet, and I do not believe that there is any governance to 
make sure that they are meeting those. So it really knocks the 
small business out of the loop. We do not get the opportunity 
to compete because it is owned by this large vehicle. And I can 
tell you it will absolutely decimate small business when it 
comes to apparel.
    Ms. SCHOLTEN. Thank you so much. And just at time. Perfect 
timing.
    Chairman LALOTA. The best Ranking Member.
    I now recognize Mr. Bean from Florida, the home to so many 
former New Yorkers, for 5 minutes.
    Mr. BEAN. Mr. Chairman, thank you very much.
    Good afternoon, Small Business Committee. Chairman, you do 
look very stately in the Chairman's chair. So well done. 
Congratulations. And Ranking Member Scholten, you, too. Of all 
the Ranking Members in this Committee you are one of them.
    I want to welcome our panelists to Washington, D.C. I read 
your bios. They are very impressive. What you have built is 
amazing and that is why you are here. You will be able to add 
you testified before Congress, which is impressive, too.
    We have heard today the declining number of small 
businesses that are doing business with the federal government. 
It is getting harder to do it, especially when government is 
competing and government launches its own business to handle 
that whatever it needs, procures it itself.
    What if there was a law that said before the federal 
government could enter this marketplace it should bid out to 
see if there is some small business or an entrepreneur that 
could do that service or procure that goods cheaper or more 
effectively? Would that be a good idea or a great idea? Mr. 
Schroder?
    Mr. SCHRODER. Congressman, thank you for that question.
    I would offer the VA as an example. So there is a law, a 
decision that was handed down a few years ago that required the 
VA Rule of Twos. So the VA is required to seek out service-
disabled, veteran-owned small business. I would say its effect 
is mixed. And so, I would look to that to a guide. In theory, 
yes, absolutely agree it would not be good; it would be great. 
It would be awesome.
    Mr. BEAN. It would be great. Very well said. Thank you so 
much.
    Ms. Ferrari, what say you? Would that be a good idea or a 
great idea?
    Ms. FERRARI. A great idea.
    Mr. BEAN. That is the correct answer. Thank you so much. 
You nailed it.
    Ms. LOPEZ. Well, I do not have any other choice. So you are 
saying actually putting it out to socioeconomics first?
    Mr. BEAN. That is exactly right, Ms. Lopez.
    Ms. LOPEZ. Well, I think that is absolutely fantastic. I 
love it.
    Mr. BEAN. I will accept fantastic to the idea, too. It just 
so happens I have filed that bill. How about that to say to the 
federal government before we put our toe in that water, let's 
see what small business, see what Ms. Lopez's business can do. 
Let's see what Ms. Ferrari is up to. Maybe she could procure or 
provide that good or service cheaper, more effectively, and you 
are hiring people. All of you are hiring people. So I say that 
not only for you but I am plugging, shamelessly plugging my own 
bill for our Committee Members to jump onboard. There is lots 
of room to co-sponsor this bill. But seriously, we want to 
know, and you have already hit on a handful of things, the 
barriers, what barriers do we need removed? What pathways do we 
need to clear? I know the VA, Mr. Schroder, you have already 
had some experience and we want to make sure this bill does not 
run into the same trap that is currently out there. We really 
want them to focus on it because small business, the 
entrepreneurship of small business is the heartbeat of America. 
It is what makes America great. I throw that out there as a 
tossup question. Anybody want to jump in? Barriers to remove or 
pathways to clear to make it easier for small business to do 
business with the federal government?
    Ms. Ferrari, jump in.
    Ms. FERRARI. I am going to jump in for a second.
    I just want to say, you know, there are so many barriers to 
entry. We are talking about them here where we can have Rule of 
Two. So same thing in my industry. The Rule of Two is 
exceptional, and if it were being adhered to it would create 
the pathway that you are trying to create.
    Mr. BEAN. Now, everybody knows what the Rule of Two is but 
for those that might not know what it is, tell us about the 
Rule of Two.
    Ms. FERRARI. They have to go out, Procurement has to go out 
and find two--if they can find two companies that can 
manufacture, let's just say it is a physical training uniform. 
Two companies that can do it that are small business, it has to 
go to small business. So it cannot go to a large vehicle. It 
cannot even go to prison industries because there are two small 
companies who can do this.
    So that is critical, and I love your great idea. And if I 
could be here to vote for you I would.
    I believe when there are these large contract vehicles, we 
have had several through our industry come out and say the 
large contract vehicle company is saying this cannot be made in 
America. Can this be made in America.
    And by the year, here is the number you should call at DHS 
and tell them. And we have had four of these things in the last 
2 months where we come back and say absolutely. And I will make 
a sample. It will be on your desk by Friday.
    In the fabric, with the yarns that are barrier amendment. 
It is doable. But the agencies just do not know.
    And I had an opportunity to attend an industry days at HHS 
2 weeks ago for 2 weeks ago for PPE. You know, there is a law 
now that says--I am getting the light--there is a law that says 
you have to make----
    Mr. BEAN. We both are getting the light but finish that one 
sentence and hopefully they will not know. Hopefully they will 
not know that we are over.
    Chairman LALOTA. Finish that objection. You have another 90 
seconds.
    Ms. FERRARI. They have to make it in America so it has been 
passed. But we sat in front of a panel of all these people from 
the VA to HHS to DHS. They do not even know how to go about it. 
So I think there has to be something that says, something from 
the SBA, maybe it is a trade show where we all go and we say, 
hey, we exist. Here is what we do. Like, it is here and we just 
need to let people know we are here.
    Mr. BEAN. Thank you very much.
    Last thing. I was going to call this the Yellow Page bill. 
If it is offered it is in the Yellow Pages. But people under 30 
do not know what the Yellow Pages are.
    Mr. Chairman, I yield back.
    Chairman LALOTA. Thank you. I now recognize Mr. McGarvey 
from Kentucky for 5 minutes.
    Mr. MCGARVEY. Thank you, Mr. Chairman. Thank you, everyone, 
for being here today. I really appreciate it, especially those 
of you who served. Thank you for your service to our country. 
We appreciate that as well.
    I am going to continue on some things that Mr. Bean was 
talking about, in fact, and you could tell he used to be an 
auctioneer before he came up here. He might still be available 
to birthdays and bar mitzvahs if you all want to.
    But he was talking about some good things and how we 
continue to get more small businesses involved in 
subcontracting. I think that is something we are all interested 
and something we all want to see. We also all serve on other 
Committees. I serve on the Veterans Committee. One of the 
things I am working on right now in the Veterans Committee is 
ways to find more training opportunities for companies so that 
we can get more veteran-owned businesses opportunities in the 
space.
    So Mr. Schroder, I will just start with you. You talked 
about the Rule of Twos already. We have heard the great idea 
from Mr. Bean. Give us a little bit more right now. What are 
some ways that we can create more contracting opportunities 
particularly for veteran-owned businesses and for service-
disabled veterans and their businesses.
    Mr. SCHRODER. Congressman, thank you for the question and 
the opportunity.
    I would say I would focus less on training companies and I 
would focus more on training contracting officers because that 
is where the rubber meets the road. And there are two ways that 
goes about. Number one is how they put the procurement out, 
because they construct it. They can follow multiple paths. The 
second is that they hold the big businesses accountable to the 
small business goals in each contract. They are considered 
goals but if you make the contracting officers hold them 
accountable contractually, that is when you will see a 
difference there because there are two areas where small 
businesses play both as sub and as prime. And I would offer it 
is more of training and holding contracting officers 
accountable for that. And then there is a whole laundry list of 
things, you know, specific barriers. We mentioned best in 
class. I mentioned the Mentor-Protege program. There are 
several things, you know, mechanically and structurally that 
can be changed to help bring in businesses. That would be my 
suggestion as opposed to training the businesses.
    Mr. MCGARVEY. What is an example that comes to mind of ways 
to hold contracting officers accountable to you?
    Mr. SCHRODER. Number one, I would have them report their 
small business set-asides, and then I would force them to 
ensure that they are reporting accurately as to why different 
contracts did not come out. Congressman, there are so many ways 
that you can put a contract out. The myriad of ways is just 
astronomical and every consultant advisor that you go to, they 
all come back with the same answer. The federal government will 
do whatever the federal government wants to do. Not necessarily 
what they should be doing. And so there is all sorts of 
different ways you can get around the different small set-aside 
programs in order to contract.
    Mr. MCGARVEY. Thank you very much.
    And I will ask Ms. Lopez sort of the same thoughts on the 
same topics.
    Ms. LOPEZ. I have to say that I agree that contracting 
officers, they need a lot of training. But I honestly also 
agree with you in that small businesses also need training 
because one of the things that happened is they do not know how 
to navigate the market. My business partner and spouse here is 
a former contracting officer. I cannot tell you how many times 
that helps us when it comes to negotiating with the government 
or speaking to what our rights are. We truly understand them. 
The procurement laws and the acquisition regs are the heart of 
how we do business with the government. To help educate small 
businesses on that would be to give them a very powerful tool.
    Mr. MCGARVEY. Thank you very much.
    And just in the quick time we have left for both Ms. 
Ferrari and Ms. Lopez, describe some of the challenges that 
women-owned businesses face in this space, and how can we 
create more contracting opportunities for companies like yours?
    Ms. FERRARI. I would like to give a shout out to the DLA. I 
think they have done a really good job with awarding awards to 
small business. And we have been the recipient of four of them. 
So I really think that they are taking the general, you know, 
sentiment in the country to do that. But that is for small 
business. So I won four awards as a small business; not one 
single award as a women-owned small business. So like I said in 
my opening remarks, since 1996, when that was put in place, 
they have only met the set-aside twice, met their goals twice. 
So I would like to see more effort be put toward women-owned 
small business but not double counting it. So putting the award 
out as small business but then not being able to say, oh, since 
it is a woman we will check that box, too. So I think not only 
women-owned small business but service-disabled, women-owned 
small business, just hit those goals would help us tremendous.
    Mr. MCGARVEY. Mr. Chairman, I know I am past time. Would 
Ms. Lopez be able to answer that question quickly? Thank you.
    Ms. LOPEZ. What she said. I absolutely agree with her and I 
think also partnering with other agencies. Even outside of the 
government. I have to say organizations like WIPP really have 
helped me understand more about procurement. They help us 
navigate the government more, so partnering with those agencies 
which SBA does has been very helpful to me as well.
    Mr. MCGARVEY. Thank you, all.
    And I yield back, Mr. Chairman.
    Chairman LALOTA. Thank you.
    We are having a good productive dialogue so I want to open 
it up to a second round if the Members would like.
    Ms. Ferrari, especially, I was interested in your opening 
statement where you discussed making uniforms for our military. 
And I wanted to ask you about some of the sourcing that you 
have experienced over the last couple of years, especially 
post-COVID with supply chain issues. How has that sourcing 
been? You are making uniforms for our men and women in uniform 
who are fighting for our country for the flags that are behind 
us right now. Are you still able to source those materials from 
the United States? And can you describe any challenge you have 
had along the way?
    Ms. FERRARI. Yes. Thank you for the question.
    We have had no supply chain issues whatsoever because it is 
made domestically. So from every component that goes into it, 
it is made domestically for Barry Amendment compliance and it 
has been great. And I can go back and say like look what 
happened during PPE and this is the value of the small 
business. During COVID, and we needed PPE and companies were 
standing in line waiting to get Chinese masks that were being 
sold out of warehouses for cash, you know, it boggled my mind. 
Why would we even want to be buying these? And I can tell you 
every single aspect of our domestic supply chain kicked it into 
gear and started shipping masks to everybody that needed them. 
It is such a long story but we did it. T-shirt factors turned 
upside down to become hospital gown factories and, you know, 
woven dress uniform factories were making masks and boot covers 
and all of these things. So with the resiliency of Americans 
and the resilience of small business in this country, we 
answered the call. And what we need to continue to do is keep 
these companies in business so that we can answer this call. 
But from yarn to thread to every aspect of a uniform, we are 
able to get it when the government needs it. We just need the 
government to need it more and more consistently so we can keep 
our factories going.
    Chairman LALOTA. And it sounds like it is productive for 
you to source inside the United States and from our perspective 
we appreciate that as well.
    Ms. FERRARI. One thousand percent.
    Chairman LALOTA. That ends my questioning and I yield to 
Ms. Scholten for some questions as well.
    Ms. SCHOLTEN. Yeah, thank you so much. Thank you for your 
additional time.
    Ms. Lopez, you mentioned raising the sole source threshold 
level to the playing field. I would like to give you an 
opportunity to elaborate on how increased thresholds can help 
not only your business but other small businesses and any 
examples that you can give would be welcome.
    Ms. LOPEZ. Absolutely. Thank you.
    I will give you an example. When I first came into the 
federal space, there was a cybersecurity program. I knew it 
inside and out. Right? There was no one, honestly, who could do 
a better job than us just because of the expertise I had in 
that the work I had done in the agency. But that project was 
$7.5 million, which meant it cannot be sole sourced to me. As a 
matter of fact, it was sole sourced to someone else, you know, 
because it was on a GWAC, really. And honestly, they did not do 
the kind of job I would have done. The client was not as happy. 
I just think that raising the threshold also allows 8(a)s as we 
go along. As we increase in our ability do work, to do more 
work for a given agency. A lot of times quite frankly agencies 
will give you a $4.5 million this year, $4.5 million next year, 
right? or $4.5 million for 2 years. Because you have done a 
great job they want to do work with you. Why should we be 
limited in that threshold? Why could it not be at least 22, 4.5 
million a year for 5 years, 22.5, or 25? It only makes sense. I 
think the government would get better value out of the 8(a) 
programs and the contracting officers would honestly have less 
work to do rather than more.
    Ms. SCHOLTEN. Thank you. That is very helpful.
    I also wondered if you could elaborate on what you learned 
through the VIP program and the SBA's Emerging Leaders program.
    Ms. LOPEZ. Wow. Both programs are absolutely phenomenal. 
VIP is, I have to say, probably the best program I have ever 
seen and it is free. I mean, everything about doing business 
with the government they teach you and they teach you in stages 
as you grow. There is a start. If you are a new entrant, you 
learn so many of the things that are barriers here. Right? You 
learn how to navigate those up front, whether it is financing 
or contracting, partnering, all those things. Then there is 
Grow; right? As you grow. And then there is Advanced. So, that 
program was very, very significant for me because even though I 
knew about the government space it gave me significantly more 
detail, especially on financing. Emerging Leaders was a 6-month 
program which accumulated in a growth plan. By the time you 
finished, you had gone in-depth in every single area of your 
business and I was able at that point to put together a really 
sterling growth plan with smart goals. I use it now all the 
time. I use it for all my strategic planning. So many of my 
fellow businesses, when they see it, they want to use it. But 
those programs really gave me a lot of great education and 
information which helped me to not only grow but it helped me 
mentor others.
    Ms. SCHOLTEN. That is wonderful.
    And in the last minute, if you have any thoughts on how we 
could better integrate these programs into the contracting 
process that would be hugely helpful.
    Ms. LOPEZ. Honestly, you could give more funding for both 
or either, especially VIP is free. I was actually just at a 
meeting where Senator Cardin helped get $2 million more so they 
could get 1,000 more individuals in the program. So anything 
you can do to get funding, those are programs that are already 
there. It is just a matter of getting it through.
    Creating a program, SBA had begun, I am not sure what 
happened to it but it had looked at doing what is called an 
8(a) Academy. I think you can take 8(a) Academy, which was 
awesome and VIP, you know, create a baby and almost all 
socioeconomics should be able to learn and go through something 
like that so that new entrants can understand how to navigate 
the market and how to grow quickly.
    Ms. SCHOLTEN. Thank you so much. I yield back.
    Chairman LALOTA. Thank you.
    I now recognize Chairman Williams, small business owner 
from the great state of Texas for 5 minutes.
    Mr. WILLIAMS. Thank you, Mr. Chairman. Again, I want to 
thank all of you for being here. I appreciate you taking the 
time to do that.
    Recently, I spoke with a small business owner from Texas, 
my state, who lost out on a federal contract to a business that 
was a subsidiary of a large, multinational corporation. They 
did not win the contract and the decision was challenged 
because the winning business was part of an international 
company. The decision still was upheld.
    So Mr. Schroder, is this type of situation common where 
larger companies have effective control over small businesses 
that compete for some of these government set-asides and what 
can we do to fix this issue?
    Mr. SCHRODER. Mr. Chairman, thank you for the question. And 
I would say, yes, we absolutely do run into that and I would 
emphasize my number one recommendation for this Committee would 
be the elimination of the Mentor-Protege program which allows 
the large business to take 60 percent ownership and then, 
thereby, competing on the small business side with 60 percent 
ownership of that joint venture. And so that is an immediate 
way to address what is a large problem in the procurement 
system. It causes a lot of confusion, a lot of delays, and a 
lot of unfair practices with the large taking advantage of the 
small.
    Mr. WILLIAMS. Good. Inflation has been hurting small 
businesses across the country, and for contractors I fear that 
this issue has an even more larger impact. And if you are 
awarded a contract that you bid on months and suddenly all your 
suppliers' costs have increased by 10 percent--we have all got 
this story, don't we? Your margins are getting squeezed tighter 
and tighter and it makes it harder to stay in business.
    So Ms. Ferrari, how has your business been dealing with the 
inflation over the past year?
    Ms. FERRARI. Thank you for giving me the chance to talk 
about it. We got hit hard with our Air Force contract. It came 
to us just at the time inflation hit and we went from being in 
the black to being in the red. And rather than putting it out 
for recompete or saying to the DLA that we could not do it, you 
know, in fear that if we said that we would never get another 
program again, we just looked deeply into the whole supply 
chain and actually went back to the DLA and asked if we could 
change the packing and double the amount of pieces we put in 
the box. And after a couple of weeks they vetted it through 
their sources and when they said yes, it put us back into the 
black, slightly. But yes, very much, it has affected small 
business, and four contracts that I know of went back into 
recompetition because they just could not handle the disparity 
in price.
    Mr. WILLIAMS. I have talked to many small businesses who 
have said the federal contractor is so time consuming and 
expensive they stopped even trying to even hire people to try 
to get it done.
    So Mr. Schroder, what advice would you have for these small 
businesses? And how can we in Congress simplify the process to 
bring more small businesses into the system?
    Mr. SCHRODER. Mr. Chairman, I would say the best advice you 
can have is for them to start small and then encourage through 
the contracting officers with large primes, encourage those 
contracting goals to be requirements because then they will be 
out farming for the small businesses. And you can start out 
with just one single contract gets you up and off your feet and 
it is a process to get going. Little contract, by little 
contract, by little contract, gets to a bigger one. And so the 
advice is to start small. But if you are requiring small 
businesses set asides as opposed to just goals, you set 
requirements, that will force the system to be able to 
encourage small businesses to join.
    Mr. WILLIAMS. Good. I appreciate that.
    Mr. Chairman, I yield my time back.
    Chairman LALOTA. Thank you, Chairman.
    I now recognize Mr. Thanedar from Michigan for 5 minutes.
    Mr. THANEDAR. Thank you, Mr. Chairman.
    As a former business owner, I believe it is important that 
the federal government provides opportunities for small 
businesses to thrive and grow. As we all know, they contribute 
greatly to hiring and creating jobs and innovation, and 
certainly, paying taxes.
    To that end, we must ensure that contracting opportunities 
are available for small business owners in my district and 
those across our country. Despite more dollars being awarded to 
small businesses, what is concerning really is the overall 
participation of small firms in government contracting has 
declined over the years.
    Now, in Congress, we remain concerned, Ms. Lopez, 
especially, we remain concerned about category management. And 
the consolidation of requirements into a limited number of 
government-wide contracts. And what I am afraid of is 
consolidation means, what does this mean for small businesses? 
And is this going to keep the new small businesses out of 
running because the more established small businesses are going 
to be able to compete better in this situation. What does that 
do to the new small businesses coming in, especially the Black 
and Brown community, the small Black-owned businesses?
    Ms. LOPEZ. It does absolutely make it more difficult for 
new entrants. Quite frankly, for those of us who are already in 
the federal space, we have seen the shrinkage and so we have to 
find more resourceful ways to compete. But for new entrants, 
there are very, very limited opportunities, which is why with 
category management, again, the keys are BICs; right? Those 
best in class vehicles which are tier three. Even though they 
give you tier two socioeconomic credit, the BICs, the tier 
three, that is still the highest level. So why not take those 
BICs, the best in class vehicles, and as we put them in place, 
ensure that there is a way for entrants; right? New entrants to 
bring in their past experience rather than just their 
government past performance. You can create a vehicle that 
allows them to participate. So I would like to see more of that 
in addition to thinks being so stringent. The Mentor-Protege 
program, honestly, and Joint Ventures, has worked well for me 
and I think I have utilized it correctly, but some people 
absolutely have been taken advantage of. One of the trends we 
are seeing is that you have to be very large, almost a Joint 
Venture to participate in a lot of these BICs and to get 
awards. So I really see a large part of the answer as creating 
vehicles where everybody has the opportunity.
    Mr. THANEDAR. Thank you.
    Now, the Biden administration announced it would increase 
the share of federal contracts being awarded to small and 
disadvantaged businesses to 15 percent by 2025. And I certainly 
applaud this commitment by the administration. As small 
business owners in my district often find it difficult to 
pursue government contracting. Others on this panel have 
commented on that difficulty in obtaining capital and 
navigating the rules and regulations mandated by SBA. And that 
is a general concern that I hear in my district.
    But Ms. Lopez, do you think this will expand participation 
or will existing businesses receive more contracting 
opportunity at the expense of the new small business entrants?
    Ms. LOPEZ. I do not know if it at the expense of the new 
small business entrants. I can tell you that I have absolutely, 
positively seen more opportunity personally. So, I cannot 
honestly say that I know or can say definitively that it is at 
the expense of new entrants. Again, I think what limits a lot 
of new entrants are the vehicles and some of the procurement 
rules.
    Mr. THANEDAR. All right. Thank you, ma'am.
    I yield back.
    Chairman LALOTA. Thank you.
    I now recognize Mr. Molinaro, my good friend from New York 
for 5 minutes.
    Mr. MOLINARO. Thank you, Mr. Chairman.
    I do not know if there is some rule about having two 
Members from New York in the same place at the same time, but I 
do appreciate your leadership with the Subcommittee, and thank 
you all for joining us.
    As I know has been noted, we are confronting a real 
challenge among small businesses entering the procurement 
marketplace, if you will. As was noted, the Biden 
administration has made several reforms to contracting policy, 
including those benchmarks mentioned to diversify a small 
business supplier base. However, without question, our small 
businesses continue to face both challenges and obstacles. 
Finding those opportunities and preparing the bids and many 
times lose out to larger businesses. We have covered all of 
this.
    We know that 70 percent of new jobs are created by existing 
small businesses, and so the federal government doing more to 
break down those barriers and create opportunities for small 
business access to procurement is critically important.
    To narrow my questions I was going to start with Ms. 
Ferrari, if you would not mind. We know that some of the major 
challenges applicants face, there are significant challenges 
applicants face within the economically disadvantaged women-
owned small business program. Could you speak I hope a little 
bit to those programs and how might they be simplified, 
streamlined, and maybe with some note in particular rural 
communities?
    Ms. FERRARI. Yes, thank you. Thank you for the question.
    You know, small business, that is where innovation comes 
from. It is the heartbeat of American and it is the heartbeat 
of manufacturing in America.
    The government needs our innovation. They need what we are 
bringing to the table. We need to hear the cry. We need 
uniforms that data moves through and how can we get there? We 
hear it and we develop it. And when we go to the government we 
just need access by adhering to the rules that are there. What 
could disadvantaged businesses and women-owned businesses get? 
We just need orders. And we can get those orders if those set 
asides are met and they are not.
    And you know, quite often I sit and I hear things about, 
well, you know, can we give you a grant? What do you need? We 
do not need your money; we just need the orders. And it is so 
convoluted. It is like the rules are there, the infrastructure 
is there, but there is just no oversight and they are not 
hitting these set-asides so it is going to other things that my 
counterparts here are talking about. So, what can you do? Just 
hit the set asides and just give us the orders based on those 
things. Again, I go back to 1996, they have hit that set aside 
twice, and never hit HUBZone. So, for me it is that.
    And going back to the innovation piece, like how can we 
bring innovation if we do and then we do not even get the 
contract. So, you know, it prohibits you from wanting to go out 
and give your best foot forward to help our warfighter in my 
case when it comes to apparel and say, oh, that is great and we 
love it and now it is going out to bid. And by the way, you are 
not getting the contract and they are not hitting the set-
aside. So I do not want to be just complaining all the time. 
They are doing some great things and they are trying. It is 
just we have to work harder and try harder.
    Mr. MOLINARO. I appreciate that. It is very helpful. Thank 
you.
    Mr. Schroder, I am sure others have but I want to thank you 
for your 20 years of service to this country. We obviously 
celebrate that and all those who have served. I know an area of 
importance is welcoming veterans into the same space.
    As we discuss what further reforms can be made to the SBA's 
role in small business contracting and its future, what are 
some of those important reforms the Committee might take up to 
modernize the federal procurement process specifically for 
veterans?
    Mr. SCHRODER. Congressman, thank you for the question. I 
would say a couple things the SBA could do in order to help 
veterans specifically. Number one, the SDVO speed program, 
which they just took over, ensure that that program is run 
effectively. That is kind of a pejorative statement but make 
that thing run effectively. It is a tough process to get 
through but to date it has gone rather smoothly. But that is 
going to take constant focus because that is the number one 
step that veterans take to get into federal contracting is to 
get themselves certified. So that is step one.
    Step two is SBA has got to be constantly educating across 
the federal government the SDVO speed requirements, as well as 
the certification process. There is a lot of, based on the NDAA 
that went into effect with self-certification, there is still a 
lot of loopholes and there is a lot of ambiguity and a lot of 
misunderstanding. When it comes to veterans, specifically, 
Congressman, I would say those are the two biggest things they 
could do to drive home the requirement and drive home the 
certification process and get rid of the self-certification.
    Mr. MOLINARO. Thank you, sir.
    I yield back. Thanks, Mr. Chairman.
    Chairman LALOTA. Thank you. And as we close I would like to 
thank all of our witnesses for being here today, for sharing 
your insights with us. It helps us as a Committee gain the 
right amount of information as we craft and vote on 
legislation. I appreciate it. To my Ranking Member for a 
productive and smooth meeting that helps inform us as well.
    And without objection, Members have 5 legislative days to 
submit additional materials and written questions for the 
witnesses to the Chair which we forwarded to the witnesses, and 
I ask the witnesses to please respond promptly.
    If there is no further business, without objection, the 
Committee is adjourned.
    [Whereupon, at 3:15 p.m., the subcommittee was adjourned.]
                            
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