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





UNDER THE MICROSCOPE: REVIEWING THE SBA'S SMALL BUSINESS SIZE STANDARDS

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                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                            FEBRUARY 6, 2024

                               __________









    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]








                               

            Small Business Committee Document Number 118-039 
             Available via the GPO Website: www.govinfo.gov 
             
             
             
             
             
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                 U.S. GOVERNMENT PUBLISHING OFFICE 
                 
54-711                   WASHINGTON : 2024 
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
                   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
                          CELESTE MALOY, Utah
               NYDIA VELAZQUEZ, New York, Ranking Member
                          JARED GOLDEN, Maine
                         KWEISI MFUME, Maryland
                        DEAN PHILLIPS, Minnesota
                          GREG LANDSMAN, Ohio
                  MARIE GLUESENKAMP PEREZ, Washington
                        SHRI THANEDAR, Michigan
                       MORGAN MCGARVEY, Kentucky
                       HILLARY SCHOLTEN, 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

Hon. Roger Williams..............................................     1
Hon. Nydia Velazquez.............................................     2

                               WITNESSES

Mr. Jay V. Lambke, President, Government Acquisitions, Inc., 
  Cincinnati, OH.................................................     5
Mr. Brad Moore, Chief Executive Officer, Sterling Computers, 
  North Sioux City, SD...........................................     7
Mr. Andrew V. Christ, Chief Operating Officer, Compass 
  Constructors, Kansas City, MO..................................     9
Ms. Erin Allen, President, Contemporaries, Inc., Silver Spring, 
  MD.............................................................    10

                                APPENDIX

Prepared Statements:
    Mr. Jay V. Lambke, President, Government Acquisitions, Inc., 
      Cincinnati, OH.............................................    30
    Mr. Brad Moore, Chief Executive Officer, Sterling Computers, 
      North Sioux City, SD.......................................    34
    Mr. Andrew V. Christ, Chief Operating Officer, Compass 
      Constructors, Kansas City, MO..............................    51
    Ms. Erin Allen, President, Contemporaries, Inc., Silver 
      Spring, MD.................................................    55
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    Airport Minority Advisory Council (AMAC).....................    60
    Global Small Business Sustainability Coalition...............    63

 
UNDER THE MICROSCOPE: REVIEWING THE SBA'S SMALL BUSINESS SIZE STANDARDS

                              ----------                              


                       TUESDAY, FEBRUARY 6, 2024

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:08 a.m., in Room 
2360, Rayburn House Office Building, Hon. Roger Williams 
[chairman of the Committee] presiding.
    Present: Representatives Williams, Stauber, Meuser, 
Molinaro, Alford, Crane, LaLota, Maloy, Velazquez, McGarvey, 
Gluesenkamp Perez, Scholten, Thanedar, Davids, and Pappas.
    Chairman WILLIAMS. Before we get started, I want to 
recognize Congressman Stauber from the great state of Minnesota 
to lead us in the Pledge and a prayer.
    Mr. STAUBER. Dear Lord, thank you for this wonderful day. 
And thank you for this Committee, the good work they do. And I 
want to thank you for my colleagues on both sides of the aisle 
that are doing your work and trying to make this nation an even 
better place. And let us share our love with one another, even 
when we disagree. It is your commandment, Lord. In your name we 
pray. Amen.
    And join me in the Pledge. I pledge allegiance to the flag 
of the United States of America. And to the Republic for which 
it stands, one nation under God, indivisible, with liberty and 
justice for all.
    Chairman WILLIAMS. Good morning, everyone, and I want to 
thank all of you for being here this morning. Appreciate it. 
And I now call the Committee on Small Business to order. 
Without objection, the Chair is authorized to declare a recess 
of the Committee at any time.
    I now recognize myself for my opening statement.
    Welcome to today's hearing, where we will be taking a close 
look at how the SBA defines small businesses and the impact it 
has in the federal contracting marketplace. To start off, I 
would like to thank our witnesses for attending today's 
hearing. We know that you have other work you could be focusing 
on, and we greatly appreciate your input.
    Size standards were established over 70 years ago to 
protect small businesses by ensuring that only small business 
firms received SBA assistance in addition to determining 
eligibility for federal contracts. While size standards may 
seem like a topic that shouldn't garner too much attention, it 
is no secret to anyone here that determining what classifies as 
a small business is more complicated than it seems. And 
accurate size standards from the SBA are critical because they 
impact the eligibility of small businesses for contracts across 
the entire government, not just one specific branch or agency.
    At the beginning in 2010, it was decided the SBA would 
reassess their size standards, industry by industry, every 5 
years. While there are many different opinions about whether 
the standards are too low or too high, one thing is abundantly 
clear, the SBA's size standards have a drastic impact on who 
can compete in the small business market.
    A common issue this Committee has observed is the boxing 
out of small businesses from the federal procurement space. 
Since 2010, the number of small businesses winning federal 
contracts has decreased by 50 percent, which is unacceptable 
and an issue we cannot and we must correct.
    Moreover, like anything in the federal government, the 
federal procurement space is home to fraud. Despite being faced 
with harsh penalties, fraudsters misrepresent themselves as 
small businesses to gain access to lucrative contracts.
    The other larger concern is a real small business losing 
their small status. Many agencies is a receipt-based standard, 
and if it is too low, it may prevent the business from fully 
participating because they can lose their size status due to 
high revenue. Generating contracts in today's dollars is all 
what it is. This is nothing more than punishment for a business 
succeeding which is antithetical to the American dream.
    Additionally, small businesses that lose their status are 
often left to compete with large firms that dominate the 
industry. We must ensure the SBA standards are not so rigid 
that they exclude thousands of small businesses.
    Outside of size standards, the theme of today's hearing is 
ensuring the small businesses are not left behind. At the end 
of the day, the federal government is the largest customer in 
the world. Our small businesses deserve to compete fairly in 
this lucrative market. Federal procurement is incredibly 
complex and any small business can get lost in it. It is the 
job of this Committee to give main street a voice at the table. 
And exactly what we are here to do today is that.
    I would like to once again thank our witnesses for being 
here with us. I look forward to today's discussion. It is my 
hope we can find some common ground so as we can best help our 
nation's small businesses during this time.
    And with that, I will yield to our distinguished Ranking 
Member from New York, Ms. Velazquez.
    Ms. VELAZQUEZ. Sorry, I was at the financial services 
hearing but I am here now. Thank you. Thank you, Mr. Chairman, 
and thank you to our witnesses for traveling here today.
    The demands on a small business owner's time are already 
immense. I appreciate that you are using some of your time to 
help this committee address these important issues.
    How the Small Business Administration defines ``small'' can 
have an enormous impact on the success of an individual small 
business, as well as the collective success of small businesses 
across the country. This hearing gives us an opportunity to 
better understand the standards, their application for 
government contractors, the environments that they create, and 
the challenges for small businesses who approach or exceed 
their industry's standard. Right sizing the size standard is 
critical to ensure fairness, promote competition, and encourage 
small businesses to enter and remain in the industrial base.
    The federal government needs to both recruit and retain 
small businesses like those on our panel. Yet both tasks are 
becoming increasingly challenging. Fewer small businesses are 
signing up to work with the government, and many more are 
exiting the market sooner than expected. This is increasingly 
prominent in the small business market. The government has 
roughly 40 percent fewer small businesses in its ecosystem than 
it did a decade ago, and it has always been a challenge in the 
mid-tier.
    A GAO report I requested in 2019 found that most small 
businesses do not successfully graduate. Only 2.5 percent of 
former small businesses receive contracts as mid-tier companies 
nine years later. This Committee has regularly reviewed the 
size standards and tried to ensure that companies that want to 
grow can.
    We have at times provided additional runway to do it, to 
give small businesses additional time to build their capacity, 
portfolio, and workforce for long-term success. Yet changes to 
small size standards and policies can be a double-edged sword 
if not done correctly. We do not want to disincentivize or 
punish growth, but must also carefully ensure we do not 
prematurely push small businesses into a market where they 
cannot compete.
    The stability of contracting with the federal government 
provides smaller businesses with the opportunity to plan, grow, 
and hire at a pace that is appropriate for them. It is 
important to ensure any changes to government policies account 
for the impact on all small businesses.
    As we will hear today, the federal government imposes 
unique and complex requirements on government contractors. 
These rules impact small business structure, cash flow, and 
workforce, as well as strategic decisions about size growth and 
ultimately whether to continue to participate in the federal 
marketplace.
    I look forward to hearing from the panel on past 
performance requirements, subcontracting processes, and 
bundling policies that will help improve the environment for 
small business government contractors. I again thank all of the 
witnesses for joining us today.
    I yield back.
    Chairman WILLIAMS. Yields back. And I now will introduce 
our witnesses.
    Our first witness here with us today is Mr. Jay Lambke. Mr. 
Lambke is the president of Government Acquisitions, 
Incorporated, located in Cincinnati, Ohio. At Government 
Acquisitions, Mr. Lambke is responsible for leveraging his over 
20 years of experience leading the organization specialized in 
the IT needs of governments to guide the company through its 
ongoing needs.
    Prior to joining Acquisitions, Mr. Lampke was president of 
the Prism Pointe Technologies as well as GovConnection, where 
he was responsible for turning around the company following the 
loss of their federal GSA schedule and negative earnings. He 
has also held executive roles at Gateway, Ingram Micro, and 
Tech Data.
    Mr. Lambke attended Central State University for 2 years, 
where he studied business management before dropping out to 
help his parents save their business. Despite being 
unsuccessful in that, he managed to grow quickly through the 
ranks of larger companies thanks to the entrepreneurial 
thinking and strict business discipline.
    Thank you for joining us today. We look forward to the 
conversation ahead.
    Our next witness here with us today is Mr. Brad Moore. Mr. 
Moore is the CEO of Sterling Computers, located in North Sioux 
City, South Dakota. I have been there. It is cold. Founded by 
Mr. Moore's cousin in 1996, Mr. Moore joined Sterling Companies 
in 2004, after over a decade at his previous job, where he 
served as vice president of sales.
    From early on, Sterling Companies focused on contracting 
with the federal government because they knew the government 
would always pay when the work was done. Now, government 
entities from the three letter agencies down to local 
governments make up the majority of the company's business. 
Federal government contracts alone represent 75 percent of 
their business. Sterling Companies now has nearly 300 
employees, with over half of them working locally in North 
Sioux City.
    Mr. Moore attended Dana College where he earned his 
Bachelor of Arts in business marketing. Thank you for joining 
us today. We look forward to speaking with you.
    Our next witness who is here with us today is Mr. Andrew 
Christ. Mr. Christ is COO of Compass Constructors located in 
Kansas City, Missouri. Prior to joining Compass Constructors in 
September of 2020, Mr. Christ worked for two large general 
contracting and roofing firms where he worked as a project 
manager and field superintendent.
    Mr. Chris has extensive experience with the U.S. Army Corps 
of Engineers and National Guard, including as a Member of the 
leadership team which oversaw construction of over $350 million 
in new barracks buildings at Fort Riley. He also is the 
president of the American Subcontractor Association of Greater 
Kansas City and is also a Member of the Executive Committee of 
the National Organization of the American Subcontractors 
Association.
    Mr. Christ attended Kansas State University, home of the 
Wildcats, where he earned his Bachelor of Science in 
construction science and management. Thank you for joining us 
today. We look forward to conversing with you.
    And I now recognize the Ranking Member from New York, Ms. 
Velazquez, to briefly introduce our last witness appearing 
before us today.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman.
    It is my pleasure to introduce Ms. Erin Allen, the 
President of Contemporaries, a Maryland-based company providing 
human capital solutions for federal agencies focused on public 
health. Ms. Allen has grown her women-owned and family-run 
company since taking over for her parents, who started the 
company in 1991. Under her leadership, Contemporaries, Inc. has 
consistently served as the largest provider of staffing 
services to the National Institute of Health under their small 
business program and grown to become one of the most successful 
staffing suppliers to the Department of Health and Human 
Services.
    They are also ranked as one of the top 10 vendors in their 
respective GSA schedule and have been recognized as one of the 
top 100 small businesses of the year by the state of Maryland.
    She co-chairs the Small Business Committee for the 
Montgomery Chamber of Commerce and volunteers with the Women 
President's Educational Organization.
    Thank you for participating today, Ms. Allen. We look 
forward to your testimony.
    Chairman WILLIAMS. Thank you, Ranking Member. And we 
appreciate again all of you being here today.
    So before recognizing the witnesses, I want to remind them 
that their oral testimony is restricted to 5 minutes in length. 
That is a big number here, 5 minutes. Okay?
    If you see the light turn red in front of you, it means 
your 5 minutes have concluded and you should wrap up your 
testimony. If you try to go over, you will hear me do this. 
That means shut it down. Okay?
    And so with that being said, I now recognize Mr. Lambke for 
5-minute opening remarks.

      STATEMENTS OF JAY V. LAMBKE, PRESIDENT, GOVERNMENT 
   ACQUISITIONS, INC.; BRAD MOORE, CHIEF EXECUTIVE OFFICER, 
STERLING COMPUTERS; ANDREW V. CHRIST, CHIEF OPERATING OFFICER, 
       COMPASS CONSTRUCTORS; AND ERIN ALLEN, PRESIDENT, 
                      CONTEMPORARIES, INC.

 STATEMENT OF JAY LAMBKE, PRESIDENT, GOVERNMENT ACQUISITIONS, 
                              INC.

    Mr. LAMBKE. Thank you. Chairman Williams, Ranking Member 
Velazquez, and Members of the Committee, it is an honor to 
appear before you today on behalf of my firm, Government 
Acquisitions. Most people call us GAI.
    My name is Jay Lambke. I am the president of GAI. We are a 
HUBZone-certified small business that has been providing the 
government with IT services and solutions for over 30 years. 
GAI is a Member of GovEvolve, an advocacy organization for 
small and midsized businesses that promote public policies 
encouraging innovation and competitiveness in the IT industry.
    At GAI, we have built a special company. And I don't just 
say that as the president. I say that because I believe we 
embody everything that is great about American small 
businesses. Our success is the result of deliberately building 
a strong family culture full of people who are heavily involved 
in supporting their local communities.
    We also all share a powerful commitment to serving the most 
important customer on planet Earth, and that is the U.S. 
federal government. We understand the unique needs of each of 
our federal customers, and we work to leverage best of breed 
technologies, such as AI, robotic process automation, and 
cybersecurity, to better enable them to deliver their mission. 
My personal aspiration is to build this company into the best 
the industry has ever seen.
    Now, over the course of my years at GAI, I have seen how 
acquisition policies shape the environment for small businesses 
in both positive and negative ways. GAI has experienced great 
success as a federal IT value-added reseller, or VAR, but we 
have also faced continual challenges regarding size standards 
for the industry. So let me set the stage for the enormous 
shift that has happened in government purchasing of technology 
over the past two decades, which is when our current NAICS code 
was put in place.
    Twenty years ago, an ITVAR sale to the federal government 
was basically buy a box, sell a box. It was not a very 
complicated business, required far fewer employees than it does 
today. And the business is so much--and today the business is 
so much more complex, requires far more people and cost. And I 
will try to demonstrate.
    Nearly everything we do for our customers as a small 
business innovator involves providing complex solutions that 
require numerous hardware and software technologies that have 
to be integrated together. This requires large numbers of very 
specific engineering resources. Twenty years ago, we did not 
have teams of people who had to go onsite to deploy these 
systems. Today, we employ large teams of people who go onsite, 
install the solution, integrate it with customers' existing 
systems, and then remain onsite, often for many years to 
continue development inside of those systems.
    Twenty years ago, the contracting environment was also very 
different. There were far fewer contracts to bid on and the 
bids were fairly straightforward. Today, our proposal efforts 
are often extremely large and very complex and require a 
significant proposal staff in order to be successful.
    Also, the contract opportunities in the industry today are 
regularly for 5 or 10 years. So if you don't win a slot on one 
of those contracts, you are probably not doing business with 
that agency for many years. Because each contract these days 
are so long, they are that much more important for companies 
like ours, which has led to an incredible increase in protests. 
This causes delays in contracts for many years.
    All of this to say, the stakes today are much higher. The 
contracting complexities I described create the need for more 
government contracting professionals on our staff, including 
lawyers, technical writers, and subject matter experts. Not 
only does this add significant expense to the business, but it 
also adds a number of employees, which is the significant 
challenge in a headcount-based NAICS code.
    To protect against the ever present cyber threats and 
ensure secure supply chains, federal contractors are required 
to comply with a number of ongoing specific requirements. While 
we believe these are great moves from the government and it is 
doing the right thing to protect the defense industrial base, 
these requirements and certifications, like others, also add 
significant cost, complexity, and people to the business.
    The method of calculating whether a small business is small 
you would think would be pretty straightforward in our 
industry, but it is not. For IT resellers there is only one 
NAICS code that easily fits all the products and services we 
provide. Often a contract for IT-related acquisition involves 
both products and service. Checking my time.
    For each contract, the contracting officer can only assign 
a single classification code for the component that accounts 
for the greatest percentage of the contract value. Recognizing 
traditional rules and regulations cannot properly be applied to 
ITVAR procurements; the federal agencies seek numerous 
workarounds. The rules have not adapted to the quickly changing 
technology related procurements, and ultimately this piecemeal 
approach is failing. It is time for the system to change.
    If the federal government intends to continue to leverage 
innovative and cutting-edge technologies, which it must, the 
size standards and corresponding NAICS codes must be modernized 
to address small ITVARs.
    I greatly appreciate you holding the hearing today, and its 
focus on critical component of determining success in selling 
to the federal government. Thank you again for having me. I am 
happy to answer any questions.
    Chairman WILLIAMS. Let the record show you talked for 5 
minutes.
    Mr. LAMBKE. Exactly, right? Yes.
    Chairman WILLIAMS. Let me inject one thing, too. You are 
going to see some of my colleagues on both sides of the aisle 
move in, move out. It is because we have other hearings we will 
go to and no reflection on this.
    Now I recognize Mr. Moore for his 5-minute remarks.

        STATEMENT OF BRAD MOORE, CEO, STERLING COMPUTERS

    Mr. MOORE. Chairman Williams, Ranking Member Velazquez, and 
esteemed Members of the Committee, thank you for your 
opportunity to testify--my opportunity to testify before you 
today. My name is Brad Moore and I am the CEO of Sterling 
Computers Corporation, an information technology value-added 
reseller also known as an ITVAR.
    As a family owned and operated company headquartered in 
North Sioux City, South Dakota, we serve an intermediary 
between our customers and the wide-ranging manufacturers of IT 
hardware, software, and services, the largest of whom are Dell, 
Cisco, and Microsoft. We serve as a reliable, nimble, and 
secure partner for our government customers in their quest for 
operational excellence through the use of modern technology.
    My aim today is to present testimony regarding a select 
issue within the ITVAR industry, namely around the 541519 size 
standard, and to propose the adoption of a new NAICS code, one 
specific to ITVARs, allowing for a new size standard of 500 
employees.
    Twenty years ago, when the SBA first established the 
industry standard of 150 employees for ITVARs, the IT landscape 
was vastly different than it is today. Our industry has, of 
course, evolved, some might say exploded, in the years since. 
Alongside such an evolution has come an increase in the breadth 
and complexity of the compliance burdens placed upon ITVARs, 
including the enhanced focus on supply chain risk management, 
ISO certifications, and the cybersecurity maturity model 
certification.
    To meet those requirements, ITVARs must now hire specialist 
employees who can effectively manage the growing slate of 
compliance obligations. For example, today Sterling employs 35 
individuals who are dedicated solely to government program 
management and compliance, and another 130 other individuals 
who hold over 400-plus required certifications from the 
technology manufacturers we represent. It quickly becomes 
evident that the allocated 150 employees is an insufficient 
headcount when stacked against the complex demands of the 
federal government.
    As such, there is currently a trend of consolidation in our 
industry. It is common for ITVARs, once they have exceeded 150 
employees, to sell their business, typically to large companies 
or private equity firms, thus eroding the supplier base of 
highly qualified and experienced VARs who have so valuably 
serviced the government. Why? Because to go from successfully 
competing as a small business to suddenly going up against 
companies with tens of thousands of employees is an improbable 
endeavor.
    The number of small businesses receiving government awards 
has steadily decreased from 121,000 companies in 2010 to less 
than half that number in 2022. This is an indication, in part, 
that the complexity of government contracting and compliance is 
making the barrier to entry much more difficult than it was 10 
to 15 years ago.
    Furthermore, 541519 is at its core of services code, which 
means ITVARs are lumped into the same designation as IT 
services companies, even though the two business types are 
vastly different, with dramatically varying solutions and 
employee headcount needs. It is a square peg for a round hole.
    Compounding the issue is the fact that ITVARs often don't 
charge separately for their value-added services, meaning the 
build services generally do not account for 15 percent of the 
total contract price, a threshold outlined by code 541519. We 
estimate as few as 2 to 5 percent of ITVARs are able to achieve 
this benchmark.
    While there are a number of possible solutions, I believe 
the most sensible to be the creation of a new NAICS code, one 
that accurately captures the core competency of ITVARs and 
includes the introduction of an appropriate SBA size standard 
of 500 employees, thus eliminating the exception under code 
541519, at footnote 18, assigning a new, applicable and more 
appropriate code will solve the aforementioned issue. It will 
also increase small business participation, enhance supplier 
qualifications, and benefit federal government customers 
through more competitive pricing.
    Once again, I appreciate the opportunity to speak to you 
today, and I am grateful for the Committee's thoughtful 
consideration. And I look forward to answering any questions 
today or in the future. Thank you.
    Chairman WILLIAMS. Thank you, Mr. Moore.
    And I now recognize Mr. Christ for his 5-minute opening 
remarks.

     STATEMENT OF ANDREW CHRIST, COO, COMPASS CONSTRUCTORS

    Mr. CHRIST. Chair Williams, Ranking Member Velazquez, 
Members of the Committee, thank you again for the opportunity 
to testify in front of you today. My topics are going to 
include federal government requirements for past performance 
and qualifications, the use of payment and performance bonds, 
the impact of continuing resolutions on small business, and the 
bundling of contracts into MATOCs and SATOCs, which are 
multiple award task order contracts and single award task order 
contracts.
    My name is Andrew Christ. I, along with my business 
partner, Mr. Allan Arias, operate Compass Constructors. We are 
a small construction business located in Kansas City, Missouri, 
that delivers high-quality and efficient construction projects 
to the federal government. A lot of our current clients are the 
Corps of Engineers, the Air Force Civil Engineering Center, the 
Naval Facilities Engineering Systems Command, or NAVFAC, and 
GSA.
    I am testifying not only as the COO of Compass 
Constructors, but also as an Executive Board Member for the 
American Subcontractors Association. We are an association of 
trade and suppliers that represent over 3,800 individuals since 
1966.
    Compass Constructors views the strict requirement for past 
performance and qualifications as the largest hurdle for small 
businesses to enter the federal market. We have witnessed 
unfair competition toward private contractors who are outside 
of the federal construction space that have similar past 
performance not receive a similarly favorable rating for 
federal government. This makes it extremely difficult for a new 
contractor to enter into the market.
    Through this experience, we have learned the value of the 
myriad of SBA resources offered to small businesses to operate 
within the federal government's contracting system. federal 
contracts require often a detailed management plan. They offer 
specific project staffing and qualifications of key members of 
the execution team, and if the company does not have these 
individuals or qualifications, it forces them to enter into the 
market for additional employees with federal construction 
experience. This can be a significant and very cost-prohibitive 
barrier of entry into the federal market.
    All federal projects, all federal projects, are mandated to 
have payment and performance bonds. These must be in place in 
order for a contract to be executed as required by the Federal 
Miller Act.
    The surety, they are going to evaluate many factors when 
determining whether or not to issue a guarantee to the obligee. 
This often includes operating capital, income statements, cash 
flow, debts, work in progress. You'll see that there are many 
parallels to the considerations that a surety recognizes versus 
what the federal government is evaluating from a performance 
and financial standpoint.
    We purport that the rigorous evaluation that the surety 
performs is far greater than what the government is going to 
evaluate in a small business' solicitation response. So we 
would recommend that less emphasis be placed on documented past 
government performance and more emphasis placed on whether or 
not the contractor can perform a bid, payment, or performance 
bond.
    ASA supports House Bill 1740. It is bipartisan legislation 
authored by Representatives Bost and Pappas that would ensure 
these bonding protections are applied to water infrastructure 
projects where federal funds are being allocated to government 
contracts.
    The instability caused by continuing resolutions also make 
it difficult for federal agencies to have certainty on funding 
for projects. There are many times that we put together 
solicitation responses, submit them, only to find out that the 
funds are no longer available. We put together these large 
proposals that can be tens of thousands of dollars. That is 
cash right out of our pocket. And then all of a sudden, due to 
a continuing resolution, the money is gone. The project no 
longer executes.
    My final concern is bundling of contracts into MATOCs and 
SATOCs. This can be where a 5- to 10-year project that they are 
going to award to four to five contractors. Now, again, the 
emphasis on past performance is often scrutinized. And if those 
small businesses don't have that, they are not going to be 
allowed to be a part of those MATOCs and SATOCs, which can be 5 
to 10 years.
    I would like to conclude my testimony by recognizing 
Representatives Stauber and Scholten, both Members of this 
Committee, for their leadership as co-chairs of the 
Construction Procurement Caucus. Again, I thank everyone at 
this Committee.
    Chair Williams, Ranking Member Velazquez, I will now take 
any questions. Thank you.
    Chairman WILLIAMS. Thank you very much.
    I now recognize Ms. Allen for her opening remarks.

    STATEMENT OF ERIN ALLEN, PRESIDENT, CONTEMPORARIES, INC.

    Ms. ALLEN. Thank you. Thank you, Chairman Williams and 
Ranking Member Velazquez and Members of the Committee. Thank 
you for the opportunity to testify today.
    My name is Erin Allen. I am the president of 
Contemporaries. We are an SBA-certified woman-owned small 
business located in Silver Spring, Maryland. I also serve as 
the Chair of the Montgomery County Chamber of Commerce, where I 
am proud to represent the many businesses that make up our 
robust Maryland economy.
    As a Member of the Women's Procurement Circle, which is a 
group that advocates for policies that strengthen women-owned 
businesses that do business with the federal government, I 
appreciate the Committee's focus on the topic of size standards 
and pathways to growth for small businesses. This issue is one 
that has become increasingly relevant to my company as we have 
grown significantly over the last several years.
    So I am a second-generation business owner. My parents 
started a company back in '91 when they cashed in their 
retirement and took out a home equity line of credit and 
started the business. As a family, we have worked really hard 
to grow our business, bootstrapping every piece of it. And now 
we find ourselves teetering on the edge of our small business 
size standard, which puts our business in a very difficult 
position. I only see really two options. One is that we sell 
off part of our business or we find a small business to team 
with, but teaming means giving away 49 percent of our business 
that we have worked so hard for.
    By every measure, we are still a small business and only 
have 95 employees. Now, that might seem like a large for a 
local mom-and-pop, but in my industry, that is still teensy.
    If we lose our small business status, I anticipate we will 
have to lay off about 30 percent of our employees. And while 
some might get picked up by another contracting firm, others 
may not.
    Our size standard is revenue-based. And however, revenue is 
not really an indicator of present competitiveness, but really 
one of future competitiveness.
    A challenge in the federal market is that size standards 
vary widely across the different NAICS codes. We primarily win 
contracts under a code with $12.5 million size standard, but 
there is other NAICS codes in my industry that have a $34 
million size standard. So this wide disparity means that I can 
be a small business in one and large in another, doing exactly 
the same work.
    So bigger small businesses that are about to graduate from 
the set-aside world need time to build their infrastructure to 
compete against the mammoth companies that are in there. A firm 
like mine simply cannot compete with large federal contractors 
overnight.
    Government contractors experience a unique pattern in their 
growth, which is causing an industry-wide midsized business 
crisis. This pattern of sudden growth is increasingly common 
because the government's frequent use of large contract 
vehicles due to contract management.
    The SBA program that I have been able to utilize is the 
WOSB program. It allows agencies to set aside contracts 
exclusively for small women-owned businesses. The government 
has the goal of awarding just 5 percent of all prime contracts 
to WOSBs, and yet since 2011, they have only met that goal 
twice.
    Agencies are authorized to sole source contracts to WOSBs. 
However, these awards are few and far between. And as I teeter 
on the edge of sizing out of being small, increased 
effectiveness of this program would really, really help. It 
would enable me to secure contracts faster, thus allowing me to 
be in a better position to make the transition into the full 
and open marketplace.
    So SBA is required to review all size standards every 5 
years. I feel like the SBA should look at industries more 
holistically and seek engagement through live forums with 
businesses. This increased engagement would give the agency a 
more accurate picture of how federal buying is really impacting 
small businesses in the market, rather than just using a 
formula to determine the size. While there are many policies 
that contribute to small business success, there are also many, 
many areas where the federal government really could improve.
    I don't pretend to have all the answers to this problem. 
All I know is that I cannot compete with large contractors like 
Booz Allen. I am way too young to retire and way, way too old 
to start over.
    Adjusting the size standards isn't about maintaining my 
business. It is about helping my employees earn a sustainable 
living in the middle class.
    I appreciate the Committee's continued efforts to support 
small businesses, and I am so grateful for the opportunity to 
share my experience today and thank you. And I look forward to 
answering any questions.
    Chairman WILLIAMS. Thank you, Ms. Allen.
    And now we recognize myself for 5 minutes.
    Mr. Lambke, small businesses are disproportionately 
affected by the government's increased compliance burdens. We 
have talked about that. The staffing costs alone to navigate 
tens of thousands of pages of regulations, in addition to 
abiding by contract rules, can be extremely difficult and 
expensive. In some industries, compliance officers end up being 
a built-in cost to doing business.
    So my question is, can you discuss how compliance 
requirements and navigating red tape can impose a burden on 
your business?
    Mr. LAMBKE. Happy to. Thank you.
    Compliance for us comes in many forms. One of the most 
recent ones is the CMMC, the cyber maturity model 
certification, which I referenced in my opening remarks, which 
we, the industry, believe is the right thing to do. The threat 
has never been higher at the defense industrial base. We are 
obviously being attacked daily. And so it is really important 
that we have the right infrastructure and protections in place 
from a cyber standpoint and for our cleared personnel and so 
forth.
    The challenge is that--so I will give you an example on our 
side. My IT staff has gone from a few people 3 or 4 years ago 
to a small army today. And the cost and complexity and that 
headcount is going to increase as CMMC actually starts to take 
place. Right? So we are in a ramping phase. It hasn't been 
fully implemented. So great requirement, but adds people and 
complexity to the business. That is just one.
    We have ISO certifications. We have all of those. And then 
there is the certifications that go with many of the bids will 
come out with requirements for, Brad mentioned Dell and Cisco, 
and those manufacturing partners that we have, many of the bids 
will come out and say you have to have this many certified 
engineers at this level to bid on this contract and so forth. 
And if you are in a certain size standard, there is just no way 
you can have those numbers of certified engineers on staff. 
Thank you.
    Chairman WILLIAMS. This is a sunk cost that could be better 
spent elsewhere in their operations. I am concerned that for 
small businesses in the contracting space, the effect of 
additional compliance officer is even worse. So not only does 
it add a cost to business, but also takes away a spot in the 
business size standards metric that puts them on one more 
employee away from not being able to compete for small business 
set-aside contracts.
    So I am going to just go down the line and ask each one of 
you this, starting with Mr. Lambke. Do you see initial 
reactions to an idea that is this, do you think we should 
exempt compliance officers from a business employee count when 
the SBA examines their size?
    Mr. LAMBKE. That would be wonderful.
    Chairman WILLIAMS. Okay. Mr. Moore?
    Mr. MOORE. Yes, that would be great, but compliance is 
going to be a lot more than one person. It is going to be 
dozens of people.
    Chairman WILLIAMS. Thank you. Mr. Christ?
    Mr. CHRIST. Yes, I agree. I believe the definition of 
compliance officer will be something that could be scrutinized 
and would offer up that a clear definition is present.
    Chairman WILLIAMS. Okay.
    Ms. ALLEN. For my business it wouldn't really make a big 
impact because we are not really in the IT space. We don't have 
a lot of--other than, though, the normal reporting that we have 
to do, you know, or outsource to maybe an attorney or a CPA, 
and some of my staff will sort of share the roles and 
responsibilities for that.
    But I would agree with Andrew that there might be some 
complications in what is the definition of a compliance 
officer? Because you could say, really, that all of my 
headquarters staff are in some way involved in headquarters--or 
in compliance. So then you get into, like, well, what 
percentage of the time are they doing compliance? And so that 
would be the challenge.
    Chairman WILLIAMS. That is if we make it hard on you. We 
want to make it easy on you.
    All right. Real quick, from time I have remaining. Mr. 
Moore, well, your firm is less than 500 employees. The SBA size 
decisions determined that you are not a small business. For any 
small business owner, you never want to cap your success. If 
business is booming, you want to capitalize on it as much as 
possible and not think about how growth could negatively affect 
your business. So getting big and growing is good?
    Mr. MOORE. Yes.
    Chairman WILLIAMS. So, can you discuss quickly the 
challenges that you face when your business outgrew the SBA 
small size standards? And do you feel that the SBA size 
standards accurately reflect your industry's needs?
    Mr. MOORE. Thank you. So the size standard in our industry 
is 150 employees. So once you are at 151, you become large and 
you are competing against IBM and Dell and everyone else with 
10,000 employees. You know, there are very few businesses in 
our industry between 151 and 500 employees. And you do the best 
you can to compete, but, in actuality, 60 percent to 70 percent 
of the opportunities that you were once working on are no 
longer available.
    Chairman WILLIAMS. Thank you very much. My time is up.
    I now recognize the Ranking Member for 5 minutes for 
questions.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman.
    Ms. Allen, you state that you have teetered on the edge of 
graduation a number of times, and it appears largely due to 
factors that are outside of your control. What would the 
appropriate size standard policy be that would bring you and 
other small businesses sufficient predictability and allow you 
to plan and grow if you choose?
    Ms. ALLEN. That is a complex question. So it depends. I 
know in my industry, you know, as I mentioned in my testimony, 
that there are several different NAICS codes that we could use. 
One is teensy, $12.5 million, but another one is $34 million, 
which, you know, for the work that I am doing in support 
services, is maybe reasonable. But if I were doing, you know, 
some of the work that these guys are doing in the IT space, 
those salary ranges are crazy high.
    And so it is sort of like--it is almost like if you look at 
a car dealer, like, are you large because you have sold, you 
know, $10 million worth of cars? Well, what if you are selling 
a Ford versus if you are selling Lamborghinis? Right. What is 
your profit margin in those, right? So it becomes a complex 
question in that and how do you work that out. Yeah.
    Ms. VELAZQUEZ. Thank you. In your testimony, you highlight 
that a more effective WOSB program would have put you in a 
better position to make the transition from small to midsized. 
Do you think that contracting officers understand how to use 
the existing authorities to maximize awards through WOSB?
    Ms. ALLEN. Not even kind of. When I am talking to a lot of 
my clients, I am having to educate them on the WOSB program. A 
lot of them don't understand it, haven't been educated on how 
to utilize it. And those that have been educated, you know, it 
is more cumbersome than some of the other programs, so it makes 
it harder for them to utilize.
    Ms. VELAZQUEZ. Do you think that if we require federal 
agencies to only count certified WOSB toward their small 
business goal, more contracting officers might be compelled to 
learn how to use the authorities?
    Ms. ALLEN. For sure, yeah. Yeah.
    Ms. VELAZQUEZ. Mr. Christ, you write that continuing 
resolutions can cause instability. How damaging are CRs or 
government shutdowns?
    Mr. CHRIST. They are extremely damaging. Thank you for the 
question, first of all.
    And the challenge is, you know, keeping projects in the 
pipeline, keeping consistent revenue. We live every day off of 
that revenue. That is how we pay our employees. And if we get 
into a scenario where the faucets all of a sudden shut down, 
and we have been providing a lot of front end work, whether it 
be design or whether it be budgetary estimates, we are out that 
money and we can't recoup it. And so that is really the damage, 
is that we need to have that consistency in the revenue and 
allowing the contracts to be executed.
    Ms. VELAZQUEZ. You cite a loss of $10,000 per proposal 
based on instability. Does the government reimburse you?
    Mr. CHRIST. No, ma'am.
    Ms. VELAZQUEZ. Does the agency have to tell you anything 
about why it canceled the solicitation if the work is moved or 
if there are similar opportunities for which you might be 
qualified?
    Mr. CHRIST. No, ma'am.
    Ms. VELAZQUEZ. Ms. Allen, the Rule of Two has been critical 
to leveling the playing field for small businesses. Will you 
elaborate on the changes you mentioned in your written 
testimony and how they will impact small businesses?
    Ms. ALLEN. Yeah. So the Rule of Two currently only applies 
to a very small percentage of the acquisitions that are 
happening in the world in the federal space. If that Rule of 
Two was expanded to, you know, things well above the simplified 
acquisitions, of which small businesses are able to compete in 
and are qualified for, it would really open so many doors and 
really be a game-changer.
    Ms. VELAZQUEZ. Thank you. I yield back.
    Chairman WILLIAMS. Yields back.
    I now recognize Representative Stauber from the great state 
of Minnesota for 5 minutes.
    Mr. STAUBER. Thank you very much, Mr. Chair.
    And Ms. Allen, between a Lamborghini and a Ford, I will 
take the Ford pickup all day long in northern Minnesota.
    Minnesota's and this country's small businesses are 
powerhouses of innovation and resilience. They create jobs, 
fuel our local economy, and contribute to the unique character 
of our states and nation. Yet when it comes to federal 
contracting, their potential is often stifled by a complicated 
process that favors large corporations with the vast resources.
    Mr. Christ, as you mentioned in your testimony, there are 
concerns with how small businesses are paid following change 
orders or modifications to the original contract. How do these 
changes affect your businesses differently than a large 
business?
    Mr. CHRIST. Thank you for that question. You know, as far 
as change order work goes, oftentimes the change order is 
executed by the contracting official. Contractually, we have to 
then begin on that work. We don't necessarily sit there and 
have to say, oh, here is upfront costs to go ahead and cover 
all the work that you have done and completed to date. A lot of 
times those change orders and contract modifications, they can 
take many, many months to go through.
    Mr. STAUBER. Do you hold the monies, then?
    Mr. CHRIST. We do, yes, sir. Yes, sir.
    Mr. STAUBER. What does that cost you?
    Mr. CHRIST. We are working on one right now that we have 
got probably $250,000 that we are holding. We have expended the 
monies, but we have no contract vehicle to actually bill for 
the funding.
    Mr. STAUBER. Well, we are working on that.
    Mr. CHRIST. Thank you.
    Mr. STAUBER. You know, the various issues that you have 
highlighted encapsulate why I introduced the Small Business 
Payment for Performance Act, and you are well aware of that. 
This legislation is not just about protecting individual 
businesses. It is about safeguarding the future of our 
infrastructure and our small businesses.
    When small contractors go bankrupt, the impact is far-
reaching. Projects stall, skilled workers leave the industry, 
and the very foundation of our nation suffers. Similarly, when 
small businesses outgrow their small status and are 
recategorized as a large business, they are forced to compete 
with big corporations, sometimes with a disproportionate gap in 
total employees.
    Mr. Moore, having experienced the transition after 
outgrowing your small business status, could you elaborate on 
some of the difficulties and regulations you have seen since 
your transition?
    Mr. MOORE. You know, the majority of the difficulties are 
you work at a lot lower margin than the large businesses. We 
are in a very low-margin business. And with the increased 
government regulations, that takes a bigger percentage of your 
net profit, which makes it harder to really scale and hire your 
employees. So you are caught in this no man's land of you are 
not small, but yet you are not big, you are not able to 
compete.
    So the size standards and the regulations are very 
impactful on U.S. midsized businesses.
    Mr. STAUBER. You know, some businesses view their status 
changes as the government penalizes them for growth. Would 
there have been a benefit to your company to restrict growth 
and remain classified as a small business, Mr. Moore?
    Mr. MOORE. Yes, for sure. It would have helped us stay more 
profitable. But we just felt like to our employees, we couldn't 
tell them to now forevermore be stagnant. So we broke through 
the barrier. But there is definitely--that line in the sand of 
that small business size standard is definitely motivation not 
to grow your business.
    Mr. STAUBER. Right, right. In 2019, the House passed my 
bill clarifying the Small Business Runway Extension Act. The 
SBA utilizes a 3-year average of gross receipts to determine 
whether a company should be classified as small and considered 
for SBA benefits.
    The Small Business Runway Extension Act extended the 3-year 
average to the 5 years. And thankfully, the SBA took it upon 
themselves to do the right thing, and they did not need further 
congressional action. However, as many of you mentioned is 
clear, we need to really foster an environment of growth, and, 
you know, I look forward to this Committee doing just that.
    Mr. Christ, I have to say that you, as a business, you are 
holding a quarter of a million dollars because a change order 
that the federal government forced upon you, it is almost like 
you have got to do that. I don't know how many businesses 
across this nation that would have the capability to do that, 
and it is simply just wrong. And thank you for your testimony, 
all of you.
    And I yield back, Mr. Chair.
    Chairman WILLIAMS. The gentleman yields back.
    I now recognize Representative McGarvey from the great 
state of Kentucky for 5 minutes.
    Mr. MCGARVEY. Thank you, Mr. Chairman.
    And I am fond of saying on this Committee, small businesses 
do big things, and the work you all do is so important. But 
what is a small business? Small businesses come in all 
different shapes and sizes. And so what we are trying to do on 
this Committee is give all these different entrepreneurs the 
support to start businesses and the tools that they need to 
help them grow. That is what we want to have with our small 
businesses. So I am glad to have the opportunity to discuss 
these size standards today with this panel.
    I can tell you I have heard from people in my district on 
this very issue who just grow frustrated. They are trying to do 
a good job with their business. What happens when they are 
dealing with these standards from the SBA, and how can we make 
it better?
    We know the current structure of small business contracting 
programs, while necessary to ensure entities can compete for 
appropriate federal contracts, can sometimes be discouraging, 
especially for the more advanced small businesses that are 
ready to grow to that medium size or maybe a little beyond. So 
these concerns stem from the fact that surpassing their size 
standard will lead to a loss of eligibility for set-aside 
contracts, increase compliance obligations, and direct 
competition against billion-dollar companies.
    So, given these realities, not enough companies 
successfully make that transition from small, again, whatever 
that means, to other than small business status. The Department 
of Defense has referred to this as the ``Valley of Death'' for 
small firms that want to grow.
    According to a 2019 GAO report, over 93 percent of 
businesses that received only set-aside contracts in fiscal 
year 2008 and were still federal contractors by year 2017 
remained small. Only about 2-1/2 percent of those businesses 
managed to graduate to midsize by fiscal year 2017.
    So, Ms. Allen, I will start with you. You mentioned that 
your company teeters on this edge of small to medium-sized 
business standard. Are there adjustments to the size standard 
rules or methodology that would ease the transition for small 
businesses like yours that are ready to move away from that 
kind of smallish business standard?
    Ms. ALLEN. Yeah, you know, the Runway Act was a really 
great start, so thank you for that. There are several things.
    I think, making the size standard more consistent in the 
industry, in my industry in particular, because there are 
multiple NAICS codes that I could operate under, and it really 
varies wildly. But additionally, the number just needs to be 
higher across the board.
    I think that, you know, as these gentlemen have pointed 
out, you can't go from 500, even 150 employees to 10,000 
employees overnight. And that is what it takes to really be 
competitive.
    And so the numbers, whether it be dollars or people, that 
number just needs to be increased.
    Mr. MCGARVEY. Is it possible to incentivize growth given 
the current framework?
    Ms. ALLEN. No, it is completely not incentivizing growth. 
It is doing completely the opposite of figuring out how do I, 
you know, operate in this really limiting environment.
    Mr. MCGARVEY. Got it. Mr. Moore, I am going to come to you 
with the next question. Before I do that, though, I do just 
want to say to Mr. Christ, I married a Missouri girl and have a 
12-year-old daughter, so there is some interest in the Super 
Bowl this upcoming weekend.
    Mr. CHRIST. I may be wearing my Patrick Mahomes socks.
    Mr. MCGARVEY. There we go. I figured that might be the 
case.
    Mr. Moore, in your testimony, you spoke to the challenges 
your company faced when you began to outgrow the small size 
category under that definition. Do you feel that an off ramp 
program dedicated to making the transition out of small 
business, again, as it is defined, making that less burdensome 
and daunting could have helped your business?
    Mr. MOORE. Definitely.
    Mr. MCGARVEY. You know what? My grandpa said, don't sell 
past the close, so definitely is the answer.
    Mr. Chairman, I yield back.
    Chairman WILLIAMS. The gentleman yields back.
    I now recognize Representative Alford from the great state 
of Missouri for 5 minutes.
    Mr. ALFORD. Thank you, Mr. Chair. Good to have everyone 
here today, especially Mr. Christ from Kansas City.
    I tell you what, it is an honor to be on this Committee 
working to really help the fabric of America. As a former small 
business owner in the Kansas City region, I understand some of 
the hurdles, nowhere near the size of your business or some of 
the issues you are dealing know.
    You know, we are here to help champion Main Street America 
under the direction of our Chairman Williams, to lower the 
barriers to creating small businesses, and to support small 
businesses that already exist. However, we know that federal 
procurement is incredibly complex, leading to massive 
compliance costs, as you guys have spelled out here, can 
prevent small businesses from even trying to compete for bigger 
contracts. And beyond the burdensome compliance cost, out-of-
date SBA size standards and agency decisions can also leave 
small businesses behind.
    While small businesses are supposed to have unique 
contracting opportunities, agency decisions can prohibit 
qualified small businesses. I want to get right into the 
questions here. I want to start with you, Mr. Moore.
    Since 2010, the number of small businesses winning federal 
contracts has dropped by 50 percent. That is a stark decline, 
and I think it can be attributed to several factors, including 
the sizing standards. The great thing about it, I hear from 
both sides of the aisle here, these standards are out of date. 
We need change on page 15 and 16.
    By the way, your testimony is unbelievable. I encourage 
everyone to read it very thorough. On 15 and 16, you offer some 
solutions. Run through those real quick, just thumbnail 
solutions for us, please.
    Mr. MOORE. I don't have that in front of me, but the 
solution has got to be either a ramp off or several things that 
we have talked about, getting credit for certain compliance 
people. But I think really an increased size standard, if we 
have gone from half--121,000 down to less than half that, small 
businesses, something is not working. You know, the businesses 
are going out of business, and the small businesses are not 
surviving long term. So there is got to be some sort of change 
in the NAICS codes, the size standards, or there is got to be 
an off ramp.
    Mr. ALFORD. So I am trying to wrap my head around this. 
What would be the opposition to this? What do you think?
    Mr. MOORE. If you go ask very small businesses, they are 
all against expanding the size standards, and I think they are 
the loudest. And there hasn't been detailed industry studies 
around some of these NAICS codes.
    Mr. ALFORD. Thank you. Mr. Christ from Kansas City, 
congratulations on becoming the National Vice President for the 
American Subcontractors Association.
    Mr. CHRIST. Thank you.
    Mr. ALFORD. Great work in our region. In your testimony, 
you talked about how strict requirements for past performance 
and qualifications are the largest hurdle for small businesses 
to enter the federal construction market. What are some of your 
recommendations? How do we fix this?
    Mr. CHRIST. So, in our industry, small business is 
classified based off of a revenue basis. We are one of those 
very small businesses. And our concern with raising the small 
business threshold is that it creates a glass ceiling still. 
Right now that is one of the issues that we see, is that there 
is a glass ceiling and no transition period.
    If there was a transition period outside of the small 
business designation, we feel that that would be successful. If 
you just raise the size standards, all you have done is raise 
that glass ceiling. People want to get right up to it, but they 
never want to make that jump, because the jump from small 
business to open competition is so drastic that you are going 
to get smothered. And that is why only 2-1/2 percent of 
businesses that graduate small business don't go on to get 
another contract. You know, it is insane. We are playing with 
the thousand-pound gorilla at that point, and we can't compete.
    Mr. ALFORD. All right. Real quick.
    Mr. CHRIST. Yes, sir.
    Mr. ALFORD. We got about a minute left. I know you do 
private projects as well as federally funded. If you build a 
private project in the Kansas City region, it is X dollars. If 
you are building pretty much the same project on the federal 
level, what is the added cost for that, for compliance and 
other factors?
    Mr. CHRIST. You know, on average, it is probably about 25 
percent to 30 percent.
    Mr. ALFORD. More?
    Mr. CHRIST. Yes.
    Mr. ALFORD. Plus 30 percent?
    Mr. CHRIST. Yes, sir.
    Mr. ALFORD. That is incredible.
    Mr. CHRIST. Yes, sir.
    Mr. ALFORD. Because the taxpayers are paying for that.
    Mr. CHRIST. Yes, sir. However, on that, they do have a 
proven three-phase quality control program that, I can attest, 
does work. Right now, the Corps of Engineers and their quality 
control requirements and program, it does mandate quality on 
those projects.
    Mr. ALFORD. All right. In your professional opinion, who 
will win the Super Bowl?
    Mr. CHRIST. Kansas City Chiefs.
    Mr. ALFORD. Go, Chiefs.
    Mr. CHRIST. Yes, sir.
    Mr. ALFORD. Thank you. I yield back.
    Chairman WILLIAMS. The gentleman yields back.
    I now recognize Ms. Scholten from the great state of 
Michigan for 5 minutes.
    Ms. SCHOLTEN. Thank you so much, Mr. Chairman. And thank 
you to all of our witnesses for being here today.
    As the Ranking Member on the Subcommittee on Contracting 
and Infrastructure, I see how small businesses get boxed out of 
the federal marketplace by agency size standard decisions. 
Everything you are talking about here today, spot on.
    I am particularly concerned with the ability of women-owned 
small businesses, WOSBs, to compete and be prepared to succeed 
if they outgrow these size definitions. That jump is so 
extreme.
    In my home state of Michigan, as our recently departed 
football coach Jim Harbaugh would say, business is booming. It 
is particularly booming for WOSBs, which represent over 40 
percent of businesses in our state. Can you believe that? Isn't 
that incredible? I am thrilled that last week this Committee 
passed bills to support the WOSB program, but there is still so 
much more to be done.
    My first question for you, Ms. Allen. As a certified WOSB, 
can you discuss your experience with the program and if there 
are any tools that Congress can facilitate to help businesses 
like yours with growth and the graduation.
    Ms. ALLEN. Yeah. So, you know, recently I was thinking 
about this. We went after a solicitation, and I will be really 
brief as I can, that was a small business set-aside. But it had 
a scorecard that we had to self score, and it was things like 
ISO certification. Have you had a DCA audit? Do you have a 
security clearance? Also, the threshold insofar as the size of 
the contracts was huge, and yet it was still a small business 
set-aside.
    And so I feel like it might be useful not only if the SBA 
were out helping to educate contracting officers, that would 
really go a long way to helping the program, but also, you 
know, if there was some sort of education insofar as--or 
training or something to help small businesses get those DCA 
audits, get our ISO certifications, get, you know, all those 
different pieces that would enable us to get a higher score 
because we are qualified to do the work. I don't need a DCAA 
audit to say that I am--you know, my CPA is auditing me all the 
time. I promise we are good. Right, whole other conversation.
    So I think that that would really go a long way to help 
insofar as small businesses. And that would help teensy, tiny 
companies and, you know, larger smalls.
    Ms. SCHOLTEN. Thank you. It is almost too practical, almost 
too commonsense. Thank you very much. Very, very helpful.
    Another concerning barrier to entry that I see in the 
contracting space is the absolute muck of ambiguity that small 
businesses are forced to navigate in applying for project 
funding. While the federal government is operating under 
continuing resolutions in particular, so unclear, no guidance. 
If we make small businesses complete a lengthy and costly 
application process, we should be able to provide some 
certainty around the funding, regardless of the threat of a 
shutdown. We feel this is a keen and pressing need for a lot of 
our small businesses.
    This question is for Mr. Christ. Can you please speak to 
your experience competing for contracts under a CR? And what 
recourse could the SBA implement for firms to weather the 
uncertainty of a shutdown?
    Mr. CHRIST. We would love to be able to have some sort of 
compensation guaranteed, but we understand that that is 
probably very far-reaching.
    We do understand that the costs involved with procurement 
is simply the cost of doing business. However, what has become 
ever-changing and increasing are the requirements for these 
solicitations, you know, the vast information that has to be 
provided, and it takes having to hire a graphic artist. We 
build buildings, we don't do pretty proposals, right? And so 
now we have the added costs of this additional individual, and 
we don't even know if the projects are going to be funded. And 
that is a challenge. It really is.
    But again, we understand it is a cost of doing business, 
but it has become a substantial cost at a risk of, potentially, 
projects not even being funded.
    Ms. SCHOLTEN. Thank you. Very helpful and informative.
    I yield back.
    Chairman WILLIAMS. Yields back.
    I now recognize Representative Crane from the great state 
of Arizona for 5 minutes.
    Mr. CRANE. Thank you, Mr. Chairman. I appreciate the 
opportunity to participate in this important hearing.
    Does anybody on the panel know what the national debt of 
the United States is? Mr. Moore, you look like you were hitting 
your button first.
    Mr. MOORE. It is a lot, 37 trillion, maybe.
    Mr. CRANE. Thirty-four trillion. You guys know that we 
spent about a trillion dollars in the last 90 days that we 
don't have? You guys know what the annual deficit is every 
single year up here? Two trillion dollars-plus, about 200 
billion a month.
    So when you hear, excuse me, one of my colleagues just 
talked about continuing resolution. Does anybody know what that 
means? What does it mean, Mr. Lambke?
    Mr. LAMBKE. It means that the agencies get funded at a base 
level from the previous year----
    Mr. CRANE. Yep.
    Mr. LAMBKE.--with no incremental funding.
    Mr. CRANE. So you guys--right. So basically, funding at the 
same level, right? So you guys are all business owners, right? 
You guys understand budgeting. If you had something similar to 
a $2 trillion deficit annually, what do you think you would be 
doing as a business owner?
    Mr. LAMBKE. That is pretty easy. If you----
    Mr. CRANE. Would you continue funding your business at the 
same level you were last year?
    Mr. LAMBKE. Absolutely not.
    Mr. CRANE. What about you, Mr. Moore?
    Mr. MOORE. Definitely not.
    Mr. CRANE. Mr. Christ?
    Mr. CHRIST. No, sir.
    Mr. CRANE. Ma'am?
    Ms. ALLEN. No.
    Mr. CRANE. Why do you think we do that up here? Because it 
is so easy to spend your money. Nobody wants to say no. Right?
    A lot of you rely on government contracts, is that correct?
    Mr. LAMBKE. We are 100 percent federal contractor.
    Mr. CRANE. When this whole thing goes bust, how many 
government contracts do you think you are going to get?
    Mr. LAMBKE. I am guessing zero.
    Mr. CRANE. Yeah. What about you, Mr. Moore?
    Mr. MOORE. None.
    Mr. CRANE. Do you think that is possible or do you think we 
can just continue to print money that we don't have?
    Mr. MOORE. I hope that we don't continue to print money 
that we don't have.
    Mr. CRANE. Well, do you see that changing? Do you guys 
spend any amount of time up here on Capitol Hill?
    Mr. MOORE. A Little bit, yeah.
    Mr. CRANE. Do you see that changing, Mr. Lambke, with the 
conversations you have had?
    Mr. LAMBKE. I haven't seen a change in the time I have been 
watching.
    Mr. CRANE. I have meetings all the time. Nobody ever asked 
that we quit giving them money or give them less money.
    Mr. LAMBKE. No, sir. The hole gets bigger.
    Mr. CRANE. The only reason I bring that up is because there 
is obviously--you know, I honestly wish the best for you and 
your businesses and your employees. I really do. As a small 
business owner myself, and a very small business owner, 
probably about 20, 30 employees, I think 50 or 60 at most, I 
understand how tough it is to start a small business, maintain 
it, you know, make sure my employees are taken care of. But 
there is a bigger problem up here that very rarely gets talked 
about, and that is our spending problem up here.
    And it concerns me because, you know, when I look at 
business owners like you that rely on the government and 
government contracts, because what we do up here is not 
sustainable. It is just not sustainable. And you even hear when 
people talk about, oh, these CRs, these continuing resolutions, 
with disdain, right? The problem is these CRs are spending at 
the same level. And you just had four business owners that have 
all been successful say that is not sustainable. We couldn't do 
that in our own business. Yet we arrogantly do that every 
single time up here.
    Go ahead, sir.
    Mr. LAMBKE. May I add something? CRs are one thing, 
shutdowns are another.
    Mr. CRANE. Yeah.
    Mr. LAMBKE. CRs are easier to deal wiyh, we have operated 
under CRs for so long, so many years. That is one thing. But it 
is the shutdowns that scare us to death. Right? Because then we 
are having to make really hard decisions about what we do with 
the families that rely on our companies, you know, to feed 
their families. Right?
    Mr. CRANE. Right.
    Mr. LAMBKE. And so those are testy times. And the longer 
they go, and there is been a few good ones, those are the ones, 
I think, that bother us the most. Scare us.
    Mr. CRANE. Well, on this same train of thought, if you guys 
had one bit of advice that you could give us on how to make 
sure that we don't completely destroy our national economy and 
cause your businesses to go completely under because there is 
no more government contracts, do you guys have anything that 
you would like to say to the Members of Congress on this panel? 
Go ahead, Mr. Lambke.
    Mr. LAMBKE. Oh, not in 5 seconds. No.
    Mr. CRANE. Go ahead, Mr. Moore. Anything? Mr. Chairman 
might give us a few extra seconds.
    Mr. MOORE. Create more jobs, more prosperity, bigger tax 
base would be my advice.
    Mr. CRANE. Pro growth?
    Mr. MOORE. Pro growth.
    Mr. CRANE. Gotcha. Mr. Christ?
    Mr. CHRIST. I would recommend taking a look at the small 
business standards and distributing some of that revenue 
throughout that organization reasonably, not to the gorillas in 
the room that are just underneath that glass ceiling that I 
mentioned----
    Mr. CRANE. Yep.
    Mr. CHRIST.--that can destroy these small businesses. You 
can imagine----
    Mr. CRANE. Yep.
    Mr. CHRIST.--us going up against $200 million a year 
company.
    Mr. CRANE. Okay.
    Mr. CHRIST. We are never going----
    Mr. CRANE. I think we ran out of time. Sorry, ma'am. We 
would have given you time, but we ran out of time.
    Thank you, Mr. Chairman, for letting me go over.
    Chairman WILLIAMS. Thank you. Yields back.
    I now recognize Mr. Meuser, Representative Meuser, from the 
great state of Pennsylvania for 5 minutes.
    Mr. MEUSER. Thank you, Chairman. Thank you all very much 
for being here with us today.
    So I spent about 25 years helping grow a small business 
into a larger business. And what was interesting as well, 90 
percent of our customer base were all, you know, mom-and-pop 
size small businesses. So I have real good understanding of 
things, private sector contracting, primarily, but some federal 
government.
    And as my colleague was bringing out, you know, it has 
actually been remarkable where you mentioned, Mr. Moore, the 
pro growth initiatives. Our revenues in the United States of 
America have increased almost 40 percent in the last 5 years, 
$5 trillion versus 3.5 trillion. But we are spending 6.5 
trillion. So that is a little bit of a disparity, a little bit 
of a problem that would, you know, wipe any of your businesses 
out likely in a hurry. I don't think your bank would last too 
long there.
    So it is certainly a combination of just good business 
management. Right? I mean, effective reductions, but pro 
growth. Pro growth. That is what brought the United States out 
of the debts that we had after World War II. And we can do it 
again.
    So on this, your businesses are based upon federal 
contracting. The size of the federal government is not your 
fault. I mean, everything you see around here is contracted. I 
mean, the size of our federal government is wildly excessive, 
and supplies and computers and you name it, need to be provided 
to it. So that is just the way it is.
    And it is great that the SBA works towards making small 
businesses receive their fair share so you don't have to 
compete against those that are hundreds of millions of dollars 
and such. So I am listening very closely to everything taking 
place here.
    Clearly, the formula for small business contracting needs 
to be reviewed, right? A hundred and fifty if the revenues are 
worked into that as well, based upon the different NAICS codes, 
it could be what, computer sales could be different than desks 
or furniture and such. And you all expressed a fair amount of 
ideas.
    I will just start, though, what should be done with the 
formula? Okay, you said just raise the standard from 150 up. 
Now that is fine, but then that could encroach upon small 
business startups.
    Now, let's face it as well, some businesses like yours 
could go from, you know, as soon as you hit 140 employees, you 
say, my new marketing department is now going to be under a new 
LLC, and they're not going to have to necessarily count towards 
my revenues. I will serve as a customer to them and they will 
be a vendor.
    You are shaking your head, so I am sure that is one of the 
oldest tricks in the book, so that is prohibited. But I 
wouldn't doubt that goes through people's minds as you are 
considering how to handle all this.
    So, a couple of questions. One, how do you think the 
formula should be better set up, revenues, size? And as well 
are you asked? Did the SBA ask you? Do you do surveys?
    And also consider this. When you are at a--you receive a 
contract, and as you stated again, that it takes time to grow, 
there should be in the formula maybe a 3-year or 4-ear, and 
these are things that I look forward to speaking with the 
Chairman of this Committee on, of assurity. Right? If you do 
grow to 200 employees, you don't lose the contract that year. 
There is at least a 3-, maybe even 4-year statute which permits 
you to continue serving in that way.
    So, Mr. Lambke, I will start with you.
    Mr. LAMBKE. Yeah. So I am fine with the headcount-based 
NAICS codes for our industry personally. I think that the 
number, though, has got to look at what has happened to the 
complexity of the business over the last 20 years, and so 500 
to me is the right number.
    If you look at what is happening in AI and large language 
models and robotic process automation, it is a team sport. It 
is a very complex business. It requires a lot of very smart 
people working together across multiple systems and platforms. 
And so it is really just if the government intends, and I know 
they do, to continue to compete with our adversaries, both 
offensively and defensively, then you have got to be able to 
have small business innovators that can get to a sufficient 
size that they can still innovate.
    I would argue that many of the larger businesses are not as 
motivated by innovation. If we don't innovate, we are out of 
business. I think when you get to a certain size, you cannot 
innovate as much.
    Mr. MEUSER. They look at it only every 18 months. I ran----
    Mr. LAMBKE. Yes, sir
    Mr. MEUSER.--our of time. My apologies for speaking too 
long. I wanted to hear from you, but perhaps we can continue 
this conversation.
    I yield back, Mr. Chairman.
    Chairman WILLIAMS. Yields back. I now recognize 
Representative Maloy from the great state of Utah for 5 
minutes.
    Ms. MALOY. Thank you all for being here. I want to start 
with Ms. Allen.
    Rep. Scholten talked about a bill we are working on 
together to protect WOSBs. And the businesses already have to 
certify that they are women-owned, but they don't have to 
certify that they are small. And what I am hearing from you is 
that could be very confusing. A business may not even know if 
they qualify as small, depending on which contract they are 
going for.
    And I have sat here listening, trying to decide what to ask 
all of you, because you have defined the problem very clearly, 
and we have asked a lot of follow-up questions. So I just want 
to give each of you a minute. Is there anything you were 
prepared to tell us as part of a solution that you haven't had 
a chance to talk about yet?
    I will start with Mr. Lambke and work my way down.
    Mr. LAMBKE. Look, I think it obviously takes time, energy, 
and resources on behalf of the government, but look at the 
industry. Spend some time with the companies that do what we do 
specific to IT and recognize that there needs to be something 
very specific. But you can spend some time with each of us, 
look at our receipts, look at our business, look at how we get 
things done and the results we deliver for the customer. I 
think you can quickly determine where the size standards should 
be.
    Ms. MALOY. Thank you.
    Mr. LAMBKE. Yes, ma'am.
    Ms. MALOY. Mr. Moore?
    Mr. MOORE. So our business is changing at lightspeed. And 
in our primary NAICS code 541519, we are basically providers of 
technology. There is a limitation on the subcontracting rule 
which says that we can only subcontract 50 percent or less of 
the value of the contract.
    There is a nonmanufacturing rule which says that, OEM--if 
we are awarded a contract and it is small business set-aside, 
then you have to procure that product from a small business, 
which is a manufacturer that is small, which there are none.
    Footnote 18 says that in our code there needs to be 15 to 
50 percent of services, 15 to 50 percent of contract value, and 
that is never the case. Product is usually the greatest value.
    So, in my opinion, I just think that the SBA has come 
together with industry. We are put in an impossible position. 
There is a lot of regulations that there is no way that we can 
meet. So I just think it takes more dialogue and understanding, 
truly, what it is that we do.
    Ms. MALOY. Thank you. Mr. Christ?
    Mr. CHRIST. Thank you. So what I would encourage, again, I 
had mentioned a transition period. I feel that the transition 
period promotes continuous growth for businesses. Do I have a 
definition on that transition period and what it looks like? 
No, that is for additional conversations and I would love to 
have those conversations with you.
    But the goal is, to promote innovation, is for businesses 
to continue to grow, and without that transition period, there 
is no incentive for growth. They want to get right to that 
point, be the large gorilla in the room, and they don't want to 
get out of there.
    So one other thing that that forces is small businesses 
to--very small businesses to look to team up with larger 
ventures and create a joint venture agreement. Right? These can 
be fantastic mentor-protege agreements. we are living proof 
that they work, because we are in one right now.
    However, there are some bad characters out there that will 
utilize those joint ventures and those mentor protege 
agreements to just have an avenue to continue to play in that 
small business. So, you know, being very diligent and 
scrutinizing that, we feel, is also another thing that could be 
extremely helpful. Thank you for your question.
    Ms. MALOY. Thank you. Ms. Allen?
    Ms. ALLEN. Thank you very much for this question. So, for 
us, these guys, I think that their NAICS codes are all based on 
the number of employees that they have, whereas mine is based 
on revenue, which to me, doesn't make any sense, because for 
me, my cost of goods sold is huge, right? I mean, my biggest 
cost is my labor. So, you know, I am paying this much money, 
but my margins are a little, teeny tiny.
    And so when you are looking at my revenue as whether or not 
I am large or small, my revenue might be up here, but if, you 
know, my margin is this little, teeny tiny bit, it doesn't make 
a lot of sense to me personally in those labor categories.
    I agree with Mr. Christ that I think that a transition 
period would be hugely helpful. As I mentioned, helping small--
especially WOSB companies, close to my heart, to get their DCAA 
audits done, to be able to get security clearances, to be able 
to the ISO certifications, helping them with that process, I 
think would be huge insofar as helping them to make those 
transitions that is incredibly expensive and time-consuming for 
us.
    Ms. MALOY. Speaker B: Thank you. My time has expired. I 
yield back.
    Chairman WILLIAMS. The gentlelady yields back.
    I now recognize Representative Gluesenkamp Perez from the 
great state of Washington for 5 minutes.
    Ms. GLUESENKAMP PEREZ. Thank you, Mr. Chairman, and thank 
you all to the witnesses for being here today.
    So we know that the SBA is tasked with ensuring that small 
businesses are given a fair shot at competing for federal 
contracting dollars. These federal contracts can be an 
incredible opportunity for small businesses and our 
entrepreneurs. And Congress has established goals to award a 
percentage of all prime and subcontracts to women-owned small 
businesses, small disadvantaged businesses, service-disabled 
veterans-owned small businesses, and HUBZone certified small 
businesses.
    I want to make sure that we are holding agencies to these 
standards, which is why I cosponsored the Corrective Action 
Report Oversight and Accountability Act with Representative 
Meuser, which would hold agencies accountable for actually 
hitting these benchmarks. But today, I am really interested in 
how we make sure that the benefits of these important programs 
that give small businesses opportunity to compete for federal 
contracts are actually going to small businesses.
    Mr. Christ, I am interested in one of the problems you 
mentioned in your testimony. You talk about acquisitions where 
small businesses are solicited by larger firms to join joint 
ventures in which the small business holds 51 percent and the 
big guys hold 49.
    You mentioned that these joint ventures can be extremely 
beneficial for small businesses to tap into the larger firm's 
bonding program, employee pool, previous government network, 
but you also know the problems arise when these big guys simply 
utilize the small businesses as a vehicle to get federal work 
otherwise set aside for small businesses. This is concerning to 
me because it means large businesses are getting this advantage 
that Congress intentionally set aside for the small guys who 
can't otherwise compete.
    So in your view, how should we improve the program to make 
sure that the small businesses receiving these benefits are 
actually small?
    Mr. CHRIST. That is a very great question and it is 
difficult to answer because there is always going to be bad 
characters no matter what we do. And I feel that the program 
itself is established in a very good manner, but examining the 
ownership structure of the joint venture is extremely critical.
    We know personally of several firms where the larger 
businesses have actually required them to give up ownership in 
some of the smaller business. So now they are not getting 49 
percent. They may be getting 54 percent of the revenue, because 
from the joint venture entity standpoint, they may only be 49. 
But when you factor in the ownership in the small business, it 
is more than that.
    So I feel that, you know, examining the ownership structure 
of both companies and making sure that there is no cross-
pattern or cross-pollination in there, I feel that that is one 
way that you can help kind of clean that up.
    Ms. GLUESENKAMP PEREZ. Thank you. Mrs. Allen, you also 
mentioned some of these issues in your testimony, including the 
problems that arise when certain companies fraudulently 
claiming to be women-owned to benefit from these set-asides. 
Can you expand on this process for self-certification, how that 
works and how you think it could be improved?
    Ms. ALLEN. Yeah, self certification, I mean, you can just 
check a box and say, oh, yes, I am woman-owned. You really need 
to have, you know, as Mr. Christ is saying, as with small 
businesses, also women and small businesses, to look at the 
structure, who is doing what, who is actually day-to-day? You 
know, is--you know, Joe Jim Bob's wife, the one who is the 
figurehead, but she has nothing to do with the business. She is 
not involved. She is not running it. That really does a 
disservice to women like me who are out there, you know, doing 
the things every day and really, you know, slugging it out with 
companies that are not woman-owned and not always small.
    Ms. GLUESENKAMP PEREZ. Yeah. Thank you.
    Before coming to Congress, I ran an auto repair and machine 
shop. And COVID, obviously, we were largely impacted. And that 
year, I had a bunch of different projects running. We worked on 
air improvement quality projects. We worked on taking our 
intake process online, all these big projects. Some of our good 
friends who own an auto body repair shop, that whole year her 
entire project was figuring out how to navigate a city's 
contract process, you know.
    And when you see these big hurdles, you really grasp like 
when the bureaucracy becomes so extreme, it is the small 
business, it is actually the women-owned that create these 
issues.
    So I sincerely thank you all for being here today. I thank 
the Committee for your attention to this.
    Chairman WILLIAMS. Yields back.
    I now recognize Mr. Molinaro, Representative Molinaro, from 
the great state of New York for 5 minutes.
    Mr. MOLINARO. Thank you, Mr. Chairman, and thank you all 
for being here this morning still.
    I think I am going to continue in sort of that line of 
questioning, only to acknowledge that in my previous life in 
local government, we certainly recognized that small businesses 
were so much more ably--or able to navigate the local 
procurement policies and, of course, state and federal becoming 
much more complex. We recognize that the bureaucracy is too 
overwhelming in many cases. Small businesses, by definition, 
have lesser resources and time to make the commitment to 
navigate that labyrinth of regulatory oversight and outdated 
standards that I think this Committee has been fairly earnest 
in attempting to address.
    The problem hasn't been that small business is too small, 
it is that big government is too big, and navigating that field 
has become even more challenging. And yeah, big business has 
found ways to circumvent.
    And I would also offer the certification of women- or 
minority-owned businesses are challenging for those who 
earnestly and appropriately qualify, and far too easy for those 
who wish to act in a nefarious way.
    Obviously, so I want to get to NAICS codes in a moment. I 
do want to reference, however, the posted act, which this 
Committee unanimously adopted. It is a bill I sponsored, passed 
the House, meant to demand the SBA open up a more greater 
transparency for small businesses to know regulation and how to 
navigate that regulation. All of you have testified to this to 
some degree, but I would like to just narrow it into or at 
least like to focus in on the issue of transparency.
    Given your experience, the work you have done, obviously 
interacting with the federal regulatory oversight and your own 
work with the federal government, what should we do to 
appropriately address the issue of lack of transparency? That 
is where it starts.
    What would be a good first step for actual transparency to 
make it easier for you all small businesses across this country 
to navigate the SBA?
    Not a single thought?
    Mr. MOORE. I just think that the SBA has been wonderful and 
very helpful during our 8(a) certification. There is many 
programs, a lot of assistance, and, you know, a lot of learning 
sessions, educational sessions, and I think that is all great.
    Once you move out of the small business category, there is 
very little, if no, support. And I would like to see more 
collaboration continuing between the small business 
administration and industry.
    Mr. MOLINARO. So greater collaboration. Anyone else?
    Mr. CHRIST. Utilization of the business opportunity 
specialists. It is amazing to me that these small businesses 
don't know that that resource is out there. And Our business 
opportunity specialist has been fundamental in helping us 
navigate through all of these programs and really helping us 
understand what is required and expected of us as a small 
business.
    So, you know, getting that out there and getting small 
businesses to participate with their business opportunity 
specialist, and probably looking at extending that and making 
it a little larger, because I know just in our region, we have 
had issues with turnover on the business opportunity 
specialists and not having enough of them to take the need that 
is out there. Thank you.
    Mr. MOLINARO. Thank you.
    Ms. ALLEN. I would agree. And you can imagine we are here 
in Maryland and, you know, we are kind of a company town. So 
you can imagine how many government contractors there are that 
could really benefit from those small business specialists, and 
there just are not enough of them to really be able to make an 
impact. If Kansas City is struggling, the Maryland-D.C. area, 
those guys are overwhelmed.
    But there is just not enough to be able to really make a 
dent in the amount of help that small businesses could use 
insofar as, you know, getting themselves off the ground and 
also making that transition, that they have a lot of knowledge 
and just, they are up to their eyeballs.
    Mr. MOLINARO. Let's do this, Mr. Lambke. I am going to let 
you jump in, but it will be my last question. Hopefully, with 
20 seconds, you will be able to get to it. But you speak and 
you all have dealing with the challenges that businesses not 
quite fitting neatly into the NAICS codes offered by the SBA.
    You obviously referenced the continuing resolution. The SBA 
has found is to continue to add footnotes to types of 
businesses that are emerging. And as a result, we all recognize 
there are now over 41 pages of different NAICS codes, which 
indicates, obviously, the ongoing problem.
    Based on your experience, do you feel the current rigidity 
of the system can shut out innovative companies, I think you 
do, and ultimately, limit competition for government 
contracting? And you may have to answer that in writing later.
    Mr. LAMBKE. Indeed.
    Mr. MOLINARO. Thank you.
    Chairman WILLIAMS. Thank our witnesses for their testimony 
for appearing for us today. And I think you can see that at 
least there is one Committee, truly is bipartisan. We get it. 
We are going to fix it.
    And without objection, Members have 5 legislative days to 
submit additional materials, written questions for the 
witnesses to the Chair, which will be forwarded to the 
witnesses. So I ask the witnesses to please respond promptly. 
If that happens.
    If there is no further business. Without objection, the 
Committee is adjourned and thank you.
    [Whereupon, at 11:35 a.m., the committee was adjourned.] 
    
    
    
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