By Chairman Steve Chabot (R-OH)
May 16, 2016
For 55 years, the National Defense Authorization Act (NDAA) has been the primary way Congress meets its constitutional responsibility to “provide for the common defense.”
As a vital national security policy bill, the NDAA has always provided our war fighters with the resources they need to defend the United States from the great and varied threats we face from adversaries around the word.
However, in the face of recent drastic defense cuts, known in Washington as “sequestration,” policymakers have had to look for new ways to meet our national security needs.
As chairman of the House Small Business Committee, I firmly believe that our nation’s 28 million small businesses can play a key role in meeting these needs in this era of declining defense resources.
Very often, small companies can provide better products and services to our military, faster and at lower costs.
Congress’ ongoing effort to improve acquisition and modernize procurement at the Pentagon is particularly important to small companies because it will enable them to deliver real benefits to our war fighters.
At a recent Small Business Committee hearing, we heard from a top official at the Office of Naval Research about two examples of life-saving technology developed by American small businesses that are now used by the US military.
“The Emergency Integrated Lifesaving Lanyard — called EMILY — is a robotic lifeguard deployed worldwide by Hydronalix, a rural Arizona company,” Robert Smith explained to our committee. “The tracking system, reconfigured as the Silver Fox Unmanned Air Vehicle (UAV), was deployed in 2007 to provide convoy protection to Marines in Iraq, saving three lives. The same basic technology package, reconfigured as EMILY, is supporting first responders throughout the US and other nations, and saving lives today in the Mediterranean Sea refugee crisis.”
Smith also pointed to Trek Enterprises’ Automated Celestial Navigation (ASN) system as another example of technology developed by a small company now used by the military.
“(ASN) provides a solution in GPS-denied environments through a fully automated star tracker for imaging individual stars both day and night to enhance navigation capability,” Smith testified. “Initially focused on Navy challenges, ASN attracted attention across the government: The result being a fellow agency ordering 15 systems, with applications in crime fighting and drug interdiction."
Success stories like these are a big part of the reason why promoting competition has been the guiding principle for defense acquisition and procurement policy.
We must allow companies of all sizes and expertise to compete for defense contracts in order to get the best possible products to the war fighter.
Contracting reforms such as those included in this year’s NDAA help us achieve this important goal for our military. They also benefit the taxpayers footing the bill, making sure they get more bang for their buck.
You don’t need to be an economist to understand that when the Defense Department has fewer offers, there is less competition, costs go up and choices are limited.
Unfortunately, we continue to see the number of companies competing for federal contracts declining, which threatens innovation and harms readiness.
Within the last three years, we have lost over 25 percent of the small firms registered to do business with the federal government.
Within the Department of Defense, the number of small business contract actions fell 47 percent from 2011, but the size of the average individual small business contract action more than doubled.
Not surprisingly, during the same period, the percentage of taxpayer dollars spent without competition has increased.
With this thought in mind, members of our committee introduced a series of bipartisan contracting bills this year.
Our committee approved these measures unanimously and we are pleased they were incorporated in this year’s NDAA, which was approved by the House Armed Services Committee by a bipartisan vote of 60 to 2 last month.
Specifically, here are five ways this NDAA helps small contractors compete:
First, it modernizes the Small Business Act to ensure clear and consistent language is used in federal procurement programs.
Second, it strengthens the small business advocates within SBA, DoD and other federal agencies, to promote competition and make sure the laws on the books, including the NDAA, are followed.
Third, it improves opportunities for small businesses to compete for subcontracts, and then to build on that experience to compete as prime contractors.
Fourth, it improves coordination between the SBA and DoD mentor-protégé programs, which help small businesses better serve our military.
Finally, this NDAA implements reforms to promote integrity and accountability in small-business programs, such as veterans contracting programs and contracting officer training programs.
This NDAA gives our troops the resources they need to defend the United States while providing meaningful contracting reforms that help our small businesses and our national security.
Rep. Steve Chabot represents Ohio's 1st Congressional District in the U.S. House where he is chairman of the Small Business Committee. He is also a senior member of the Judiciary and Foreign Affairs committees. You can follow him on Twitter @HouseSmallBiz.
"In sum, the Obama Administration is flouting a law that President Obama signed in a way that jeopardizes worker pensions while dumping the problem on taxpayers."
Congress passed legislation in 2014 to help insolvent multi-employer pension plans save themselves. But now the Obama Administration and Teamsters are enabling a giant taxpayer bailout that Congress sought to prevent.
This month Treasury Department Special Master Kenneth Feinberg blocked the Central States Pension Fund’s plan to use a 2014 law that allows declining multi-employer pension plans to cut benefits within limits. Mr. Feinberg cited technical shortcomings in the Central States plan, but the rejection defies Congressional intent and will put pensioners at greater risk.
Central States, which covers about 400,000 Teamsters workers and retirees, is paying $3.46 in benefits for every dollar the fund takes in due to employer withdrawals and aging demographics. Under optimistic actuarial assumptions, the plan will go broke in the next decade and take down the Pension Benefit Guaranty Corporation with it. The PBGC’s multi-employer program is already running a $52 billion deficit.
The PBGC insures about 1,400 multi-employer pension plans for 10 million workers. Hundreds of thousands of retirees who draw pensions from the PBGC would then receive less than 10 cents on the dollar. The maximum PBGC annual guarantee for retirees who have worked 30 years is $12,870, so most pensioners would get less than $1,000 a year.
The 2014 law gave endangered pension plans broad discretion to pare benefits so long as retirees wouldn’t get less than 110% of their PBGC guarantee. Retirees over the age of 80 and disabled pensioners must be held harmless. The law also protects employers like UPS that paid their withdrawal liability and agreed to offset future benefit reductions for their workers.
The average pension reduction would be about 22.6% under the Central States rehab plan. However, nearly half of plan participants, including 12% who are covered by the UPS “make-whole” agreement, wouldn’t be affected. Active-worker accruals would be reduced by 25%. Benefit cuts would be capped at 50% for all members and 40% for a protected UPS class.
Treasury is required to approve benefits cuts if the plan sponsor’s assumptions aren’t “clearly erroneous.” Yet Mr. Feinberg quibbles that the Central States actuarial assumptions, including its 7.5% projected investment return, are too optimistic. This may be true, but a lower rate would require much larger benefit cuts. Mr. Feinberg also complains that cuts aren’t “equitably distributed” since UPS beneficiaries not covered by a make-whole provision in a 2007 collective-bargaining pact get worse treatment than those who are. But this is allowed under the law.
The nit-picking suggests that Treasury was looking for a pretext to reject the Central States plan. Mr. Feinberg insists he came to “the right result under the law.” But he adds that 137 Congress Members—many of whom voted for the law—exhorted him to reject the plan. They warned him “that if I follow the clear requirement of the law and go through with the cuts, this would be an outrage.”
Mr. Feinberg further argues that it’s likely too late to save Central States without much larger cuts that may violate the law and would cause a political ruckus—namely for Democrats. The Obama Administration doesn’t want to be blamed for allowing benefit cuts. So Treasury is punting the multi-employer pension crisis to the next Administration and Congress, which it hopes will supply a bailout.
Treasury Secretary Jack Lew gave the bailout game away when he told Congress in a letter this month that, “Central States may choose to reapply and propose even larger cuts” but “we urge Congress to consider carefully the issues” and “work together to preserve the promise of retirement security.” Saving Central States with benefit cuts becomes harder each day, so Mr. Lew is trying to make a taxpayer rescue a fait accompli.
Central States has already asked Congress to cover its $11 billion shortfall. Bernie Sanders has sponsored a bill to bail out the fund and other insolvent multi-employer plans. In sum, the Obama Administration is flouting a law that President Obama signed in a way that jeopardizes worker pensions while dumping the problem on taxpayers.
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Emmy-nominated actor and Made in America advocate
President & CEO
Elite Aviation Products
Dr. Ray Perren
Lanier Technical College
WASHINGTON—House Small Business Committee Chairman Steve Chabot (R-Ohio) today announced that next week’s full committee hearing, which will focus on small businesses that provide employment opportunities for adults with intellectual or developmental disorders, syndromes, or disabilities, will feature a local Cincinnati business owner.
Terri Hogan, owner of Contemporary Cabinetry East in Cincinnati, will share her story about how her company came to provide employment opportunities for individuals with special needs.
“We talk a lot about how small businesses are the biggest job creators in America,” said Chairman Chabot. “Even more inspiring are the opportunities they provide for people who too often get overlooked despite the enormous contributions they can make to the workforce. Terri Hogan’s story is a wonderful example of how small businesses can partner with individuals who face more adversity than most, and how those businesses and their employees can thrive from that relationship.”
In addition to Ms. Hogan, the Committee will hear from Joe Steffy, owner of Poppin Joe’s Gourmet Kettle Korn in Louisburg, Kansas, Lisa Goring of Autism Speaks, and Rajesh Anandan of ULTRA Testing in New York.
The hearing will stream live at smallbusiness.house.gov at 10:00 AM on Thursday, May 19.
John Ratzenberger Pitches American Manufacturing to Congress
WASHINGTON – Emmy-nominated actor and “Made in America” advocate John Ratzenberger told members of the House Small Business Committee that the face of American manufacturing has changed dramatically in recent years, presenting new job opportunities for millions of Americans. Ratzenberger, best known as Cliff Clavin from the sitcom Cheers and the voice of Hamm from Pixar’s Toy Story movies, testified alongside a panel of small manufacturers and experts about the importance of vocational training to close the manufacturing skills gap.
“When people think of manufacturers, too often they think of giant corporations with huge production facilities and steam whistles commanding shift changes,” said House Small Business Committee Chairman Steve Chabot (R-OH). “The truth is that the vast majority of American manufacturing is done by small businesses. In fact, 99 percent of all manufacturers are categorized as small. Though they might be considered “small” businesses, their effect on our economy is enormous.”
“We must do better job educating young people to improve the perception of what manufacturing really is and getting the word out that manufacturing is “clean and safe” and “high-tech” rather than “dirty and dangerous,” added Chairman Chabot.
Chabot noted that manufacturers in the United States employ over 12 million people and directly contribute over $2 trillion to our economy each year.
The New Face of American Manufacturing
“There are close to a million jobs available right now in small businesses around the country that rely on people with mechanical common sense skills that we've stopped offering in our public schools three generations ago,” testified Mr. Ratzenberger. “The most repeated complaint today from potential employers is that it's impossible to train someone for any of the jobs available when they graduate from high schools everywhere without the ability to even read inches and fractions from a simple ruler.”
“Manufacturing is the backbone of Western Civilization. Everything we do every single day is reliant first on someone's ability to not only put a nut and a bolt together but to make that nut and that bolt in the first place,” observed Mr. Ratzenberger. “The big worrisome question then is this: How do we reinstate the necessary programs in our schools to give our children a familiarity of the tools that built and maintain our civilization and way of life? If the average age of the people that keep our nation and the nation’s infrastructure working is 58 years old, then how long do we have before it all stops?”
One American Manufacturer’s Story
“As a nation we also need to do a better job of accurately characterizing the multi-faceted and exciting careers that exist within manufacturing,” said Dustin Tillman, the President and CEO of Elite Aviation Products. Despite our talent as a culture for crafting topnotch media, we do a poor job at shining a spot light on the exciting and fulfilling career paths that exist within modern manufacturing; full of all the intricate and challenging dynamics that would enthrall and captivate the young workforce entering the job market.”
“For us, and many other businesses out there, the best pool of talent that I’ve been exposed to have been veterans. These highly trained individuals who possess key characteristics for success in business, e.g., honor, integrity, discipline, and leadership are right in our own backyards, and, from what I’ve seen, eager to get to work,” added Tillman whose company founded the Elite Veterans Initiative Elite to support, empower, and employ veterans.
The Role of Education
“Today’s manufacturing environment requires highly skilled individuals who not only understand complex technological applications but also are adept at problem solving,” testified Dr. Ray Perren, the President of Lanier Technical College in Oakwood, Georgia. “Although the face of manufacturing is changing, too often the perception of manufacturing has not changed. Too often, people think of manufacturing jobs as being physically repetitive work, carried out in dirty environments, with little or no ability to utilize critical thinking to improve job performance. Nothing could be further from the truth.”
This crisis has led to a number of painful consequences for individuals and families across the country, but few are as tragic as those suffered by infants born to parents struggling with an opioid addiction.
As is often the case with addiction, the parents’ struggle affects those around them, including their newborns. In fact, according to a recent Reuters investigation, more than 130,000 babies born in the United States in the last decade entered the world addicted to drugs.
The Reuters report described the pain suffered by newborns going through withdrawal and told the stories of infants who actually lost their lives because of a terrible addiction.
Many of the stories are too disturbing to even mention, but perhaps even more disturbing than the details is the fact that these deaths should have been prevented.
Current policies—including the Child Abuse Prevention and Treatment Act—are meant to prevent these tragedies from ever happening. The law is simple: if a state wants to receive federal funding, then the state has to provide some basic assurances about their child welfare policies, and the Department of Health and Human Services has a responsibility to ensure those policies are actually in place.
But as we now know all too well, this important federal law is not being properly followed and enforced.
Earlier this year, I sent a letter to the Department of Health and Human Services to better understand how it works with states to ensure they are meeting current child welfare requirements.
Not surprisingly, the department passed the buck and suggested recent changes to the law somehow absolve them from their enforcement responsibilities—a disappointing response, to say the least.
Fortunately, thanks to the work of Representatives Barletta and Clark, we’re here today to consider our response to this preventable problem: the Infant Plan of Safe Care Improvement Act.
I appreciate their leadership in developing a bipartisan bill that will require the department to do its job and assist states in their efforts to prevent and respond to child abuse and neglect.
I urge my colleagues to support this important legislation and to help ensure the most vulnerable victims of the opioid epidemic receive the help and care they desperately need.
These are the victims the Infant Plan of Safe Care Improvement Act will help protect.
Federal policies—including the Child Abuse Prevention and Treatment Act, or CAPTA—have long supported state efforts to identify, assess, and treat children who are victims of abuse and neglect.
The law provides states with resources to improve their child protective services systems if they assure the Department of Health and Human Services that they have put in place certain child welfare policies. For example, requiring health care providers to notify child protective services agencies when a child is born with prenatal illegal substance exposure and requiring the development of something known as a “safe care plan” to keep these newborns and their caregivers healthy and safe.
Last year, a Reuters investigation examined the care infants receive when they are born to parents struggling with opioid addiction. The investigation detailed the heartbreaking consequences those infants had to endure—consequences like suffering through the physical pain of withdrawal, and in the most shocking cases, terrible deaths.
It’s hard to imagine stories like these could be any more tragic. Unfortunately, they are—because they should have, and in many cases, could have been prevented. As Reuters revealed, HHS is providing federal funds to states that do not have the necessary child welfare policies in place. In short: the law is not being properly followed and enforced, and some of our most vulnerable children and families are slipping through the cracks.
That’s why Representative Clark and I worked with a number of our colleagues on both sides of the aisle and introduced the legislation before us today. This bill requires HHS to better ensure states are meeting their legal responsibilities when it comes to preventing and responding to child abuse and neglect.
Through a number of commonsense measures, it strengthens protections for infants born with illegal substance exposure, improves accountability related to the care of infants and their families, and ensures states will have best practices for developing plans to keep infants and their caregivers healthy and safe.
As the House works this week to fight the opioid epidemic destroying communities and lives across the country, these are commonsense reforms we should all embrace. By working together and advancing this legislation, we can help ensure these children, mothers, and their families have the help they need and the care they deserve.
NBC, CBS, FOX, CNN, Gizmodo, and Others Cover Commerce Committee Chairman John Thune’s Letter to Facebook on “Trending Topics” Bias Allegations
"Good morning, I welcome all our witnesses to today’s hearing, which presents a good opportunity to discuss ways to improve the efforts of the federal government, the private sector, and academia in R&D; STEM education initiatives; and technology transfer of scientific research to commercial applications.
"The Committee has jurisdiction over important federal science agencies, including the National Science Foundation, or NSF, the National Institute of Standards and Technology, or NIST, and the White House Office of Science and Technology Policy, or OSTP, and the Committee has been actively developing legislative proposals to confront the challenges associated with advancing the U.S. Science and Technology Enterprise in our budget environment.
"The good news is that, among individual countries, the United States is still the largest investor in public and private R&D, comprising 27 percent of the global R&D total in 2013 according to the National Science Board. But China is catching up, with 20 percent of the global total.
"While we could hope for more resources, tough budget realities underscore the importance of developing policy solutions that maximize our federal investments so we can stay competitive, get the biggest bang for our buck, and leverage even more private sector resources to expand the reach of our R&D. This Committee has been active on this front.
"Last year, in consultation with Ranking Member Nelson, we established an Innovation and Competitiveness Working Group of the Commerce Committee to inform efforts to craft legislation to reauthorize science and technology R&D policies previously directed under the America COMPETES Acts. We asked Senators Gardner and Peters to lead this Working Group, and we are appreciative of their sustained efforts over many months to help develop consensus-based policy solutions that could comprise a bipartisan Commerce Committee product.
"The Working Group convened a series of candid, bipartisan discussions to gather input from the U.S. science and research community regarding federal R&D policy priorities. The roundtable format of these meetings allowed for a free-flowing discussion among key stakeholders.
"These roundtable meetings focused on the topics of “Maximizing the Impact of Basic Research,” “STEM Education and Workforce Issues,” and “Research Commercialization and Technology Transfer.”
"We had broad participation by research universities, government advisory bodies, and non-profit research organizations in the informal discussion with Senators. Members of the public and interested groups were also invited and encouraged to submit input on the topics via email, with over 250 emailed submissions received on these three topics.
"Common themes arising from the roundtables included support for continued investment by the federal government in basic research, as well as encouragement of wider participation in STEM subjects; stronger partnerships among government, the private sector, and academia that could better leverage discoveries emerging from our research universities to drive innovation; and the importance of minimizing barriers and improving incentives for universities and the private sector to better maximize the scientific and economic return on limited federal research resources.
"The Committee’s Working Group is developing bipartisan legislation drawing on the input received from the roundtables and stakeholder feedback, related bills introduced by members of the Commerce Committee and others, and policy recommendations made by entities such as the American Academy of Arts and Sciences, the Information Technology and Innovation Foundation, and the National Academy of Sciences. We are hopeful the bill will be ready in the coming days.
"Again, I thank the witnesses for being here today and I look forward to hearing about policy ideas that can leverage our science and technology enterprise, such as improved public-private partnerships, reduction of administrative burdens, and improved strategic planning of the federal R&D investment.
"We have a distinguished list of witnesses from academia, the private sector, and government advisory bodies testifying before the Committee today.
• "Dr. Droegemeier joins us having just finished his term as Vice Chair of the National Science Board this past Friday.
• "Dr. Wing has served as Corporate Vice President for Microsoft Research as well as at NSF, and contributed to a recent report published by the American Academy of Arts and Sciences entitled “Restoring the Foundation.”
• "Dr. Atkinson’s organization, ITIF, has published numerous recommendations related to tech policy, and both he and Dr. Droegemeier previously participated in our Working Group roundtables on STEM and commercialization.
• "Finally, Dr. Munson joins us from the University of Michigan’s College of Engineering, where he has helped translate university research into commercial applications, including at his own company, InstaRecon.
"I welcome our distinguished panel and now invite your testimony."
Lawmakers Hear from Popular Small Biz Experts
WASHINGTON – Today a panel of well-known entrepreneurs shared their personal stories with Members of Congress about what it takes to start a successful small business and what Washington can do to help aspiring entrepreneurs start, grow and expand their business. Coming days after National Small Business Week, the experts and members of the House Small Business Committee had a spirited discussion on the best ways Washington can empower entrepreneurs. Simplifying the tax code, rolling back unnecessary regulations and improving small business education outreach were key topics of discussion.
“At the very heart of small business‒ what allows them to succeed‒ are the people; the men and women of this country who set out with an idea and the desire to turn that idea into a reality,” observed House Small Business Committee Steve Chabot (R-OH). “It is this enduring spirit of American innovation that continues to breathe life into our economy and create the jobs no government program can.”
“Each of our witnesses has taken the lessons learned from building their own businesses, and provide guidance to small business owners and aspiring entrepreneurs. The difference between a good idea and a good business is execution, and who do America’s small businesses turn to for help developing and executing a business plan? They turn to JJ Ramberg, to Ramon Ray, to Susan Solovic, and to Melinda Emerson. And so today, so do we,” said Chairman Chabot in kicking off today’ hearing.
THE EXPERTS WEIGH IN
“Let’s think about the husband and wife who start a business together, or a high school graduate working on an invention, or that laid off 50 year-old forced to begin their own business,” said Ramon Ray, the Editor of Smart Hustle Magazine. “The best thing our government can do for small business owners, is to have limited regulation, lower and simplified taxes and continue to invest in the education of small business owners at the local, state and Federal level.”
“Both on and off Main Street, we have heard a common refrain: difficulty finding affordable funding to expand, a challenge around recruiting top notch employees and a sense of loneliness and lack of community to help with business issues,” testified JJ Ramberg, an entrepreneur and the host of MSNBC’s Your Business. “That said, I believe we are in the beginning of a sweeping change when it comes to small business. Companies in the fintech and edtech space are working to address the issues of financing business and educating our workforce.”
“With millennials now making up the largest share of the American workforce and primed to take over an increasing share of small business ownership, much will continue to change when it comes to entrepeneurship,” added Ramberg.
“The regulatory burden in this country is in the trillions of dollars and small businesses pay 36 percent more than larger enterprises,” noted Susan Solovic, THE Small Business Expert and an advocate. “Could small businesses in the U.S. eventually become extinct? In my opinion, if we continue down this path of hyper-regulation, they will certainly become an endangered species. How can we protect this important market sector? As one long-time entrepreneur said to me when I asked what needs to be done: Get out of our business.”
“There are other regulatory challenges that small businesses face that should be reviewed,” said Melinda Emerson, the founder & CEO of Quintessence Group and the Melinda F. Emerson Foundation. “The expanded categorization of who can and cannot be considered a 1099 independent contractor is a challenge for small businesses and the cost of full-time employees is prohibitive to cash-strapped start-ups. The tax code needs to be simplified to help more small business owners; it costs a lot to be in business in the U.S.”
Last week, the Small Business Committee celebrated National Small Business Week:
- Chairman Chabot delivered the Weekly Republican Address outlining the ways the Committee is working to empower America’s 28 million small businesses.
- Chabot penned an op-ed for The Washington Examiner on the importance of small businesses to the U.S. economy and the men and women who work to make them succeed.
- Chabot also stopped by “Mornings with Maria” on Fox Business Network to kick off National Small Business Week with host Maria Bartiromo.
- Chabot, Ranking Member Nydia Velázquez and Committee members introduced a bipartisan House resolution recognizing the economic contribution of America’s small businesses.
- From Main Street to Silicon Valley, the Committee told the story of how America’s small businesses and innovators are changing the way our economy works on Medium. You can read their stories here.
Thune and Gardner Question Excessive Consulting Fees Draining Rural Health Care Telecommunications Funds
The Honorable Peg Gustafson will provide testimony at a U.S. Senate Committee on Commerce, Science, and Transportation confirmation hearing at 10:00 a.m. on Tuesday, May 10. On April 25, 2016, President Obama nominated Ms. Gustafson to serve as inspector general for the Department of Commerce. The Department of Commerce has been without a Senate confirmed inspector general since June 3, 2015. Commerce Committee Chairman John Thune (R-S.D.) and Sen. Ron Johnson (R-Wisc.), a member of the Commerce Committee and Chairman of the Senate Committee on Homeland Security and Governmental Affairs, wrote to President Obama on August 5, 2015, requesting a nomination.
Ms. Gustafson’s nomination questionnaire is available here.
The Honorable Peg Gustafson, Small Business Administration Inspector General (current position)
Tuesday, May 10, 2016
Full Committee hearing
This hearing will take place in Senate Russell Office Building, Room 253. Witness testimony, opening statements, and a live video of the hearing will be available on www.commerce.senate.gov.