House Small Business Committee
The Committee on Small Business Subcommittee on Contracting and Workforce will meet for a hearing titled, “SBA’s Entrepreneurial Development Programs: Resources to Assist Small Businesses.” The hearing is scheduled to begin at 10:00 A.M. on March 30, 2017 in Room 2360 of the Rayburn House Office Building.Hearing Documents
The Committee on Small Business will meet for a hearing titled, “Evaluating the Paperwork Reduction Act: Are Burdens Being Reduced?” The hearing is scheduled to begin at 11:00 A.M. on Wednesday, March 29, 2017 in Room 2360 of the Rayburn House Office Building.
The Committee will examine the Paperwork Reduction Act’s effectiveness in reducing the paperwork burden on small businesses and issues that may warrant further scrutiny or legislative action.
1. Hearing Notice
2. Witness List
Mr. Sam Batkins
Director of Regulatory Policy
American Action Forum
Ms. Leah F. Pilconis
Environmental Law & Policy Advisor
Associated General Contractors of America
WASHINGTON—Small Business Committee Chairman Steve Chabot (R-Ohio) made the following statement upon the announcement of President Donald J. Trump’s nomination of Rear Admiral Althea Coetzee to serve as Deputy Administrator of the Small Business Administration (SBA).
“Allie Coetzee’s distinguished record in the U.S. Navy is the remarkable foundation for the innovative and entrepreneurial approach she has since brought to making local, state, and federal government entities work better on behalf of small businesses,” said Chairman Chabot. “The Small Business Administration and Congress alike are sure to benefit from her firsthand knowledge of how small contractors equip and empower the service members that defend us all. The Small Business Committee looks forward to working with her and the rest of the formidable team Administrator McMahon is assembling at the SBA.”Last week, Chairman Chabot welcomed SBA Administrator Linda McMahon to his office for a conversation about their shared priorities in improving the SBA.
1. Hearing Notice
2. Witness List
John D. Lawrence, Ph.D.
Associate Dean and Director for Extension and Outreach
College of Agriculture and Life Sciences
Iowa State University
Mr. Tim White
TA White Farm LLC
* Testifying on behalf of the National Cattlemen’s Beef Association
Ms. Sarah Rickelman
* Testifying on behalf of the Iowa Farm Bureau
“Small farms have always been a part of our nation’s fabric, and it cannot be stressed enough that the small family farm is a small family business,” said Subcommittee on Agriculture, Energy, and Trade Chairman Rod Blum (R-Iowa). “Although the industry has changed over time, agriculture is still a force pushing America’s economy forward. 41 percent of all land in the United States is used for farming. U.S. agriculture has a 45 billion dollar trade surplus with other countries, and while it may be surprising, over 93 percent of America’s farms are small family farms.”
“In addition to low prices, small family farms have a multitude of other issues to worry about. From high taxes, increasing regulatory burdens, and trouble selling their products internationally, it seems like government bureaucracy is only making it harder to run a small farm,” added Blum, who was chairing his first hearing as the Subcommittee’s new Chairman.
Washington Red Tape Holding Back Small Family Farmers
“Our biggest concern is over-regulation,” testified Tim White, the owner of White Farm LLC in Lexington, Kentucky. “The EPA’s WOTUS Rule is one such example. WOTUS has been a big concern to producers. The overreach in that regulation would require many beef producers to get permits, and comply with those permits, which would be a huge burden. Not to mention it would open us up to citizen lawsuits from litigious activist groups. Producers pride themselves on being good stewards of our country’s natural resources.”
“We maintain open spaces, healthy rangelands, provide wildlife habitat, and feed the world,” added White, who testified on behalf of then National Cattlemen’s Beef Association. “But to provide all these important functions, we must be able to operate without excessive federal burdens, like the WOTUS Rule. As a small business owner, I am particularly concerned with the lack of outreach to the small business community by federal agencies such as EPA.
“As a family-owned business, and knowing the detrimental impact this regulation could have on my operation, it is appalling the agencies could assert that it would not have a significant economic impact on small businesses,” said White. “It is clear to me that the rule’s primary impact would do just that. There was no outreach to us in the agriculture community before the rule was proposed. There wasn’t a meaningful dialogue with the small business community as a whole. And because of that, what we got was a WOTUS Rule that doesn’t work for small businesses and doesn’t work for animal agriculture. The positive news is that President Trump signed an Executive Order requiring the EPA to go back and revise the WOTUS Rule so it doesn’t regulate every drop of water in this country.”
Broken Tax Code Also Hurting the Family Farm
“Another way that D.C. is affecting the family farm is through current tax policy,” said Sarah Rickelman, the Manager of Degener-Juhl Farms in Hudson, Iowa. “As Congress looks to reform our nation’s tax policy I hope that lawmakers will consider the impact any change will have on the thousands of family farms across the country. While lowering individual tax rates is a positive reform, family farmers will ultimately pay more taxes if essential tax policies for small businesses are eliminated. “
“Agriculture is a capital-intensive business and being able to deduct business expenses is a critical tool – this should include the ability to deduct interest expenses,” added Rickleman, who testified on behalf of the Iowa Farm Bureau. “As a young farmer, I’m extremely concerned about the ability of the next generation to purchase their first piece of ground or expand their operation if they can’t deduct interest expense. A tax reform package that doesn’t include these provisions will ultimately increase taxes on family farms. On that same note, I hope Congress will finally and permanently eliminate the death tax while maintaining stepped-up basis. These tax provisions are essential to the survival of the family farm.”
Supporting The Next Generation of Family Farmers
“Obviously, farm income is directed to more things than just supporting the household,” explained Dr. John Lawrence, the Associate Dean and Director for Extension and Outreach at Iowa State University’s College of Agriculture and Life Sciences. “Farmers reinvest profits back into the farm operation by purchasing or improving land, machinery and facilities. It may be cash payments or financed purchases with annual loan service payments. The decision between family living expenses and investment in the farm is a balancing act as old as farming itself. If a family farm is going to sustain itself into the future, it must maintain its assets, whether they be physical or in support of the family.”
On Wednesday, March 22, 2016 at 11:00 a.m. the Committee on Small Business will conduct a hearing titled, “Making Washington Work For America’s Small Businesses.” The purpose of the hearing is for small business owners to outline their priorities and provide the Committee with ideas about federal policies that will help them most grow their businesses. A priority setting hearing, the hearing will help inform future committee hearings, advocacy efforts, and legislative priorities for the Committee on Small Business for the 115th Congress.Documents
Ms. Maxine Turner
Salt Lake City, UT
* Testifying on behalf of the U.S. Chamber of Commerce
Ms. Ann Chambers
Co-Founder and CEO
* Testifying on behalf of Women Impacting Public Policy
Mr. Rutledge “Skip” Paal
Rutland Beard Floral Group
Baltimore, MD 21228
* Testifying on behalf of the Society of American Florists
WASHINGTON - House Small Business Committee Chairman Steve Chabot (R-Ohio) took to the House floor today in strong support of H.R. 1101, the Small Business Health Fairness Act. The measure was approved by a vote of 236 to 175 in the House and now advances to the U.S. Senate.
“For virtually any one of us in this Chamber, it can be said that hundreds of thousands of our constituents depend on small businesses for their livelihoods. They’ve been looking to those same small businesses for options as Obamacare has done the opposite of what it was supposed to do, and diminished choices for workers. By allowing small businesses to join together through association health plans, the Small Business Health Fairness Act would give small business employees at least as many choices as those who happen to work for larger companies. Association health plans have long been a solution suggested by small businesses who share their views with me and other members of the Small Business Committee, and this bill puts that idea into action.”
Making Washington Work for
Small Business Owners Sound Off on Obamacare, Regulations, Taxes
WASHINGTON – Today small business owners told the House Small Business Committee that Obamacare’s mandates, as well as overregulation and the current tax code, are having a devastating effect on their businesses, employees and customers.
“These issues are important because too often, small businesses get the short end of the stick which is counterproductive to the economic health of our nation,” explained House Small Business Committee Chairman Chabot (R-Ohio). “This hearing is a little bit different than others we do. Instead of focusing on one topic, we simply asked the witnesses to give us advice on the policies and initiatives that we can do to help them the most. By getting input now, we can focus our efforts throughout the 115th Congress to serve our constituency as responsibly and effectively as possible.”
“Take for instance, the implementation of the Affordable Care Act, or Obamacare,” said Chairman Chabot. “Small business witness after small business witness has come before us (and constituent after constituent back home) and stated how unworkable the whole thing is.”
“We hear stories of astronomical premium increases, severely limited choices, and little to no assistance for small businesses trying to help insure themselves and their employees. Yet, there are folks out there who think that Obamacare is working just fine. Well, it’s not, and small businesses are the ones left holding the bag,” added Chabot.
“Uncertainty and Lack of Clarity”
“I ask Congress to fix the broken ACA system,” said Skip Paal, the owner of Rutland Beard Floral Group, a small floral business based in Baltimore, Maryland. “It is detrimental to me and countless other main street businesses. If something is not done quickly, I fear that when I receive next year’s health insurance quote it will simply be unaffordable to the point where we would no longer be able to offer that benefit to our employees.”
“I applaud the recognition by Congress and the Administration that the Tax Code, which seems to be so large that not even my accountant can fully understand it, needs to be drastically simplified,” observed Paal, who testified on behalf of the Society of American Florists.“Tax relief to small business is incredibly important. The complexity of the Tax Code and its associated case law is not something that I can even begin to understand. Payroll taxes are simple, straightforward to calculate, and easy to plan for – we need something just as uncomplicated for corporate and pass-through taxes.”
“One of the greatest concerns that I and other members of my industry have is the sense of uncertainty and lack of clarity in legislation and regulations” said Paal. “It is impossible for small businesses to make decisions and plan when legislation and rules are constantly changing. I have discussed the challenges I face with several of my peers in different segments of the floral industry. Every single person told me their greatest concern was either uncertainty or lack of clarity.”
Red Tape Holding Back Women Entrepreneurs
“Federal regulations cost businesses just under $10,000 per employee annually, with the annual total cost burden on the typical U.S. business coming in at a $233,182,” said Anne Chambers, an entrepreneur from Cincinnati, Ohio who is the Co-Founder and CEO of Red212. “This problem is exacerbated by the government’s inability to provide long-term policies on which businesses can rely.”
In her testimony, Chambers praised H.J. Res 37, which nullifies the Occupational Safety and Health Administration (OSHA) contractor blacklisting rule. She also expressed her strong support for The Regulatory Accountability Act (H.R. 5), which would strengthen the Small Business Administration (SBA) Office of Advocacy and allow for the issuance of smarter, less burdensome regulations that consider the direct economic effects on small businesses.
View from the Chamber’s Small Business Members
“The Chamber has heard loudly from its small business members about the problems with the torrent of federal regulations emanating from Washington, DC,” testified Maxine Turner, the Founder of Cuisine Unlimited, a small catering business based in Salt Lake City, Utah.
“Research conducted by the U.S. Chamber of Commerce Foundation probes into the costs of red tape on small business and spells out how the $1.9 trillion annual cost of federal mandates is a drag on the American economy. The Foundation study includes a survey of leaders from local chambers of commerce who are alarmed by the slump in new business startups and insist that federal regulations are largely to blame,” stated Turner, who testified on behalf of the U.S. Chamber of Commerce.
“New opportunities for entrepreneurs, beginning with tax reform, regulatory reform, and other priorities, would result in an economic vigor that would benefit every family across this country. A health care program that meets the needs of our citizens with reasonable costs would spark new optimism,” she concluded.
1. Hearing Notice
2. Witness List
Ms. Jennifer Brown
Research National Institute on Retirement Security
Ms. Paula Calimafde
Small Business Council of America
Ms. Elise Feldman
Feldman Benefit Services, Inc.
WASHINGTON – Experts told a Subcommittee of the House Small Business Committee today that millions of American small business owners and employees are barred from using a popular provision of the tax code that would enable them to save on important expenses such as insurance premiums, medical costs and dependent care.
“Cafeteria plans are available across the board to large and mid-size companies, non-profits, schools, universities, and the federal government,” said Subcommittee on Economic Growth, Tax, and Capital Access Chairman Dave Brat (R-VA) in his opening statement. “However, one major category of people who are not allowed to participate in a cafeteria plan is small business owners. They can sponsor these plans for their employees, but they cannot personally participate. This provides a disincentive to offering the plan in the first place.”
Small Business Employees Put at a Disadvantage
“In addition to health insurance premium payments, those employers that sponsor Section 125 plans can make a number of other benefits available to employees, such as the Medical Reimbursement benefit as well as the Dependent Care benefit,” testified Elise Feldman, the President of Feldman Benefit Services, Inc. “These benefits give the employees an opportunity to provide better health care for themselves and their family members, because the Section 125 plan structure enables the employees to do so more easily and more affordably (because the contributions are made on a pre-tax basis). The option to take advantage of these benefits is generally appreciated by the employees.”
Benefits of Cafeteria Plans
“Section 125 of the Internal Revenue Code (“Code”) regulates “Cafeteria Plans,” which are tax favored methods for offering a variety of fringe benefits to employees on a pre-tax basis through a plan offered by an employer,” said Jennifer Brown, the Manager of Research at the National Institute on Retirement Security (NIRS). “They are called cafeteria plans because these plans give an employees the ability to select benefits from a menu set by their employer, in exchange for forgoing compensation. Some cafeteria plans offer a choice between cash and one or more type of insurance coverage, while other plans offer one or more reimbursement accounts.”
3/4 of Small Business Owners Excluded
“While employees of most large and mid-sized businesses as well as non-profits, schools, universities and the federal government can take advantage of the valuable benefits provided by cafeteria plans, most small business owners are not allowed to participate in a cafeteria plan,” said Paula Calimafde, the Chair of the Small Business Council of America. “Specifically, cafeteria plans can be utilized by common-law employees, but not by sole proprietors, partners in a partnership, S-corporation shareholders holding an interest of 2% or greater (and by attribution, their family members) and members in a limited liability company that has elected to be taxed as a partnership. According to recent data from the U.S. Small Business Administration (SBA), seventy-three percent of small employers are sole proprietorships, partnerships or S-corporations – meaning, that almost three quarters of small business owners are excluded from participating in a cafeteria plan.”
Plans Could Provide Flexibility for Small Businesses
“Cafeteria plans allow employers to offer flexible benefits to their workers, at a reasonable cost to both the workers and the employers,” explained Matt Tassey, the Treasurer of the National Association of Insurance and Financial Advisors (NAIFA). “The flexibility of being able to let workers choose benefits best suited to their unique circumstances is often the most important reason for an employer to establish and maintain this type of benefits plan. It is unfair to pass-through business owners to exclude them from eligibility to participate in cafeteria plans. And, it may discourage these owners from offering—and paying for—cafeteria plan benefits to those who work for them. “
Ms. Sonya McDonald
Executive Vice President and Chief Lending Officer
Randolph Brooks Federal Credit Union
Universal City, TX
* Testifying on behalf of the National Association of Federally-Insured Credit Unions
Ms. Cindy Blankenship
Bank of the West
* Testifying on behalf of the Independent Community Bankers of America
Mr. Tony Wilkinson
President and CEO
National Association of Government Guaranteed Lenders
WASHINGTON – Today the House Small Business Committee’s Subcommittee on Investigations, Oversight and Regulations examined the successes of the U.S. Small Business Administration’s (SBA) 7(a) loan program, as well as potential opportunities to strengthen and improve the program. The 7(a) loan program is the SBA’s most common loan program, which made 64,000 loans in FY2015, totaling $24.1 billion. Today’s hearing was the first in a series of hearings and actions the Small Business Committee will be taking this year to reform and protect the popular program which helps entrepreneurs access crucial early capital.
“Our start-ups, our entrepreneurs, our small businesses—the true engines of our economy—continue to experience a rigid lending environment, said Subcommittee Chairman Trent Kelly (R-MS). “While large companies are turning to debt and equity markets to raise capital, small businesses all over the country regularly turn to conventional bank lending to finance their projects.”
“At times, small firms cannot access conventional lending, so they have nowhere to turn for the capital to grow their business and create jobs. The program, which is currently running at zero cost to the American taxpayer, does not provide direct loans; rather, the SBA offers guarantees of repayments made by lenders,” explained Subcommittee Chairman Kelly, who was chairing his first hearing as the new Chairman of the Subcommittee on Investigations, Oversight, and Regulations.
Small Community Banks and Credit Unions Weigh In
“Small businesses are the driving force of our economy and the key to its success,” testified Sonya McDonald, the Executive Vice President and Chief Lending Officer of the Randolph Brooks Federal Credit Union, who testified on behalf of the National Association of Federally-Insured Credit Unions. “The ability for them to borrow and have improved access to capital is vital for the job creation that will lift our nation out of the economic malaise in which we find ourselves today. And while the Small Business Administration’s 7(a) program provides much needed opportunities to established and fledgling businesses, there are several relatively simple steps that could propel the program to its full potential.”
“A robust and sustainable 7(a) program with broad community bank participation will help small businesses thrive and create jobs, strengthening and extending a sluggish economic recovery,” said Cindy Blankenship, the Vice Chairman of Bank of the West in Grapevine, Texas, who testified on behalf of the Independent Community Bankers of America.
“The American entrepreneurial spirit is stronger than ever,” observed Tony Wilkinson, President and CEO of the National Association of Government Guaranteed Lenders. “Unfortunately, there is a very real gap in conventional bank lending in this country and even the most qualified business owners often struggle to secure financing that meets their business needs.”
“A small business seeking capital is often offered loans with terms of 90-days to 3 years when they really need much longer term financing to thrive. The needs of this country’s small businesses have always been a depository mismatch for banks that simply cannot, or may be reluctant to, tie up their capital in long-term loans for borrowers, especially in wake of the Recession,” added Wilkinson.
The Honorable Maureen K. Ohlhausen
Acting Chairman Federal Trade Commission
Chuck Romine, Ph.D.
Director Information Technology Lab
National Institute of Standards and Technology (NIST)
Mr. Charles Rowe
President & CEO
America’s Small Business Development Centers (SBDC)
Mr. Jim Mooney
President and CEO
Chevron Federal Credit Union Cybersecurity Committee Chair
National Association of Federally-Insured Credit Unions
*Testifying on behalf of the National Association of Federally-Insured Credit Unions
60% of Small Businesses Close Within Six Months of a Cyber Attack
WASHINGTON – Experts told the House Small Business Committee today that the federal government must do a better job coordinating federal resources to protect America’s 28 million small businesses from growing and varied cybersecurity threats.
“A cyber attack can have serious consequences, not only for small businesses, but also their customers, employees, and business partners,” said Chairman Chabot. “Sixty percent of small businesses that fall victim to a cyber attack close up shop within six months. A 2014 survey from the National Small Business Association estimated the average cost of a cyber attack on a small business to be over $32,000.”
“In our Committee’s efforts to spotlight these serious and growing threats, it has been abundantly clear that the federal government needs to step up its game when it comes to protecting the cybersecurity of small businesses and individuals. And, to some extent, federal agencies have begun offering resources directly to small businesses in recent years,” added Chabot.
According to a report from Verizon, 71 percent of cyberattacks occurred in businesses with fewer than 100 employees in 2012.
A DEVASTATING EFFECT ON SMALL BUSINESSES
“When implementing new technologies, small businesses need to fully understand all of the potential security risks created by connecting to the Internet,” said Chuck Romine, Ph.D., Director of the Information Technology Lab at the National Institute of Standards and Technology (NIST). “The risks to systems are so complex and pervasive that one cannot reasonably expect small businesses to be experts in all areas of security, including properly implementing security controls for complex system configurations and assessing security features associated with new and emerging technology. Cybersecurity incidents can have a devastating effect on small businesses—60% of small companies will close within six months following a cyberattack.”
THE FTC WEIGHS IN
“Reports of data breaches affecting millions of American consumers have become commonplace,” testified Maureen K. Ohlhausen, the Acting Chairman of the Federal Trade Commission (FTC). “Data is an increasingly vital asset for every business, including small businesses, and as companies collect more personal information from consumers, the databases they create become more attractive targets for criminals. Hackers and others seek to exploit vulnerabilities, obtain unauthorized access to consumers’ sensitive information, and potentially misuse it in ways that can cause serious harm to consumers and businesses.”
SBDCs CAN HELP
“If a small business has any Fortune 500 companies as customers, they are an even more enticing target,” explained Charles “Tee” Rowe, the President & CEO of America’s Small Business Development Centers (SBDCs). “These secondary attacks are now a regular problem for small business. Small businesses are particularly vulnerable to email attacks mimicking their banks or other trusted institutions and citing an urgent need for account or some other vital information, and often multiple employees have access to that information. Further, business accounts do not enjoy the same protection against loss as consumer accounts—something many small business owners do not discover until it’s too late.”
- Yesterday, Chairman Chabot made a statement on the announcement that a Chinese cellphone equipment manufacturer had plead guilty and agreed to pay a nearly $1 billion settlement to the U.S. government for violated sanctions on Iran.
- The House Small Business Committee held several major hearings throughout the 114th Congress on foreign cyber threats to U.S. small businesses where expert witnesses identified foreign telecommunications companies as a major area of concern.
- Cybersecurity is a key focus of the House GOP’s A Better Way to Keep Us Safe and Free. On page 23, it states: “The United States needs a more comprehensive approach to sharing information on cyber threats. Today, since most networks are interconnected, weaknesses in security can create significant vulnerabilities in both civilian and government infrastructure. Likewise, information that is valuable to one network defender is helpful to all network defenders—and must be shared. Although some private-sector actors may be reluctant to share cyber threat information, government and industry have a common goal: to prevent cyber criminals and cyber terrorists from disrupting commerce, disabling critical infrastructure, and weakening national defense.”
Last year, the House passed the Improving Small Business Cyber Security Act which helps small businesses facing cyber threats by providing access to additional tools and resources through existing federal cyber resources. The bill became law as part of the National Defense Authorization Act of 2017. The Department of Homeland Security (DHS) and other federal agencies have been permitted to work through Small Business Development Centers (or SBDCs) to streamline cyber support and resources for small businesses.
Small Business Cybersecurity Hearing Set for TOMORROW
WASHINGTON – House Small Business Committee Chairman Steve Chabot (R-Ohio) made the following statement on the announcement that a Chinese cellphone equipment company will plead guilty to charges that it violated sanctions restricting technology sales to Iran. The announcement from the Departments of Commerce and Justice that the company, ZTE, will pay a $1 billion settlement to the U.S. government comes the day before the Small Business Committee is scheduled to hold a major hearing on improving the coordination of federal resources to protect small businesses from cyber threats.
“For years, our Committee has spotlighted the threat to American economic security and national security posed by the illegal trade practices of foreign companies like ZTE,” said Chairman Chabot. “Small businesses, including small contractors in the defense and telecommunications supply chain, are especially vulnerable to these types of threats. This episode reminds us why we must remain vigilant in guarding against bad foreign actors who sell malicious hardware and software to our small businesses. This settlement is a good first step because one of the worst offenders has finally been held to account, but more work remains to ensure this does not happen again. As tomorrow’s hearing will demonstrate, we must do all we can to protect small business owners, contractors, employees and customers from cyber threats, whether they are foreign or domestic in origin.”
Chairman Chabot, who also serves as a Senior Member of the House Judiciary and Foreign Affairs Committees, led several members of Congress in sending letters to then-Secretary of State John Kerry and then-Secretary of Commerce Penny Pritzker last year when reports first surfaced that ZTE may have been used to subvert U.S. sanctions against rogue regimes like Iran.
In one of those letters, Chabot and the lawmakers wrote:“We would further note that ZTE specifically built its sanctions-evading strategy on a company it called “F7” in an internal memo. It is clear that “F7” is in fact the Chinese government-influenced telecom company Huawei. Huawei may be the next large company to avoid consequences for its actions unless steps are taken now to prevent it from developing a critical mass of links to American companies and markets.”
Measure to Undo Obama-Era Rule Heads to President Trump's Desk
"When the federal government contracts with small businesses, the American taxpayer saves money and communities across the nation benefit economically,”said Chairman Chabot. “That’s why the ‘blacklisting’ rule hurts everyone, especially our small businesses who have played by the rules. At our Committee, we’ve heard first-hand accounts from the small business community of how this rule would kill jobs. It is for the sake of these small job creators and their employees that I applaud the Senate's action and look forward to President Trump signing this resolution that repeals the damaging blacklisting rule."
The House passed H.J. Res 37 last month and it now advances to President Trump's desk for his signature.
Chairman Steve Knight has scheduled a hearing of the Committee on Small Business Subcommittee on Contracting and Workforce titled, "Learning from History: Ideas to Strengthen and Modernize the HUBZone Program" The hearing is scheduled to begin at 10:00 A.M. on Thursday, March 2, 2017 in Room 2360 of the Rayburn House Office Building.
Mr. William Shear
Director, Financial Markets and Community Investment
U.S. Government Accountability Office
Mr. Hannibal “Mike” Ware
Acting Inspector General
U.S. Small Business Administration
Ms. Shirley Bailey
Co-Owner-Executive Vice President and Chief Operating Officer
GCC Technologies, LLC
*Testifying on behalf of the HUBZone Contractors National Council
WASHINGTON – As the Small Business Administration’s Historically Underutilized Business Zones (HUBZone) program approaches the 20 year anniversary of its establishment, experts told the House Small Business Committee’s Subcommittee on Contracting and Workforce today that the program faces significant challenges with certification and reporting.
“When the HUBZone Program was first established, its goal was to create hope for ‘hundreds of thousands of underemployed or unemployed who long ago thought our country had given up on them,’” said Subcommittee Chairman Steve Knight (R-CA) in his opening statement. “I can think of no more important goal than bringing economic hope, independence, jobs, and businesses to neglected areas marked by high unemployment and poverty. To achieve this objective, the HUBZone Program must be run efficiently and effectively. That requires us to take a hard look backwards and learn from the past.”
“Vulnerable to Fraud and Abuse”
“We previously found that SBA’s challenges with its certification process made the HUBZone program vulnerable to fraud and abuse,” testified William Shear, the Director of Financial Markets and Community Investment for the U.S. Government Accountability Office (GAO). “For example, in July 2008 we testified that 10 HUBZone firms in the Washington, D.C., area had made fraudulent or inaccurate representations to get into or remain in the HUBZone program, and in a March 2009 report we found that another 19 firms in four other metropolitan areas had made fraudulent representations.”
“OIG has identified weaknesses in small business contracting programs and inaccurate procurement data as a top management challenge,” said Hannibal “Mike” Ware, the Acting Inspector General of the SBA. “These weaknesses and inaccuracies undermine the reliability of contracting goal achievement reporting to Congress.”
“Although, they’ve made a lot of strides, a lot more work needs to be done,” added Ware.
An Economic Development Program with Challenges
“The HUBZone program was created with the intent of moving individuals into meaningful jobs in communities that have suffered from a lack of investment. It is unlike other SBA programs in that the focus is not on the company, but the community. It is an economic development program,” explained Ms. Shirley Bailey, who testified on behalf of the HUBZone Contractors National Council. “Since its inception, the program has underperformed. While Congress has addressed expansions of the program to certain places, it has been more than fifteen years since changes were made to the primary program structure. In order for the HUBZone program to reach its full potential as outlined in 1997, the program needs to be modernized.”
“The visibility was not there and it was a lengthy process,” said Dr. Mansooreh Mollaghasemi, the President & CEO of Atria Technologies LLC, in recounting part of her own experience with HUBZone certification. “I’ve had more questions answered today than I’ve ever been able to ask because of all the valuable advice that’s here.”You can read full testimony from today’s hearing HERE and watch full video HERE.
Pursuant to House Rules and the Congressional Budget Act, the Committee must report its views and estimates on the President’s budget within six weeks of its submission to Congress. In the absence of this submission, which was statutorily required by February 6, 2017, the Committee on Budget has requested that House committees proceed and provide their views and estimates by March 3, 2017.
The meeting will be held in Room 2360 of the Rayburn House Office Building.
The Committee’s views and estimates letter is attached. It is also available on the Committee website.
Chairman Steve Chabot (R-OH)
- Meeting Notice
- Views and Estimates
WASHINGTON - House Small Business Committee Chairman Steve Chabot (R-Ohio) made the following statement on House Passage of H.J.Res. 83,a measure which would block implementation of the Occupational Safety and Health Administration’s controversial “Volks” rule:
“As with so many of the Obama-era regulations, small businesses were hit worst and first by the OSHA power grab known as the “Volks” rule. This sweeping new rule not only failed to improve the health and safety of Americans who work for small businesses, but it also created additional regulatory compliance costs and confusion for small businesses.At a time when small businesses are struggling to get back on their feet, the last thing they need to contend with is another costly, unnecessary rule dreamed up by some Washington-knows-best bureaucrat. Fortunately, this unified Republican government is continuing to work quickly and efficiently to give small businesses relief from burdensome rules like Volks.”