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[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]

 
              ORGANIZATIONAL MEETING AND SBA VIEWS AND 
                  ESTIMATES FOR THE 114TH CONGRESS

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                           FEBRUARY 12, 2015

                               __________

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            Small Business Committee Document Number 114-002
              Available via the GPO Website: www.fdsys.gov
             
             
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                  HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                        RICHARD HANNA, New York
                         TIM HUELSKAMP, Kansas
                        TOM RICE, South Carolina
                         CHRIS GIBSON, New York
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        CARLOS CURBELO, Florida
                          MIKE BOST, Illinois
                         CRESENT HARDY, Nevada
               NYDIA VELAAZQUEZ, New York, Ranking Member
                        YVETTE CLARKE, New York
                          JUDY CHU, California
                        JANICE HAHN, California
                     DONALD PAYNE, JR., New Jersey
                          GRACE MENG, New York
                       BRENDA LAWRENCE, Michigan
                       ALMA ADAMS, North Carolina
                      SETH MOULTON, Massachusetts

                   Kevin Fitzpatrick, Staff Director
            Stephen Dennis, Deputy Staff Director for Policy
            Jan Oliver, Deputy Staff Director for Operation
                      Barry Pineles, Chief Counsel
                  Michael Day, Minority Staff Director
                            C O N T E N T S

                           OPENING STATEMENT

Hon. Steve Chabot................................................     1
Hon. Nydia Velaazquez............................................     2

                                APPENDIX

Additional Material for the Record:
    Rules and Procedures.........................................     9
    Oversight Plan of the Committee on Small Business for the One 
      Hundred Fourteenth Congress................................    23
    Views and Estimates of the Committee on Small Business on 
      Matters to be set forth in the Concurrent Resolution on the 
      Budget for Fiscal Year 2016................................    30

   ORGANIZATIONAL MEETING AND SBA VIEWS AND ESTIMATES FOR THE 114TH 
                                CONGRESS

                              ----------                              

                      THURSDAY, FEBRUARY 12, 2015

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
2360, Rayburn House Office Building. Hon. Steve Chabot 
[chairman of the Committee] presiding.
    Present: Representatives Chabot, Luetkemeyer, Hanna, 
Huelskamp, Rice, Gibson, Brat, Radewagen, Knnight, Curbelo, 
Bost, Hardy, Velaazquez, Hahn, Payne, Meng, and Adams.
    Chairman CHABOT. Good morning. The Committee will come to 
order.
    I call the Committee on Small Business Organizational 
Meeting to order at this time. I want to welcome all the 
returning and new members of the Committee. And before 
introducing the new Republican members, I would like to take a 
moment to recognize the Ranking Democratic Member, 
Congresswoman Nydia Velaazquez, with whom I served as ranking 
member when she was the chair of this Committee back in 2007-
2008. We had an excellent working relationship for the most 
part, and I hope to use that example to foster civil discourse, 
even when we have our policy differences. And we know, of 
course, there will be differences in this Committee as there 
are in all Committees, but for the most part, the Small 
Business Committee is one of those Committees, kind of like the 
Foreign Affairs which I also serve on, where there is more to 
agree on than disagree. So I hope that we can continue to have 
that very good relationship that we have both personally and 
professionally.
    There are seven new Republican members of the Committee. 
Mr. Gibson retired from the United States Army as a colonel, 
and then returned to his hometown in the Hudson Valley of New 
York when he was elected to Congress back in 2010. And we 
welcome him here to the Small Business Committee.
    The other new members that I am going to recognize at this 
time are our freshmen. Mr. Bost served as a state legislator 
and helped run a small business in Illinois.
    Mr. Brat was a professor of Economics and Business at 
Randolph Macon College in Virginia. And it was kind of an 
earthquake last year when he won a primary but we will not go 
into that. So we are welcoming him to the Committee certainly.
    Mr. Curbelo was a small business owner and school board 
member in Miami, Florida, and we welcome him here to the 
Committee.
    Mr. Hardy, Crescent Hardy served in the Nevada state 
legislature. Where is Crescent? There he is, right here. And 
owned a small construction firm in Nevada.
    Mr. Knight is--there he is. Mr. Knight is also a veteran. 
He was a police officer and served in local government and the 
state legislature in California.
    Amanda Radewagen is the first woman to represent American 
Samoa in Congress, and has the title of orator in the village 
of Aumua.
    The very diverse background of our new members will add to 
the experience and expertise of our returning members to create 
a pro-growth agenda for America's entrepreneurs.
    I would like to welcome back the members who served on the 
Committee during the 113th Congress. Mr. King from Iowa, Mr. 
Luetkemeyer from Missouri, Mr. Hanna from New York, Mr. 
Huelskamp from Kansas, and Mr. Rice from South Carolina.
    And finally, I would like to announce the vice chair of the 
Committee and the subcommittee chairs for the 114th Congress. 
Mr. Luetkemeyer, who served as vice chair of the Committee in 
the 113th Congress will return to that position in the 114th 
Congress, and we are very fortunate to have somebody of Mr. 
Luetkemeyer's stature and capabilities in case I cannot make it 
to a meeting or whatever because he is a tremendous member of 
Congress and we are lucky to have him.
    Two subcommittee chairs from the 113th Congress also will 
be returning to those positions in the 114th Congress. Mr. 
Hanna will chair, again, the Subcommittee on Contracting and 
Workforce, and Mr. Rice will chair the Subcommittee on Economic 
Growth, Tax, and Capital Access. Mr. Curbelo will chair the 
Subcommittee on Agriculture, Energy, and Trade. Ms. Radewagen 
will chair the Subcommittee on Health and Technology. And Mr. 
Hardy will chair the Subcommittee on Investigations, Oversight, 
and Regulation. And I think we are going to have a great year, 
a great Committee, and we welcome everybody--the new members 
back and the older members, we hope that you will put as much 
effort into it this Congress as you did last because it was 
really an excellent Committee under the previous chairman, Mr. 
Graves, and we are going to try to follow in his footsteps as 
far as the way he led this Committee because I think he did a 
very good job.
    And I would now like to yield to the Ranking Member, Ms. 
Velaazquez, to introduce her members.
    Ms. VELAAZQUEZ. Good morning, and thank you, Mr. Chairman. 
I, too, want to say that it is a pleasure to have Chairman 
Chabot at the helm because we have worked together before when 
I was the chair of the Small Business Committee and he was the 
ranking.
    I always say that when it comes to small business, there is 
no republican or democratic approach; that we need to do our 
best to address the issues that will enable small businesses to 
do what they do best, and that is to create jobs and to expand 
our economy. I look forward to a cordial, productive, 
substantive working relationship with the chairman and to be 
able to pass bipartisan legislation the way we did when I was 
the chair. I always recognized the right of the minority, and I 
expect that the chairman will do the same. I am confident that 
will happen.
    Also, I would like to welcome the members of the committee, 
new members and all members from both sides of the aisle.
    We have two new members joining us, Brenda Lawrence of 
Michigan. I believe she is not here yet. Representative 
Lawrence is new to Congress this term. She is a former mayor of 
Southfield, Michigan, and a former long-time employee of the 
U.S. Postal Service. She also serves on the Oversight and 
Government Reform Committee where she is ranking member of the 
Subcommittee on the Interior.
    Alma Adams of North Carolina, welcome. Representative Adams 
is new to Congress as well. Prior to being elected to the 
House, she served in the North Carolina House and was also 
Professor of Art History. In addition to this committee, she 
serves on the Education and Workforce Committee and the 
Agriculture Committee.
    We have several returning members to the committee. With us 
today is Janice Hahn of California. This is her second full 
term on the committee and second in Congress as she initially 
won a special election in 2011 and filled a portion of that 
term. Prior to being elected to the House, she served on the 
City Council in Los Angeles. She also served on the 
Transportation and Infrastructure Committee.
    Congresswoman Grace Meng hails from Queens, New York, and 
this is her second term in Congress and on the committee. In 
addition to this assignment, she also serves on the Foreign 
Affairs Committee. An attorney, she previously served in the 
New York State Assembly.
    I look forward to working with all of you during the next 
two years. I thank the chairman and yield back.
    Chairman CHABOT. Thank you very much. The gentlelady yields 
back.
    Now we will move on to the organizational part of today's 
meeting.
    There are 28 million small businesses in America, a lot. 
While the members of this Committee will have policy 
differences, all of us have one common goal--to make sure that 
our small businesses can prosper and create the solid middle-
class jobs that America needs. Given that, there are certainly 
numerous issues where we can find common ground, as the Ranking 
Member said, that will make government more efficient and 
ensure that the Small Business Administration carries out the 
will of Congress, rather than continually inventing new and 
untested initiatives. I believe that the Rules Package, 
Oversight Plan, and Budget Views under consideration today will 
lay the groundwork for finding those areas that we have in 
common, while maintaining the highest levels of bipartisanship 
for which the Committee is known.
    I would now yield to the ranking member, Ms. Velaazquez, if 
she would have an opening statement.
    Ms. VELAAZQUEZ. Thank you, Mr. Chairman for yielding.
    Small business continue to make unprecedented contributions 
to our economy, and we will do whatever it takes to support 
them. They have generated nearly two-thirds of net new jobs 
over the last 15 years and are the innovators and drivers of 
economic progress. Entrepreneurship also serves as the backbone 
of our nation's economy, enabling individuals to pursue their 
dreams and become financially self-sufficient.
    As we move forward, we must make sure that small businesses 
are given the resources and protections they need to prosper as 
both republicans and democrats want and need small firms to 
succeed and create jobs in our community. I look forward to 
continuing this tradition during the 114th Congress.
    I yield back.
    Chairman CHABOT. Thank you. The gentlelady yields back.
    I would like to thank the majority and minority staffs for 
their hard work and cooperation in putting together this rules 
package. There is only one significant change from the rules 
adopted in the 113th Congress. In consideration of the time 
demands of members, I believe it is appropriate to apply the 
five-minute rule on questioning of witnesses to the Chair, 
myself, and the Ranking Member. Even with this change, I expect 
that we will be able to accommodate the needs of all members in 
questioning witnesses. So basically, we had the opportunity to 
go on more or less as long as we wanted before other members 
and we are going to make sure that we make it as equal as 
possible so that all members have an opportunity to question 
witnesses. So we are going to apply that same rule to 
ourselves. And I would now recognize the ranking member, Ms. 
Velaazquez, for any remarks that she may have on the rules 
package.
    Ms. VELAAZQUEZ. Sure. Thank you, Mr. Chairman.
    Our committee's rules are not only a vital institutional 
requirement, but they also set clear parameters for how we will 
operate. More importantly, they contain protections to ensure 
that all points of view are considered. It is important for 
members on both sides of the aisle to note that in most 
regards, these are the same rules that I used when I was chair 
of the committee, and I believe this is a testament to Chairman 
Chabot's leadership.
    In this day and age when too many try to stack the rules in 
their favor, it is refreshing that this committee does not have 
to be concerned about those distractions. A committee that is 
run openly and with a sense of community is a committee that 
works and can best achieve its objective. It is my hope that 
the rules we consider today will make this happen.
    I yield back.
    Chairman CHABOT. Thank you.
    Are there any other members who wish to be recognized for a 
statement on the rules package?
    If not, the Committee now moves to consideration of the 
rules package. The clerk will read the title of the document.
    The CLERK. Rules and procedures adopted by the Committee on 
Small Business, United States House of Representatives, the 
114th Congress 2015-2016.
    Chairman CHABOT. I ask unanimous consent that the rules 
package be considered as read and open for amendment in its 
entirety.
    Does any member seek recognition for the purpose of 
offering an amendment?
    Seeing no amendments, the question is on adopting the 
rules. All those in favor say aye.
    All opposed say no.
    In the opinion of the chair, the ayes have it.
    The ayes have it.
    The rules for the Small Business Committee of the 114th 
Congress are adopted and the staff is authorized to make 
technical and grammatical changes.
    Today's second order of business is to consider the 
Committee's Oversight Plan. This plan represents the agenda for 
the Committee during the 114th Congress. I wish to thank the 
ranking member, Ms. Velaazquez, for her input into the 
Oversight Plan. The plan is very similar to that adopted in the 
113th Congress with a slightly greater emphasis on performing 
an examination of SBA programs. It is my view that the plan 
recognizes this Committee's broad oversight authority under the 
rules of the House to investigate any problem affecting small 
business.
    At this point, I would yield to the Ranking Member for nay 
comments she may have on the Oversight Plan.
    Ms. VELAAZQUEZ. Thank you, Mr. Chairman.
    The oversight plan sets forth a policy framework for our 
work this Congress, and the chairman is to be commended on 
producing a thoughtful document. The plan calls for the robust 
oversight of the SBA and other federal small business 
initiatives, a long tradition that this committee takes 
seriously. It also delineates several programs for review and 
possible termination. In this context, the committee has forged 
a bipartisan consensus opposing the SBA's continued creation of 
unauthorized pilot programs. Diverting taxpayers' dollars away 
from proven programs can often open the door to fraud, waste, 
and abuse, something we are all working to minimize. Whether it 
is the SBA or other matters of importance to small businesses, 
Congress needs a clear agenda of assisting them, and it is 
paramount that we start addressing these issues as soon as 
possible. By doing so, we have the potential to truly help 
create new jobs and move the economy forward.
    With that, I urge members to approve this oversight plan.
    I yield back.
    Chairman CHABOT. Thank you.
    Are there any other members who wish to be recognized for a 
statement on the Oversight Plan?
    If not, the Committee now moves to consideration of the 
Oversight Plan. The clerk will read the title of the document.
    The CLERK. Oversight Plan of the Committee on Small 
Business for the 114th Congress.
    Chairman CHABOT. I ask unanimous consent that the Oversight 
Plan be considered as read and open for amendment in its 
entirety.
    Does any member seek recognition for the purpose of 
offering an amendment?
    Seeing no amendments, the question is on adopting the 
Oversight package. All those in favor say aye.
    All those opposed say no.
    In the opinion of the chair, the ayes have it.
    The Oversight Plan for the Small Business Committee in the 
114th Congress is adopted, and Committee staff are authorized 
to make technical and grammatical changes in the Oversight 
Plan.
    Today's third order of business is to consider the Views 
and Estimates of the President's Fiscal Year 2016 budget for 
the Small Business Administration. The SBA budget request for 
Fiscal Year 2016 in my view fails to address certain critical 
matters. These matters are not items on which the Agency has 
discretion; they have been mandated by Congress. During the 
last five years, Congress has imposed some 15 requirements on 
the SBA to complete with respect to its government contracting 
programs. The SBA only has completed one of those tasks. 
Despite this, the SBA budget request makes no mention of these 
mandates. The SBA is required to have an individual whose 
primary responsibility is to oversee acquisition management 
within the Agency, the chief acquisition officer or CAO. This 
is a significant vulnerability for the SBA in my view and for 
the taxpayers. Yet, the Agency's response is to assign the 
CAO's duties to the chief financial officer, thereby 
distracting the chief financial officer from providing 
appropriate oversight to the SBA's $100 billion loan portfolio.
    In addition, the Agency does not have an individual that 
serves as the chief information officer even though it is a 
statutory requirement. This compounds the problem of overseeing 
the SBA's information technology, including the Loan Management 
Accounting System that uses 1960s technology and that the 
inspector general continues to cite as a critical 
vulnerability.
    While the Agency continues to ignore congressional 
mandates, the budget request has the audacity to request over 
$40 million for initiatives of its own design. The SBA's first 
responsibility is to complete the tasks mandated by Congress 
before it expends funds on untested initiatives the Agency 
believes will help small businesses. Even if the SBA had 
completed all of the tasks assigned to it by Congress and 
filled the statutory mandated management positions, the budget 
request priorities still, in my view, are misplaced. The budget 
request makes no mention of adding more key personnel who will 
help small businesses enter or compete in the nearly $500 
billion federal procurement marketplace. Instead, the SBA 
requested nearly $37 million to provide entrepreneurial 
training that duplicates longstanding programs operated by the 
SBA and its partners, such as Small Business Development 
Centers and SCORE.
    The views and estimates that we are considering today 
highlight these problems and asks for a reduction of SBA's 
budget while judiciously reallocating funds to areas that will 
reduce agency vulnerabilities and prove more effective in 
assisting small business owners.
    At this point, I would like to yield to the ranking member, 
Ms. Velaazquez, for any comments she might have on the 
Committee's views and estimates.
    Ms. VELAAZQUEZ. Thank you, Mr. Chairman.
    The SBA continues to be an important agency for spurring 
economic activity. Through its access to capital, procurement, 
and entrepreneurial development programs, the agency assists 
hundreds of thousands of entrepreneurs each year. The SBA 
budget submission gives this committee the opportunity to 
assess the agency's priorities on whether it is carrying out 
its statutory mission appropriately. The SBA's near-term 
blueprint for accomplishing its mandate is its Fiscal Year 2016 
budget request of $860 million. This funding will enable the 
agency to continue to provide loans, contracts, and training to 
small businesses across the country. In this capacity, the SBA 
truly plays a vital role, strengthening our economy and 
promoting job creation.
    In many areas, I concur with the majority's views and 
estimates on this project. This includes opposing unauthorized 
pilot programs which continue to grow unchecked at the agency. 
Policing SBA's contracting programs has unfortunately become a 
necessity and this needs to be a top priority. Finally, I am 
glad to see that the majority opposes the administration's 504 
refinancing proposal. Such an initiative is outside of the 
mission of the underlying program's purpose and places undue 
risk on taxpayers.
    However, in several areas the views and estimates take 
cost-cutting measures a bit too far. It supports abolishing the 
Prime program as does the administration itself. This program 
should continue to be funded as it provides resources to low 
income entrepreneurs seeking to become self-sufficient. Critics 
say Prime is duplicative, but that is a hard case to make when 
the Microloan program is tied to a loan and Prime is tied to 
capacity building and technical assistance. Plus, they barely 
receive more than 3 percent of the agency's budget.
    Similarly, eliminating the Veterans Business Outreach 
Center, Office of Native American Affairs, and Office of 
International Trade are misguided. While other departments do, 
in fact, perform similar activities, the SBA operates these 
initiatives with a small business focus, an element that the 
other federal entities lack. As a result, these activities 
should remain in the SBA, and if reform is needed, it should be 
pursued incrementally instead.
    As we all know, disagreement on priorities in the agency's 
annual budget is not unusual. As we move forward, I look 
forward to working to refocus the SBA on its statutory mission 
in a manner that is both efficient and prudent.
    And with that, Mr. Chairman, I yield back.
    Chairman CHABOT. Thank you. The gentlelady yields back.
    Are there any other members who wish to be recognized for a 
statement on the Committee's Views and Estimates on the SBA 
budget request for Fiscal Year 2016?
    If not, the Committee now moves to its consideration of the 
views and estimates. The clerk will read the title of the 
document.
    The CLERK. Views and estimates of the Committee on Small 
Business on matters to be set forth in the concurrent 
resolution on the budget for Fiscal Year 2016.
    Chairman CHABOT. I ask unanimous consent that the views and 
estimates be considered as read and open for amendment in its 
entirety.
    Does any member seek recognition for the purpose of 
offering an amendment?
    Seeing no amendments, the question is on adopting the views 
and estimates on the SBA budget request for Fiscal Year 2016. 
All those in favor say aye.
    All those opposed, no.
    In the opinion of the chair, the ayes have it, and the 
views and estimates are agreed to.
    I now recognize the Ranking Member for a motion.
    Ms. VELAAZQUEZ. Sure. Mr. Chairman, I would like to ask 
unanimous consent. I would like to give notice pursuant to 
House Rule 11 Clause 2(l), that the committee democrats will be 
filing additional views with the Budget Committee regarding 
SBA's Fiscal Year 2016 budget.
    Chairman CHABOT. Without objection, so ordered.
    And the Committee is authorized to make technical and 
grammatical corrections to the views and estimates.
    I would like to thank everyone and look forward to working 
with all of you. This meeting of the Committee on Small 
Business is adjourned and the Committee will stand in recess 
for a few moments to prepare for a Committee hearing. We do 
have a hearing following up, so members and anyone here that 
would like to stay, we will be starting that up in just a 
moment or two so we can get the witnesses in there.
    So at this time, the Committee is briefly adjourned. We 
will be back shortly.
    [Whereupon, at 10:25 a.m., the Committee was adjourned.]
                            A P P E N D I X

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