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72–176 2011

EXAMINING THE BARRIERS FOR SMALL BUSINESS 

CONTRACTORS AT THE DOD 

HEARING 

BEFORE THE

SUBCOMMITTEE ON CONTRACTING AND 

WORKFORCE 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

HEARING HELD 

NOVEMBER 8, 2011 

Small Business Committee Document Number 112–044 

Available via the GPO Website: www.fdsys.gov 


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(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

ROSCOE BARTLETT, Maryland 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

JEFF LANDRY, Louisiana 

JAIME HERRERA BEUTLER, Washington 

ALLEN WEST, Florida 

RENEE ELLMERS, North Carolina 

JOE WALSH, Illinois 

LOU BARLETTA, Pennsylvania 

RICHARD HANNA, New York 

ROBERT SCHILLING, Illinois 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

MARK CRITZ, Pennsylvania 

JASON ALTMIRE, Pennsylvania 

YVETTE CLARKE, New York 

JUDY CHU, California 

DAVID CICILLINE, Rhode Island 

CEDRIC RICHMOND, Louisiana 

JANICE HAHN, California 

GARY PETERS, Michigan 

BILL OWENS, New York 

BILL KEATING, Massachusetts 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, General Counsel 

MICHAEL DAY, Minority Staff Director 

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C O N T E N T S 

OPENING STATEMENTS 

Page 

Mulvaney, Hon. Mick .............................................................................................. 1 

WITNESSES 

Mr. Robert Griffin, Assistant Commander for Acquisition, Navy Facilities 

Engineering Command, Washington, DC .......................................................... 4 

Ms. Jackie Robinson-Burnette, U.S. Army Corps of Engineers, Associate Director of Small Business, Washington, DC ........................................................ 8 

Mr. John Caporal, Secretary, U.S. Air Force Small Business Programs Office, 

Washington, DC ................................................................................................... 11 

Mr. Bill Lynam, Owner, Lynam Construction, Sumter, SC ................................. 21 

Mr. William ‘‘Billy’’ Aycock, President, Aycock Construction LLC, Sumter, 

SC .......................................................................................................................... 25

Mr. Scott H. Bellows, Program Manager, South Carolina PTAC, The Moore 

School of Business Small Business Development Center, Columbia, SC ........ 28 

APPENDIX 

Prepared Statements: 

Mr. Robert Griffin, Assistant Commander for Acquisition, Navy Facilities 

Engineering Command, Washington, DC ................................................... 37 

Ms. Jackie Robinson-Burnette, U.S. Army Corps of Engineers, Associate 

Director of Small Business, Washington, DC ............................................. 48 

Mr. John Caporal, Secretary, U.S. Air Force Small Business Programs 

Office, Washington, DC ................................................................................ 58 

Mr. Bill Lynam, Owner, Lynam Construction, Sumter, SC .......................... 62 

Mr. William ‘‘Billy’’ Aycock, President, Aycock Construction LLC, Sumter, 

SC ................................................................................................................... 63 

Mr. Scott H. Bellows, Program Manager, South Carolina PTAC, The 

Moore School of Business Small Business Development Center, Columbia, SC ............................................................................................................ 65 

Questions for the Record: 

None 

Answers for the Record: 

None 

Additional Materials for the Record: 

ABC Statement for the Record ........................................................................ 67 

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EXAMINING THE BARRIERS FOR SMALL 

BUSINESS CONTRACTORS AT THE DOD 

TUESDAY, NOVEMBER 8, 2011 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON CONTRACTING AND WORKFORCE, COMMITTEE ON SMALL BUSINESS, Washington, DC. 

The Subcommittee met, pursuant to call, at 9:59 a.m., in Sumter 

County Council’s Chambers, 13 East Canal Street, Sumter, South 

Carolina, Hon. Mick Mulvaney (chairman of the Subcommittee) 

presiding. 

Present: Representative Mulvaney. 

Chairman MULVANEY. I’m Mick Mulvaney, 5th District representative from South Carolina, and the chairman of the Small 

Business Subcommittee on Contracting and Workforce. To my right 

is Joe Hartz with the Small Business Committee in Washington, 

D.C., and on the left is Natalie Binkholder, legislative assistant in 

my office. I believe some of you all have also met Eric Bettingbiel, 

the deputy chief. 

It is not unusual to have these hearings with just one member 

of Congress. The ranking member, who is a Democrat, is entitled 

to be here. However, she is from California, so it is not surprising 

she didn’t make the trip. We also extended an invitation to Mr. 

Clyburn’s office, and we may see them come in or come and go as 

the hearing goes. 

So what I will do is go ahead and call the meeting to order, 

which is a very fancy way of starting, and let’s go over some logistics first before I give my opening statement. 

In front of you, you will see a timer. Typically, we ask folks to 

keep their comments to 5 minutes, and I say typically because a 

lot of times we will have 15 members and 20 witnesses, and if we 

don’t limit the time, the meetings would take 6 hours. We try to 

avoid that. 

What you will see then in front of you is a timer that says 5 minutes. The green light will be on for the first 4 minutes, then the 

yellow light will go on when there is 1 minute remaining, and then 

once you go over 5 the red light goes on. I encourage you to use 

that only as a guide today. Because of the size of the hearing, and 

because of the relatively small number of witnesses, I am going to 

encourage you to go ahead and take your time, and if you need to 

go beyond the 5 minutes, that is great. If we get to the point, if 

you have talked for 20 minutes, what you will hear me do is very 

quietly tap the end of the gavel, and that would encourage you to 

please wrap up, as we do have other folks who want to testify. 

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How I run the meetings is I will introduce each of the witnesses, 

ask you all to give your testimony at one time, and then I will ask 

questions at the end, and then we will start to our second panel. 

So with that, I will read an opening statement and then introduce the first panel. 

Thanks again for being here. I appreciate your willingness to appear before the Subcommittee to talk about the barriers small business contractors face when working with the Department of Defense. 

The Federal Government purchases nearly $500 billion in goods 

annually. Because this is a significant amount of Federal dollars, 

we owe it to the taxpayers to make sure we are using those funds 

wisely and efficiently. 

Government contracting offers a unique opportunity to invest in 

small businesses while also stimulating our economy. Small businesses play a critical role in our economy and job growth, creating 

seven out of every ten jobs in the country. With unemployment still 

stalled around 9 percent nationally, 11 percent in South Carolina, 

closer to 14 percent in this district, it is more important than ever 

to invest in the small firms that support our communities and create our jobs. It is difficult to build a strong economy when its foundation, America’s small businesses, are not strong themselves. 

Small business contractors are good for the government and good 

for the economy. They increase competition, innovation, create jobs, 

and save taxpayer dollars, which is why there is a statutory goal 

that 23 percent of all prime contractor dollars issued, spent by the 

United States Government, go to small business. 

Unfortunately, other than criticism from Congress, no penalty exists for a failure by the Federal Government to meet these goals, 

which is one of the reasons we have not only this hearing today but 

all the hearings we have in Washington. In addition to a lack of 

penalties, there are a number of other barriers that prevent the 

Federal Government from maximizing the use of small businesses 

in Federal procurement. 

For instance, we should reduce the flawed practice of contract 

bundling, which we will talk a little bit about today, which occurs 

when the government consolidates smaller contracts into bigger 

contracts that small businesses are not able to perform, and it can 

virtually shut out small businesses from the contracting process. 

Additionally, we must work to strengthen the enforcement system. 

And finally, in light of the President’s executive order concerning 

the use of project labor agreements, which we will touch on briefly 

again here today, we must keep our eyes open to when such agreements are used and whether those agreements have an adverse impact on small businesses, especially here in South Carolina. 

By addressing those and other problems that we hope to examine 

today, we can help small businesses compete in the national marketplace. 

That is sort of a general background. What we are looking to accomplish here today is to examine some of the problems and the 

barriers, if there are any, that face small businesses when working 

specifically with the Department of Defense. As most everybody 

here knows, during the recent BRAC process, the United States 

saw fit to move the 3rd Army from Fort McPherson, Georgia, up 

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here to Shaw Air Force Base. As part of the BRAC process, several 

large construction projects were necessary for facilities, housing, 

and infrastructure to accommodate the approximately 1,000 additional soldiers, civilian employees, and their families moving to this 

base. 

In 2009, the Navy awarded the construction of 3rd Army Headquarters. The Navy was actually responsible for the building of an 

Army headquarters on an Air Force base, which I thought was fascinating. The Navy gave that contract to a company from Montgomery, Alabama; and while some of the subcontracts of that general contract came to local businesses, many did not. 

By no means is this hearing today to lay blame on anybody. This 

is a fact-finding mission. A lot of folks in this community have 

reached out to me and said why didn’t we get more business locally. That is why we are here today, to find out exactly what happened and why it happened. My experience in the short time that 

I have been in office is fairly simple: small businesses here want 

to work at Shaw Air Force Base. At the same time, the folks who 

run Shaw Air Force Base want to use small business. 

So today we are going to find out more exactly about the process 

by which 3rd Army was built and Shaw was improved. When small 

businesses did get work, and some of those folks are here today 

and will be testifying, we will find out why. We will also hear from 

folks who didn’t get work on that particular project, and we are 

going to find out why as well. There could be perfectly legitimate 

reasons why contracts went someplace other than to local contractors. 

Today’s hearing is specifically designed to lay out on the table 

the facts, not the rumors and the things that we hear in the community, but the facts about why 3rd Army was built the way that 

it was by the folks that it was. 

Again, thank you all for participating in the process. We are 

going to introduce the first panel. The first witness is Robert Griffin, the Assistant Commander for Acquisition at the Navy Facilities 

Engineering Command. He has nearly 30 years of public service 

and was selected to the Navy’s Senior Executive Service in July of 

2000. He is the Command’s senior civilian contracting official responsible for the contractual business practices, policy and oversight for the Command’s $10 billion contract program. 

He is a graduate of George Mason University in Virginia, with 

a Bachelor of Science in Business Administration. His awards include the President’s Meritorious Executive Service Award in 2004, 

the Department of Navy Superior Civilian Service Award in 1998, 

and the Meritorious Civilian Service Award in 1996. 

Mr. Griffin, thank you for being here. 

Also on the first panel is Ms. Jackie Robinson-Burnette. She is 

the Associate Director for the U.S. Army Corps of Engineers’ $6 billion Small Business Program. She is the principal advisor to the 

Corps’ commander and the Secretary of the Army, the Director of 

Small Business Programs and all Corps small business matters. 

Ms. Robinson-Burnette oversees an integrated network of over 70 

contract specialists that serve as the Corps’ small business advisors 

throughout the country. She is the senior authority on small business legislation and regulations, and develops and implements 

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training programs. She graduated from the University of Maryland 

with a Bachelor’s in Business Management. 

Thank you very much as well, Ms. Robinson-Burnette, for being 

here. 

Finally, rounding out the first panel is John Caporal. Did I get 

that right? 

Mr. CAPORAL. Yes, sir. 

Chairman MULVANEY. Like ‘‘corporal’’ without the R? 

Mr. CAPORAL. Yes. 

Chairman MULVANEY. Acting Director of the Air Force Small 

Business Programs Office, where he manages the execution of 

small business programs for the Department of the Air Force. As 

a member of the Air Force small business leadership since November of 2004, he has helped transform, modernize, and promote successful practices with respect to engaging small business. Through 

his leadership, the Air Force has implemented several innovative 

strategies to better align the small business community with the 

mission and priorities of the Air Force. 

He has a Bachelor’s degree in Secondary Education from Miami 

University in Oxford, Ohio, and a Master’s degree in Public Administration from the University of Dayton. He graduated from the Air 

Force Command and Staff College in 1987 while at Wright Patterson Air Force Base. 

Welcome to all of you. 

With that, we will begin. And I think if there is one thing that 

is evident from those introductions is that these are the exact folks, 

these are the folks who help make the decisions. These are very 

high-ranking individuals, and I appreciate you all taking time from 

your busy schedules to do that. 

With that, Mr. Griffin, you have between 5 and 10 minutes, so 

fire away. 

STATEMENTS OF ROBERT GRIFFIN, ASSISTANT COMMANDER 

FOR ACQUISITION, NAVY FACILITIES ENGINEERING COMMAND, WASHINGTON, D.C.; JACKIE ROBINSON-BURNETTE, 

U.S. ARMY CORPS OF ENGINEERS, ASSOCIATE DIRECTOR OF 

SMALL BUSINESS, WASHINGTON, D.C.; JOHN CAPORAL, SECRETARY, U.S. AIR FORCE SMALL BUSINESS PROGRAMS OFFICE, WASHINGTON, D.C. 

STATEMENT OF ROBERT GRIFFIN 

Mr. GRIFFIN. Chairman Mulvaney, thank you for the opportunity 

to testify before you and your constituents today on the construction contract for the 3rd Army Headquarters Complex at Shaw Air 

Force Base in Sumter, South Carolina, also the process by which 

the Federal Government awards contracts and the use of project 

labor agreements. I would also like to confirm the Navy’s commitment to increase the utilization of small business firms. We view 

the key to successful contracting as the health of the industrial 

base, and that begins with small business firms. 

The contract for construction of the 3rd Army Headquarters 

Complex at Shaw Air Force Base is a negotiated, firm fixed price, 

design-build construction contract. It was procured via full and 

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ministration on September 16, 2008, and awarded by the Navy on 

May 29, 2009 to Caddell Construction Company of Montgomery, 

Alabama. The price at time of award was $91,600,000. The scheduled completion date is November 14, 2011. Prior to the issuance 

of the solicitation, a market survey was conducted to determine if 

a sufficient number of capable small businesses existed to compete 

this procurement among small business prime contractors only. 

However, no small businesses capable of performing the work were 

identified. 

According to the Small Business Administration’s Table of Small 

Business Size Standards, a company is considered a small business 

if its average annual receipts for the past three years is $33.5 million or less. Eighteen offerors responded to the first phase of the 

solicitation. These offerors’ proposals were evaluated on experience, 

past performance, and past small business utilization. The top four 

proposals were invited to Phase 2 of the solicitation, where they 

submitted a price proposal and a separate technical proposal. 

The technical proposal consists of a small business subcontracting plan, a management approach, and a technical solution. 

The Caddell proposal was found to be the best value since their 

technical proposal was the highest rated and their price proposal 

was the lowest. 

The Executive Order 13502 on Project Labor Agreements issued 

on February 6, 2009 encourages executive agencies to consider 

project labor agreements in connection with large-scale construction projects greater than $25 million. When the 3rd Army Headquarters construction acquisition was solicited in December 2008, 

the Executive Order 13502 was not in place, and Executive Order 

13202, dated February 17, 2001 actually prohibited the use of 

project labor agreements. Accordingly, a project labor agreement 

was not considered on this project and had no impact on the award 

of this project. 

I would also like to mention that the Navy is performing a small 

business outreach event today in Sumter, South Carolina, and 

thank you again for the opportunity to testify before you today. 

[The statement of Mr. Griffin follows on page 37.] 

Chairman MULVANEY. Mr. Griffin, thank you very much. 

Ordinarily what I do is let everybody go first, but I think I will 

change that up a little bit today because my guess is that each of 

you will have a lot of detail. You had a great deal of detail in a 

very short period of time, so let me ask you a couple of questions. 

So one of the things that we have heard back home here is that 

the project labor agreements were part of the process, and what I 

am hearing from you today is that they were not. 

Mr. GRIFFIN. They were not. 

Chairman MULVANEY. Can you please explain to folks what 

project labor agreements are? 

Mr. GRIFFIN. Okay. A project labor agreement is an agreement 

between the government and a contractor, and the contractor and 

a workforce. Basically, the AFL–CIO, which represents the Building and Trades Council, is the agent for the local unions that represent the workers that would work in a specific geographical area. 

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erned and coordinated by the Building and Trades Council, which 

is the AFL–CIO. 

Under a project labor agreement, either the contractor would negotiate at arm’s length in advance of submitting a proposal with 

the AFL–CIO and establish the ground rules under which labor 

matters would be managed in the contract, which would include 

wage rates, would include benefits, would include certain requirements for safety, it may include programs to develop certain specific skills or sets of workers. They can vary from point to point. 

The Department of the Navy has not implemented a project labor 

agreement to date in any of its projects. We have evaluated consistent with the Executive Order all projects since 2009 over $25 

million using the criteria set forth in the executive order. Specifically, we look to see if the project requires multiple contractors and 

subcontractors, whether there is a shortage of skilled workers in 

that area where the work is to be performed, whether completion 

of the project will take an extended time, and whether there is risk 

to completion maybe based on certain environmental windows for 

purposes of construction access, whether PLAs or project labor 

agreements have been used for similar projects in the past and 

whether they have been successful, whether the project labor 

agreement would promote the long-term interests of the Department, develop future skilled labor, and other factors that may come 

into play in unique situations. 

Chairman MULVANEY. Thank you. And my understanding is that 

project labor agreements have been generally perceived as being favorable to union labor over at-will labor. But my understanding is 

exactly what you just laid out, which is that 3rd Army expansion 

at Shaw was not covered by a project labor agreement because it 

was let before President Obama issued the policy. 

Mr. GRIFFIN. Yes, sir. 

Chairman MULVANEY. I guess it is fair to say that if there was 

another project over $25 million that began today at Shaw Air 

Force Base, it would be subject to the review that you have just 

laid out, and it might fall under the project labor agreement. 

Mr. GRIFFIN. Yes, sir. 

Chairman MULVANEY. But that the work that was done out there 

that was the subject of today’s hearing for 3rd Army was not done 

under the rules regarding project labor agreements. 

Mr. GRIFFIN. Yes, sir. That is correct. 

Chairman MULVANEY. Tell me a little bit about design-build and 

whether or not you perceive that as having any influence or any 

impact on whether or not small businesses can participate in a particular project. 

Mr. GRIFFIN. The decision to go design-build, the Department 

has—— 

Chairman MULVANEY. Could you, for the record, give a little 

summary of what design-build means? 

Mr. GRIFFIN. Certainly. There are two basic approaches to constructing a building. You can hire an independent architect engineering firm who in turn would design the facility and then take 

that design and compete that design for purposes of the award of 

the construction contract, or you can combine the design aspects of 

the requirement and the construction and award a single contract 

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to a single entity, which normally would be some type of joint venture or prime-sub relationship between a construction firm and an 

architect engineering firm. 

Depending on the complexity of the project, the Navy’s policy is 

to evaluate what we believe would be the most effective and efficient approach. One benefit that we have found from design-build 

is that we eliminate the finger pointing if there’s some type of error 

and omission during the construction phase. So that single entity 

cannot come back and blame an independent architect because the 

drawings may have been mistaken, resulting in a construction 

change, which causes a cost overrun. So we believe that there is 

great benefit in certain types of construction. When we go into very 

complex industrial type construction, kind of one off, it is not a normal process, we still go back to our conventional design bid build 

where the design is a separate component. So it is just another 

technique for purposes of construction. 

Chairman MULVANEY. What would you say to the criticism that 

design-build projects tend, or at least might have the tendency, to 

exclude small businesses on the design side, that a small architectural firm, a small design firm might be excluded because they 

don’t have the ability to do the design-build relationships? 

Mr. GRIFFIN. Well, I think there is some credibility to that concern. I mean, the Naval Facilities Engineering Command works 

very closely with the Society of American Military Engineers, and 

also the Association of Independent Architects, and we try to partner with them and the Association of General Contractors to find 

the sweet spot between where we should be doing stand-alone design and where we should be doing design-build. 

We also have to peel the layer back even more, a couple of layers, 

so that we can see where we can have opportunities for small business architect engineering firms, because normally the dominant in 

a design-build scenario would be the construction firm. So the architect engineering firm will always be the sub because their proportion of the work is usually 6 to 9 percent of the total construction price. 

Chairman MULVANEY. And last question for this round. You 

mention in your testimony that the Navy found that no small businesses were capable of taking this contract. I believe this is one of 

the contracts that was open to small business because I think this 

is one of the contracts where small businesses, had they been 

named as the prime contractor, would have been allowed to delegate or subcontract out 85 percent of the work. So they would only 

have to do 15 percent. There are different levels for different contracts. 

But on this one, small businesses would have been appropriate 

to name a small business as a general contractor if they could meet 

the requirements. You said you couldn’t find any small businesses 

that met those requirements. 

Tell me about the process. Tell me how the Navy went through 

the process of looking at small businesses that would have applied 

to be the general contractor here. 

Mr. GRIFFIN. Oh. Yes, sir, I would be happy to. In coordination 

with the Small Business Administration, we do a market survey, 

and we basically advertise in Fed Biz Ops that we intend to do a 

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project of this size and scope at this location; in this case, $90-plus 

million in Sumter, South Carolina. We give the nature of the 

project and we request qualifications from interested parties, and 

we evaluate those qualifications. 

We did have a half-a-dozen small businesses come in and show 

interest in the project, and we evaluate each of those independently, and we determined based on our own experience that none 

of those, in our opinion, had a likelihood of success. So we elected 

to go to the Small Business Administration and ask that we advertise the project on an unrestricted basis, which would allow large 

businesses to bid, as well as small businesses. 

One of the things we look at is the risk factor as well. So as I 

explain in my testimony, the size standard for a small business is 

$33.5 million a year based on average annual receipts over three 

years. So to ask a small business who has traditionally not done 

more than $33.5 million a year total work to step up and do a single project almost three times that value seems like it is a leap as 

far as size, and then they have to get bonding capability. 

Chairman MULVANEY. How big was the whole project? 

Mr. GRIFFIN. The project was—— 

Chairman MULVANEY. The whole contract? 

Mr. GRIFFIN. Total value after change orders was $106,300,000. 

Those change orders for additional security work and collateral 

equipment. 

Chairman MULVANEY. Okay. 

Mr. GRIFFIN. So they would have to bond the original amount of $91 million, and the bonding industry right now is extremely tight, 

the surety industry. So they have problems getting bonds. They 

probably would have working capital challenges initially until the 

payment flow begins, and we could theoretically harm them if we 

allow them to get into a project as a prime that they have never 

done before at that size and scope. We could bankrupt a company. 

So we look at it very carefully. They still can bid the project, and 

they would still be evaluated, and actually they would have an advantage in one of the major factors, which is—— 

Chairman MULVANEY. And you say 15 small businesses bid this 

project as a—— 

Mr. GRIFFIN. No, no. 

Chairman MULVANEY. How many was it? 

Mr. GRIFFIN. I said a half-a-dozen in the market analysis said we 

were interested, and we had a total, I believe, of 18 people who bid 

the actual job in Phase 1, and I explained under our process of 

Phase 1/Phase 2 we have criteria to short list, and we did short 

list, and then none of the small businesses made it to the second 

phase. 

Chairman MULVANEY. Got you. Thank you, Mr. Griffin. We have 

more when the other folks have finished. 

Ms. Robinson-Burnette, would you like to present your testimony, please? 

STATEMENT OF JACKIE ROBINSON-BURNETTE 

Ms. ROBINSON-BURNETTE. Mr. Chairman, thank you for the opportunity to speak. It is one of my greatest passions to educate 

small businesses. It is understandable why Congress is heavily fomstockstill on DSK4VPTVN1PROD with HEARINGS

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cused on the efforts of Federal agencies to award contracts to small 

businesses, because small businesses play a significant role in recovering our economy. 

At the Corps of Engineers, we greatly depend on small businesses to help us meet an array of diverse missions around the 

world. Our missions include research and development, managing 

valuable aquatic resources, building infrastructure, providing engineering solutions to DOD and other Federal agencies, international 

government agencies and non-international government agencies in 

nearly 100 countries around the world. 

The small business goal for the Army is 25.3 percent, and this 

past fiscal year the Corps exceeded that goal, achieving 42.5 percent, nearly $8 billion to small businesses, and 63 percent of our 

subcontracting dollars went to small businesses. 

The Charleston District exceeded their goals for the last three 

years. Charleston District is responsible for the State of South 

Carolina. In fiscal year 2011, Charleston’s small business goal was 

40 percent, and they are projecting achievement at 84 percent of 

all dollars awarded to small businesses. You can see that our commanders at every level in the Corps are committed to giving small 

businesses contract opportunities. 

There are organizations like the Procurement Technical Assistance Center and the Minority Business Development Center that 

walk small businesses through the contracting process. It is imperative that small businesses that have yet to receive their first contract award contact these organizations so they can focus their efforts in a way that would more clearly get them to a contract 

award. 

Each buying activity has small business advocates, and the Federal Acquisition Regulation requires that all contract actions under 

$150,000 are set aside exclusively and automatically for small businesses. And for procurements over $150,000, small business advocates sit side by side with contracting officers and program managers to determine if there is a reasonable expectation that two or 

more small businesses will submit a competitive offer at a fair market price. This is referred to as the Rule of Two. When market research validates the Rule of Two, contracting officers are required 

to set aside actions for small businesses over $150,000. 

The Rule of Two is validated by several different methods 

through market research. The most effective method is the sources 

sought synopsis, which is posted on the Federal Business Opportunities webpage. Typically, we ask small businesses to respond to a 

handful of questions and list information about their financial capability as well. Many small businesses are unaware of the significance of the sources sought synopsis and they don’t respond, therefore missing their opportunity to influence the acquisition. Of 

course, small businesses may submit a proposal when the acquisition is unrestricted, available for proposals from large and small 

businesses, but they maximize their potential when the procurements are set aside. 

Small businesses have to be diligent about marketing their experience, past performance, and financial capability. Our customers 

are expecting us to minimize risk to their projects by making the 

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ence. Having 8(a) certification or small business certification is 

definitely an advantage, but it never takes precedence over capability to perform. Firms must clearly understand what is in the requirement in order to submit a winning solution. Small businesses 

must keep in mind that they must provide their best possible technical proposal and best possible price with the initial offer because 

they may not have an opportunity to submit a revision. 

Finally, small businesses must ask for debriefings. The 

debriefings can provide critical information necessary to improve 

future proposals. Our large businesses are also very interested in 

supporting Federal small business programs through subcontracting. They are engaged with firms, and especially when small 

firms find the contracting opportunity and focus their marketing efforts around those specific opportunities. Large firms also prefer to 

hear about a firm’s capability, past performance and financial capability, and establish relationships, more so than just the firm’s size 

standard. 

Today we are prepared to talk to firms in the local community 

about different projects that we have in the Corps of Engineers. 

There are many small business projects projected for set-aside to 

small firms. I want to list a few of them. 

There is a competitive 8(a) design-build fire protection multiple 

award task order contract. It is going to be valued—the task orders 

will be valued between $75,000 and $1.5 million over a five-year 

period. 

We have Clouter Creek Ditching, which is a project that is going 

to be between $500,000 and $1 million. It is going to be in Berkeley 

County, South Carolina. 

We have the Virginia Charleston New Post Traumatic Stress 

Disorder/Mental Health Research Facility. It will cost between $5 

and $10 million in Charleston, South Carolina. 

And then the Gantry Crane Rehab and Inspection Certification 

at Stephen Power Plant, Stephen, South Carolina. 

We look forward to talking to firms after this hearing about 

those opportunities. They will be specifically set aside for small 

businesses, and I look forward to any questions that you have. 

[The statement of Ms. Robinson-Burnette follows on page 48.] 

Chairman MULVANEY. Thank you, Ms. Robinson-Burnette. And 

that gives me the opportunity to go off the message here for a little 

bit to remind everybody that after this meeting on the way out, 

various departments will have information available on projects 

that are available to small businesses in the area. So thank you for 

doing that. 

Ms. ROBINSON-BURNETTE. You’re welcome. 

Chairman MULVANEY. And before we got ready for this meeting, 

I had no idea your numbers were what they were. I do this a good 

bit. One of the things that we press the agencies on, I mean from 

Treasury to Health and Human Services to the Army Corps up in 

Washington, is on the percentage of their set asides for small business. Those are the best numbers I have ever heard. 

Ms. ROBINSON-BURNETTE. Thank you, sir. 

Chairman MULVANEY. So it makes me extraordinarily proud to 

know that that is happening in South Carolina. Thank you for 

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11 

doing that. Please keep up the good work. We need all the help we 

can get. 

Help a layman understand. Was the Army Corps involved with 

the 3rd Army expansion at Shaw Air Force Base? Or was it the 

Navy working with Caddell directly? Tell me what your role was, 

if anything, on this project. 

Ms. ROBINSON-BURNETTE. Sir, I don’t have the full details on 

that, but I believe that they independently awarded and solicited 

for that contract. 

Chairman MULVANEY. So the Army Corps of Engineers—the 

Navy was in charge of this. I recognize that. But again, for a 

layperson, was the Army Corps of Engineers involved in this 

project? 

Mr. GRIFFIN. No. Title 10 identifies two organizations that do 

military construction, the Army Corps of Engineers and the Naval 

Facilities Engineering Command. The Air Force work is distributed 

between the Army and the Navy based on geographic basis. South 

Carolina happens to be a territory that the Naval Facilities Engineering Command would do the MILCON for the Air Force. 

Chairman MULVANEY. Got you. Great. That helps. Thank you 

very much. 

Mr. Caporal, if you want to go ahead and begin, please? 

STATEMENT OF JOHN CAPORAL 

Mr. CAPORAL. Thank you, Congressman Mulvaney. Thank you 

for the opportunity to discuss Air Force Small Business Program. 

Our office reports directly to the Undersecretary of the Air Force. 

We provide policy advice, guidance, training, and innovative strategies to ensure quality solutions for Air Force acquisition teams to 

maximize opportunities for small businesses. Our vision is to ensure maximum practicable opportunities for small businesses at 

the earliest stages of acquisition planning and to make small business the solution of choice to meet the needs of the Air Force mission. 

We strive to promote a culture of shared responsibility with our 

acquisition partners, recognizing the critical role small businesses 

plays not only in advancing the mission but in strengthening our 

nation’s industrial base. We are more than advocates for small 

business. We are advocates for the Air Force mission using small 

business solutions. 

In fiscal year 2010, the Air Force awarded $8.8 billion to small 

businesses, or 15.4 percent of total procurement dollars. In fiscal 

year 2011 the awarded amount dropped to $8.2 billion or 14.5 percent. This is not official yet. We haven’t verified those numbers, but 

don’t expect it to change too much. While this represents a drop in 

dollars and percentages over the previous year, 2011 saw an unprecedented level of commitment to small business programs from 

our Air Force leaders at all levels. Our fourth quarter numbers 

began to rise in conjunction with the heightened attention. Despite 

a tough budget environment, we believe this increased level of support of the program, reflected in our future acquisition strategies, 

will pay big dividends in the coming years. 

Under our new director, Mr. Joseph M. McDade, we are reinvigorating the role that small business plays at the prime and subconmstockstill on DSK4VPTVN1PROD with HEARINGS

12 

tracting levels in all of our acquisitions. We are developing a new 

plan that we believe will receive the endorsement of our senior 

leaders, leading to a higher level of achievement in the coming 

years. 

Shaw Air Force Base, one of our most active operational installations, has done a superb job of supporting the Air Force Small 

Business program. They awarded over $78 million to small businesses in fiscal year 2011. That is 86.6 percent of their total 

spends, and that exceeded their goal, which was set at 81 percent. 

Air Combat Command, Shaw Air Force Base’s parent command, 

also had a great year for small business awards. The ACC awarded 

a total of $836 million or 41.8 percent to small businesses. In fact, 

11 of our 13 major commands awarded more than the statutory 

goal of 23 percent, ranging from 25 percent to 78 percent. 

The challenge is with the product mix of our major weapons system commands that obligate more than 70 percent of our budget, 

yet award less than 10 percent of prime contract awards to small 

businesses. One of our goals for 2012 is to increase the market research and data analysis that is needed to increase prime contract 

awards in these two MAJCOMS. 

Our strategic goals in fiscal year 2012 include: finding that right 

balance between enterprise buying strategies, known as strategic 

sourcing, and making sure that our small businesses are full partners in the process and are utilized to the maximum extent; number two, focusing more intensely on market analysis to identify additional opportunities for small business in this time of declining 

budgets; and three, finding the right acquisition strategies for 

small business when a long-term contract is written. These include 

providing on-ramp opportunities, which allow small businesses not 

selected initially another opportunity to compete later on in the ordering period, and also to encourage more teaming arrangements 

between small businesses to allow them to compete on longer, higher dollar contracts. 

In closing, I would like to share a story about a small business 

contractor who performs work here at Shaw Air Force Base. ISPHI 

Information Technologies, Inc., a Mount Pleasant, South Carolina 

small business, has provided over 25,000 hours of logistical support 

for contingency operations, exercises, war-readiness material prepositioning, maintenance, and day-to-day planning efforts in support of the contingency/deployed personnel at the Air Force Central 

Command Area of Responsibility. The invaluable work performed 

under this contract demonstrates that while achieving Air Force 

small business goals are important, it is the support provided to 

the warfighter that showcases the true value of the program. We 

need to develop strategies that ensure that companies like ISHPI 

Information Technologies continue to thrive and grow. It is the jobs 

provided to the local communities and the innovation, agility, and 

value they provide to the taxpayer that needs to be encouraged. 

Finding and helping small businesses like ISHPI succeed and contribute to the mission is what motivates all 145 of our small business specialists that are located at every Air Force installation. 

There are success stories like these at every installation. Our aim 

is to develop more of those success stories. 

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13 

Ms. Judith Cruxton, our small business specialist, and Major 

Harris, who is our contracting commander, are also here today and 

will be set up outside afterwards, and we will be glad to talk to 

small businesses and help them learn more about the opportunities 

that are here at Shaw Air Force Base. 

So with that, I want to thank you for the opportunity to address 

you today. I will be glad to take any questions you might have. 

[The statement of Mr. Caporal follows on page 58.] 

Chairman MULVANEY. Let me ask you a question on the logistics 

involved. You’ve got an Army base on an Air Force base. Who is 

going to be responsible for the maintenance of the Army side of the 

property? Will it be the Air Force, or will it be the Army? 

Mr. CAPORAL. Going back to my contracting days, lots of times 

we would have a memorandum of agreement. Normally it is the 

contracting organization that does the maintenance, or that does 

the oversight. But a lot of times, if it is done by DCMA, they don’t 

come on an Air Force base or an installation. So local agreements 

have to be made, and sometimes the folks at the Air Force and the 

construction flight will take that responsibility to come out and 

oversee the project. 

It gets a little touchy sometimes because, you know, manpower 

is short and they don’t get any manpower credit sometimes when 

they do that. But from what I recall, we have worked out lots of 

successful agreements like that. 

Chairman MULVANEY. Let’s say that I am—pick a business—I 

am an asphalt company, and I am here in Sumter, and I want to 

know the next time that resurfacing the roads on part of the base 

goes out to bid. If I talk to the Air Force small business contact, 

or I talk to your contracting person, is that enough, or do I need 

to also go over and talk to somebody on the Army side of the base 

as well? 

Mr. CAPORAL. Well, we do lots of local construction projects. Title 

10 is really for the big construction projects that are done. We have 

a Center for Engineering and Environment down at San Antonio 

at Lackland Air Force Base called AFCEE, and they do projects for 

the Air Force that are some of the larger ones. But besides that, 

we have lots of local small construction projects that are handled 

locally at the base. 

Chairman MULVANEY. Right, and that is what I am asking 

about. I am not interested in doing work in San Antonio, Texas. I 

am a local guy here. I do resurfacing, and I want to just know the 

next time a project comes up at Shaw that I might be able to qualify for, I might be able to bid on. If I have reached out to the Air 

Force, have I covered all of my bases? Will I know about all of the 

bids, the contracts that go out, or do I also need to go talk to the 

Army as well? 

Mr. CAPORAL. Probably need to talk to both, and probably the 

small business person could advise whether that is going to be a 

larger requirement that maybe the Army is going to handle. Also, 

we have a forecast tool on our website. So sometimes it is too late 

when you see the requirement, and it is 30 days to close. But with 

our forecast tool, you can find out about these requirements maybe 

six months to a year ahead of time. 

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Chairman MULVANEY. Ms. Robinson-Burnette, even though you 

are not directly involved with Shaw, you have a lot of small business experience. Tell me the one thing that small businesses do 

that excludes them from getting contracts. What is the biggest mistake that a small business makes when they bid on a contract with 

the Army Corps of Engineers? If you could waive a magic wand to 

fix it in order to allow more small businesses to participate—I recognize you all are doing a great job anyway but, generally speaking, what is the number-one mistake that small businesses make 

when they bid for government contract work? 

Ms. ROBINSON-BURNETTE. Sir, I think the number-one mistake is 

misunderstanding the requirements of the solicitation and not understanding the limitations of the contracting officer when there 

are mistakes. For example, contracting officers can indicate that 

there is a page limitation for submitting the technical proposal, 

and sometimes small businesses will give—if the page limitation is 

10, small businesses may add 12 pages, and they don’t understand 

that after we get to the 10th page, we are prohibited from reading 

and considering the additional information, and a major portion of 

their technical information could be on those additional pages. 

Another thing that small businesses do, and I have learned this 

from counseling with them, is after they propose, they utilize the 

debriefing as a chance to challenge the contracting officer’s decision 

more so than gaining critical information that they can use to 

make their next proposal more successful. Quite often they may 

hold back a little bit from their technical proposal and increase the 

price so they can submit a—we used to call it best and final offer— 

revised proposal that they believe will really push them a bit higher. And even in the case with this award from Shaw, there wasn’t 

an opportunity for revised proposals. The government has the opportunity to award on initial proposals. 

Chairman MULVANEY. Mr. Griffin mentioned that as part of the 

process, that there are two considerations. There could be more 

than two, but the two major considerations are the—what did you 

call it?—the abilities, and then also price. These contracts are not 

bid just on price generally. 

Mr. GRIFFIN. Yes, sir. There are best value determinations basically balancing the merit of their technical proposal and their price 

proposal. 

Chairman MULVANEY. Ms. Robinson-Burnette, what can small 

businesses do—I think we all—I have been a small business. I understand lowest price. This is pretty easy for me to get. What about 

the best technical side? What can small businesses do to better 

present the technical sides of their arguments, or their bids? 

Ms. ROBINSON-BURNETTE. I think it is important for small businesses, when they look at the requirements of the solicitation, to 

present solutions and not just repeat what is in the solicitation but 

provide solutions that will show that they are technically excellent 

and that they have strong technical capabilities, and that they are 

providing additional solutions. For instance, they could talk about 

green initiatives in a project. That is just one thing that could provide them an edge up on their proposal. But just clearly looking at 

the requirements, and then making sure that they respond adequately. 

mstockstill on DSK4VPTVN1PROD with HEARINGS

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One of the things that large businesses do is they often have proposal writers from another team that have not been involved in 

that proposal that is being submitted to look and review, and that 

way an objective team can take a look to see if the proposal writers 

have answered the mail for that acquisition. 

Chairman MULVANEY. Before I go back to rebuilding the 3rd 

Army, because I have a series of questions on that, I want to ask 

you both, the two of you questions about in-sourcing. Have you 

seen the impact of that? 

For those of you who aren’t familiar with it, there is a new initiative with the current administration to take what are deemed to 

be—I can’t remember the exact bureaucratic term, but essentially 

government functions—— 

Mr. GRIFFIN. Inherently governmental functions. 

Chairman MULVANEY. Inherently governmental functions, and 

there is also ancillary—— 

Mr. GRIFFIN. Close to, yeah. 

Chairman MULVANEY. Close to. Tell me about what you have 

seen generally with in-sourcing, which can be described as government going off and not renewing contracts with private small businesses especially, and effectively bringing the jobs in-house, and if 

there is any experience you have here in South Carolina on those, 

that would be helpful as well. 

Mr. GRIFFIN. I would be glad to answer that. We have seen the 

effects of in-sourcing, and it seems like it has fallen disproportionately on small businesses. A lot of the things that were brought 

back in tended to be more of the low-hanging fruit that small businesses could do, advisory and assistance support contracts, those 

sorts of things. And it became a double whammy for these businesses. Not only did they lose the contract, but they also lost their 

workforce. The government swooped right in and made these folks 

job offers, and if you have 15 employees and you wind up losing 

10 back to the government, that can be a critical mass for trying 

to grow your company in the future. 

We don’t have any really good figures on it, just a lot of anecdotal evidence. A lot of the ones that were being threatened or that 

were in the process, I think the Air Force pulled back on some of 

those. They didn’t really come to fruition, but it still caused a lot 

of consternation. They decided maybe they couldn’t really find the 

cost savings. There was a lot of subjectivity about the cost, as you 

can imagine, about whether it is really least expensive for the contractor or the government. And as a result of that, I think in some 

cases they decided to leave the contracts in place, which probably 

worked out well for our small businesses overall. 

Chairman MULVANEY. Ms. Robinson-Burnette. 

Ms. ROBINSON-BURNETTE. Yes. There are some in-sourcing that 

is occurring, not a lot at the Corps. Some of the contracts that we 

have attempted to in-source are focused merely on contract support-type services, and some of those contracting actions we still 

have small businesses working them, but we have in-sourced some 

of the contracting functions. And part of the acquisition, grow the 

acquisition workforce, we are receiving new staff and personnel to 

take on those contracting functions, and they are being in-sourced. 

I don’t have specific numbers for you today. 

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Chairman MULVANEY. We have heard some disturbing stories on 

the committee. The one that sticks out in my mind was the cartographer who showed up at his office one morning, and there was a 

Department of Defense person there who had been instructed to go 

in and essentially take this gentleman’s business from him. He said 

we have not renewed your contract, we need you to abandon the 

building right now. And he said what am I supposed to do about 

my employees? He said don’t worry, we have hired all of them and 

given them 20 percent raises. That is in-sourcing. So I appreciate 

your insights on that. We will continue to keep an eye on that in 

Washington. 

Let’s finish, Mr. Griffin. Let’s go back to 3rd Army, because 

that’s really the real purpose that we are here today. You mentioned something that I think is probably at the core of the issue, 

which was the subcontracting plan that Caddell came up with. 

And full disclosure, by the way. We invited Caddell to come 

today. They were very candid with us and said that everybody who 

was involved with this project was overseas. We will continue to 

reach out with them if we have any follow-up questions. They have 

not been excluded from this meeting. They simply chose not to participate. 

Tell me about their subcontracting plan, and tell the folks here 

why that is significant and what part of the process that subcontracting plan plays. 

Mr. GRIFFIN. Okay. Subcontracting goes—there are two phases in 

the acquisition. The first phase, we look at their historical use of 

small business, have they had a positive pattern of hiring and 

using small business, have they maintained their commitment that 

they usually provide in their proposal. In the second half, the 

Phase 2, they come in and tell us specifically for this project what 

their subcontracting strategy will be. 

In this case, Caddell came in with a very aggressive subcontracting plan, 71.5 percent of the dollars available they wanted to 

subcontract out. They did a job fair initially when the project was 

first awarded, and they identified 45 major subcontracts that they 

planned to award. Of the 45 major subcontracts, 23 were awarded 

to South Carolina firms, of which 5 were from Sumter. So we think 

that Caddell put the effort out and really tried hard to meet its 

commitment locally to hire small business firms. 

They do have to balance cost as well. There were some subcontracts awarded out-of-state for work that could have been performed in-state because it was more cost effective to do so. 

Chairman MULVANEY. Do you have any idea of the value of the 

23 subcontracts and the 5 subcontracts specifically that were in 

Sumter? 

Mr. GRIFFIN. Yes, sir. Let me see. I can tell you that the small 

business value was $37,552,000. 

Chairman MULVANEY. That was total, not—— 

Mr. GRIFFIN. That is total small business. I do not have the distribution for the South Carolina firms. 

Chairman MULVANEY. If you could provide us with that at a later 

date, that would be great, because that is really the crux of the 

issue. You had a $100 billion contract. 

Mr. GRIFFIN. Yes, sir. 

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Chairman MULVANEY. So the question is what percentage of that 

$100 billion—and then again, there is math that even somebody 

with my degree can handle—what percentage of that came to 

South Carolina firms, and what percentage of that came specifically to Sumter firms? I think that would be helpful to have. 

Tell me about the process by which you all oversee the execution 

of the subcontracting plan. How often do you all touch base with 

a Caddell and say, look, have you let these subcontracts? Who have 

they gone to? Do you ask them how those subcontractors got the 

job? Tell me about how you all oversee that particular part of the 

business. 

Mr. GRIFFIN. And I may have to defer the details to the two to 

my right, who are smarter than I am on subcontracting matters. 

But the contractor is required to report into a database its subcontracting activity. The contracting officer and the small business 

specialist are responsible for overseeing that data and seeing how 

that data aligns with what was promised initially in the proposal. 

And if the contractor is meeting his goals, then things are going 

well. If not, then the government has a responsibility to inquire as 

to why. There may be a logical reason why the goal was not obtainable. It may be that the asset was not available, that the subcontractor was not available at the small business level. But it is incumbent upon the government to enforce the promises made by the 

contractor in the proposal. 

Chairman MULVANEY. Are any records kept on subcontracts that 

are not awarded? For example, is the information available—we 

know that five Sumter businesses got subcontracts under the 

Caddell contract. Is there a way to know how many Sumter businesses bid on subcontracts? 

Mr. GRIFFIN. Okay, I will have to take that for the record or pass 

it to one of the small business specialists. 

Chairman MULVANEY. Are those records kept? If I run a small 

business here, I run a landscaping company and I want to bid on 

the clean-up for this contract during the construction, and I don’t 

get it, and there could be completely legitimate reasons not to get 

it, is a record kept of my bid and my application for that particular 

job? 

Ms. ROBINSON-BURNETTE. Sir, we don’t keep records of subcontractors’ proposals to the prime. The relationship between the 

government is between the government and the prime, and we 

don’t have privity of contract to be able to see it. 

Chairman MULVANEY. Great point. Is the prime obligated to keep 

those records? 

Mr. GRIFFIN. One area I do understand. If the contractor also 

does cost reimbursement work and the contractor seeks what is 

deemed an approved purchasing system which is regulated by the 

government, then they need to maintain those records because the 

government has to go periodically and inspect their purchasing 

process and determine if, in fact, they are competing the work the 

way the government would otherwise compete the work. So the 

larger firms tend to have that, predominantly the ones that do cost 

reimbursement work. Fixed price contractors that are not seeking 

to have an approved purchasing system usually do not have the inmstockstill on DSK4VPTVN1PROD with HEARINGS

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centive to keep those records and probably do not keep those 

records. 

Chairman MULVANEY. Got you. But it is possible to know the dollar amounts we talked about before? 

Mr. GRIFFIN. Yes, sir. I have got the data aggregated to the 23 

firms, so I would have the sub data, and I will provide it within 

a couple of days. 

Chairman MULVANEY. Okay. There are no geographic preferences, are there, in any of these contracts? There is a small business preference, and within that there could be various disadvantaged groups. There could be Alaskan Indian-owned groups. There 

could be women-owned or disabled veteran-owned. But there are no 

geographic preferences at all in these contracts? 

Mr. CAPORAL. There is one exception to that, and that is in the 

8(a) program. In the 8(a) program, they need to draw from that district. 

Chairman MULVANEY. That’s the business pub or the—— 

Mr. CAPORAL. The SBA district. That is the 8(a) Business Development Program. These are firms that for nine years are in a special status and can get sole-sourced contracts up to $4.5 million, $4 

million for services and $6 million for manufacturing. 

Chairman MULVANEY. Are those the no-bid contracts? 

Mr. CAPORAL. They can be awarded sole-source up to those dollar 

amounts. 

Chairman MULVANEY. I lose track. There is more than one program to administer. I recognize that. 

Mr. CAPORAL. Yes. 

Chairman MULVANEY. And that is the one I think that the Indian-owned companies are exempt from, right? They can go up to 

a higher dollar amount? 

Mr. CAPORAL. Yes. 

Chairman MULVANEY. And they can go for longer than nine 

years? 

Ms. ROBINSON-BURNETTE. Yes, sir. 

Chairman MULVANEY. Okay. Do you all keep records of 8(a) as 

a subdivision, 8(a) companies as a subdivision of an overall contract? I imagine you would, wouldn’t you? If there were 8(a) folks 

working at 3rd Army at Shaw, there would be a record of it, right? 

Ms. ROBINSON-BURNETTE. Yes, sir. 

Chairman MULVANEY. Okay. And if they had applied and were 

denied, there would be a record of that as well, wouldn’t there? 

Ms. ROBINSON-BURNETTE. Yes, sir. 

Chairman MULVANEY. Okay. Thank you. 

Ms. ROBINSON-BURNETTE. Sir, I would like to add, in terms of 

geographical programs, there is the Historically Underutilized 

Business Zone Program, and Hubzone firms, we can set aside an 

action for a Hubzone area, and the firm has to be in that Hubzone 

and has to employ a specific number of folks from the historically 

underutilized business zone. 

Chairman MULVANEY. That did not apply to 3rd Army, did it? 

Okay. And Sumter is not a Hubzone generally when it comes to 

government contracts. 

Mr. GRIFFIN. I think in the case of this project, it was just the 

size. It was too large when you did the market survey. If the marmstockstill on DSK4VPTVN1PROD with HEARINGS

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ket survey would have shown that there were two Hubzone contractors capable of performing the work, then we would have considered a set-aside for a Hubzone. 

Chairman MULVANEY. Got you. 

Mr. GRIFFIN. This one just was so large, it probably wasn’t feasible. 

Chairman MULVANEY. Folks, I think that is all I have got. Hold 

on just a second. 

[Pause.] 

Chairman MULVANEY. Thanks very much. That is it. Thank you. 

Just one very quick follow-up. 

Mr. Caporal, Ms. Robinson-Burnette was very helpful and gave 

an idea of some of the jobs that were coming down the pipeline in 

the area. Are you familiar with some of those that the Air Force 

is having or might have in the near future as well? 

Mr. CAPORAL. We have got a list of those that is available that 

can be passed out. 

Chairman MULVANEY. Great, that would be great. I found that 

one of the biggest challenges that we face in the Small Business 

Administration, although I have been misquoted on this, Mr. Griffin, is simply making the information available to the small business community of the opportunities that are out there. 

Folks, I can’t thank you enough for taking the time to do this. 

I know that everybody is extraordinarily busy, and especially in 

you all’s position, as high up as you are, this is a major sacrifice 

for you. I appreciate that. 

I would appreciate getting the information. We will follow up 

with your office separately on that. That would be extraordinarily 

helpful to answer the questions here. One of the questions is how 

much money stayed in Sumter, and I think the folks here have a 

right to know that, and clearly that information exists. It is not a 

secret, and we will get that out and get that to everybody. 

So I can’t thank you enough, but I appreciate your time. 

The next panel? If the next three folks could come up, please, 

that would be great. 

Mr. Griffin, if you wouldn’t mind sticking around? I don’t know 

what your schedule is like, but some issues may come up in the 

next panel. If you could stick around for another half-hour, that 

would be great. Is that possible? Thank you. 

We are going to go ahead and bring up the second panel. I will 

introduce them very briefly, and then we will go through the same 

process. 

Mr. Lynam is first. Mr. Lynam is the owner of Lynam Construction. It is Bill Lynam; I apologize. He started the company here in 

Sumter in 1990. They specialize in the building of commercial, industrial, school and church projects. The company has been a certified Varco-Pruden Metals building contractor for 23 years, and 

that enables them to design and engineer metal buildings from 

small commercial to large industrial projects. 

Mr. Lynam has managed Sumter, South Carolina jobs such as 

the St. James Lutheran Church, the Jehovah Missionary Baptist 

Church, the Child Day Care Center, Kaydon Corporation, Jemison 

Demsey, and the Hodge Warehouse. In addition to the Sumter jobs, 

he has also managed the South Carolina Employment Security 

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Commission building in Columbia and a 20-story high-rise in Fort 

Lauderdale, Florida. 

He is a graduate of Clemson. That is okay. 

[Laughter.] 

Chairman MULVANEY. Where is my deputy chief? Yes, my deputy 

chief is from Clemson. 

He runs the company along with his son, Zeke. 

Welcome, Mr. Lynam. Thank you for being here today. 

The next witness is Billy Aycock, president of Aycock Construction, also here in Sumter, 20 years of experience as a general contractor and custom home builder in Sumter. They have been involved in many premiere construction opportunities in and around 

North and South Carolina, including projects such as the construction of the West Acton High School, Lexington Medical Office 

Building, the Fort Bragg barracks and parachute facility, Toomey 

Hospital parking garage, and the renovation of the governor’s mansion. 

Among Mr. Aycock’s long list of credentials, he is proud to be a 

member of the local and state homebuilders association and was 

also Creative Homes winner in 2003, sponsored by the HPA. As a 

former builder and member, I congratulate you on that. 

He is also honored to be judge in the 2010 Columbia Tour of 

Homes, and in 2010 he was elected by the Sumter and Clarendon 

HPA as their president, and was reelected this year. He is also a 

member of the State HPA Board of Directors for 2010 and 2011. 

Mr. Aycock, it is a pleasure to have you. 

Mr. AYCOCK. Thank you. 

Chairman MULVANEY. Finishing up the second panel, Scott Bellows. Scott is the South Carolina program manager for the procurement and technical assistance center, or what we call PTAC. You 

can’t have a government meeting and not use at least one acronym. 

He is embedded with the South Carolina Small Business Development Center, SBDC, and focuses on assisting businesses that are 

interested in selling their goods and services to the government. 

Mr. Bellows gained much of his contracting experience during his 

12 years with the U.S. Agency for International Development, 

USAID. He has also worked in the private sector with an emphasis 

on the integration of technology into schools and small businesses. 

Prior to joining USAID, he worked with a New York-based engineering firm where he worked primarily overseas in Egypt. 

He holds a Master’s degree in International Affairs from Columbia University in New York and an MBA from a school that some 

people call USC, but it is in a different state, someplace on the 

West Coast. 

[Laughter.] 

Chairman MULVANEY. So, Mr. Bellows, glad to have you here, 

sir. 

Mr. BELLOWS. Thank you. 

Chairman MULVANEY. Mr. Lynam, fire away. 

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STATEMENTS OF BILL LYNAM, OWNER, LYNAM CONSTRUCTION, SUMTER, SOUTH CAROLINA; WILLIAM ‘‘BILLY’’ 

AYCOCK, PRESIDENT, AYCOCK CONSTRUCTION LLC, SUMTER, SOUTH CAROLINA; SCOTT H. BELLOWS, PROGRAM MANAGER, SOUTH CAROLINA PTAC, THE MOORE SCHOOL OF 

BUSINESS, SMALL BUSINESS DEVELOPMENT CENTER, COLUMBIA, SOUTH CAROLINA 

STATEMENT OF BILL LYNAM 

Mr. LYNAM. Okay. Congressman Mulvaney, I certainly appreciate 

this opportunity. I was asked to come and testify, and I was given 

the term and the one that you brought up, it was ‘‘barriers’’ to 

working at Shaw Air Force Base. I want to include a little bit on 

Fort Jackson, too, because we worked there, and it is basically exactly the same. 

When you all talked earlier about 3rd Army, I was involved in 

the subcontractor selection process, and just to give a comment on 

how that could be of more benefit to Sumter small businesses, and 

I am strictly small business. In fact, we are smaller now than we 

have been in a long time. 

Chairman MULVANEY. Smaller than you want to be, I would 

imagine. 

Mr. LYNAM. Yeah, a whole lot smaller. I started working at Shaw 

Air Force Base in 1977 and have been off and on at Shaw ever 

since. Of course, back then you sat around a table and you cut the 

bids open, and the low man got the job. It is totally different now. 

The barriers to the 3rd Army for the local small business is my 

perspective, and when I met with Caddell’s representatives, was 

the packages were too large. When I went to—we separated at that 

meeting, and the person that we talked with was the structural 

end of it, which we were looking at the pre-engineered metal buildings and concrete. The pre-engineered metal buildings had already 

been purchased. The concrete they told us you would have to do the 

entire project. We couldn’t take one of the structures and do the 

concrete, which probably on a $100 million project, probably is $10 

million worth of concrete, way out of our league, couldn’t deal with 

it. So we were pretty much ruled out of 3rd Army by the packages 

that they presented. 

Small business at Shaw, you brought up something at the last 

panel right at the end, which is 8(a). 8(a) is now at Shaw as construction in small business. I don’t know about other trades, but 

construction is pretty close to 100 percent. We can’t find anything 

that is not 8(a) out there. I don’t qualify for 8(a). I am a veteran 

of the 60s and the Army. 

Chairman MULVANEY. But you are not disabled. 

Mr. LYNAM. No, it is not the same, and I have taken 27 months 

now to get that certified and still don’t have it. That is a barrier, 

I think, but there is no veteran contracting work at Shaw that we 

know of, can’t find any. 

We worked for five contractors at Shaw. We don’t work for all 

five, but there are five. They are called MACC contractors that are 

pre-selected, all 8(a) contractors. So anyone else is fairly excluded. 

We would like to see that opened up a little bit. We would like to 

see it opened up to veteran contractors. 

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Another—of those five MACC contractors, two are foreign Americans. 

Chairman MULVANEY. And ‘‘MAC’’ is M-A-C, sir? 

Mr. LYNAM. M-A-C-C. 

Chairman MULVANEY. Okay. 

Mr. LYNAM. Multi-contract—— 

Chairman MULVANEY. What is it? 

Mr. BELLOWS. Multiple Award Contracts, Construction Contracts. 

Chairman MULVANEY. Okay. 

Mr. LYNAM. The requirements for 8(a), when everybody talks 

8(a), so many people don’t realize that to qualify for 8(a) is pretty 

broad. I have worked for Koreans, I have worked for Chinese, I 

have worked for Hispanics, and to take—and they are American 

citizens. But to take those contractors and put them above our veterans to me is an injustice. 

I was at a meeting similar to this one a few months ago that Mr. 

Clyburn put on down at Santee, and there were two individuals 

there from the SBA. One of them was a Mr. McLorhorn from—I believe he was from Kentucky. And one of his comments was that the 

veterans are the only people who have put their lives on the line 

for this country. Why not move them up to the front and give them 

opportunity to bid these jobs? It is not happening. 

There is a new bill, but it is pretty much restricted to VA-funded 

projects. 

The barriers that exist right now, and I confirmed this this past 

Wednesday, working for the 8(a) contractors and in talking to local 

contractors—now, I am strictly talking the Sumter area, contractors that I know who there are a few in this room tonight, today— 

is payment, payment from the general contractor to the subcontractor. The government pays. That is not a problem. But enforcing 

that payment from the contractor to the subcontractor is a problem. 

Right now, today, November the 8th, I am still waiting on September money, and they say they haven’t gotten their money. The 

contracting officer says they have. The same thing with other 

things like retainage. These are the barriers that contractors in 

Sumter say I am not going out there. 

We need to fix those things, and it would be simple enough to 

do. But that is the biggest one that I hear locally is I am not going 

to Shaw because you can’t get paid. Well, you can. It just takes a 

little time. 

[The statement of Mr. Lynam follows on page 62.] 

Chairman MULVANEY. Mr. Lynam, I don’t mean to cut you off, 

but this is a big topic in Washington right now because part of the 

President’s jobs bill—and despite what folks read in the newspaper, 

there is actually many pieces of the President’s proposed jobs bill 

that members of my party agree with. There is a long list of them, 

actually, and one of them or several of them deal with small businesses, and one is the one you just mentioned, which is that the 

President proposed and has actually issued some executive orders, 

I believe, to start paying subcontractors on 15 days instead of 30 

days. Excuse me, contractors on 15 days instead of 30 days. 

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Are you telling me that that hasn’t been filtered down, that the 

government is paying the contractors faster, or at least is starting 

to do that, but the contractors are not paying the subcontractors 

any faster? 

Mr. LYNAM. That is correct. If you look at the actual regulations—now, I just signed a contract with another one out there, 

and he did not put payment terms in his contract. He put a FAR 

number. I looked that FAR number up on the Internet, and it will 

kind of shock you what it says. The contractor got paid in about 

14 days, which is great, from the government. They are supposed 

to pay the subs in 7, and they signed on—— 

Chairman MULVANEY. It is 7 after they get their money. 

Mr. LYNAM. After they get their money, and it is 7 calendar days, 

not working days. They are not doing it. 

Chairman MULVANEY. All right. What I may do before we are 

finished here is call some of the first panelists up to address some 

of those issues, because it is one of the things that concerned us 

in Washington, was that we all agree with paying subcontractors— 

excuse me, and I do that too often. We all agree with the concept 

of paying contractors more quickly. We understood what the flow 

of money through the system would do, but we are concerned about 

the fact that might not be passed from the contractors down to the 

subs, and it sounds like that is happening. 

Mr. LYNAM. That is right. 

Chairman MULVANEY. I didn’t mean to cut you off, so please continue, sir. 

Mr. LYNAM. As barriers go, and I am trying to use that word 

‘‘barrier,’’ that is one of the largest ones that my friends, people I 

know that are contractors in Sumter say I can’t deal with that. I 

don’t have the money. We don’t. 

Chairman MULVANEY. Tell me about the process to become qualified for the 8(a), because you say you are trying to. 

By the way, 8(a), for those of you—please stop me if I am wrong 

on this, because I do lose track of the programs. I believe that is 

the one that, if you are 8(a) certified, you have the right to bid 

for—excuse me, to do no-bid contracts. There are certain set-asides 

in certain contracts up to a certain amount of money. Is it $4.5 million? That was it? So it is very advantageous to be certified as 8(a). 

Tell me about the process you have gone through to try to get your 

company certified for that. 

Mr. LYNAM. Well, I can’t become 8(a). You have to be African 

American, Native American, Alaskan American, and then there is 

a list on the Internet of all the other countries. 

Chairman MULVANEY. But there is a veteran—I am looking now 

to the SBA people. Is there not a veteran 8(a) set-aside? I thought 

it was a service disabled—— 

Mr. AYCOCK. No, sir. It primarily is for those in the past who 

have been disadvantaged. That list, minority or anything, it says 

those that are economically disadvantaged in the past, and it kind 

of goes to what Mr. Lynam has said. Those are the individuals— 

we do have, like, a white female in Charleston that got 8(a) certified, but I think that is the only person in the State of South 

Carolina—— 

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24 

Chairman MULVANEY. And my staffers are correctly pointing out 

that I am confusing the 8(a) program with the Service Disabled 

Veterans program. 

Mr. AYCOCK. Two separate things. 

Chairman MULVANEY. They are. So what you are saying is that 

if 100 percent of the contracts in that particular area are 8(a) at 

Sumter, that you will never get a chance to bid on those. 

Mr. LYNAM. That is correct. 

Chairman MULVANEY. Because those are no-bid contracts. 

Mr. LYNAM. Well, I think those five did. We bid, too. We bid the 

products that we sell, the metal buildings, the concrete, the sheetrock, or whatever. We bid it to those five. Usually at Shaw, when 

they come up with a project they are going to do, it will go out to 

an invitation to those five contractors to submit usually designbuild type packages. 

Chairman MULVANEY. Got you. Okay. Mr. Lynam, you talk about 

the package as being too large, and I take it from your testimony 

that deals with the size of the job itself, not the physical size of 

the package in terms of the number of pages, it is just too complicated, people don’t want to do it. 

Mr. LYNAM. Right. 

Chairman MULVANEY. But it is the size of the job. 

Mr. LYNAM. Right. 

Chairman MULVANEY. Did you get the impression that the contractor had bundled any of those? And by ‘‘bundling’’ I mean maybe 

there was supposed to be a job for the concrete over here and a job 

for the concrete over there and then the concrete in a third location, and he just decided on his own to bundle those together, to 

take it as one contract? 

Mr. LYNAM. I couldn’t tell you what his motivation was to do it. 

When we approached him about it, we asked him—we knew very 

little about 3rd Army building. That was the first time we had seen 

it, was in that meeting. They said—I asked him could we bid the 

concrete on one of the buildings. He said no, you have to take the 

entire project. 

Chairman MULVANEY. And did they say why? 

Mr. LYNAM. Didn’t say why. 

Chairman MULVANEY. Okay. You said you were involved in the 

subcontractor selection process. That is what you have been describing. 

Mr. LYNAM. Yes. 

Chairman MULVANEY. You weren’t involved with Caddell in picking subcontractors. 

Mr. LYNAM. No. 

Chairman MULVANEY. You were trying to be a subcontractor. 

Mr. LYNAM. We were just trying to be one, right. 

Chairman MULVANEY. All right. I am going to come back to a 

couple of the other things when we are finished. 

I am sorry, Mr. Lynam. I cut you off. Are you—— 

Mr. LYNAM. No, I am finished. 

Chairman MULVANEY. Mr. Aycock. 

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25 

STATEMENT OF WILLIAM AYCOCK 

Mr. AYCOCK. Yes, sir. I presented or prepared a brief statement 

which you asked. Some questions in here have already been answered by the first panel, but I am going to go ahead and present 

it as I have it prepared today. 

First of all, thank you for having me today. On behalf of the 

Sumter-Clarendon Home Builders Association, I am grateful for the 

opportunity to speak with you. I would also like to thank the local 

businesses and the Sumter Board of Realtors that have supported 

the growth of this community and the never-ending support of 

Shaw Air Force Base. Together with these organizations we have 

raised a great deal of money and local support of Shaw Air Force 

Base and its growth through the addition of the 3rd Army Campaign. 

As this town will benefit greatly from the addition of new friends 

and neighbors with a growing economy here, our local builders and 

subcontractors are suffering from a dramatic decrease in new construction sales. As our local HBA members have declined by over 

30 percent over the past 3 years, many of us are asking the question: With the number of new homes on the market now in our 

community, why is the government building hundreds of new 

homes to further depress this market? That isn’t the question that 

we are here today. That is just a statement. 

The next question: If the homes are going to be built nevertheless, why aren’t we, the ones here supporting this base and community, the ones building these homes? 

This brings us to the concerns of this hearing today. Why aren’t 

small businesses receiving, at a minimum, the percentage of business as described by this government? Let me say that it is not because of the lack of local labor force but the lack of the opportunity. 

At a local meeting held by Hensel Phelps—and Hensel Phelps 

was awarded this job, I believe, by Caddell. I believe that it is the 

chain that—Forest City? Okay. It was awarded these homes. They 

had a general meeting here, a local meeting here looking for subcontractors. I saw over a hundred small business owners from this 

community excited about going back to work. I also had a few other 

contractors locally that spoke to me at the meeting and after the 

meeting that said, made the statement, we will never have a 

chance at this project. I later found this to be true. 

Hensel Phelps placed such stringent guidelines and unrealistic 

expectations that it became obvious that this meeting, in my opinion, was just a tool for the company to say we offered opportunity. 

There were only three companies at this meeting that I am aware 

of that may have the financial resources to possibly meet their requirements. I would say at least this would definitely deter our 

local small businesses from ever receiving an opportunity to work 

on this project. I personally registered at this meeting with my 

name and address, expecting to receive a bid package that had several different types of things they wanted, different people to bid 

on as far as subcontractors and specific type jobs. I never received 

this bid package. 

I followed up with phone calls; was informed that Hensel Phelps 

wanted companies that would commit to numerous bases, I guess 

back to the bundling that you were speaking of earlier. Knowing 

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26 

full well that my small business couldn’t take on this amount of 

work, I had to face the realization that my idea of small business 

and theirs is two completely different things. 

Two weeks ago I followed up again by phone and I was given a 

company based in—given a name of a company based in West Virginia to see if I could gain employment from them to work on a 

base just minutes from my home. We here have locally supported 

the base through the BRAC list just a few years ago. I personally 

met hundreds of families from Fort McPherson who have come to 

tour this town to try to gain them as neighbors and friends, and 

I find it unfortunate that I have got to call a company a few states 

over to see if I can gain employment of a base right down the road. 

This leaves me with the question: If the government sets aside 

a percentage of business for small owners, who determines the 

amount of the cap of the business? Who says it has got to be worth 

$33.5 million? And that seems like a high number to me. That is 

cutting out, weeding out a lot of small businesses that can’t exceed 

or can’t reach the amount of work by bundling or whatever type 

strategies they are using to basically just overlook us. These seem 

to be obvious loopholes for these large companies like Hensel 

Phelps to exclude the small businesses, at least in this community. 

[The statement of Mr. Aycock follows on page 63.] 

Chairman MULVANEY. I think the $33 million deals with the definition of a small business, and there is really no rhyme nor reason 

to that. The definition of a small business varies dramatically depending on the industry segment that the small business is in. So 

I don’t think it is accurate to say that they didn’t have to deal with 

anybody if they weren’t at $33 million. I think the original testimony was that once you are over $33 million, you are no longer a 

small business. But you make some other excellent points. 

The housing is really what got my attention on this, and the 

building products, when we first got into this, because it is one of 

the industries I understand. And I toured the base, and they were 

rebuilding the apartments on the base and tearing down some of 

the old housing and building some of the new housing, and I can’t 

remember what the numbers were, but the dollars per unit on the 

apartments were way above what I could have built them for, because I used to build those things. 

And I recognize we get caught in this mental game where we 

say, well, okay, if we are going to go and build some houses on an 

Army base or an Air Force base or a Naval base, it has got to be 

cheaper to find somebody to do all of it because there is going to 

be economies of scale. And if they can do a job in South Carolina 

and Florida and Arizona, then we are going to be able to beat them 

down on price. 

And housing has never been like that. Housing has always been 

one of those things that is actually much more effective or can be 

as effective on a small scale as it is on a large scale. There are certain very limited exceptions, such as when you buy your appliances 

and so forth. 

But there was a reason that you go back before the last crash 

and the top 10 largest home builders in the nation only controlled 

50 percent of the business. Home building has always been a small 

business. It is an entrepreneurial business. It is very efficient and 

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27 

cost effective at a very small level, and I think it is one of the 

places where the Federal Government has sort of lost track of that 

particular item. 

I am disappointed to hear that Hensel Phelps, that part of the 

process that gave them this contract was that they could build on 

several different—and we will come back, Mr. Griffin, and have you 

come up before we are over—disappointed that we thought we 

would get a better deal as taxpayers by giving it to a company that 

is far away in dealing with a huge project, as opposed to doing exactly what you just described, which is home builders in Sumter 

can build houses in Sumter probably cheaper than anybody else. 

I also share your concerns regarding the impact on the overall 

market here. There were a lot of houses that were built in anticipation of 3rd Army moving in without realization that all this housing would be rehabbed on the base. So now we end up with an 

over-supply of housing in Sumter without significant immediate 

prospects for filling it with other industries. There is some good 

news recently. 

But really what we are talking about here when it comes to 

housing on bases is the ultimate in in-sourcing. There is no reason 

for the government to be building housing. There is a huge private 

sector out there that can provide this in a cost-effective manner, 

and effectively what we have done is taken it away from small 

business. So I am extraordinarily sympathetic. 

I want to go back to a couple of questions. Tell me about the 

meetings. Tell me about the Hensel Phelps meetings. And am I 

pronouncing that correctly? Tell me about those meetings. Tell me 

about how they advertised it, how they ran the meetings. I want 

to know. And I take it Hensel Phelps is a large subcontract of— 

it is a separate contract, then, to do the housing? 

Mr. GRIFFIN. Not to—— 

Chairman MULVANEY. Understood. 

Mr. GRIFFIN. Unfortunately, the housing component of the Department of Defense moves to what is called public/private venture 

housing under a new statute, and it is no longer appropriated 

money. Basically, they have assigned 50-year leases on the housing, and large management companies have taken the inventory 

and then bond financed to raise the capital that would be offset by 

the rental income. And those companies like Forest City won those 

deals, and they are not governed by the same rules and regulations—— 

Chairman MULVANEY. Fair enough. That is the way most college 

dorms are built as well these days. I understand that. Thank you 

for that insight. 

Tell me about the meetings with Hensel Phelps. Tell me how 

that went through the process. 

Mr. AYCOCK. They contacted our local homebuilder’s office looking basically to hire our subcontractors, wanted some of our subcontractors to come, bid. I went to a local meeting we had at a 

building there at Swan Lake, which is a local area here. They had 

a form there, wanted everybody to sign it and fill it out, and they 

talked about how great the jobs were going to be and how good this 

company is to work for, and they may be. 

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Everybody who registered, I was under the impression that we 

would all receive a bid package to bid on certain things that they 

were requiring or they were needing. I know of a couple of other 

people who got these packages who actually bid on them who never 

were contacted back. One of them who was contacted back said 

that they want him to commit to two other bases, three in total, 

and he just wasn’t aware, wasn’t able to do that, which if this 

doesn’t fall under the guidelines, it is tough for a small business 

to commit to that type of work. So basically that is the only meeting that I went to that they had and that I am aware of. 

Chairman MULVANEY. Did any local builders get hired by Hensel 

Phelps? 

Mr. AYCOCK. Not to my knowledge. 

Chairman MULVANEY. Any local subs? 

Mr. AYCOCK. Not to my knowledge. No, sir. 

Chairman MULVANEY. All right. We will come back. 

Mr. Bellows, why don’t you do your testimony? We will come 

back to the questions. 

STATEMENT OF SCOTT BELLOWS 

Mr. BELLOWS. All right. Thank you for this opportunity to 

present my views on matters relating to barriers for small business 

contractors at the Department of Defense. In my role as the South 

Carolina Procurement Technical Assistance Program Manager, a 

Department of Defense initiative aimed at maintaining America’s 

industrial infrastructure and enhancing competition in the procurement arena, I work with a broad assortment of private sector firms, 

collaborate closely with the Small Business Development Center 

network colleagues, and interface often with various agency small 

business specialists. Although our operations have helped our 

South Carolina clients to secure over $1 billion in contract awards 

so far this year, this work masks a number of fundamental problems that affect our client base, especially the smaller of the small 

businesses. 

I believe that there is a general consensus that America’s small 

business community is what is going to revitalize our economy. I 

think that there’s also a quiet concern that with the pending government belt tightening, the downward shift in public sector work 

will align with a depressed private sector economy to further complicate an already depressed economy. The return of a large number of our troops in the coming months may only accentuate the 

problem. In this context, I offer the following four observations. 

First, there are a number of forces at play in our economy that 

are, for the time being, distorting what should be a highly competitive market. Changes in banking regulations are stifling loans, 

changes in the insurance industry are reducing the ability of firms 

to reduce risk, and changes in labor laws are causing firms not to 

add new employees. 

The consequence of all this appears to be that the larger firms 

are moving into a self-financing mode and in-sourcing work where 

possible, medium-sized firms are contracting out labor but are hesitant to actually bring on W–2 employees, and small businesses are 

just working to survive. Most of our work revolves around helping 

the small business community. 

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Second, the small business community is undercapitalized. While 

the larger, less risky firms are finding ways to deal with the economy, smaller businesses are finding this much more difficult or impossible. Termination of the SBA’s Community Express Loan pilot 

program ended one of the few meaningful options available to 

many of these small businesses. Similarly, changes to the Export 

Express Loan Program that was made permanent under the Jobs 

Act tightened the language in a way that the funding could only 

be used for export-related activities. For many small businesses 

whose domestic and export functions are not as clear cut, this 

change ruled out yet another option for many of the smaller, 

would-be exporters. 

Third and compounding these problems, our well-intentioned 

small business programs have evolved in a way that skews their 

original intent. First, the plethora of small business programs— 

8(a), Hubzone, SDVOSB, WOSB—has disenfranchised many of 

those who are not eligible to the extent that they no longer back 

the very programs they once were glad to support. Even those setaside programs don’t really achieve what most think that they do. 

It is not that the percentages are wrong, it is just that many of the 

same contractors tend to get the work time and time again, and 

those who want to break into government contracting soon realize 

that it is a long, uphill battle. Instead of asking how many dollars 

went to small business contractors, if one asks how many unique 

vendor contracts were awarded during a certain period of time, you 

might just come away with a different impression of how these programs are promoting small business development and helping to 

revitalize our economy. Many of these small business contracts are 

actually quite large, awarded for long periods of time, and all but 

eliminate new opportunities for aspiring government vendors. I 

have included a report generated from the Federal Procurement 

Data System in support of this argument. In all fairness to the contracting officers, these individuals tend to be understaffed, have to 

consider the risk to taxpayer money, and are cognizant of the need 

to meet small business target numbers. Technically speaking, they 

are just playing by the rules set before them. The prime contractors 

likewise are helping to meet the small business targets while simultaneously minimizing their risks by using subcontractors that 

they know and trust. I would probably do the same thing if I were 

in their position. 

The fourth and final point that I would like to make is to note 

that across all government sectors there seems to be an emphasis 

on job creation. The best way to do this is to create a policy environment that facilitates private sector growth. If the government 

does this, I am confident that the private sector can manage the 

creation of jobs. 

Thank you for this opportunity. 

[The statement of Mr. Bellows follows on page 65.] 

Chairman MULVANEY. Mr. Bellows, it is interesting that you 

mention the issue regarding the differentiation between the 

amount of money that is contracted out and the number of unique 

providers. In the hearing, the corresponding hearing to this that we 

had out in California, one of the topics was how difficult it has become to deal with small business programs, not necessarily the Admstockstill on DSK4VPTVN1PROD with HEARINGS

30 

ministration. The administration actually gets very, very high 

marks for ease of dealing with. You would almost rather deal with 

the SBA than any other Federal bureaucracy. They are actually 

pretty good to work with. 

But the process has become so difficult that it is essentially a 

specialized sub-market, that SBA lending, which was the subject of 

the hearing out in California, has become a specialized sub-market 

where most banks now don’t do SBA lending, or many. That is an 

exaggeration. But it’s such a specialized business that large banks 

will hire entire teams that come in and do nothing but SBA lending, and the concept of our local neighborhood bank or credit union 

doing an SBA-backed loan doesn’t exist anymore. You have to go 

to the Wells Fargos and the Bank of Americas of the world in order 

to get it. Again, an over-generalization, but a general trend. 

Similarly, I think that if we look into it, and I was making a 

comment to Ms. Binkholder that we are going to do that when we 

go back to D.C., I think what you will see is exactly what you have 

mentioned, which is that government contracting, at least within 

the SBA program, is becoming a specialty in and of itself, that it 

is so complex to try to learn how to do it that you actually have 

to go off and do just that. You can’t be what you all are and also 

be a small business, or a big-time small business participant. It is 

either you are in or you are out. It is simply too complex of a process. Again, over-generalizations for sure, but certainly worth some 

inquiry. 

Let me ask you, out of the four that you have mentioned, I go 

back to D.C., and I should have asked this of all the panelists. I 

will ask of the other two gentlemen before you leave. What is the 

one thing I can do, what is the one issue that I can raise back in 

Washington on this committee to try to fix the problems that you 

have identified? Of those four, which is the one that you would like 

to see me spend the most amount of time on, recognizing that we 

can’t fix everything but we can fix some things? 

Mr. BELLOWS. I think if you work on the assumption that small 

business—and I am talking this kind of small business. The SBA’s 

definition of small business for many of my clients is big business. 

But if you are looking at small business and saying, yes, they are 

truly going to have an impact, they are the ones that are going to 

really address a lot of the problems in this economy, then they 

have to be included in the process. 

And what has happened is if you go to a typical base—and we 

are Shaw. My report focuses on Sumter County because I knew 

that might be of interest to you. I think you can go across the country. I don’t think it is particular to Shaw. And I think what you 

will find is you are a contracting officer, you have got people telling 

you, look, we need to meet these targets, 25 percent for this, 5 percent for this and all that, you have got taxpayer money at work. 

Heaven forbid that a contract go awry. And there is a natural inclination when you are understaffed to say, all right, we are going to 

bundle this thing because I can’t manage 10 small projects; I can 

manage one large project. And I am going to put the burden on the 

prime contractor. I am going to tell them I want to see that subcontracting plan. I want to make sure that this work gets allocated. 

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Now, you have been a contractor. Put yourself in the contractor’s 

place. You have got people you have worked with for the last 5 or 

10 years. They know what they are doing. They have built the 

same type of housing. They come in, boom, boom, boom, you get the 

job done, the government is happy. 

And people like this say what about me? That is risk. And the 

government is not going to compensate you if one of these guys 

goofs up. So you are stuck. And so they come in, they do their job. 

They won it according to the rules that were set before them. They 

didn’t do anything wrong, and the job gets done, and the targets 

are met, and almost everybody is happy. 

Where it is really hard is for these people to break into that, especially if they are not a certified program, given some special advantages. It is really tough. That is all I can say. 

Chairman MULVANEY. How long does it take to become certified 

generally? Do you know? 

Mr. BELLOWS. Which program? 

Chairman MULVANEY. 8(a). 

Mr. BELLOWS. I work with a lot of firms becoming 8(a) certified. 

I probably on an individual basis put in, I am guessing, 10 hours 

at least of my time with each applicant. There are firms—almost 

anybody that applies for 8(a) and, frankly, a service disabled vet 

will tell you they get contacted frequently by firms that charge anywhere from $3,000 to $8,000 to help them get certified and told 

that if you don’t do this, you are simply not going to get work. 

Chairman MULVANEY. From start to finish, how long does the 

process typically take in terms of weeks or months? Do you have 

a feel for that? 

Mr. BELLOWS. The 8(a) program has got—it used to be an 8- 

month processing by the SBA. I understand it is down to 3 or 4 

months, and about the same for Hubzone, and I believe the same 

for service disabled vet, although yours may have taken longer. 

Chairman MULVANEY. Your experience—and again, at this level 

I have only anecdotal evidence so far. We are continuing to try to 

pull some data. But if you are 8(a) certified, on average what percentage of your business is thereafter 8(a) work? 

Mr. BELLOWS. As much as you can make it. I mean, that is my 

impression, because there is—one of the previous speakers mentioned there is a 9-year window, and that is your opportunity to 

grow your firm, to do whatever you are going to do. In a sense, if 

you digress too much from the government focus, the time is going 

to tick by you. So you want to—the objective—if I were an 8(a) 

firm, I would want to grow my firm as quickly as I could, as big 

as I could, and then toward the end of the 9-year period start to 

shift my focus into other areas. 

Chairman MULVANEY. And that is what we have seen, is that the 

program—again, I wasn’t around when the program was created, 

but my expectations of the program would be that gentlemen like 

this could use it, which is that they would run their own business, 

and then if a government contracting opportunity came up, they 

might go over and do the 8(a) program as well. But that doesn’t 

seem to be—again, I don’t want to over-generalize, but the anecdotal evidence is that once you get that certification, you go off and 

do as much of that as you possibly can to establish your business, 

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and then at the end of the 9 years you go off and you go back and 

do what these gentlemen do, which is go back and be essentially 

private sector. 

Mr. BELLOWS. It is kind of a Catch–22, because even if you look 

at the 8(a) firms, which are for socially and economically disadvantaged firms, and there are ethnic groups that are implied to be socially and economically disadvantaged, they get a preference. They 

don’t have to do the social disadvantaged narrative in the application process. 

Chairman MULVANEY. Right, and the best thing to be is a Native 

American—excuse me—Native Alaskan Eskimo, I think. How that 

happened—oh, I asked that question how that happened, by the 

way. They said it was the same guy that did the Bridge To Nowhere got that passed. 

Mr. BELLOWS. Yeah, I know. If you look at the attachments, you 

will see that a number of the contracts are exactly that. 

Chairman MULVANEY. I have seen that, yes. It is amazing what 

that can do. Thank you, Mr. Bellows. 

Gentlemen, I am going to come back to your experience at Shaw 

a little bit. One of the things that we have heard regularly when 

small business people come to Washington to testify—and again, 

we have had similar hearings to this in Washington with folks all 

over the country on dealing with the government. That is what this 

committee does. One of their frustrations is they don’t ever hear 

why they didn’t get the job. Have you ever had the opportunity to 

sit down with anybody after you had bid a job? You didn’t get a 

chance to bid it, Mr. Aycock, so that doesn’t really apply to you. 

But clearly, Mr. Lynam, did you have a chance—were you satisfied—did you know why you didn’t get the work? It sounds like you 

may have in the circumstance, with the job being too large. But is 

that typical, or do you always get to get some feedback? 

Mr. LYNAM. We typically don’t have the opportunity to bid 

straight to the government, so we are bidding to contractors. 

Chairman MULVANEY. Correct. 

Mr. LYNAM. Which they will tell you that you weren’t cheap, you 

weren’t the best price. No, we don’t have a problem with that. They 

will generally tell you why you didn’t get it. 

Chairman MULVANEY. Okay. Did you ever not get a job because 

of your qualifications? 

Mr. LYNAM. Yes. 

Chairman MULVANEY. Tell me about that. 

Mr. LYNAM. Working on one right now that we are not going to 

get. 

Chairman MULVANEY. I have been there. We all know we put 

bids in that we are not going to get. 

Mr. LYNAM. We get calls occasionally. I am working on my third 

one right now, and I can’t just turn it away, at Shawl, by a user 

of a building, not contracting. They need a price. I had to call this 

morning, wanting to hurry up and get my price in. We know that 

the units, the users are not going to award these contracts. They 

go through contracting. And I have had, on the last two that we 

gave them a price—what we have to do—apparently—I say apparently because I am not sure what they are doing—they will take 

two or three contractors, a sergeant or somebody from a unit, and 

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get a price on what they are doing. Then they submit it to contracting. Well, then contracting, the last time it happened I got a 

call said are you 8(a)? I said no. They say we are sorry. I did all 

the design work and the whole works. 

Chairman MULVANEY. They are using that to compare the 8(a) 

bid, aren’t they? 

Mr. LYNAM. That is correct. We have got to get one out there 

today or tomorrow that I would almost bet the contracting people 

here in this room don’t know about, but they will as soon as they 

get their prices in and they give them the data on it, and we will 

have 20 or 30 hours worth of time in it. 

Chairman MULVANEY. I’ll generally ask you this and maybe start 

to wrap up. We have taken some good testimony today on some of 

the general issues facing small business. Thank you, Mr. Bellows, 

for your input. It is extraordinarily helpful. And thanks again to 

the first panel. 

When we drill right down to home here, okay, I have not seen— 

I have friends of members of Congress all over the country, and I 

have yet to talk to any of them who have major military installations in their area who have better relations than Sumter has with 

Shaw. In fact, the exact opposite is usually the case, that the community in which the military base is located is at loggerheads so 

often with the communities that they are in, and this is the exact 

opposite. We have a tremendous relationship here between the civilian community and the military community. 

But that being said, what can we do to make it better? What can 

we do, Mr. Aycock, to fix the situation? What can we do to make 

sure, short of waving a magic wand and changing the SBA, which 

I don’t have the ability to do. But what are the things that we can 

do locally? What are the things that you could do, that I could do, 

that the folks in this room could do to make it so that you all could 

get more business from this base? You live it every single day. You 

all know more about it than I do, all the time. 

Mr. AYCOCK. Locally, I am not sure. I think that housing should 

be subject to this 23 percent rule. I think that it should, you know, 

and using small or local businesses with that. When it is not, I 

think there definitely should be a penalty in place to make sure 

this is policed and followed up on. As far as locally, I am not sure. 

I don’t think—they don’t really abide by local guidelines, government issued contracts and things like that. So I don’t know if locally there is anything I can do about it, or we. 

Chairman MULVANEY. Mr. Lynam. 

Mr. LYNAM. I would like to see the market opened up a little bit, 

not so tightly restricted to five contractors, again small business, 

and I am talking small business, not the government’s definition. 

We probably don’t have a contractor in Sumter that approaches 

that level, maybe one. And allow us to—or support us with these 

contractors, one or the other. Now, I have no problem with Shaw. 

You mentioned the relationship. I worked at Shaw since ’77 and 

have had a great relationship with them. It is those people we are 

working for that I am having the problem with. 

Chairman MULVANEY. Right. 

Mr. LYNAM. And not getting a whole lot of support to help me. 

That is the problem. I can’t wait for money as long as we wait for 

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money, knowing that they have been paid, and then the contracting 

officer tell me right fast they have been paid, retainage, things like 

that. When the government is not holding retainage on the contractor and they are holding it on us, that is basically illegal, but 

they do it every day. 

We need support to help us with those things, and it would be 

a great opportunity. 

Chairman MULVANEY. You know, the reason we do these hearings, and folks ask me all the time after the meetings up in D.C., 

out in California, here, they say was it worthwhile. The reason we 

do these hearings, a couple of different reasons. Number one, we 

are always looking for anecdotes. We are looking for stories. The 

government is so large and it is so difficult to get your hands 

around it, oftentimes telling a story such as the one where you 

went to the meeting and they actually tried to hire your subcontractors instead of hire you, that allows us to explain very complex issues in a relatively simple fashion. It allows me to understand it. It sort of crystallizes the issue. 

We also try to use these meetings to stir the debate. Invariably 

the Sumter Item will publish some type of article today. The Homebuilders Association may put it in their journal, and it may end up 

in three other journals that you have never read about. But with 

the Internet, it drives the debate. The example that I give of that 

is the 3 percent withholding rule that we just changed this year 

was something that probably very few people outside of this room 

knew about two or three years ago, but because Congress has been 

having hearings, we continued those hearings this year, not only 

did we actually get a bill passed that ended up in the President’s 

jobs package, and there is a good chance that 3 percent bill will be 

passed out of the Senate this year. So we do it to drive debate as 

well. 

Personally, I do it for another reason, not a different reason but 

another reason, which is I am looking for ideas. I am looking for 

things that we can actually change. Again, the big picture, very difficult to change Congress at this level. But if a small group of people is interested in changing it at small levels, there are actually 

opportunities to make improvements. 

One of the things we took out of the California meetings, for example, was to try and work on changing micro-lending. It is evidently just as difficult within the SBA world to lend $15,000 as it 

is $5 million. As a result, nobody lends $15,000. Why would you, 

if you were a bank, take all the time to fill out this amount of paperwork to lend $15,000 and make a small amount of money on 

that, versus the exact same time and paperwork to lend a couple 

of million dollars that you can make some money on? So as a result, nobody does micro-lending, yet micro-lending is extraordinarily important. That was the one idea we took out of California. 

We have got two here today that I will tell you folks I want to 

work on. The first one you mentioned at the very outset—I am glad 

you did mention it—which is on the payment times, because that 

is exactly what we were afraid would happen, that this benefit— 

not benefit, but the additional consideration given in trying to get 

payments out the door faster—and thank the Lord there are 

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enough people in government who understood the importance of 

that, that there is a difference in business if you get paid in 30 

days versus 15 days. But we were concerned when those rules 

changed, or at least they are starting to be implemented now, that 

it wouldn’t filter down, and that the benefit would be consumed at 

the contract level and would not go down to the subcontract level. 

For me, I am particularly concerned about the impact on small 

business, and we are going to look into that, maybe have some special hearings on that when we go back next year. 

The other one is a little more subtle, but Mr. Aycock and Mr. 

Griffin, your testimony together has brought my attention to something I was not familiar with and probably nobody cares about in 

Washington other than me as of today I sit here. Changing the 

housing model has some unintended consequences. What I imagine 

they tried to do is move to a system where the government didn’t 

have to pay for the housing. It is a great deal for the taxpayers. 

But by moving to that model—and this is the model that, again, 

many universities have switched to, where instead of a university 

building a dorm, they will contract with an outside company that 

builds the dorm, and then the university will essentially force the 

students to live there, and the company that has built the dorm 

can finance the structure, make a little bit of money, make a profit. 

It is a low-risk endeavor. It is the way that most university dorms 

are built these days, and it sounds to me as if DOD has copied that 

model. 

And there is a perfectly legitimate reason for doing that, because 

it takes it off the government books, the taxpayers don’t have to 

pay for it, it is privately funded. But when you do it in the scale 

that it looks like they have done it, it cuts this gentleman out of 

the process entirely. In fact, it excludes most small businesses at 

all from running those developments, not from being involved, because a small contractor or subcontractor could still provide the 

concrete, the brick, the electrical work for these houses, for that 

particular building, but it prevents homebuilders from doing what 

they do, which is build houses, because you are not building one 

or two. You have got to build 600 at a time. In fact, more than 

that. You probably have to build several thousand at a time because you are doing five or six bases at a time, and there are very 

few, even of the national builders, who have the ability to do that. 

And what we have done, in essence, is cut a huge part of the private sector economy, in this area especially, out from the process. 

The only people now who can afford to run the projects to build 

housing on military bases are probably large insurance companies 

or huge contracting firms, and that is something that we need to 

take a look at. There is no reason to do it that way, Mr. Aycock. 

There is no reason that we can’t simply allow the local homebuilders in Sumter to build a couple of extra houses and let the 

military folks buy them if they want to, rent them if they want to, 

or not buy them if they want to, or not rent them if they want to. 

So maybe taking a look at that housing model is something that 

is worthwhile and in the long run will be helpful to our small businesses. 

That is more than I usually like to talk at these things, but since 

there is no other congressman here, I can do it for all of them. 

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Listen, thank you all to everybody for participating. Again, I 

know everybody walks out of here saying, gee, I don’t know if that 

was helpful. These things are very, very helpful. You have no idea. 

This is how government works. We don’t sit up in Washington and 

sit on the sofa one day, watch TV and go, wait a second, I wonder 

if my subcontractors are getting paid. It is doing things like this 

that drive home the real world, and in some sense maybe we 

should do this more often because we don’t get it enough inside the 

Beltway, perhaps. 

With that, I am going to stick around for a little bit. There will 

be organizations outside for the small businesses to get involved. 

I know there is a representative here from the SBA in South Carolina. Mr. Griffin is here, put on a tremendous presentation here a 

couple of weeks ago to introduce small businesses or folks interested in running a small business to the services that are available 

to you. Again, the SBA, one of the best—and it is not just me saying it—one of the best Federal agencies with which to work. You 

heard, I think, the process on 8(a) has come down from eight 

months to several months. I have heard the same thing. That is 

not the story across all Federal agencies, as you can probably imagine. In fact, most of them are going the other way. 

So again, thank you for your time. Thank you for your effort. 

Thank you for your input. 

And with that, we will adjourn the meeting. 

[Whereupon, at 11:45 a.m., the Subcommittee was adjourned.] 

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