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81-288 PDF 2002

S. HRG. 107–615

SMALL BUSINESS DEVELOPMENT IN NATIVE

AMERICAN COMMUNITIES: IS THE FEDERAL

GOVERNMENT MEETING ITS OBLIGATIONS?

JOINT HEARING

BEFORE THE

COMMITTEE ON SMALL BUSINESS AND

ENTREPRENEURSHIP

AND THE

COMMITTEE ON INDIAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

APRIL 30, 2002

Printed for the Committee on Small Business and Entrepreneurship

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/senate

(II)

COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

ONE HUNDRED SEVENTH CONGRESS

JOHN F. KERRY, Massachusetts, Chairman

CARL LEVIN, Michigan

TOM HARKIN, Iowa

JOSEPH I. LIEBERMAN, Connecticut

PAUL D. WELLSTONE, Minnesota

MAX CLELAND, Georgia

MARY LANDRIEU, Louisiana

JOHN EDWARDS, North Carolina

MARIA CANTWELL, Washington

JEAN CARNAHAN, Missouri

CHRISTOPHER S. BOND, Missouri

CONRAD BURNS, Montana

ROBERT F. BENNETT, Utah

OLYMPIA J. SNOWE, Maine

MICHAEL ENZI, Wyoming

PETER G. FITZGERALD, Illinois

MIKE CRAPO, Idaho

GEORGE ALLEN, Virginia

JOHN ENSIGN, Nevada

PATRICIA R. FORBES, Democratic Staff Director and Chief Counsel

EMILIA DISANTO, Republican Staff Director

PAUL H. COOKSEY, Republican Chief Counsel

COMMITTEE ON INDIAN AFFAIRS

ONE HUNDRED SEVENTH CONGRESS

DANIEL K. INOUYE, Hawaii, Chairman

BEN NIGHTHORSE CAMPBELL, Colorado, Vice Chairman

KENT CONRAD, North Dakota

HARRY REID, Nevada

DANIEL K. AKAKA, Hawaii

PAUL WELLSTONE, Minnesota

BYRON L. DORGAN, North Dakota

TIM JOHNSON, South Dakota

MARIA CANTWELL, Washington

FRANK H. MURKOWSKI, Alaska

JOHN MCCAIN, Arizona

PETE V. DOMENICI, New Mexico

CRAIG THOMAS, Wyoming

ORRIN G. HATCH, Utah

JAMES INHOFE, Oklahoma

PATRICIA M. ZELL, Majority Staff Director/Chief Counsel

PAUL MOOREHEAD, Minority Staff Director/Chief Counsel

(III)

CONTENTS

OPENING STATEMENTS

Page

Wellstone, The Honorable Paul D., a United States Senator from Minnesota .. 7

Inouye, The Honorable Daniel K., Chairman, Committee on Indian Affairs,

and a United States Senator from Hawaii ......................................................... 1

Cantwell, The Honorable Maria, a United States Senator from Washington .... 48

Bond, The Honorable Christopher S., Ranking Member, Committee on Small

Business and Entrepreneurship, and a United States Senator from Missouri ....................................................................................................................... 12

Campbell, The Honorable Ben Nighthorse, a United States Senator from

Colorado ................................................................................................................ 11

Enzi, The Honorable Michael B., a United States Senator from Wyoming ........ 13

Crapo, The Honorable Mike, a United States Senator from Idaho ..................... 19

Thomas, The Honorable Craig, a United States Senator from Wyoming ........... 19

Johnson, The Honorable Tim, a United States Senator from South Dakota ..... 22

WITNESS TESTIMONY

Johnson, The Honorable Tim, a United States Senator from South Dakota ..... 22

Udall, The Honorable Tom, a Member of Congress from New Mexico ............... 3

Street, Kaaren Johnson, associate deputy administrator for Entrepreneurial

Development, U.S. Small Business Administration .......................................... 32

Danforth, The Honorable Gerald, chairman, Oneida Tribe of Indians of Wisconsin, Oneida, WI ............................................................................................... 49

Homer, Pete, president & chief executive officer, National Indian Business

Association, Washington, D.C. ............................................................................ 56

Dorr, Derek, chief operating officcer, Deco, Inc., Onimia, Minnesota ................. 61

Drapeaux, Monica, executive director, The Lakota Fund, Kyle, SD ................... 66

Hampson, Tom, executive director, ONABEN: A Native American Business

Network, Tigard, OR ............................................................................................ 79

ALPHABETICAL LISTING AND ADDITIONAL MATERIAL SUBMITTED

Bagne, Conrad

Comments for the record ................................................................................. 208

Bond, The Honorable Christopher S.

Opening statement ........................................................................................... 12

Campbell, The Honorable Ben Nighthorse

Opening statement ........................................................................................... 11

Prepared statement .......................................................................................... 2

Cantwell, The Honorable Maria

Opening statement ........................................................................................... 48

Prepared statement .......................................................................................... 204

Committee on Small Business and Entrepreneurship

S. 2335, Native American Small Business Development bill summary

and text .......................................................................................................... 150

H.R. 2538, Native American Small Business Development bill text ........... 187

Crapo, The Honorable Mike

Opening statement ........................................................................................... 19

Danforth, The Honorable Gerald

Testimony .......................................................................................................... 49

Prepared testimony .......................................................................................... 51

Post hearing questions ..................................................................................... 126

Page

IV

Dorr, Derek

Testimony .......................................................................................................... 61

Prepared testimony .......................................................................................... 64

Post-hearing questions ..................................................................................... 138

Drapeaux, Monica

Testimony .......................................................................................................... 66

Prepared testimony .......................................................................................... 68

Enzi, The Honorable Michael B.

Opening statement ........................................................................................... 13

Prepared statement .......................................................................................... 15

Hampson, Tom

Testimony .......................................................................................................... 79

Prepared testimony .......................................................................................... 82

Post-hearing questions ..................................................................................... 128

Homer, Pete

Testimony .......................................................................................................... 56

Prepared testimony .......................................................................................... 58

Post-hearing questions ..................................................................................... 135

Inouye, The Honorable Daniel K.

Opening statement ........................................................................................... 1

Johnson, The Honorable Tim

Testimony .......................................................................................................... 22

Prepared statement .......................................................................................... 25

Street, Kaaren Johnson

Testimony .......................................................................................................... 32

Prepared testimony .......................................................................................... 35

Post-hearing questions ..................................................................................... 113

Thomas, The Honorable Craig

Opening statement ........................................................................................... 19

Prepared statement .......................................................................................... 20

Udall, The Honorable Tom

Testimony .......................................................................................................... 3

Prepared testimony .......................................................................................... 5

Wellstone, The Honorable Paul D.

Opening statement ........................................................................................... 7

Prepared statement .......................................................................................... 9

COMMENTS FOR THE RECORD

Bagne, Conrad, chief operating officer, Arctic Slope Regional Corporation,

Barrow, AK ........................................................................................................... 208

Burns, The Honorable Conrad R., a United Sates Senator from Montana ........ 201

Cooper, David, president and chief executive officer, Hana Engineering, Inc.,

Honolulu, HI ......................................................................................................... 210

Dorr, Tom, director, Western Washington University, Small Business Development Center, Bellingham, WA ........................................................................ 100

Hughes, Claire, president, native Hawaiian Chamber of Commerce, Honolulu,

HI .......................................................................................................................... 212

Jarrett, Ron, president, Jarrett Technology Solutions, Inc., Kailua, HI ............. 213

Keppler, H.K. Bruce, attorney at law, Honolulu, HI ............................................ 214

Keppeler, Jack, president, John P. Keppeler II, Inc. Agribusiness Consultant,

Honolulu, HI ......................................................................................................... 215

Minthonr, Antone, chairman, Board of Trustees, Confederated Tribes of

Umatilla Indian Reservation, Pendleton, OR, testimony before the House

Subcommittee on Appropriations ........................................................................ 216

Mleynek, Darryl, state director, Hawaii Small Business Development Center

Network, Hilo, HI ................................................................................................. 219

Nicolai, Matthew, president and chief executive officer, Calista Corporation,

Anchorage, AK ...................................................................................................... 221

Park, Kaulana, program manager, Native Hawaiian Revolving Loan Fund,

Officer of Hawaiian Affairs, Honolulu, HI ......................................................... 223

Robbins, Kenneth, president, Native Center for American Indian Enterprise

Development, Mesa, AZ ....................................................................................... 93

Rose, Charles, president, Association of Hawaiian Civic Clubs, Honolulu,

HI .......................................................................................................................... 225

Page

V

Shinn, Dorothy, executive director, Ahtna Heritage Foundation, Glenallen,

AR .......................................................................................................................... 227

Vasconcellos, Vaughn, president and manager, Akimeka LLC, Honolulu, HI ... 228

(1)

SMALL BUSINESS DEVELOPMENT IN NATIVE

AMERICAN COMMUNITIES: IS THE FEDERAL

GOVERNMENT MEETING ITS OBLIGATIONS?

TUESDAY, APRIL 30, 2002

UNITED STATES SENATE,

COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP,

WITH THE COMMITTEE ON INDIAN AFFAIRS,

Washington, D.C.

The committees met jointly, pursuant to notice, at 9:35 a.m., in

room SR–428A, Russell Senate Office Building, the Honorable Daniel K. Inouye, Chairman of the Committee on Indian Affairs and

the Honorable Paul Wellstone of the Committee on Small Business

and Entrepreneurship presiding.

Present: Senators Wellstone, Cantwell, Inouye, Johnson, Bond,

Enzi, Crapo, Campbell, and Thomas.

OPENING STATEMENT OF THE HONORABLE DANIEL K.

INOUYE, CHAIRMAN, SENATE COMMITTEE ON INDIAN AFFAIRS, AND A UNITED STATES SENATOR FROM HAWAII

Chairman INOUYE. The Committee on Indian Affairs and the

Committee on Small Business and Entrepreneurship meet today to

receive testimony on the challenges confronting the formation, development, and growth of small businesses in Indian country.

The committees will also receive testimony on S. 2335, a bill

introduced by Senators Johnson, Kerry, Cantwell, Wellstone,

Daschle, Baucus, Bingaman, Stabenow, and Clinton. I am also

pleased to serve as a cosponsor of this measure. S. 2335 provides

statutory authority for the establishment of the Office of Native

American Affairs within the Small Business Administration and

further provides for the establishment of the Native American

Small Business Development Program.

On behalf of both committees, I must advise the witnesses for today’s hearing that we do have several committees meeting at the

same time today, and so to enable Members who have to chair

other hearings to do so, there may be several Senators chairing

this hearing and we have to complete this hearing by 11 a.m.

Now, may I call upon Congressman Udall for this important

hearing.

Mr. Udall.

Congressman UDALL. Thank you very much, Mr. Chairman and

Vice Chairman Campbell.

Chairman INOUYE. Before we proceed, may I ask if the Vice

Chairman has anything he wishes to say?

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Senator CAMPBELL. If we have just a really short timeframe, Mr.

Chairman, I will put my statement in the record and maybe make

a little statement when I ask some questions.

[The prepared statement of Senator Campbell follows:]

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Chairman INOUYE. Senator Bond.

Senator BOND. Mr. Chairman, like you, I have many other things

to do. I would be happy to hear the Congressman’s testimony. I do

want to say some things, because the Small Business Committee

has been very active in this issue. I am not going to be as kind as

my colleague from Colorado. I am going to say my statement when

you get around to it.

Chairman INOUYE. That is great.

Senator Enzi.

Senator ENZI. Mr. Chairman, I would wait until after Mr. Udall’s

testimony, as well, but I do have a statement that I would like to

make.

Chairman INOUYE. Mr. Udall.

STATEMENT OF THE HONORABLE TOM UDALL,

A REPRESENTATIVE IN CONGRESS FROM NEW MEXICO

Congressman UDALL. Thank you, Mr. Chairman and Vice Chairman Campbell, Senator Bond, and Senator Enzi. Thank you for

convening this hearing on this important topic. I appreciate the opportunity to be here.

One of our biggest challenges as a Nation is bringing economic

development to Indian country. Despite the work that has gone

into improving economic and small business development in Indian

country, there is still a great deal that needs to be done to improve

the economic standing of Native Americans throughout the United

States.

The current economic situation on Native American lands is very

grave, but does hold promise for the future. The average unemployment rate on these lands is almost 10 times the national average,

while at the same time, Native Americans are creating small businesses at an unprecedented rate. Native American- and Native

Alaskan-owned small businesses grew by 84 percent from 1992 to

1997, and their gross receipts grew by 179 percent in the same period. Clearly, these figures point to a desire and an ability to start

small businesses.

For over 200 years, the Federal Government and the first Americans have been engaged in a trust relationship which has resulted

in a great deal of work on economic development issues. However,

the work has yet to usher in a new era of economic development

in Indian country.

That is why I am so pleased today with the legislation before

these committees. Senator Kerry and Senator Johnson have expanded upon my earlier introduced and House-passed Native

American Small Business Development Act. This legislation moves

forward with three programs which will provide excellent assistance to Native American entrepreneurs.

In addition, I applaud the Senators for including language to create a statutory Office of Native American Affairs under the U.S.

Small Business Administration. This office would be headed by an

assistant administrator who must be knowledgeable about Native

cultures and have experience providing culturally tailored small

business development assistance to Native Americans.

Those of us in the House and those of us in the Senate who represent tribes, we know firsthand the need to spur economic develVerDate 11-MAY-2000 13:56 Oct 25, 2002 Jkt 081288 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 C:\SBA\81288.XXX SSC3 PsN: SSC3
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opment in Indian country. I represent parts of the Navajo Nation,

numerous Indian pueblos, and the Hickory Apache Nation, and I

can tell you firsthand that something dramatic needs to be done to

alleviate the high levels of unemployment that exist.

The Federal Government can play an integral role in spurring

further small business development while at the same time assisting the recently established businesses to gain a stronger foothold

in the market. We have an excellent opportunity to help bring increased economic prosperity to these areas that have not been as

fortunate in reaping the rewards of the recent U.S. economic expansion.

I look forward to working with you further and with my colleagues in the House to ensure that this legislation is passed as expeditiously as possible. I believe passing the Native American

Small Business Development Act will provide the necessary tools

and assistance to establish and build on their businesses and, in

turn, their communities.

The House and Senate Small Business Committees have worked

endlessly to ensure that programs exist to assist veterans, women,

and minority business owners, but entrepreneurs like the ones I

have mentioned rarely face the barriers of living in an area with

little to no infrastructure, including lack of water, electricity, and

facilities, which many Native Americans face. Our discussion today

is the first big step, I believe, to tearing down those barriers and

building up economic development for Native Americans.

Let me, in closing, just thank the staff of our committees and our

personal staff for working very closely together and thank you for

the opportunity, again, to testify. I am happy to answer any questions.

Chairman INOUYE. Thank you very much, Congressman

[The prepared statement of Congressman Udall follows:]

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Chairman INOUYE. Now, may I call upon Senator Wellstone, who

is joining me this morning to chair this important hearing on behalf of the Committee on Small Business and Entrepreneurship.

OPENING STATEMENT OF THE HONORABLE PAUL D.

WELLSTONE, A UNITED STATES SENATOR FROM MINNESOTA

Senator WELLSTONE. Thank you, Mr. Chairman. I wonder, I do

not want to precede other colleagues if opening statements have

been made. I gather we are also waiting for Senator Johnson, is

that correct?

Let me ask, I do have an opening statement. Let me ask the

Congressman, are you OK on time or do you want to—I would be

willing to defer to questions to him and then make an opening

statement.

Chairman INOUYE. Go ahead.

Senator WELLSTONE. All right. Then I will go forward with an

opening statement. I want to thank my colleagues, both on Small

Business and the Committee on Indian Affairs, for the joint hearing. It is real important. I want to thank you, Congressman Udall,

for your excellent work and also your sole personal commitment. I

want to thank Senator Johnson, as well, and I am proud to be a

cosponsor of this legislation.

I want to point out that during the 1990’s, when we saw this economic expansion in the country, we saw double-digit unemployment rates in Indian Country, in excess of 20 to 30 percent. In the

State of Minnesota, that was the case, even though the State’s

overall unemployment rate was 3 percent or less.

So we are going to have a lot of success stories today, but I think

this legislation is critically important and I think we ought to really be pushing entrepreneurship so that you can have more homegrown economies. We are going to hear from Derek Dorr, who will

be here, and he is here with his father, Robert Dorr, and they are

going to talk about their experiences with SBA and what sounds

like a great success story, both on the 8(a) and on the HUBZone

Program.

The Native American Small Business Development Act, which

you have introduced, again, I think is critically important in getting more Federal resources out to reservations and in meeting our

trust obligations to the tribes.

We are also going to hear from SBA on their work in Indian

Country and I want to get some explanation, I say to my colleagues, especially on the Small Business Committee, and I hope

a reversal of the SBA’s decision to cutoff all funding for the Tribal

Business Information Center, or the TBIC Program. I do not really

quite understand this.

The Minnesota TBIC, which has been run by the Minnesota

Chippewa Tribe, has done great work at the cost to the Federal

Government of $33,000 a year. That is it. Their TBIC is basically

used like a business library, where prospective small business people in Indian Country use computers, access the Internet, do research, and it is critically important, and I cannot for the life of me

understand the Small Business Administration’s decision here.

According to the director of the Minnesota Chippewa Tribe Native American Business Development Center, the loss of funding

8

for the TBIC means that they will literally have to lock the doors

because they cannot afford to staff it. It just does not make any

sense whatsoever.

I have got a full statement that I want to be included in the

record, so I will just conclude this way. I hate to say it, but to colleagues on both Committees, the pattern I have seen with SBA,

and I have been on this Committee since the very beginning and

try never to even miss a committee hearing, but the pattern I have

seen is nickel-and-diming small businesses. I do not understand it.

To propose cutting $4.5 billion in loans, I mean, the cuts and the

50 percent reduction in 7(a) and 504 are very short-sighted. Small

businesses will tell you that. The lenders will tell you that. All of

them will say it.

The proposed cutting and then flat funding for the Microloan

Technical Assistance Program, which has been extremely important, I do not understand, as well. Now we are wiping out the SBA

program that targets or helps Native Americans to save $200,000

or less, which is 0.0003 percent of the SBA’s annual budget. From

a cost/benefit point of view, it is irrational.

So I am here to thank my colleagues for their legislation. I am

here to also sharply question SBA about what in the world they are

doing right now. I thank the Chair.

Chairman INOUYE. Thank you.

[The prepared statement of Senator Wellstone follows:]

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Chairman INOUYE. Senator Campbell.

OPENING STATEMENT OF THE HONORABLE BEN NIGHTHORSE

CAMPBELL, A UNITED STATES SENATOR FROM COLORADO

Senator CAMPBELL. Mr. Chairman, since Senator Johnson is not

here yet to speak on behalf of this bill, let me make maybe just a

short opening statement.

I appreciate you and Senator Wellstone convening this hearing.

I was on the Small Business Committee for 6 years on the House

side and have been active in this Committee ever since I have been

in the Senate. But I do have some questions about the bill, and

that is why I am not an original cosponsor of it.

I understand the importance of creating jobs on Indian reservations. Small business is the backbone of most economies in America. Seventy percent of employment, or more, comes from small

business. But one of the problems I have always had when we talk

about creating new Federal programs for Indian reservations is I

think there is confusion when we use the word ‘‘economic development.’’

I know many times in the past, in talking to people on reservation, the feeling among some is that what we need to do is get a

grant from the Federal Government and that creates jobs and,

therefore, somehow, that equals economic development. It is a kind

of a flow from the Federal Government that creates the jobs, when,

in fact, we all know that is not the basis for job creation in America. It is done by efforts to create a product or a service and sell

that and that makes a profit and that, in fact, is what makes the

free enterprise system work.

With reservation system now, an awful lot of small businesses

are related to what we call home industries. In fact, Senator Udall

represents the Navajo Tribe. The Navajos as well as many other

tribes in the Southwest, they say that the home industry dealing

with pottery, basketry, rugs, things of that nature, are almost $1

billion a year, a huge industry.

I would have some questions of this, although I support anything

that would create more jobs on the reservations. But first of all, I

am not sure what this bill would do that is not already being done,

and as Senator Wellstone mentioned, we are already in the President’s budget cutting some programs that I think are extremely important. To create another agency when we are not funding the

ones that are already in place to the point where we should, I am

not sure if that is productive or not. I also would be interested in

knowing what the cost will be in implementing this new effort and

what models we have looked at of those successful small businesses

on reservations that we might help.

But I notice that Senator Johnson is here, so I will curtail the

rest of my comments and ask some questions when I have the time.

Chairman INOUYE. Senator Bond.

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OPENING STATEMENT OF THE HONORABLE CHRISTOPHER S.

BOND, RANKING MEMBER ON THE COMMITTEE ON SMALL

BUSINESS AND ENTREPRENEURSHIP, AND A UNITED

STATES SENATOR FROM MISSOURI

Senator BOND. Thank you very much, Mr. Chairman. I welcome

the opportunity to be here with you and Ranking Member Campbell, as well as my colleagues on the Small Business Committee,

to talk about solving some of the real problems and developing

common sense solutions.

The question before us today is how to improve small business

services in Indian Country, how to make sure that the free enterprise system, through small businesses, provides the jobs, the opportunity, the hope that really is lacking in too many Native American areas in the country today. We should be able to strengthen

SBA’s delivery of technical assistance to help entrepreneurs startup

and develop small firms on various reservations. We have some

thoughtful additions to existing programs. I look forward to reviewing them and to hearing from the SBA’s Kaaren Johnson Street on

the Bush Administration plans in this area.

No question about it, the needs are enormous. Far too often, Indian reservations have been a metaphor for economic despair and

neglect. As has already been noted, unemployment levels are at a

scandalous level that should shock our consciences.

We know that small business can be a vital part of changing that

picture. Getting technical support to the reservation on a continuous basis rather than on one-shot, occasional training seminars

should help translate entrepreneurs from their abstract business

plans and visions into real jobs and opportunity.

A number of years ago, we developed, or I developed the

HUBZone Program to get Federal contracts out of the Washington

Beltway into the hands of small businesses in areas with high unemployment and high poverty, and one of the specific targets was

the Native American reservations. One of our witnesses today, Pete

Homer of the National Indian Business Association, was a very

good friend and advisor to us in that. Thank you again, Pete, for

your help there.

We wrote in that original HUBZone Act that Federal Indian reservations would automatically be considered HUBZones. Small

businesses could agree to locate there and hire from those

HUBZones, and could get special competitive advantages in winning Federal contracts. There is a set-aside, but then there are also

specific price preferences that go with it to make sure that we

make the Federal Government as a purchaser—a market for small

businesses locating in these impoverished, high unemployment

areas.

We ran into technical issues that got in the way of this vision,

so we developed the HUBZones in Native America Act of 2000 to

fix those problems. Again, Pete Homer was there for that. Ben

Nighthorse Campbell was then chairman of the Indian Affairs

Committee, and as chairman, we enjoyed working with you, and

Senators Stevens and Murkowski worked constructively with us on

the Alaska Native provisions. The effort was totally bipartisan. My

now-chairman John Kerry, who was ranking member at the time,

was part of the initiative. Senator Kerry and I have changed roles,

13

but the bipartisan approach and the concern and commitment to

this live on. Keeping focused on the issues instead of the politics

is key.

As with the original HUBZone Act of 1997 and the HUBZones

in Native America Act of 2000, we can develop solutions that work.

We look forward to reading the comments of witnesses and also

hearing the Administration’s views. Once we have all the cards

face up on the table, I think we can see what the needs are, what

our options are, and move from there.

Again, I apologize for not being able to stay for the entire hearing, but we look forward to a thorough briefing on what is going

on this morning and we appreciate very much you calling this

hearing. Thank you.

Chairman INOUYE. Thank you.

Senator Enzi.

OPENING STATEMENT OF THE HONORABLE MICHAEL ENZI,

A UNITED STATES SENATOR FROM WYOMING

Senator ENZI. Thank you, Mr. Chairman and Ranking Members

for holding this hearing. I am pleased to have this information regarding the importance of successful Native American small business and economic development nationwide. I appreciate the

unique challenges facing the Native American community in creating and sustaining Indian small business and economic development opportunities. Therefore, I support and encourage discussing

common Native American small business development barriers and

approaches to overcoming these barriers.

Small business development on the Wind River Indian Reservation in Wyoming has and will continue to create a network of Native Americans that are excited and knowledgeable about entrepreneurship. Northern Arapaho and Eastern Shoshone small business

entrepreneurs have planted the seeds of economic diversity in communities that really need it.

I know the SBA is dedicated to ensuring that all Native Americans who seek to create, develop, and expand small businesses

have full access to the necessary business development and expansion tools available. I was pleased to see the creation of the Native

American Small Business Outreach at $1 million in the President’s

fiscal year 2003 budget request. This outreach will greatly assist

the new small businesses being created by the Northern Arapaho

and Eastern Shoshone on the Wind River Indian reservation in

Wyoming to sustain economic growth in my State.

Now, I have a person on my Wyoming staff who is a former State

legislator. He lives on the Wind River Indian reservation and is a

tribal member. I have worked with him for years and I appreciate

the perspective that he gives me. His message: first fund the current program so that it can reach full effectiveness.

I got to participate in the change for the Native American

HUBZone effort and I noted that Senator Wellstone mentioned the

Tribal Information Systems. We do not have that in Wyoming yet.

Those are current programs. I think there is a shortage of concentration and completion, not a shortage of programs.

I look forward to hearing from Ms. Street concerning SBA’s Native American Small Business Outreach initiatives, with an open

14

dialog between all interested parties. I know we will be encouraged

to focus more resources on increasing small business and economic

development assistance to Native Americans.

In closing, the Senate Committee on Small Business and Entrepreneurship is committed to ensuring that the Small Business Administration stays on task in an efficient and effective manner

when assisting small businesses nationwide, including Native

American small businesses.

Again, I want to thank Senator Johnson, Congressman Udall,

Ms. Street, and the other witnesses for being here today. I look forward to the information that you will share with us and discussing

the Native American small business issues. Thank you, Mr. Chairman.

[The prepared statement of Senator Enzi follows:

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Chairman INOUYE. I thank you, sir.

Senator Crapo.

OPENING STATEMENT OF THE HONORABLE MICHAEL CRAPO,

A UNITED STATES SENATOR FROM THE STATE OF IDAHO

Senator CRAPO. Thank you, Mr. Chairman. I appreciate the fact

that we are having this hearing today because there is a tremendous amount of interest in Native American economic development

issues in Idaho.

I come to this hearing with a sincere interest in finding out what

it is that the Native American community believes we should do to

address these issues. As is obvious from some of the comments that

have already been made, issues have been raised as to whether we

should begin moving into new programs or whether we should be

focusing on strengthening and increasing support for and the effectiveness of existing programs, or whether a mix of the two needs

to be achieved. I am open to considering all of these options. What

I want to find are effective solutions.

I have also worked very closely with the HUBZone Program for

the Native American tribes as well as other aspects of the

HUBZone Program. We have seen some significant effects of that

in Idaho. My opinion is that we need to find out what works, find

out what needs to have additional support and strengthening, and

then move ahead in these two committees to make sure that we

support them the way that we should here in Washington, and

frankly, that is what I am here to learn about today. Thank you

very much.

Chairman INOUYE. Thank you.

Senator Thomas.

OPENING STATEMENT OF THE HONORABLE CRAIG THOMAS,

A UNITED STATES SENATOR FROM WYOMING

Senator THOMAS. Thank you, Mr. Chairman. I will submit a

statement. I just know that we have worked on the Indian Affairs

Committee, trying to find ways for a better economy for the tribes.

I was on our tribe’s reservation just a couple of weeks ago, met

with the business council.

I, too, am concerned about how we do this. No one would argue

with the fact that we want to improve small business and the economic opportunities on the reservation, certainly, but I think we

have to take a look at how we can best do that. Some measure of

success at what has been there and what needs to be changed to

make it more successful, and some accountability in terms of moving toward our objectives is important.

So I am happy to be here and look forward to hearing from the

witnesses.

Chairman INOUYE. Thank you very much, and your full statement is made part of the record.

Senator THOMAS. Thank you.

[The prepared statement of Senator Thomas follows:]

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Chairman INOUYE. May I now call upon Senator Johnson, the author of the measure.

STATEMENT OF THE HONORABLE TIM JOHNSON, A UNITED

STATES SENATOR FROM SOUTH DAKOTA

Senator JOHNSON. Thank you, Mr. Chairman. I want to thank

Senator Wellstone and Senator Inouye for chairing today’s hearing

and for their support of S. 2235, the Native American Small Business Development Act.

I was pleased to introduce this important legislation last week,

along with Senator Kerry, and I appreciate the opportunity to discuss its objectives as well as the serious economic problems facing

Native American communities and families. I would like to thank

Congressman Udall for his leadership in the U.S. House to bring

these issues to the forefront and for his cooperation on this historic

legislation.

I also want to express my appreciation to Monica Drapeaux, executive director of the Lakota Fund, for her participation in today’s

hearing. Monica will testify later this morning and brings with her

years of experience, both as a business owner herself and in operating programs to promote Native American entrepreneurship.

Native American communities continue to struggle with the social, economic, and cultural repercussions derived from persistent

and pervasive poverty and unemployment. A recent report released

by the Census Bureau entitled, ‘‘Poverty in the United States:

2000,’’ indicates that the 3-year average poverty rate for American

Indians and Alaska Natives from 1998 to 2000 was 25.9 percent,

higher than for any other race groups.

While most Americans can look forward to continued prosperity

during 2002, the approximately 2.7 million Native American people

living in the United States will not. It is essential that Native

American concerns are provided adequate consideration.

The Native American Small Business Development Act is an effort to enhance the availability of technical assistance to support

entrepreneurship in Indian Country. The communities served by

this initiative represent some of the most traditionally isolated, disadvantaged, and underserved populations in our country.

In my home State of South Dakota, and I am sure it is very similar in your respective States, members of this panel, employment

opportunities chiefly, to the extent they exist, are through the

tribe, through tribally-owned enterprises, and through Federal employment. There is virtually no private sector that is in existence

in very many of our tribal communities across my State and across

the country.

Consider the following statistics. According to the Department of

Commerce, unemployment rates on Indian lands in the continental

U.S. range up to 80 percent compared to 5.6 percent in the United

States as a whole. Census data also show that the poverty rate for

Native Americans during the 1990’s was 26 percent, compared to

the national average of 12 percent. Overall, Native American

household income is only three-fourths of the national average.

The disparity is particularly evident in my home State of South

Dakota, where Native Americans represent over 8 percent of the

State’s population, and while the overall State economy is relVerDate 11-MAY-2000 13:56 Oct 25, 2002 Jkt 081288 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 C:\SBA\81288.XXX SSC3 PsN: SSC3
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atively strong, with a low 3.1 percent unemployment rate, Native

American populations continue to suffer. Our counties with Indian

reservations are ranked by the Census Bureau as among the most

impoverished anywhere in the United States.

This month, the Wall Street Journal ran an article that focuses

in part on the toll of poverty for the Oglala Sioux living on the Pine

Ridge Indian Reservation. The article noted that nearly half the

tribe’s population is destitute. The unemployment rate is about 75

percent. There is no bank, no motel, no movie theater. Restaurants

open and close down before anyone even notices.

We cannot eliminate poverty until we combat unemployment,

and we cannot address unemployment without promoting sustainable business practices to create jobs. Without adequate assistance

for entrepreneurs, economic limitations facing Native American

communities will persist and this panel and the rest of the committees in this Congress will continue to struggle to finance programs

designed to address the symptoms of lack of unemployment. Health

care, education, family dysfunction, crime, and child abuse will continue to persist so long as we fail to address the underlying problem of economic opportunity.

Due to the unique and persistent challenges to business development in these areas, the proposed legislation establishes a statutory Office of Native American Affairs at the SBA. The office will

serve as an advocate in the SBA for the interests of Native Americans. In addition to administering the Native American Development Program, the assistant administrator will consult with tribal

colleges, tribal governments, Alaska Native corporations, and Native Hawaiian organizations to enhance the development and implementation of culturally specific approaches to support the

growth and prosperity of Native American small business.

Among the achievements included in the bill is the establishment

of the Native American Development Program to provide necessary

business development assistance. This program will work to establish and maintain Native American business centers to provide

business planning marketing services, and management assistance

to support entrepreneurship. These services are vital to establish

and support small business.

The Federal Government currently invests to provide business

services in communities throughout our nation. It is past time for

these services to be integrated into our efforts to promote self-sufficiency and economic development in Indian Country.

In addition, we recognize that in order to remain competitive,

businesses and entrepreneurs must be innovative and flexible to

change. This legislation reflects the needs of businesses, tribes, and

regional interests to pursue unique approaches that will complement local needs and improve the overall quality of services.

Two pilot programs are integrated in this approach to promote new

and creative solutions to assist American Indians to awaken economic opportunities in their communities.

We have got to strive to eliminate the impediments that restrain

Native American entrepreneurs. By providing business planning

services and technical assistance to potential and existing small

businesses, we can unlock the capacity for individuals and families

to pursue their dreams of business ownership.

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The problems that face Native American communities are complex. This legislation is not a panacea which will, by itself, remedy

all the economic hardships faced by tribal communities. It is, however, an integral component to foster opportunities for individuals,

families, and entire communities to achieve success in their pursuit

of economic growth.

To complement the initiatives brought forth in this legislation,

we have also got to work to improve access to investment capital

to support economic and community development for Native Americans. As the Chairman of the Senate Banking Financial Institutions Subcommittee, I am conducting hearings to identify opportunities and techniques that may foster greater access to capital markets for tribal and Native American entities.

The lack of access to investment capital in Native American communities significantly contributes to the inability to invest in businesses, services, and economic development, but providing investment capital alone, without the supportive services necessary to

fully and successfully utilize those funds, may be inadequate and,

ultimately, unsuccessful. The business planning and technical assistance included in the Native American Small Business Development Act is essential to provide the infrastructure and support necessary to maximize the impact and success of local ventures and

investments. Together, these initiatives will help to turn an important corner as we endeavor to enhance the livelihood of the first

Americans.

I greatly appreciate the consideration and cooperation of the committee chairmen and the Committee Members to examine these

issues and to work to tackle the difficult and persistent economic

challenges that face Native American communities. So long as private sector efforts struggle in Indian Country, the need to address

the symptoms of that lack of economic activity will continue to

overwhelm us, there is no question about that, and in the end, we

have got to find ways to foster greater Indian entrepreneurship and

private sector development in Indian Country. Otherwise, I am

afraid there will never be enough money in our budget to address

the problems that are consequent of that lack of that private sector

involvement.

Thank you, Mr. Chairman. Thank you, Members of the Committees.

Chairman INOUYE. Thank you, Senator Johnson.

[The prepared statement of Senator Johnson follows:]

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Chairman INOUYE. Senator Wellstone, any questions?

Senator WELLSTONE. Mr. Chairman, I know we have other panels, so I will not ask questions. I just will, in 20 seconds, say to

both Congressman Udall and Senator Johnson that I think that

one really critical distinction is you are not really talking about the

government being the engine of economic growth. You are talking

about really some technical assistance which goes to the how to

start a business. It is not the government businesses. It is the sort

of missing piece of the technical assistance to enable people to

themselves have the access to the capital to start the business. Is

that not really the kind of basic premise of this? We do that a lot

in SBA programs, but this is with the specific focus in Indian

Country.

Senator JOHNSON. I think you are exactly right, Senator

Wellstone. In many Indian communities, there is not a tradition of

private entrepreneurship. There is not a lot of familiarity. There is

not a lot of knowledge about business plans and capital formation

and the like that the SBA has provided so ably across the country

as a whole. We need a special energized focus, I think, to assist Indian entrepreneurs to have the know how and the business planning that, in fact, can lead to these efforts being successful.

Congressman UDALL. If I can just add to that, Senator Wellstone,

if there is anything that I think we have failed in is not bringing

those skills and programs right near or on the reservation, and I

believe what this piece of legislation does is locate those kinds of

operations on or near the reservation because of the long distances

and the problems in terms of entrepreneurs leaving the reservation

and going off-reservation to get access to those kinds of advice and

technical assistance.

Senator WELLSTONE. Thank you.

Chairman INOUYE. Senator Campbell.

Senator CAMPBELL. Just maybe a couple of quick questions, Mr.

Chairman. I certainly support any initiative that is going to create

more jobs on reservations.

The figures I have from SBA and BIA both say that Native

American and Native Alaskan-owned small businesses grew by 84

percent between 1992 and 1997, when the overall growth of nonnative businesses grew by 40 percent in the same timeframe. So

there is no question in my mind that that, plus the 179 percent increase of gross receipts during that same amount of time, tells me

something is happening on the reservations that is good. It is not

all totally depressed and not all totally bad. I live on a reservation

and I see small business growing and I know it is growing all over.

I guess the real question for me is we have had some experience

in the past with ‘‘638’’ programs and programs that have not been

tailored to the tribes’ needs at the Federal level, and what we have

done with the IHS and the BIA is we have created self-governance

and we have given the money directly to the tribes so that they administer their own programs, and I am wondering if it would not

be more appropriate if they had or could contract to get the expertise to be able to do what this bill does without creating new bureaucracy, if it would not be better to try and fund the tribes directly.

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Senator JOHNSON. I would only observe, Senator Campbell, who

I know has as great an interest in the economic welfare of Native

peoples as anyone, that the Office of Native American Affairs at

the SBA already exists. This legislation makes it statutory and further requires the head of the office to have experience providing

culturally tailored business development assistance to Native

Americans. So we are formalizing an effort at the SBA that has

been undertaken, but we want to put statutory language behind it

and we want to expand what they are attempting to do. The cost of the total bill is relatively modest, $7 million a year, $5 million for the statutory Office of Native American Business

Center Grants that would have greater outreach than we have

now, plus $1 million for development grant pilot projects for nonprofits, as well as the Small Business Development Council Centers.

So I do not think we are trying to duplicate anything or create

new bureaucracies, but we are trying to refocus a small effort that

has already been in place to try to, in the end, by creating a stronger private sector in Indian Country, reduce the reliance on government bureaucracies as a whole. As more Native Americans become

self-sufficient through the private sector, in the end, it will lead to

less dependence and less bureaucracy.

Senator CAMPBELL. That would be my hope, too, that it would

lead to less, because we have got too much now, from my perspective. It would seem to me it might be simpler to fund the Tribal

Business Information Centers that were established in 1992 rather

than start another program that might duplicate efforts, but that

is just my general observation. Go ahead, Congressman.

Congressman UDALL. Senator Campbell, I think the thrust of

your question is why are we not getting things closer to Native

Americans and to the——

Senator CAMPBELL. That is right.

Congressman UDALL [continuing]. To the reservations.

Senator CAMPBELL. In this program, so much of it is eaten up by

salaries in Washington, D.C. That has always been one of the problems with Indian programs.

Congressman UDALL. Two of these programs in here are pilot

programs that are grant programs and they specifically target. One

is the Native American Development Grant Pilot Program. The

other is the American Indian Tribal Assistance Center Grant Program, and both of these target the reservation. The eligible participants in the grant, it is open to any Small Business Development

Center or nonprofit that has a board of directors with a majority

consisting of tribal government members.

So I think the attempt here with the grant is to get as close as

possible to the reservation, open up those opportunities for any individuals or nonprofits that are operating on the reservation to provide the kind of services we are talking about. So I think that this

bill does that.

Senator CAMPBELL. Maybe one last comment, then. We have

done a number of things through the Indian Affairs Committee

where we have created pilot programs, and I think they are good,

because usually when we do it, we have some kind of a measuring

device. We create a pilot program and come back 2 years later or

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3 years later and see how the thing worked, and if it did not work,

there is no use expanding the thing, and if it did work, then we

try and expand it with another bill.

What would you think of, if this bill moves forward, of establishing some kind of a provision where we do have a way of measuring the pilot’s performance after a given period of time?

Congressman UDALL. It makes sense to me and there is also in

here a sunset on this in 4 years. So at the end of 4 years, you can

come back and take a look at it.

Senator CAMPBELL. Thank you. Thank you, Mr. Chairman.

Chairman INOUYE. Thank you.

Senator Thomas.

Senator THOMAS. I will hold my questions until the Small Business Administration comes.

Chairman INOUYE. May I thank Senator Johnson and Congressman Udall. You have been very helpful.

Congressman UDALL. Thank you.

Senator JOHNSON. Thank you very much.

Chairman INOUYE. Our next witness is the Associate Deputy Administrator for Entrepreneurial Development of the U.S. Small

Business Administration, Ms. Kaaren Johnson Street.

Ms. Street, welcome to the committee. Please proceed.

STATEMENT OF KAAREN JOHNSON STREET, ASSOCIATE DEPUTY ADMINISTRATOR FOR ENTREPRENEURIAL DEVELOPMENT, U.S. SMALL BUSINESS ADMINISTRATION, WASHINGTON, D.C.

Ms. STREET. Thank you. Good morning, Chairman Inouye, Senator Wellstone, Senator Campbell, and Senator Thomas, and Distinguished Members who will join us, hopefully later, of both committees. Thank you for convening this joint hearing to discuss the

extremely important issue of Native American economic development.

Administrator Barreto apologizes for being unable to attend. He

is attending the National Center for American Indian Enterprise

Development’s annual Economic Development Conference as their

honored guest and featured speaker. In light of this, the Administrator asked that, as Associate Deputy Administrator for the Office

of Entrepreneurial Development, I speak on behalf of the U.S.

Small Business Administration.

I am honored and delighted to have this opportunity. I would

also like to request that the committee include my full written testimony in the record.

Chairman INOUYE. Without objection, so ordered.

Ms. STREET. The SBA is dedicated to ensuring that all Native

Americans who seek to create, develop, and expand small businesses have full access to the necessary business development tools

available through all of our agency programs.

As you know, the President’s fiscal year 2003 budget for the SBA contains a $1 million request for our expanded Native American

Economic Development Outreach Program. This program is designed to recognize cultural needs and aid in small business job

creation. Furthermore, it is intended to complement the existing

economic development activity of Native American tribes and tribal

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organizations seeking to improve the economic conditions of their

communities by adding a critical small business component.

The 2003 initiative is an expansion of the current SBA Native

American Outreach Program. The current SBA Technical Assistance Program activity, Tribal Business Information Centers, or

TBICs, operates in only six States. It is an objective of the expanded program to increase the geographic diversity of SBA assistance. It will expand our scope nationally, thereby enabling us to

have a greater impact on more Native American businesses.

Those eligible to participate in the program include Native American tribes and tribal organizations who presently have a multifaced economic development program and can present a welldefined plan for increasing small business development in Native

American communities. The current TBICs will be encouraged to

participate in this program.

Today, I am also pleased to say that the SBA is in the final

stages of selecting our National Director for Native American Outreach. The National Director will direct and coordinate an agencywide program designed to promote, expand, and enhance small

business opportunities and services for all Native Americans. We

expect to fill this position as soon as possible.

The SBA currently provides technical assistance for the startup

and growth of all small businesses. We recognize that successful

businesses require three key ingredients. They are access to capital, access to business opportunities, and access to information,

training, and technical assistance. These are currently provided

through SBA programs which are available to everyone.

In fiscal year 2001, the Women’s Business Centers counseled

2,200 Native American women-owned businesses. There were 634

Native Americans in our 8(a) program. Eight hundred and seventyfive Native Americans are certified in our SBD programs. Four

hundred and twenty-eight Native American businesses are located

in HUBZones. Five thousand and four-hundred Native Americans

are registered on PRONet, and SCORE served over 5,700 Native

Americans, and our SBDCs counseled over 7,500 Native Americans.

I am also pleased to inform you that the 2002 Entrepreneurial

Success Award winner is a Native American, Adrian Lugo, President of Lugo Construction. Lugo Construction was an 8(a) company. He applied for minority status under the 8(a) program in

1984 and graduated in 1992. During Lugo’s 8 years in the program,

the company increased its sales to more than $15 million in 1993,

a year after their graduation from the program. Today, Lugo is a

$50 million construction company and a nationally recognized

Washington State contractor. Mr. Lugo attributes the company’s

success to the knowledge and reputation earned through SBA’s 8(a)

program.

Through the SBA counseling and training programs, we have

served over 1.4 million aspiring and existing small business owners. Nevertheless, we need to constantly strive to reach all segments of the 25 million American small businesses. Part of this effort is our objective to increase SBA services to Native American

communities. This initiative will complement our existing programs

and aid our outreach to this traditionally underserved population

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so that we may help to create other success stories similar to Lugo

Construction.

Again, thank you, Chairman Inouye and Distinguished Members

of both committees for providing me the opportunity to share the

SBA’s vision for Native American economic development. The appointment of a national director for Native American Outreach, in

conjunction with the 2003 Native American Economic Development

Outreach Program, are the essential steps, we believe, for providing the appropriate tools to promote self-sufficiency and job creation in Native American business communities.

I look forward to working with each of you to achieve this goal,

and at this time, I am prepared to answer any of your questions.

Chairman INOUYE. Thank you very much, Ms. Street.

[The prepared statement of Ms. Street follows:]

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Chairman INOUYE. In your statement, you said that your agency

has done its best to set up programs to provide access to capital,

one. Now, there are over 550 tribes and most of the members of

those tribes live on reservations and these reservations are generally many, many miles away from urban centers, and these reservations very, very seldom have banks. Furthermore, I am certain

you know that reservation lands are held in trust by the government of the United States and, therefore, not subject to alienation

if one wants to use land as collateral. So does your program provide any access to capital for Native Americans?

Ms. STREET. Presently, our access to capital includes our

microloan program, which Native Americans have participated in,

that as well as our 7(a) program for loans out of our 7(a) program.

So they are participating in our capital access programs.

Chairman INOUYE. Where do you go to apply?

Ms. STREET. Those would be to banks, and these are Native

Americans, not necessarily tribal organizations, but Native American businesses. So I doubt if they are tribal organizations.

Chairman INOUYE. You spoke of establishing training programs.

Where are they established, in urban areas or out in reservation

areas?

Ms. STREET. These would be on tribal organizations through our

expanded economic development outreach program.

Chairman INOUYE. You have training programs on these reservations?

Ms. STREET. No, we do not have them now, but they will be—

currently, we propose that in the President’s 2003 budget.

Chairman INOUYE. Where are they located?

Ms. STREET. They will be located—we are going to be outreaching with our director of Native American Affairs to solicit

input from Native American tribal organizations.

Chairman INOUYE. So up until now, if a Native American wanted

to get some training, he had to go to an urban area?

Ms. STREET. No. Up to this point, they have been able to at least

get access through Tribal Business Information activity, which is

a resource center, or they would have to go into the urban area,

you are correct.

Chairman INOUYE. Where are the resource centers?

Ms. STREET. The resources centers are located on 16 different

tribal organizations, on tribal land, at tribal colleges, the

current——

Chairman INOUYE. Now, if you have difficulty accessing these

training programs, then you have limits in terms of talented people, is that not true?

Ms. STREET. I am not sure I understand the question.

Chairman INOUYE. People with skills.

Ms. STREET. Skills to provide the training?

Chairman INOUYE. To do a job, whether it is carpentry or computer work.

Ms. STREET. That is why the training workshops would be important.

Chairman INOUYE. Now, where are the markets of the United

States?

Ms. STREET. When you say markets——

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Chairman INOUYE. Where people buy things?

Ms. STREET. I would say all over.

Chairman INOUYE. In the urban areas, are they not?

Ms. STREET. Well, rural markets exist, as well, and we do provide services to the rural communities, as well. Of course, there is

a centralization. I think you are alluding to the centralization of

our malls and our central commercial districts are, to a large extent, in urban areas, but more and more, it has expanded into

rural and suburban areas. So opportunities are going to where people live.

Chairman INOUYE. I ask these strange questions because, as you

are well aware, we entered into treaties with many tribes, actually,

800 treaties, and of those 800 treaties, 430 are in some filing cabinet in the United States Senate. Of the 370, the United States has

violated provisions in every one of them. The most common violation was not to put the Indians where they were promised to be

put, and as a matter of policy, we put Indians as far away from

us population centers as possible. Very seldom do you find a reservation right next to a city. They are out in the remote rural areas

of the country. You have to travel miles and miles to get out there,

and that is not where the markets are.

My question is, what are we doing to help these people that we,

as Americans, by policy, sent out to the remote rural areas?

Ms. STREET. Well, we hope with the expanded Native American

Economic Development Program that we would encourage the applicants who would apply for funding would have a multi-faceted

economic development program that would deal with issues such as

geography, in terms of taking advantage of urban opportunities

when they are located in these remote areas. I think that is a global economic development process. We want to bring the small business component to that.

There are lots of issues, as the previous testimonies have revealed, but we can only focus on the small business element of that

and we are hoping, and that is one of the reasons we have a requirement in this program that it be part of a global economic development program, that it is not just a stand-alone, similar to

what we currently have, stand-alone little small activity, but it be

part of an entire economic development process.

Chairman INOUYE. I know that the Small Business Administration is trying its best, and I commend you for it, but in order to

benefit from your programs, these Indians are put in a quandary.

They have to leave their reservations to get into training programs

in the metropolitan areas. At the same time, they want to remain

on the reservations to maintain their culture and their traditional

ways and stay with their people.

So there is a problem here, and in many ways, we are the ones

who brought it about. I think if we can come up with programs

that will provide greater access to capital, which most tribes do not

have, greater access to training programs in their areas, then I

think we are getting somewhere. The authors of this measure felt

that maybe this may be the first step. Do you think it is a good

first step?

Ms. STREET. I think the program that we have in place, that we

are proposing in terms of our Native American Outreach Program

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in the President’s 2003 budget, would bring those training and

technical assistance programs to the tribal organizations on tribal

land, and I think that critical training component, technical assistance and information assistance, would help complement any economic development program to bridge that geographical difference

and other economic issues, like digital divide is another issue that

affects minorities and Native American communities, in particular,

and use of computers or access to computers and that kind of thing.

So our program would be based, an element or a great portion

of it would be based on tribal lands to provide that assistance, and

hopefully be leveraged with State and local dollars and any other

private sector commitments to further expand what we are engaged

in to help foster a strong economic development process for Native

Americans. So it is a start. It is not going to solve all of the issues,

but at least I think it is a really great effort in terms of expanding

upon the small activity that we currently have and moving forward

to a more broader, comprehensive program.

Chairman INOUYE. Ms. Street, my final question, what is the

total budget of the Small Business Administration, your agency?

Ms. STREET. Approximately about $700 million.

Chairman INOUYE. Seven hundred million?

Ms. STREET. Yes.

Chairman INOUYE. Your agency has recommended to the Presi- dent that we set aside $1 million for Indian programs?

Ms. STREET. Yes, for this particular program.

Chairman INOUYE. So out of a $700 million budget, $1 million

has been set aside for Native Americans?

Ms. STREET. Yes, specifically for this program——

Chairman INOUYE. Thank you very much.

Ms. STREET [continuing]. However, we do have a—I guess what

I want to say pretty much is that this $1 million is for this specific

program. It does not preclude Native Americans from participating

in any of our other programs. In fact, they indeed are, and, in fact,

we are going to encourage and beef that up so that we can enhance

their engagement in those programs, because just as you said,

Chairman Inouye, that isolating the program as well as a geographic location limits the whole economic development posture. So

eventually, there comes a point where Native Americans would be

able to participate in all of SBA’s programs and advance into that,

as they are currently doing in our other programs. So the $1 million coupled with the rest of our budget is inclusive for Native

Americans as well as all other small businesses.

Chairman INOUYE. Thank you.

Ms. STREET. You are welcome.

Chairman INOUYE. Senator Wellstone.

Senator WELLSTONE. Mr. Chairman, first of all, before I forget,

I want to say to the Dorrs that I am very proud that you are here,

and I may have to go to another committee before I get to hear people from Indian Country in Minnesota testify because it deals with

the NIH budget and I have a commitment to be there dealing with

some research in certain diseases.

Ms. STREET, first of all, thank you, because my question is going

to be not hostile, but it is going to be tough. You know, the Chairman said, out of this overall budget, $1 million, then you said but

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there are other programs, but you are cutting. I mean, the people

in Indian Country, they do not have access to the traditional education or capital. But we have the 7(a) and the—you are cutting

that program. You are flat-lining the microloan, which is so important. You are flat-lining technical assistance. The job training, the

workforce investment, the Administration has a proposed cut of, I

do not know, 15 to 20 percent.

So to go to Senator Campbell’s point, the irony of it is that the

very programs that are really out there in the country helping people in Indian Country, you are actually cutting, and I want to come

back to one of them, because I cannot for the life of me figure this

out.

According to the director of the Minnesota Chippewa Tribe Native American Business Development Center, you are eliminating

the TBIC, and he says, ‘‘Well, we are going to have to basically lock

the doors.’’ That is it. So we have got the computers, the access to

the Internet, it is like a business library, Senator Campbell, out

there in Indian Country. You are cutting it. Now, you have got the

computers and other equipment and they go to waste.

Now, the Native American Business Development Center uses,

out in Minnesota, uses the TBIC to counsel and provide resources

to 300 prospective Native American entrepreneurs. They helped

about 100 of them secure capital for their business. That was $6

million, 60 to 70 percent of which was raised through private lenders. The technical assistance that the tribe made available through

the TBIC, which you are eliminating, was critical to those small

businesses that these men and women were able to start.

With the help of a $160,000 grant from the Minority Business

Development Program at the Department of Commerce and your

$33,000 TBIC grant from SBA, they helped 100 entrepreneurs

raise $6 million. That is a real return on investment. So the loss

of the TBIC is a tremendous blow, and the irony to me is that the

$200,000 that you save through TBIC’s elimination gets you almost

nothing here in Washington, but the money goes pretty far, Senator Campbell, out in Indian Country.

So you are sucking $200,000 of Indian Country. You have dealt

a significant blow to entrepreneurship among Native Americans.

You have hardly changed the fiscal position of SBA here at all.

Why? Why are you cutting this program?

Ms. STREET. First of all, it is not a program, it is an activity. It

is an activity——

Senator WELLSTONE. Well, that is better. I like activity better.

Why are you cutting the activity action?

Ms. STREET. OK. We looked at it from the point of view that due

to our very, very, very tight budget constraints this year, the nominal success of the program—the TBICs have been counseling or

providing counseling to approximately 200 participants annually.

As you know, the budget—we have not had a line item funded for

this measure since 1995. We have been funding it—SBA has been

funding it out of our salary and expense line item, and every year,

we have to decide or look and try to find ways that we can fund

this program.

Coupled with its nominal success and not part of a comprehensive economic development program and none of the other aspects

43

of technical assistance or training, workshops, in terms of technical

assistance, it was not as effective as we would like to see it be and

it prompted us to reevaluate that program——

Senator WELLSTONE. Well, listen——

Ms. STREET [continuing]. Design a program——

Senator WELLSTONE. Let me interrupt you, Ms. Street. First of

all, as far as the savings, this is a savings of 0.0003 percent of

SBA’s annual budget. It is $200,000 or less. If you think the program is not working as well as it should, reform it. Do not eliminate it in the middle of the year. You just heard Senator Inouye’s

rather dramatic illustration of how little commitment we are making to Indian Country. If you want it to do better, then come here

with some proposals about how to reform it and make it do better.

Do not eliminate it in the middle of the year.

This is unacceptable. As a member of the Small Business Committee and also the Committee on Indian Affairs, and I am not posturing, I swear to you, this is just unacceptable. I do not think you

make the case at all.

Ms. STREET. Senator——

Senator WELLSTONE. You say it is not effective. I gave you a report from the State of Minnesota. Do you have any quarrel with

what the Minnesota Chippewa Tribe has reported to me about exactly how much money they have had, what they have been able

to do with it, and how much capital they have leveraged? Do you

have any basis for disagreeing?

Ms. STREET. No, I have no basis——

Senator WELLSTONE. Well, you should not be eliminating this

program, then.

Ms. STREET. In all due respect, Senator Wellstone, we did not cut

their funding off in midstream. March 31 was the end of the program year for this particular activity. So we did not just—every

year at March, in March is when we review and look for, search

for, and try to find moneys out of our salary and expense budget

because there has been no line-item budget.

It is time, we believe, that a line-item appropriation be submitted

and approved by Congress for Native American education and

training and technical assistance, and this is an opportunity that

we are delighted and excited about, this $1 million 2003 budget appropriation. It is a great start. It is a beginning. We believe it was

nickel-and-diming it every year, because every year, we never knew

what amount of funding we would be able to dedicate to it.

Senator WELLSTONE. Well, I will finish. This is why we need to

do the Johnson bill. We need to have more than a line item. We

need to have some statutory authority so we know exactly what

you are doing and we give you a mandate about what you do in

Indian Country. I do not want to leave it up to you in terms of your

own discretion.

Chairman INOUYE. Senator Campbell.

Senator CAMPBELL. Thank you, Mr. Chairman.

I certainly want to associate myself with the comments of Senator Wellstone and Senator Inouye. I do not mean to put you on

the spot, Ms. Street, but they are both absolutely right. I do not

know how we do a better job when they are facing the fact that

we are cutting the programs that are needed.

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Senator Inouye is very right in one respect when he talks about

the difficulty of getting to markets. Those tribes who are in the 72

metropolitan areas generally have done pretty well through casinos

or whatever. Then there are some that are blessed with the abundance of natural resources and they are doing pretty well, too. But

the ones that he is speaking about and the ones that I am really

concerned about are the ones that have neither. They are a long

way from markets and they are a long way from being able to develop their own resources, too.

We tried to get an amendment, into the energy bill to provide

some opportunities for them to develop their own energy and met

with so much resistance, we dropped it before introducing it in the

Senate last week.

But to give you an example of how far they are from the markets, I mentioned home industry from particularly, say, like the

Navajos that Congressman Udall mentioned. The mark-up of a

home craft product, such as a rug or a piece of jewelry or something for Indian people who are actually making them out on the

reservation is six times. That means they get for making the thing

and providing their own tools, their own materials, their own everything, about one-sixth of what sells in a store downtown.

Everybody else is in the deal. The craftsman gets a small part,

the jobber gets some, the wholesaler gets some, the retailer gets

some. Everybody adds something on, but when you see a price in

a store of something that was manufactured on a reservation with

a hand product, the person that did that got about one-sixth of

what that sales tag says because they are so far from the market.

You mentioned that there are ‘‘Distance Learning’’ programs

available through the colleges, and I think that is terrific. I am active with the Indian colleges. But I guess that also just reinforces

my view about this bill, that in my view, we are not doing a good

job with the programs we have got. I am not sure that more laws

will make better programs. It seems to me we ought to focus on

doing a better job than we are doing now.

Believe me, it is not a savings at all if you think by putting less

money into programs to help people help themselves, somehow that

is a savings. If you do not put money into them helping themselves,

you are going to end up with more and more dependency and pay

a heck of a lot more in terms of social programs, dependency programs, truancy, drug abuse, all that other stuff that is all related

to the lack of jobs on reservations. If we cannot create more jobs,

we are going to end up just paying more and more to those ‘‘afterthe-fact’’ programs than we do.

Let me just ask you a couple of simple questions that ought to

be very easy to answer, and one is something we have not gotten

to yet, and that is does the Administration support this bill or not?

Ms. STREET. We have not had an opportunity to actually review

it in depth. We are more focusing on what we have proposed in our

2003 budget, which is $1 million, which is an increase over—so we

are putting money into our 2003 budget for this effort.

Senator CAMPBELL. In 2000, we enacted the Native American

Business Development Trade Promotion and Tourism Act. It was

one that I sponsored. Senator Inouye worked very hard on that,

too. It set up a coordinator for all economic programs at the FedVerDate 11-MAY-2000 13:56 Oct 25, 2002 Jkt 081288 PO 00000 Frm 00050 Fmt 6633 Sfmt 6633 C:\SBA\81288.XXX SSC3 PsN: SSC3
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eral level, to try to coordinate them so we do not kind of have a

shotgun approach to those programs. The office is supposed to be

in the Commerce Department. Do you work with that office or

other agencies to try to coordinate economic resources for tribes?

Ms. STREET. Yes, and when we begin, we hire our Director of the

Office of Native American Affairs, that person would be clearly

working very closely with their counterparts in other Federal agencies.

Senator CAMPBELL. The loans to Native Americans, can you tell

us how many small business loans you make to Native Americans?

Ms. STREET. Sure. Let me see if I have that.

Senator CAMPBELL. Just in the last year would be fine. I would

like you to tell me that number and tell me how you define Native

American.

Ms. STREET. I am trying to just check and see.

Senator CAMPBELL. I mention that, and Senator Thomas is kind

of smiling at this over here because I know he has faced the same

thing. I will tell you what, 25 years ago, nobody wanted to be Indian, it seems like. But now that there seems to be some money

in it, you would be surprised how many people suddenly remember

they have a cousin that was Indian.

One of the problems that I continually have with some of the

grants that go to Indian people is that we have found that some

are very enterprising people who are not American Indian, who

have found that if they develop a partnership with an Indian, with

an enrolled American Indian, they can get in one some of the

grants, when, in fact, it may help the Indian person a little bit, but

it helps the non-Indian a hell of a lot more.

How do you define when you give a grant to a Native American,

No. 1, and how many did you give last year?

Ms. STREET. Well, we had—our 7(a) loans, we had 537 loans——

Senator CAMPBELL. Five-thirty-seven?

Ms. STREET [continuing]. Five-thirty-seven were given last year,

for a total of $90 million.

Senator CAMPBELL. Ninety million dollars? OK. And the second

part, how did you define who was to get——

Ms. STREET. We have been following the Bureau of Indian Affairs, the definition of Native American, and that would include

Native Americans, Alaskan Natives, and Hawaiian Natives, but we

have been following those guidelines.

Senator CAMPBELL. Did most of those grants go to Native Americans that live on reservations or do they also go downtown to

urban Indians?

Ms. STREET. Well, we have not broken them down in terms of

reservation or outside, off the reservation. I could get that information for you at a later time.

Senator CAMPBELL. If you could provide that to the committee,

I would appreciate it.

[The information of Ms. Street is located on page 121.]

Senator CAMPBELL. Certainly, they both the need the help.

Ms. STREET. Yes.

Senator CAMPBELL. But because of the proximity to markets, as

Senator Inouye mentioned, the ones who live on reservations, in

46

my view, have it a lot tougher in trying to produce something for

sale.

Ms. STREET. Our program is specifically for on reservations.

Senator CAMPBELL. It is designed——

Ms. STREET. Yes.

Senator CAMPBELL [continuing]. Primarily for on-reservation?

Ms. STREET. Yes.

Senator CAMPBELL. Mr. Chairman, thanks. I will go ahead and

yield the floor.

Chairman INOUYE. Senator Thomas.

Senator THOMAS. Thank you, Mr. Chairman. Thank you, Ms.

Street, for being here.

I was going to ask, what is the total expenditure, then, relating

to tribes? That would be your loans, your programs. I guess you

have already gone through that.

Ms. STREET. No, I do not specifically know what the total aggregate, if we added up all of our programs, because Native Americans

are participating in different degrees in all of our programs.

Senator THOMAS. I guess that is kind of the point. I am sure

there is some uniqueness, clearly, with the tribes, but on the other

hand, they are eligible to participate in the things that everyone

else is eligible to participate in.

Ms. STREET. Absolutely, and we outreach to them to do that and

they are doing that. In my testimony, I cited certain statistics in

terms of the numbers that are participating, and those numbers

are growing in our general program.

Senator THOMAS. Home loans are sometimes more difficult because of the lack of ownership of the land to be able to have something to base the loan on.

Ms. STREET. Collateral rules.

Senator THOMAS. Collateral, so it is difficult. In Wyoming, the

TBIC Program has worked through the State Small Business Development Centers——

Ms. STREET. Yes.

Senator THOMAS [continuing]. And worked on the reservation

that way. I wonder, can we continue to do that, do you think, in

the future, under the program that you talked about?

Ms. STREET. Even if we had no funding, the Small Business Development Centers as part of their mandate and our funding to

them is to provide services to Native Americans and they are doing

that, at the tune of 8,000 per year that they are actually providing

services to. The program that we have in our 2003 budget is a complement, an addition to all the other services that are available to

Native Americans.

In SCORE, our Small Business Development Centers, our Women’s Business Centers, we have Native American women-owned

businesses who are benefiting from our services in our Women’s

Business Centers, as well. Any of our programs are accessible to

all Native Americans and we have evidence that they are participating in them.

Senator THOMAS. So the program that you are seeking to initiate

here would be one that recognizes the uniqueness, then——

Ms. STREET. The culturally sensitive on tribal lands, with Native

American tribes and tribal organizations——

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Senator THOMAS. Well, I have to say——

Ms. STREET [continuing]. Who have the most difficulty, as has

been mentioned here.

Senator THOMAS. I do appreciate the fact that you are looking at

the effectiveness of these programs. I think too often we just think

if we can put some more money in it, it is going to be successful.

I do not agree with that. I think there has to be an evaluation, an

appraisal, and some accountability for success.

You mentioned the number of tribal members you had dealt with

in terms of training and involvement. Do you know how many of

those, then, have actually been able to create some sort of business? Do you have any success rates——

Ms. STREET. We are beginning to compile that information. We

do not have that data available to us. The current program is an

activity where individuals can come in and use our computers, use

the equipment there, take CD-ROMs, get manuals, reference materials. It is a kind of self-learning environment. It is certainly not

sufficient, and that is why we evaluated that program and decided

that we needed a much more comprehensive, dedicated source of

funding, and a more comprehensive program that would focus on

Indian reservations, businesses on reservations, who are having

the most difficult time because of the geography and the long distances to it. The others, the more urban Native American businesses, are participating in greater proportions in our regular programs.

Senator THOMAS. I am sure that is true, and that is because you

have a market. Particularly on the gambling, you have to be where

there are some people to do the gambling, obviously. But that is

not the case in Wyoming. We do not have urban areas, and so the

people who are close to that are also in small rural areas. So there,

the Native American activities there are going to have to be oriented toward rural communities because that is where they are,

and I suspect it will be that way.

Then your Department has not a position on this proposed legislation?

Ms. STREET. No, we do not.

Senator THOMAS. Do you think what you are planning to do

would be similar? Would it do the kinds of things generally

that——

Ms. STREET. We believe greater outreach for our other programs,

the Native Americans to participate in our general overall programs, plus the budget allocation for our 2003 budget, is more than

sufficient as a beginning, and we will reevaluate it next year and

see where we go from there.

Senator THOMAS. Thank you.

Chairman INOUYE. Thank you.

Senator Campbell.

Senator CAMPBELL. Maybe I should have already asked this, Ms.

Street, but I was just reading your testimony. The SBA delivers access to capital and opportunities for a microloan program,

HUBZone contracting program, business development program, 504

loan programs, counseling, training, technical assistance programs,

includes Small Business Development Centers, SCORE, Women’s

Business Centers, et cetera, et cetera, and I guess I would just get

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a little clearer picture of it based on what Senator Thomas just

asked. Does this bill, S. 2335, duplicate what you are already

doing?

Ms. STREET. We think it does.

Senator CAMPBELL. Thank you, Mr. Chairman.

Chairman INOUYE. Senator Cantwell.

Senator CANTWELL. Thank you, Mr. Chairman, and thank you

for conducting this hearing. As a Member of both the Indian Affairs

Committee and the Small Business Committee, I am glad to see

that we are having a discussion on this important intersection.

Mr. Chairman, I heard a slight rumor that we are trying to adjourn shortly? No? We have time?

Chairman INOUYE. Oh, yes.

Senator CANTWELL. I obviously have some comments and questions for the next panel and want to offer my encouragement for

what I think is important legislation.

I guess the question is, so you are officially not supportive of this

concept of an office——

Ms. STREET. We already have an Office of Native American Affairs. It is staffed. We are in the midst right now of making the

decision for a national director to lead that office. So we already

have that in place already.

Senator CANTWELL. So you believe you have all the staff that you

need, as well, to service in this capacity and outreach?

Ms. STREET. Sure. For this year, we think we do, yes.

Senator CANTWELL. And the level of expertise?

Ms. STREET. The level of expertise would be—the National Director for Native American Affairs would have to have experience, and

we have been talking to and interviewing, as a result of referrals

from Native American organizations. They would have to have that

experience in programming and small business development for

Native American affairs. We believe we have the quality. We have

had some very good candidates to come forward and we are close

to a decision.

Senator CANTWELL. So when would you expect to have that position filled?

Ms. STREET. Hopefully any day.

Senator CANTWELL. Any——

Ms. STREET. Any day now. We are still going through that process. We have not completed the process yet.

Senator CANTWELL. I am sorry, I did not quite hear. So any day

is what you said?

Ms. STREET. Yes.

Senator CANTWELL. OK. What could the committee expect, then,

in the filling of that position? I mean, if 30 days went by, that

would be beyond what your expectation is? I mean, does any day

mean in the next 30 days or does it mean——

Ms. STREET. I would say—it is hard to answer because there is

a whole process that goes along with bringing someone on board

and it could take anywhere—I would say 60 would be, to give myself as much—give ourselves as much room, I would say 60 would

be——

Senator CANTWELL. Thank you. Thank you, Mr. Chairman.

Chairman INOUYE. Thank you very much.

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May I ask one parochial question. What assistance does SBA provide for small business development to Alaskan Natives and Native

Hawaiians?

Ms. STREET. I do not have any breakdown of that information.

I could get that information for you. We just have it all categorized

under Native American and Native Americans, but I will try to

get——

Chairman INOUYE. You do provide assistance for small business

development to Alaskan Natives?

Ms. STREET. And Hawaiian Natives, yes.

Chairman INOUYE. I thank you very much, Ms. Street.

Ms. STREET. You are welcome.

Chairman INOUYE. Now, may I call upon the third panel, consisting of the chairman of the Oneida Tribe of Indians of Wisconsin, the Honorable Gerald Danforth; the president and CEO of

the National Indian Business Association, of Washington, D.C., Mr.

Pete Homer; the chief operational officer of DECO, Incorporated, of

Minnesota, Mr. Derek Dorr; the executive director of the Lakota

Fund of South Dakota, Ms. Monica Drapeaux, and the executive director of ONABEN: A Native American Business Network of Oregon, Mr. Tom Hampson.

May I first call upon Chairman Danforth.

STATEMENT OF GERALD DANFORTH, CHAIRMAN, ONEIDA

TRIBE OF INDIANS OF WISCONSIN, ONEIDA, WISCONSIN

Mr. DANFORTH. Mr. Chairman, Members of the joint committee,

good morning and thank you for the opportunity. I was really excited when I first saw this bill last Thursday, and without hesitation was anxious to come here to our Capital to provide testimony from the Oneida Tribe of Indians of Wisconsin.

I would like to first commend Senators Johnson and Kerry for

this visionary proposal. It was very clear in reading through this

bill that the Native American voices have been heard, specifically

regarding the issues and concerns associated with small business

in Native American communities, because as I read through this,

I could see the answers to many, many of our concerns. It is a good

bill. It is a good bill.

The Native American Small Business Program recognizes that

many Native American communities still function in Third World

reality. Even though in Wisconsin we have a casino, we look at the

revenue that that casino generates. In a course of days, that revenue instantly leaves the reservation. Small businesses and business expansions, we recognize, are fundamental to the development

of our community, to the diversification of our economic base, and

to the achievement of individual fulfillment and objectives of various career paths.

A sound, diversified, and integrated economy is the direction that

we need to go in Native American communities. The Johnson-Kerry

bill moves us in that direction.

In Oneida, we have tried a number of times to establish and generate, initiate small business programs, and I am sad to say that,

with rare exception, most of those initiatives have failed. Some of

the common problems of those failures have been lack of understanding of growth and management of those businesses, inability

50

to effectively market and establish a marketing plan, inability to

access financial resources, inability to access technical assistance at

critical times. This bill answers those questions.

The bill requires long-term planning. When I saw 5 years, that

was very key in my mind. Often, our programs of small businesses

have gotten off the ground only to fly short distances and are

crashing and dying out. The entrepreneurs turn to somebody and

generally end up coming back to the government, the tribal government, to say, we are fading out, and we do not have and did not

have the mechanisms and the processes in place to support those

needs during those critical times.

The bill answers many of those questions. The bill provides for

long-term periods of critical monitoring and follow-up action with

experts in the business arena for persons of entrepreneurs to turn

to. It provides for getting through the barricades for additional financial assistance when the time is needed.

Generally, in the reporting section, the examination and reporting section of the bill, and I really have not had time to cover that

and examine it and I would like more time, it just seemed like the

reporting and examination was a bit cumbersome. But compared to

other grant programs, perhaps it is not. I guess I would like more

time to be able to evaluate that section and to provide additional

comments in the future. I think within 10 days, I could provide

that information for you.

In summary, this bill can work. It will diversify an economic

base. It will permit individuals to achieve their potential. It will

bring success to Indian communities and Native American communities, and it will bring success to the surrounding communities in

small business development.

Thank you again very much for this opportunity. I would be

happy to try to answer your questions.

Chairman INOUYE. Thank you very much, Mr. Danforth. We will

listen to the whole panel before we ask questions.

[The prepared statement of Mr. Danforth follows:]

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Chairman INOUYE. Mr. Homer.

STATEMENT OF PETE HOMER, JR., PRESIDENT AND CHIEF EXECUTIVE OFFICER, NATIONAL INDIAN BUSINESS ASSOCIATION, WASHINGTON, D.C.

Mr. HOMER. Thank you, Mr. Chairman and Members of the Senate Committee on Small Business and also the Senate Committee

on Indian Affairs. On behalf of the National Indian Business Association, I would like to thank you all for the opportunity to testify

today on this very important legislation, the Native American

Small Business Development Act.

My name is Pete Homer. I am Mojave, an enrolled member of the

Colorado River Indian Tribes. I serve as the tribal consultant on

the hydroelectric project. I am also the President and CEO of the

National Indian Business Association, an organization that was established in 1992 to promote Native American business development through education, communication, and advocacy. We represent approximately 24,000 Native American-owned businesses

nationwide. Our mission is to stimulate business development, job

creation, and economic activity within Native American communities.

I have over 36 years of experience working in business, employment, and community development, and in 1992, I served as the

Small Business Administration’s first director of the Office of Native American Affairs. I structured, implemented, and coordinated

all SBA programs for Native American communities, and today is

an exciting day for me, because hopefully, I am assisting in making

these programs statutory.

As you are aware, the socio-economic statistics pertaining to Native Americans remains grim. Even today, many Native American

businesses are still without adequate training and technology to

compete and do business with the private sector and Federal Government. Yet in spite of this, there are some bright spots on the

horizon for Native American business development. The explosive

growth and the demand for information technology and business

e-commerce continues. Overseas businesses often fill the void in the

United States-based information technology businesses, while potential resources of Native American businesses on and off Indian

reservations are overlooked.

Among the problems cited by Native American businesses is that

there are few training and technical assistance centers, mentor or

incentive programs that focus specifically on assisting the development of Native American businesses. It is this void that drives

NIBA in its support of the Native American Small Business Development Act.

The establishment of Small Business Development Centers in Indian Country would serve as the central focal point for training,

technical assistance, education, e-commerce development programs,

and technical assistance service with the goal of expanding the

number of Native American businesses and creating Native American jobs.

The National Indian Business Association is presenting testimony to seek your support on the passage of the Senate Native

American Small Business Development Act. We urge both commitVerDate 11-MAY-2000 13:56 Oct 25, 2002 Jkt 081288 PO 00000 Frm 00062 Fmt 6633 Sfmt 6633 C:\SBA\81288.XXX SSC3 PsN: SSC3
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tees, the Senate Committee on Small Business and Entrepreneurship and the Senate Committee on Indian Affairs, to work together

and come to a consensus, because Native American businesses will

benefit as a result of this legislation. I also thank the committees

for recognizing and focusing on legislation that will create selfsufficiency, jobs, and economic development in Indian Country

through training and technical assistance.

This legislation establishes two innovative culturally tailored

business pilot programs for Native reservations and community

businesses, the Native American Development Grant Pilot Program

and the American Indian Tribal Assistance Center Grant Program.

These programs may bridge the gap of the digital divide in information technology for Native American communities. NIBA supports the two innovative pilot programs.

NIBA is highly optimistic that this legislation can serve to advance Native American economic development through preference

contracting by providing assistance to Native American businesses

that will allow for the development of more tribal 8(a) companies

and HUBZone certified companies.

Sustainable small business development in Indian Country remains as the engine for new job creation and economic growth.

Given the current fragile State of the economy, this is no time for

further weakening much needed small business resources.

Chairman Kerry and Senator Bond were the ones, and we thank

them and other Members of the Committee. It was through their

leadership and bipartisan support that created the HUBZone program, a very important program in Indian Country. Chairman

Inouye and Senator Johnson and Senator Kerry, we thank you for

the Native American Small Business Development Act and we ask

for that same bipartisanship support in passing this important

piece of legislation.

Thank you for allowing me to present testimony today and I will

be around for answering questions.

Chairman INOUYE. Thank you very much, Mr. Homer.

[The prepared statement of Mr. Homer follows:]

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Chairman INOUYE. I now call upon Mr. Dorr.

STATEMENT OF DEREK DORR, CHIEF OPERATING OFFICER,

DECO, INC., ONIMIA, MINNESOTA

Mr. DORR. Hello. My name is Derek Dorr and I am the chief operating officer and executive vice president of DECO. I am joined

with my father, Robert Door, Chief Executive Officer of DECO.

First, I would like to thank Senator Wellstone from our State of

Minnesota for allowing us the opportunity to present our experience and understanding of the Federal marketplace pertaining to

small business development, particularly from our position as a

Native American-owned and operated company located on the Mille

Lacs Band of Ojibwe Reservation, a band within the Minnesota

Chippewa Tribe. We would also like to thank Senators Kerry and

Inouye for allowing us this opportunity.

DECO was established in 1986. We had limited growth until

1992. At that time, tribal gaming began to flourish and the procurement system increased the opportunities made available to Native American-owned companies, such as ours. From 1992 to 1998,

DECO slowly grew, with revenues increasing approximately five to

10 percent per year.

It was not until 1998 when we started to explore the markets,

programs, and assistance available within the Federal Government

that we truly began to enhance our potential as a Native American-owned company. Specifically, in 1999, DECO was certified in

the SBA 8(a) program and was the first company in the State of

Minnesota to become HUBZone certified. Also, DECO is currently

certified under the SBA Mentor/Protege Program, and for the past

year or so has been mentored by a large company that is a leader

within the security industry.

Frankly, the introduction of these programs and specifically

Randy Czaia at the SBA Minnesota District Office has provided an

overwhelming benefit to our continued growth and success. Further, the Small Business Development Centers, funded partially by

the SBA and located throughout Minnesota, helped this goal, as

well. From 1998 through 2002, DECO’s revenues have and will increase between 50 to 100 percent each year while maintaining a

healthy and stable net income. At the same time, the Federal market is only 25 percent of our yearly revenues, while tribal governments remain our largest client.

I am proud to tell you that DECO was awarded the 2001 Minority 8(a) Firm of the Year for the SBA Region 5 and was a runnerup nationally. Overall, these achievements were made possible by

the SBA 8(a) and small business programs. For DECO, participation in these programs has been extremely positive and overwhelmingly successful.

Currently, DECO is licensed to perform services from security

guards to security systems to electrical systems and maintains contracts with a variety of clients, including the Federal Government,

for all of these services. We now provide security guard services to

the GSA, Federal Protective Services in Regions 5 and 7, the U.S.

Department of Commerce Bureau of Census, and the U.S. EPA,

while providing electrical contracting services for the U.S. Department of Defense Air Force Reserve 934th Airlift Wing, the DepartVerDate 11-MAY-2000 13:56 Oct 25, 2002 Jkt 081288 PO 00000 Frm 00067 Fmt 6633 Sfmt 6633 C:\SBA\81288.XXX SSC3 PsN: SSC3
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ment of Defense Grand Forks Air Force Base, and the Department

of Veterans’ Affairs Minneapolis Medical Center. Although we

maintain corporate offices on the Mille Lacs Band of Ojibwe Reservation in Minnesota, we also have six field offices located in other

parts of Minnesota, Texas, Illinois, Indiana, Michigan, and Ohio.

As we strive for continued success, we also remain focused on

key issues on the reservation. Since 1998, DECO has solely funded

a Native American apprenticeship program, where band members

are given the opportunity to work on the reservation projects and

gain experience and training in electrical trade. Accordingly, as

these individuals’ experience grows, they are further supplemented

with required educational materials and instructors to become a licensed tradesman. The final stages of this program are either completed with the cooperation of the National Electrical Contractors

Association and/or via the appropriate Minnesota State licensing

agency.

Since 1998, we have provided training to over 40 band members

within the State of Minnesota. As a matter of fact, we feel by coupling work ethic, i.e., timeliness, attentiveness, and quality assurance with the instant rewards of a paycheck, that our project has

transformed from a sole economic opportunity to a long-lasting

community effort. Of course, without any financial or administrative assistance for this program, DECO must also maintain our

competitiveness within the market, which is often an obstacle.

Upon the completion of the construction of our corporate offices

on the reservation, our clear desire was and is to build a solid economy separate from gaming. Even though our office remains the

only building within our industrial park, we feel confident that our

success may eventually redefine some of the negative stereotypes

within our community. With the assistance of the Mille Lacs Band

of Ojibwe Chief Executive Melanie Benjamin, we continue to strive

to lead by example.

However, our success depends largely on Federal procurement

procedures and policies for small 8(a) and HUBZone companies.

Particularly, through our years of growth, we have experienced

specific obstacles within the Federal marketplace and within the

Federal programs we work with which advocate for small businesses. For example, we have direct experience with the SBA

throughout the country and have found that procurement center

representatives or safeguards overlooking the Federal procurement

process are overwhelmingly understaffed. Specifically, contracts

that have been in the SBA 8(a) or small business programs for

many years have been procured outside this arena because there

are so few people watching these various areas within Federal purchasing.

Furthermore, the HUBZone Program has extreme potential within the Federal marketplace. However, with so few people administering this program, full advocacy is rarely achieved. Although

our HUBZone status is clearly beneficial when coupled with our

SBA 8(a) certification, we rarely, if ever, receive inquiries regarding

our HUBZone certification.

Within the few years we have been 8(a) certified, we have noticed

a dramatic reduction in SBA personnel. In all, we feel the strength

and vitality of the SBA within the Federal procurement arena is

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essential to the ultimate success of Native American small business

and Native American communities.

From our experience, the most clear and direct impact that the

Federal Government has to revitalize and maintain businesses

within the Native American community is the SBA 8(a) program.

Overall, we perceive that Federal agencies throughout the country

respect this program and are striving to maintain its goals. However, there is a severe issue rising to corrode this program. This

issue is the GSA Federal Supply Schedule. Under the FAR regulations, the 8(a) and small business programs are not applicable

when agencies procure under FSS.

We have had firsthand experience with contracts we originally

procured under the 8(a) program that were reprocured under the

FSS Program without consideration of 8(a) and given to large businesses. As a matter of fact, we have heard from a variety of Federal clients that FSS procurement will soon become the leading

procurement method within the Federal Government. If this holds

true, it will likely nullify the benefits of the 8(a) and small business

programs.

Generally, we are not against the concept of the FSS Program.

However, the FSS Program should be modified to include small

business programs and, thus, require that 8(a) and small business

contracts remain within the program. We believe this will help to

level the playing field.

In conclusion, throughout the past few years, we have clearly

benefited from the SBA and its programs. The SBA and its continued strength and influence is a key to the success with the Native

American communities in the Federal contracting area. Thank you

very much.

Chairman INOUYE. Thank you very much, Mr. Dorr.

[The prepared statement of Mr. Dorr follows:]

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Chairman INOUYE. Now, may I recognize Ms. Drapeaux.

STATEMENT OF MONICA DRAPEAUX, EXECUTIVE DIRECTOR,

THE LAKOTA FUND, KYLE, SOUTH DAKOTA

Ms. DRAPEAUX. Good morning, Senators. I would like to say good

morning to Senator Inouye and Senator Campbell, and I would also

like to thank Congressman Udall and Senator Wellstone and, of

course, Senator Johnson. Also, I would like to thank you for holding these hearings that are so important to us in Indian Country.

I would also like to thank Congressman Udall for introducing this

bill.

My name is Monica Drapeaux and I am the executive director of

The Lakota Fund on the Pine Ridge Reservation in South Dakota.

I have come here today to support the proposed Native American

Small Business Development Act. The Lakota Fund’s mission is to

promote economic growth and sustainability on the Pine Ridge Reservation in a culturally sensitive manner. I would like to give you

an overview of The Lakota Fund and what we do.

We began in 1986 as a microlender, giving small loans from $1,000 up to $25,000. We have increased our lending limit dramatically in the year 2000, from $25,000 up to $200,000. Also in the

year 2000, we were the second reservation in the United States to

be certified by the U.S. Treasury Department as a CDFI.

We own and operate Spirit Horse Gallery, which provides a marketing arm for our local artists. Lakota Fund owns and operates a

30-unit tax credit housing project in Wanblee, South Dakota. This

was the first low-income tax credit project on a reservation in

South Dakota.

We have recently launched the first IDA program on any reservation in South Dakota. This is a pilot project that will provide

30 tribal members with a matched savings program that can be

used for home ownership, education, business, or business development.

We provide training and technical assistance to our borrowers,

which is a key to successful entrepreneurial development. Our

training is culturally relevant and appropriate. We develop our own

training materials and we provide all of these services through our

TBIC.

We utilize the TBIC in conjunction with our lending. We provide

small business training, computer technology workshops, bookkeeping, marketing, credit counseling, and business taxes to tribal

members. The Lakota Fund firmly believes that the TBIC has a direct impact on the entrepreneurial development on the Pine Ridge

Reservation. Each month, an average of 25 people utilizes the centers and its resources. The TBIC center is generating new businesses and jobs on a monthly basis, a remarkable fact for the context of the reservation economy.

We believe that our economy will be built one business at a time,

from the inside out. Pine Ridge has no access to capital, which

means there are no banks or credit unions on the reservation, so

if we are not making loans, no one is making loans. Nothing will

change and people’s lives will stay the same.

However, in 2001, we loaned over three-quarters of a million dollars to tribal members. Those loans created 66 jobs. Thirty-four

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percent of those loans were given to existing businesses and 66 percent were startup businesses. Over the past 16 years, Lakota Fund

has helped build the economy with businesses such as buffalo

ranches, hair salon, tire repair shop, bakery, tipi retail, bed and

breakfast, a trading post, and a trucking operation, to name a few.

People in our community travel 100 miles one way to get services

that we do not have on the reservation. Now, people do not have

to travel to Rapid City to get their tire fixed. They can get it done

locally. In another community, we have a local convenience store

where people can buy a gallon of milk instead of driving 60 miles

one way. We now have an opportunity to provide services to tourists at a local bed and breakfast. As a result of these businesses,

it has created income and revenue which did not exist before.

We now have the Pine Ridge Area Chamber of Commerce that

provides a voice and support for our local businesses. The need for

the Chamber is a vital component and a sign that an economy is

being built. We are proud that we are a part of assisting them financially and getting them started.

I would like to comment on the proposed legislation. You are recommending that eligible organizations are described as any nonprofit organization that has tribal government members or their

designees comprise the majority of its board of directors. We are

concerned that the requirement of the organizations be directed by

tribal government. While The Lakota Fund is tribally chartered, we

are a private nonprofit 501(c)(3). While we coordinate efforts with

tribal government, maintaining our independence is also important. Rather than tribal government members comprising a majority of the board of directors, to ensure local governance and input,

The Lakota Fund would recommend the requirement that tribal

members comprise the majority of the board.

We concur that Native American Business Centers be reservation-based, culturally appropriate, where priority will be given

based on the proximity of the center population being served. In

our case, our TBIC is located in the center of the Pine Ridge Reservation in Kyle, South Dakota. The Lakota Fund agrees that adequate staffing and capacity is necessary in providing effective services.

In closing, the needs of our reservation and most reservations are

great. At The Lakota Fund, we are proud of our accomplishments

and working to meet the needs of the people we serve. This piece

of legislation is critical to us. It is a cornerstone to grow our economy and provide future sustainability. Thank you for the opportunity to share our experience.

Chairman INOUYE. Thank you very much, Ms. Drapeaux.

[The prepared statement of Ms. Drapeaux follows:]

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Chairman INOUYE. Now, may I call on Mr. Hampson.

STATEMENT OF TOM HAMPSON, EXECUTIVE DIRECTOR,

ONABEN: A NATIVE AMERICAN BUSINESS NETWORK,

TIGARD, OREGON

Mr. HAMPSON. Good morning. Thank you very much. I want to

express my appreciation to Senator Cantwell for giving me the opportunity to speak to you today. It is a real honor to talk to all of

you. Also, to Senators Wellstone and Inouye for holding these hearings, and, of course, to Senator Johnson and to House and Senate

cosponsors who broke ground, I think, in this particular piece of

legislation. Because of the differences between the Senate and the

House bills, this particular legislation addresses issues in the small

business development community that have not been directly addressed before.

You have my written testimony before you, and with that, the

appendices as well as the commentary that I made, I would like to

request that that be made a part of the record and particularly emphasize a few points with respect to the query that you have posed

to us today, which is what is the Federal obligation relative to

small business development.

Now, ONABEN is a Native American business network, and like

The Lakota Fund, we are a 501(c)(3). We do have tribal member

or tribal representatives on our board. We are also founded by federally recognized tribes in Oregon. Each one of these tribes offer

services to Native Americans through their own owned and managed Small Business Development Center Network, and we provide

the services in terms of content, classes, counseling.

It is a program that depends upon collaboration between a

501(c)(3) and a Native American tribe, and when they are available, Small Business Development Centers. We did not always

used to collaborate with Small Business Development Centers.

Within the last 2 years, we have felt it is absolutely essential to

find every resource within the community to make sure that the

Native American people within our service area, both on the reservation, near the reservation, and within urban areas, are served.

So at this point, this bill represents truly a innovative way of

bringing all of these things together.

Now, Native American entrepreneurs, as you have heard, face a

lot of barriers, and you have heard some tremendous good news

stories from the panel themselves. Some of those barriers that Native American entrepreneurs face are common to all small business

owners. Some are unique to their circumstances, and I will not

dwell on them except to say that when a Native American person

tries to start a business on the reservation or near the reservation,

they confront considerable obstacles, not only because of the marketing issues that Senator Inouye has referred to, but also because

of some of the political issues that they face with respect to their

relationship to their own tribal government.

But the interesting and paradoxical thing about that is that

these folks look to their tribal governments for help. They look to

their Small Business Development Centers, if the tribes have one.

They, like so many other entrepreneurs, see their tribal governments as both helpers and hindrants, but when they do get servVerDate 11-MAY-2000 13:56 Oct 25, 2002 Jkt 081288 PO 00000 Frm 00085 Fmt 6633 Sfmt 6633 C:\SBA\81288.XXX SSC3 PsN: SSC3
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ices from the tribal governments, those services are very, very welcome, although albeit they are never considered enough.

Now, tribes are seeking on their behalf to balance the needs and

concerns that they have before them in the complex world that

they manage. They have to balance both economic concerns, cultural concerns, and there is ever present a natural tension between

individual free enterprise as expressed through the Native American families that you have heard today and tribal enterprises,

which have been probably responsible for the renaissance in Indian

Country today.

That natural tension is emblematic of Indian Country in general.

Indian Country represents the best examples of local governments

being entrepreneurial. Indian Country also represents some of the

worst examples of mixing politics and business to the detriment of

both the tribe and to the business.

Therefore, it is not a matter of whether the government should

or should not be involved in supporting free enterprise. It is really

a function of what the strategy is and what the level of involvement should be. Ultimately, from our point of view, as a triballyfounded organization that serves individual entrepreneurs and is

dedicated to creating a private sector, we believe that tribes and

entrepreneurs and the local small business owners and their local

community neighbors all really share fundamentally the same

goals and objectives, which are to have strong and healthy communities based upon enterprises that are both privately founded as

well as public in their orientation, and to have a strong small business community there to support them. That is a classic economic

rural development model. That is also the model that underpins

the Small Business Development Program as founded by the SBA.

As a former tribal business manager, as a former tribal economic

development person, and also as a former Small Business Development Center manager in a neighboring community, I know that

those lines are not easily crossed, but when SBDCs do cross them,

the results are considerable.

You have within your testimony testimony from Tom Dorr, who

runs the Small Business Development Center out of Western

Washington University. By Tom’s own admission, even though he

wants desperately to be involved with the eight tribes within his

service area, he would not have been able to do it had not the SBA

provided a grant in the form of a small business LINC Program to

support his outreach efforts.

Small Business Development Centers in Oregon and in Washington, in Idaho and Northern California, the areas that we serve,

would like to serve Indian Country. They simply do not have the

resources. If they are provided with that incentive, they will work

with tribes to do so. We are currently working with Jill ThomasJorgenson from the Small Business Development Center at

Lapwai, who is now doing outreach with the Nez Perce tribe.

The fact of the matter is that relative to Small Business Development Centers, it is a working model, but tribes deserve parity in

taking advantage of the things that are provided by funding of

Small Business Development Centers by SBA. Our experience tells

us primarily that the local presence of a Small Business Development Center, just as you have heard in the experience of The

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Lakota Fund, is absolutely essential to providing continuity of service to Native American entrepreneurs. As someone on the panel

said, it cannot be just an occasional class, an occasional seminar,

and then walk out of town.

ONABEN’s experience in Washington is not dissimilar to that experience. We provide intensive 6-week classes, but those classes are

only provided when we have the resources to serve the Washington

tribes. Colville, Yakama, Makah, and Chehalis have all taken advantage of our programs, but when our funding is diminished because SBA is not able to fund us in that particular year, then we

cannot provide those services.

Government’s role is fundamentally—I think the most important

role that government can play is to provide incentive capital. It

does not need to be large amounts of money, but it needs to be significant, it needs to be continuous over time. I think $1 million is

a little shy to meet the needs of the tribes that we have, and particularly when you add Alaskan Natives and Native Hawaiian organizations.

But the other thing that the Federal Government needs to do

through legislation like the Small Business Development Act is to

encourage collaboration to maximize the use of these resources.

ONABEN’s SBDCs, tribal colleges, organizations like The Lakota

Fund, we must be asked and we must work together to make it all

work.

The Small Business Development Act does all of these things. It

is a well-crafted piece of legislation where people have listened to

the practitioners and integrated the best practices into this legislation. On behalf of our board, our member tribes, we stand ready

to help assist to make it work. I thank you very much for the opportunity to talk to you this morning.

Chairman INOUYE. Thank you very much.

[The prepared statement of Mr. Hampson follows:]

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Chairman INOUYE. Before proceeding with questions, I would like

to announce that all of your prepared statements are made part of

the record. The record will be kept open for 2 weeks, until the close

of business Tuesday, May 14. So if you have any addendums, corrections, or amendments to make, please feel free to submit them.

I would like to insert in the record at this time a statement from

Kenneth E. Robbins, president of the National Center for American

Indian Enterprise Development.

[The prepared statement of Mr. Robbins follows:]

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Chairman INOUYE. I would also like to include a statement provided by Tom Dorr, director of the Western Washington University

Small Business Development Center.

[The prepared statement of Mr. Dorr follows:]

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Chairman INOUYE. May I call upon Senator Campbell.

Senator CAMPBELL. I thank the panel for testifying. Just going

through my own notes and jotting some things down from my own

memory in the years I have been involved in different Indian affairs programs, it seems to me that, I do not know, I do not have

it in front of me, but probably half the agencies in the Federal Government have some kind of programs designed to try to help Native

Americans. Certainly the Department of Labor does, Interior does,

the Department of Defense has a small section, SBA, HHS. They

almost all have some programs that people can make themselves

available to.

It seems to me that the weaknesses of all of them are either we

dropped the ball here in Congress and did not fund them to the

level they should be funded—we hear that quite often, and Senator

Wellstone spoke very well to that when he was here, and it looks

like we are not doing that this year in the President’s budget

again. The second weakness seems to be the delivery system, and

the third is that tribes or individual Indian people are not aware

of the programs they can avail themselves to, and we hear that a

lot, too. We put things in place and then we hear 2 years later that

the networking did not go through the agencies to the tribes so

they know that they could do or avail themselves to different

things.

The BIA has a loan guarantee program. We did a hearing last

week on S. 2017, the Indian Financing Act Amendments of 2002.

They have a program that guarantees 90 percent of a bank loan

to start Native American-owned businesses. The SBA, as I read

from their testimony a while ago, has many of the things that seem

to be covered in this bill—loan programs, HUBZone contracting

programs, business development programs, small business centers,

counseling, I mean, all kinds of things.

So I guess I have to come back to my original question, and that

is we have seen so many things we have put in place in the law

that just simply do not get implemented. My question is, do we

need more laws that people are not going to implement anyway or

should we be doing a better job of what we are already doing? I

do not know for sure, but it just seems to me, if we put this in

place and we get it signed into law, that we are just doing more

of the same things that can be covered if we would do a better job

of funding it here in Congress or if it was better implemented by

the agencies themselves.

So I guess that is the question. Maybe, Pete, since you were with

the SBA yourself, could you answer that for me? Is this really

going to be an improvement——

Mr. HOMER. Yes, I can.

Senator CAMPBELL [continuing]. Or should we, can we do it with

existing things that are already in place?

Mr. HOMER. I think we can improve SBA programs with this legislation because we have National Indian Business Associations

around the country that do a good job monitoring and coordinating

with the Small Business Administration, we work with SBA staff

on a weekly basis. Also, the National Indian Business Association

submitted four resume ́s of individuals from Indian Country that

are very competent individuals and have the capacity to administer

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the office at SBA. SBA asked NIBA to submit Native attorney

resume ́s that have Indian law capability, we did this for the SBA.

Hopefully, SBA will hire a Native attorney in that capacity.

Senator CAMPBELL. Have they given you a timeframe or any indication of when that is going to be done?

Mr. HOMER. On the SBA directorship, NIBA submitted four Native resume ́s, two dropped out because they got tired of waiting

and took other jobs. SBA hiring is a slow system, and I understand

the system SBA goes through—it’s one that is out of SBA hands.

Actually, it is in the Justice Department system, actually, that’s

the hold-up.

What we are looking to develop, is to create State Small Business

Development Centers for Native Americans, bring them into the

mix of other SBA programs that are existing in non-Indian communities. NIBA, in 1996 negotiated with the SBA Small Business Development Centers to create funding for Native American colleges

as Small Business Development Centers, because around the country, SBA funded over 108 different business development centers in

every State, but they did not fund one Native American Business

Development Center.

The SBA women’s programs, and veterans’ programs, were the

models Congress used in 1998, to create the office of Native American Affairs. It took SBA 4 years to hire a national director, and

I was the first Native American hired in 1992 to follow through

with what Congress recommended.

Today NIBA wants to coordinate our effort with all State Small

Business Development Centers, not only the Indian centers. We

must organize and fund the Indian center’s programs first. NIBA

asked SBA to create funding for 31 Native American colleges, along

with all the colleges, junior colleges and vocational education associations that SBA funded in all the States. NIBA wanted to include

31 Indian colleges. Because the program might have been so political, SBA was not going to carve off $7 million for funding 31 Indian colleges. Also, SBA stated that Native colleges did not fit the

criteria and SBA was not legally responsible to fund the 31 Native

colleges as they were not specifically written in the SBA Small

Business Act, so SBA did not fund them.

So we are here today asking for support in funding Native American Business Development Center programs. The monitoring will

be from the Indian tribal governments and business associations

around the country. Since we are the only National Indian Business Association, in Washington, D.C., we do a lot of coordinating

with SBA and the Department of Commerce, BIA and IHS on buyIndian contracting. We attend all their hearings.

Senator CAMPBELL. Pete, did I understand originally when this

bill was introduced on the House side you were not particularly

supportive of it?

Mr. HOMER. Yes, originally I had two problems with the House

bill and I debated Representative Udall on Native American—calling radio shows from the University of New Mexico in Albuquerque. Congressman Udall asked me: ‘‘Pete, do you have a problem with SBDCs?’’ I said, ‘‘No, they do a great job in Tucson and

Phoenix, Las Cruces and Albuquerque, but they do not outreach to

the Native American communities.’’

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The two problems I had were the Office of Native American Affairs (ONAA) in SBA was structured to coordinate all Indian programs and the Udall bill stated that the SBA Small Business Development Center Program would administer this Native American

program. The other problem was the State Small Business Development Center programs would provide the training to Indian reservations.

When you look at the estimated 200 SBDCs around the country

and there is only one Indian hired working on that T&TA program

in Bellingham, Washington, you say, ‘‘No, State SBDC’s will not be

able to provide services to Indian Country.’’ There are some existing programs in our colleges. There are some existing TBICs that

will be involved in this Senate bill funding. NIBA will continue to

support TBICs. Senator Wellstone from Minnesota mentioned other

TBICs from some of the other States, including Oregon. NIBA will

enhance the TBIC efforts making them marketable so they can coordinate with all SBDCs funded by SBA.

Senator CAMPBELL. Does this Senate bill address those concerns?

Mr. HOMER. Yes, it does. It fixes the problem NIBA had with the

House bill.

Senator CAMPBELL. I have a few more questions but I think I

might submit them in writing, Mr. Chairman. I thank you.

Senator INOUYE. Thank you. I just want to have a little profile

of a tribe here. I realize that the Oneidas are not typical, but how

many members do you have on your reservation?

Mr. DANFORTH. We have approximately 15,000 members total, of

which 6,000 reside in and around the immediate reservation, adjacent to Green Bay, Wisconsin.

Senator INOUYE. Of that number, how many individuals are involved in small businesses?

Mr. DANFORTH. There are probably in the neighborhood of 20,

approximately.

Senator INOUYE. Twenty out of fifteen thousand.

Mr. DANFORTH. Now out of that 20, if I can just comment, there

are about half a dozen successful. The remainder are either marginal or unsuccessful. There are approximately 80, currently, potential entrepreneurs that are waiting for a program that is in its

beginning State of being initiated as we speak.

Senator INOUYE. What sort of help can you give the 80?

Mr. DANFORTH. We have a couple of initiatives we are just beginning. One is a small business loan program where we have injected

$4 million.

Senator INOUYE. This is a tribal initiative?

Mr. DANFORTH. A tribal program. That $4 million would be injected into that program this year and $1 million per year after

that. We have another program that is more like a revolving loan

program where we have lobbied the state—we pay approximately

$5 million a year to the State for gaming. Those monies are supposed to come back to the reservation and surrounding communities. We have about $500,000 of that money came back for small

business loans.

Senator INOUYE. Of those that succeeded, what sort of businesses

were they in?

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Mr. DANFORTH. To name a few, one is a sub shop franchise, a

food service business, insurance. Now there are several instances

where a tribal member has joined with an insurance company and

operating as an insurance business, Native insurance business. Another is a casino furniture manufacturer or delivery service.

Some of the businesses that have failed: dry cleaning and laundry service, a couple of restaurants, grocery store, about five construction companies, a larger tribally-sponsored program referred

to as Bortech, a machine shop, a couple of body shops, car wash,

landscaping business. Those are some—some of those I mentioned,

the body shop, landscaping, car wash, are potentially moving toward becoming successful but over the years have not been to date.

Senator INOUYE. How close is the nearest major urban area?

Mr. DANFORTH. Green Bay, Wisconsin borders our reservation on

the east side so it is a—I forget the actual population there but it

is industrial, paper mill areas. We know that the revenues from the

casino in that area have expanded the existing businesses and have

initiated many additional small businesses. A small handful of

those have been Oneida businesses or other Native American businesses.

Senator INOUYE. How many members have benefited from your

loan program?

Mr. DANFORTH. Under these? None right now. It is just in its initiation stages, both of those programs. We have attempted programs in the past. Those failed businesses I mentioned were some

of those who have benefited from those. Other things that have

caused problems with our own administered programs, tribal politics enters into these things. It should not be, but it does. I see this

bill helping overcome that problem, where we have a technical assist that lays out adopted criteria that a person must go through,

an entrepreneur must go through to establish its loan and business

plan to be adopted.

Senator INOUYE. Thank you. Mr. Homer, you have mentioned

eight principles in your prepared statement. Do you think that

your eight principles can be achieved by this bill? The eight objectives you have?

Mr. HOMER. Yes, I do.

Senator INOUYE. So you support this measure?

Mr. HOMER. Yes, I do. I have worked with these principles in the

past. In the Small Business Administration I worked with these

same principles. My efforts were to create within the SBA these

kinds of program principles to outreach to Indian country, and

NIBA coordinated with every SBA district office. On a volunteer

basis, the SBA district offices in every State designated one employee from each as the Native American coordinator to coordinate

all Native American activity with the Office of Native American Affairs.

The ONAA program was cosmetic when we initially started out.

SBA did not have the resources to actually operate a National program in the Office of Native American Affairs. I was the only

fulltime staff that you had there. So we had to outreach for support

from the district offices. We got approval from the SBA Administrator, and we operated and coordinated all over Indian country.

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The 13 Western Indian States had very good SBA coordinators.

They started working to making T&TA inroads to Indian country.

Today we need to establish the SBA Office of Native American

Affairs with statutory legislation, to provide Native Training and

Technical Assistance with some funding behind it. Senator Campbell, it will not work if we don’t have the $7 million funding behind

it. This funding for 5 years will start training and technical assistance, so Native American Programs can coordinate with State

SDBC programs. It only makes sense that we coordinate with all

SBA programs in this way. Tribes around the country have been

coordinating all programs making them comprehensive programs.

I lived in the day when we successfully assisted the Choctaw,

Mississippi through comprehensive funding from many Federal

agencies and from all agency components. Laguna Industries was

not any different from Choctaw. A&S Industries is not any different either—all were successful. This is how they were successfully created through these types of funding. The private sector did

their share in the development of Indian Country business.

Today, these concepts in development are what we have to look

at for future developments. We need T&TA to start working with

these concepts again. Manufacturing is a big initiative right now

in Indian country; light, small manufacturing. Native businesses

need training and technical assistance. NIBA is going back to

square one in providing assistance with: business development,

business plans, feasibility, and financial management plans. These

services will also be provided by the SBA Native Small Business

Development Centers.

Senator INOUYE. Thank you. Mr. Dorr, before I proceed, congratulations on your recent award.

Mr. DORR. Thank you.

Senator INOUYE. You have been certified under the SBA’s mentor-prote ́ge ́ program. What sort of benefits do Indians get from that

program?

Mr. DORR. Specifically in our industry of security guard services,

a variety of our mentor offers a variety of administrative, technical

assistance, resourcing, employment options, legal advice. So a variety of spectrum of our business experience.

Senator INOUYE. These mentors are Native Americans?

Mr. DORR. No, they are not. This specific one is located very close

to our office, our corporate office by the reservation and is a very

large business. So this specifically is not.

Senator INOUYE. So you believe that this program works?

Mr. DORR. Very much so.

Senator INOUYE. I presume from what you are stating there is

a shortage of mentors.

Mr. DORR. I think there are quite a few mentors available. I just

think that maybe the marketing or the SBA’s letting them know,

or what have you, I guess is not really available.

Senator INOUYE. How many contracts do you believe your company has lost because its 8(a) status is not considered under the

Federal supply schedule?

Mr. DORR. In the last 30 days we have lost four.

Senator INOUYE. If you were considered you would have had

those?

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Mr. DORR. We would be more considered. I cannot assume that

we would be awarded those. But instead of considering small businesses, they excluded the small business programs and it is the

largest companies in the world competing against contracts that

are historically 8(a) for a number of years.

Senator INOUYE. Ms. Drapeaux, you have indicated that in your

training and business development services that you try to make

them culturally relevant.

Ms. DRAPEAUX. Yes.

Senator INOUYE. What do you do to accomplish that?

Ms. DRAPEAUX. We actually developed our own training curriculum and now we are using the—like buffalo economy. Part of

our training we go back to the very beginning of time and why Native people should be businesspeople and why we probably always

have been businesspeople as we have always bartered, and how we

have survived as a people.

So what that has really done, I think, has helped individuals

really consider themselves to be eligible to be businesspeople.

Where we live a lot of people are like, you know, we do not know

if we should be in business. Is that really us? Is that something we

should be doing as people? So part of our education process is simply getting people to think that it is OK to be in business and it

is something that we should strive for and look to, and it is not just

for white people, or it is not just a certain of person that should

be in business; that it is really OK for us to be in business.

Where we live is pretty isolated so we really do start at the very

beginning of where our people come from, and we build in our own

belief systems and tie them to our business training, so it is more

acceptable, so people can start believing in themselves about going

into business.

Senator INOUYE. You have indicated that your fund has provided about $750,000 in loans?

Ms. DRAPEAUX. Yes.

Senator INOUYE. Have they all been repaid on time?

Ms. DRAPEAUX. No, we have a delinquency rate, but our delinquency rate is actually pretty good. It is right now I think sitting

at around 17 percent of delinquency. We have a pretty rigorous

training program. We have a 10-week small business training program. Just because you go through our program does not necessarily mean that you are going to receive a loan. It is very labor

intensive. We provide a lot of one-on-one technical assistance. Our

staff goes onsite a lot and visits with people, and a lot of times

when people have hard times, for whatever reason, because everything is tied to the economy. Even out there it is pretty driven by

what is happening everywhere else.

So we will do things like write notes. We do not do what typical

banks do. We actually try to help them so they can succeed, if we

need to. Just because that is what it takes to do business out there.

Senator INOUYE. How many jobs do you believe you have created

by your activities, new jobs?

Ms. DRAPEAUX. I would say many, primarily because a lot of our

beginning borrowers which were micro-borrowers, which really

turned out to be artists and home-based businesses. So we have a

couple of hundred that are probably home-based. These are quill

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workers, quilters, beaders, a lot of artists. Since our loan fund was

only—the maximum that they could borrow was $25,000, it was not

enough money to really start any other type of business. So when

they increased the amount it has really moved the Lakota Fund up

and forward to other types of larger businesses, and even that is

not a lot.

Senator INOUYE. Thank you.

Mr. HAMPSON, in your prepared statement you speak of a joint

venture with Lewis & Clark College?

Mr. HAMPSON. Yes, sir.

Senator INOUYE. That the funds were cutoff at midstream?

Mr. HAMPSON. No, our effort with Lewis & Clark College came

as a result of the request by the Nez Perce tribe of Idaho to—they

asked us to serve their reservation with our going into business

programs. We did not have money to do that at that particular

point in time. So at that point we were not able to do anything.

After a period of time we received a demo, which essentially was

a demonstration program through SBA for the 7(j) program that allowed us to go again outside of Oregon to do a demonstration program with tribes. We did classes at Fort Hall. We did classes in

Spokane, Yakima, and both Colville and Nez Perce expressed an

interest. But by the time that they were ready to do something

those funds had expired. So it was not a matter of those funds

being terminated prematurely, it was just a matter of, timing is everything.

It goes back to the point about continuity. If you make a promise

today and your funding is delayed, particularly with, as you know,

the Federal domestic pipeline can be delayed anywhere from 6

months to a year. Then by that time you are already into the midpoint of the grant before you actually see the resource. You cannot

make your commitments on a timely basis.

The bottom line was what we did was we asked the SBDC to provide services. We facilitated a joint meeting between the tribe and

the small business development center, and right now as of this

moment the SBDC has committed to teaching their next level

training class for the confederated tribes of Nez Perce and we will

be providing other Native American-appropriate content and facilitation services to that process.

Senator INOUYE. Do you charge a fee to those who are seeking

your assistance?

Mr. HAMPSON. We do. We charge a fee, $10 a class, or $100 for

the entire series. Oftentimes that fee is picked up or reimbursed

to tribal members by the tribe if they successfully complete the program. By successfully complete that means they have completed a

business plan, their counselor has approved the plan, and authorized the tribe to reimburse them.

Senator INOUYE. Under this training program, how many jobs do

you think you have developed?

Mr. HAMPSON. We can only give you that data in Oregon because

in Oregon we are supported by the economic development department of the State and as part of the small business providers network we all chip in and provide for an external evaluator. That

evaluator surveys all of the program clients, including the SBDC

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network and the other minority and low income entrepreneurship

programs.

They issue a report, and the last 2 years—and this data has been

submitted in the record for the appendices. The consultant that did

the study estimated, based upon surveys in the 1998 to 1999 period, out of 1,556 clients served there were 405 new jobs, and the

succeeding year 480 new jobs where there were 1,205 people

served.

Senator INOUYE. As I have indicated, the record will stay open

until close of business 2 weeks from now, so if you have any additions to submit please feel free to do so. Like Senator Campbell, the

committee will be submitting questions to all of you, if we may, for

your consideration and response.

Senator CAMPBELL. Mr. Chairman, may I reflect on one thing

that Mr. Danforth mentioned about the failure of some of the businesses on the reservations? I was thinking myself, the failure of

outside businesses are probably roughly the same. I understand

that about 80 percent of new startup businesses in the private sector, the non-Indian sector, are out of business within a couple

years, and probably for the same reasons, a weak market or oversaturation, or the main reason I think is just not enough capital,

undercapitalization.

But I did want the record to reflect that I do not think Indians

are going out of business any faster than anybody else. With the

right training they have the same opportunities to stay in as anybody else does. But I wanted the record to reflect that.

Let me ask just one last little tiny question, because I was also

very impressed with Mr. Dorr’s comments. How did you get the initial capital to start your business?

Mr. DORR. We grew slowly and we self-capitalized ourselves.

Senator CAMPBELL. Was it through any loans or grants though?

Mr. DORR. No programs.

Senator CAMPBELL. Or did you just shoestring it up?

Mr. DORR. Right.

Senator CAMPBELL. Congratulations. You did a wonderful job.

Thank you, Mr. Chairman, I have no further comment.

Senator INOUYE. With that, we thank you very much. The record

will be open for 2 weeks and the meeting is adjourned.

[Whereupon, at 11:56 a.m., the joint committee meeting was adjourned.]

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