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80–333 2002

PENTAGON’S PROCUREMENT POLICIES AND

PROGRAMS WITH RESPECT TO SMALL BUSINESS

HEARING

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

WASHINGTON, DC, MAY 15, 2002

Serial No. 107–57

Printed for the use of the Committee on Small Business

(

(II)

COMMITTEE ON SMALL BUSINESS 

DONALD MANZULLO, ILLINOIS, Chairman 

LARRY COMBEST, Texas 

JOEL HEFLEY, Colorado 

ROSCOE G. BARTLETT, Maryland 

FRANK A. LOBIONDO, New Jersey 

SUE W. KELLY, New York 

STEVE CHABOT, Ohio 

PATRICK J. TOOMEY, Pennsylvania 

JIM DEMINT, South Carolina 

JOHN R. THUNE, South Dakota 

MICHAEL PENCE, Indiana 

MIKE FERGUSON, New Jersey 

DARRELL E. ISSA, California 

SAM GRAVES, Missouri 

EDWARD L. SCHROCK, Virginia 

GELIX J. GRUCCI, JR., New York 

TODD W. AKIN, Missouri 

SHELLEY MOORE CAPITO, West Virginia 

BILL SHUSTER, Pennsylvania 

NYDIA M. VELA ́ ZQUEZ, New York 

JUANITA MILLENDER-MCDONALD, 

California 

DANNY K. DAVIS, Illinois 

BILL PASCRELL, JR., New Jersey 

DONNA M. CHRISTENSEN, Virgin Islands 

ROBERT A. BRADY, Pennsylvania 

TOM UDALL, New Mexico 

STEPHANIE TUBBS JONES, Ohio 

CHARLES A. GONZALEZ, Texas 

DAVID D. PHELPS, Illinois 

GRACE F. NAPOLITANO, California 

BRIAN BAIRD, Washington 

MARK UDALL, Colorado 

JAMES R. LANGEVIN, Rhode Island 

MIKE ROSS, Arkansas 

BRAD CARSON, Oklahoma 

ANI ́BAL ACEVEDO-VILA ́ , Puerto Rico 

DOUG THOMAS, Staff Director 

PHIL ESKELAND, Deputy Staff Director 

MICHAEL DAY, Minority Staff Director 

(III)

C O N T E N T S 

Page 

Hearing held on May 15, 2002 ............................................................................... 1

WITNESSES

Aldridge, Hon. Edward C. ‘‘Pete’’, Under Secretary of Defense, Acquisition, 

Technology & Logistics ........................................................................................ 3

DeGiacomo, John E., Program Director, Procurement Technical Assistance 

Center .................................................................................................................... 24

Ritter, Cathy, President, The Constellation Design Group, Inc. ......................... 25

Braden, Pamela, President, Gryphon Technologies .............................................. 28

Tucker, Mike, President, George W. Allen Co., Inc. ............................................. 31

Erwin, Frederick, Program Manager, Dimensions International, Inc. ............... 33

Cabrera, Bill, Lord and Company, Manassas, VA ................................................ 34

APPENDIX

Prepared statements: 

Aldridge, Hon. Edward C. ‘‘Pete’’ .................................................................... 47

DeGiacomo, John E. ......................................................................................... 57

Ritter, Cathy ..................................................................................................... 65

Braden, Pamela ................................................................................................ 69

Tucker, Mike ..................................................................................................... 85

Erwin, Frederick ............................................................................................... 90

Cabrera, Bill ...................................................................................................... 98

Additional Information: 

Post hearing response by Pamela Braden, Gryphon Technologies ............... 100

Submission by Jerald S. Howe J., Senior Vice President and General 

Counsel, Veridian Corporation .................................................................... 102

(1)

PENTAGON’S PROCUREMENT POLICIES AND 

PROGRAM WITH RESPECT TO SMALL BUSINESSES 

WEDNESDAY, MAY 15, 2002 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, D.C. 

The committee met, pursuant to call, at 2:00 p.m. in room 2360, 

Rayburn House Office Building, Hon. Donald Manzullo [Chairman 

of the Committee] presiding. 

Chairman MANZULLO. Good afternoon and welcome to this hearing of the Committee on Small Business. A special welcome to 

those who have come some distance to participate and attend this 

hearing. 

Today, we welcome the Honorable Pete Aldridge, the Under Secretary of Defense for Acquisitions, Technology & Logistics, ATL. 

The Pentagon is the major buyer of goods and services from the 

private sector, accounting for approximately 65 percent of all Federal procurement dollars. Defense is an important marketplace for 

small businesses. Doing business with small business is good—

Larry, we should bring you here more often. Did you bring half 

these people here with you or what? It is great. 

How many people came here with the Secretary? Just raise your 

hand, just for the heck of it. 

Oh, one person? Oh, yeah? That is okay. That is okay. 

Doing business with small businesses is good business. The number of large firms that DoD does business with has been steadily 

decreasing in recent years. A few large companies account for a 

major portion of the Pentagon procurement dollars, leaving little 

competition or choice. 

In contrast, competition is alive and well in the small business 

community providing the DoD with multiple sources and competitive prices. 

In addition, small businesses have been more creative than big 

businesses, accounting for more patents per employee, having been 

more productive in creating jobs, and have provided the economic 

stimulus to lead this nation out of periods of economic downturn. 

In all aspects, doing business with small business is good for the 

nation. 

Unfortunately, the use of large mega-contracts and consolidation 

or bundling by the Pentagon undermine the benefits that small 

businesses can provide for the future in the nation. These large, 

unwieldy contracts reduce competition and eventually would drive 

2

up the cost of procurement. It also stifles innovation since the free 

market system is built on risk and reward. Without reward, no one 

will be willing to take the risk of mortgaging their home and other 

assets to start a small business. 

In laying out the Administration’s small business plan at the 

Women’s Entrepreneur Summit, the President emphasized the 

need to ensure that small business has access to government contracting. He identified mega-contracts and bundling as the major 

impediment to the entry and fair participation of small business in 

the Federal marketplace. 

The President has charged each government agency with breaking down large contracts so that small business owners have a fair 

shot at federal contracting. We are most interested in how the Pentagon is implementing the President’s small business plan. 

In this respect, I am very pleased to see that the Air Force’s 

FAST contract for this fiscal year to date has attained a 77 percent 

prime contract participation by small businesses. This is well above 

the 50 percent goal, and we hope that this success will continue. 

I also want to thank you, Mr. Secretary, in our opening statements for the great participation that both the Majority and the 

Minority staffs have had with your staff in going through each of 

the five prime—each of the five big contracts that have been identified by Mrs. Velazquez. It has been an ongoing process and monitoring. Our staff is extremely excited over the opportunity to have 

input in it and to help you with making those decision. 

And I would then yield to our Ranking Minority Member, Mrs. 

Velazquez. 

Ms. VELAZQUEZ. Thank you, Mr. Chairman. 

Two months ago President Bush announced his small business 

agenda. Significantly, he said, and I quote, ‘‘Whenever possible, we 

are going to insist we break down large contracts so that small 

business owners have got a fair shot at federal contracts.’’ That statement goes to the heart of what this committee has 

been trying to do for the past 10 years. A major determining factor 

in turning the President’s rhetoric into reality will be the implementation of this agenda by the Department of Defense, the agency 

that is responsible for 65 percent of all government purchases. 

If the past is any indication, however, we have a long uphill 

climb to work on compelling the Pentagon to implement this agenda, and that climb is getting steeper every day. There is no one 

agency more responsible for the exclusion of small businesses than 

the Department of Defense. For the past two years, DoD has not 

met a single one of its small business goals, costing small businesses $3.5 billion and women-owned businesses $4.3 billion. This 

absolutely must change. 

Our committee has spent a considerable amount of time and energy looking at DoD’s mishandling of contracting on seven separate 

occasions. It is nice to finally have the opportunity to hear from 

Mr. Aldridge. 

In the previous hearings, we always heard the words about how 

important small businesses are to the agency, but we have seen no 

evidence of any concrete action. 

In the committee Democrats’ annual SCORECARD study, the 

DoD has received a failing grade for the past three years running. 

3

The primary reason for these failing grades is the increasing reliance on contract consolidation, the very thing the President said 

must stop. 

Just a few weeks ago we issued a Watch List of 10 of the worst 

contracts that rob opportunities from small businesses. Seven of 

these 10 were DoD contracts. That is disgraceful. Worse yet, the 

Pentagon continues to engage in this practice without being able to 

demonstrate one dime of savings to the taxpayer. 

In fact, this system has disintegrated to the point where this 

committee has taken the drastic action of reviewing these contracts 

one by one because the department is either unwilling or unable 

to manage them itself. The department puts out plans that do not 

even meet the requirements of the law, and then structure its contracts to make sure work will not even be achieved. This is just the 

planning stages. 

If and when a small business is lucky enough to get a contract, 

the situation only goes from bad to worse. Small businesses are 

threatened with poor performance ratings, paid late, and forced to 

perform work without proper paperwork and documentation that 

creates confusion and frustration later on. At that point they come 

to this committee because there is no effective advocate within the 

department. This is not the way it should be. 

Small businesses are a critical factor in the economy and should 

not be treated like second-class citizens, especially from a federal 

department that has a history of $600 hammers and $7,000 coffee 

makers, because small businesses can and do provide the government with a quality product, many times more affordable than the 

big corporate counterparts. 

Thank you, Mr. Chairman. 

Chairman MANZULLO. Thank you. Mr. Secretary, we look forward 

to your testimony. Could you introduce your assistant with you? 

Mr. ALDRIDGE. I plan to. 

Chairman MANZULLO. Alright. 

STATEMENT OF THE HONORABLE EDWARD C ALDRIDGE, JR., 

UNDER SECRETARY OF DEFENSE, ACQUISITION, TECHNOLOGY & LOGISTICS, DEPARTMENT OF DEFENSE 

Mr. ALDRIDGE. Mr. Chairman, Ranking Member Velazquez, and 

Members of the Committee, I am pleased to be here today to discuss the activities of the Department of Defense with regard to the 

utilization of the nation’s small and disadvantaged businesses in 

support of our national security mission. 

I am accompanied by Mr. Frank Ramos, the Director of Small 

and Disadvantaged Business Utilization Office within my organization. 

I have prepared, Mr. Chairman, a formal statement for the 

record, but I would just like to provide a few summary points for 

my verbal testimony today. 

Chairman MANZULLO. We will accept all of the formal statements 

prepared by the witnesses and by all the Members. 

Mr. ALDRIDGE. First, it is essential for our national security that 

we have a healthy industrial base. I have made enhancing a 

healthy industrial base as one of my top five goals as the Under 

Secretary of Defense for Acquisition, Technology & Logistics. 

4

If we are to provide our nation’s soldiers, sailors and airmen with 

the finest equipment in the world, this equipment must come from 

a health, innovative and competitive industrial base. 

Second, small businesses are a vital and an essential element of 

that industrial base. Small businesses have advanced technology 

we need, they are innovative, and the have the agility to rapidly 

respond to our needs. This past year small businesses received over 

$50 billion in DoD business with over 54 percent of that value 

through prime contracts. This is the largest amount in the history 

of the Department of Defense, and I hope to continue this trend. 

Third, we have initiated plans to continually improve our utilization of small businesses and we will track our progress. On May 

16, 2001, I implemented a new process across the department for 

establishing goals, measuring progress, and reporting our results. 

Fourth, we have set goals for small business utilization, but I 

will insist, as we all should, that the fiscal goals of all DoD contracts be met with an equally important goal of quality performance. 

Fifth, we are initiating training courses at the Defense Acquisition University to show DoD acquisition managers how to better 

utilize small businesses. 

Finally, I am serious about the utilization of small businesses 

and will take no action that will reduce the quality contribution of 

small businesses to the mission of the Department of Defense. 

I am proud of DoD’s record on small business issues, and look 

forward to continuing to work constructively with this committee to 

make that record of achievement even better.

This concludes my prepared remarks, and with Mr. Ramos, we 

will be happy to answer any questions that you may have. 

[Mr. Aldridge’s statement may be found in the appendix.] 

Chairman MANZULLO. As is our custom whenever we have somebody who testifies in a very technical issue, we always invite the 

resident expert from the agency to sit alongside the Under Secretary, and we invite your participation, Mr. Ramos, and thank you 

for coming. 

Mrs. Velazquez. 

Ms. VELAZQUEZ. Mr. Aldridge, in a memo you issued on January 

17, 2002, you stated that, and I quote, ‘‘When the department consolidates requirements, we must avoid unnecessary and unjustified 

bundling of requirements or make efforts to mitigate the negative 

impact that contract bundling has on small business concern.’’ This falls in line with the President’s statement in March, in 

which he set out his small business agenda. In that agenda one 

item included by the President is ‘‘avoiding unnecessary bundling.’’ Based on the fact that unnecessary and unjustified bundling violates the statute and will be prohibited anyway, would you please 

give us some insight into your understanding of the President’s 

small business agenda? 

Mr. ALDRIDGE. I think the President’s agenda was very clear. He 

would like to avoid bundling of contracts. We support that. That is 

exactly what the January memo was intended to do. We needed 

make sure we establish guidelines. If any of the departments were 

wanting to bundle a contract for purposes of saving taxpayers’ dollars, they had to justify it. And we gave the guidelines by which 

5

they could do that analysis that would imply a justification of bundling. We do not intend that that would be a very common practice. 

In fact, it should be a very rare practice that we would bundle contracts. 

I was noticing that in the total of the number of the contracts 

within the Department of Defense, we have only defined 26 of 

thousands of contracts as being bundled, which only represents less 

than two-tenths of one percent of the total DoD acquisition. 

I think bundling is a rare occurrence. We are going to make it 

rarer, and we are going to give the guidelines that when it can be 

done for the purposes of saving taxpayers’ dollars, we give them 

the guidelines by which that would be accomplished. 

We have to be very clear on this to justify each one of those and 

that was the purpose of our memorandum, is to make sure that we 

have the proper rationalization and justification for doing so when 

it is proposed to make it happen. 

Ms. VELAZQUEZ. Mr. Aldridge, Democratic members of this committee released a report a couple of weeks ago that highlighted the 

rampant consolidation occurring with the department, consolidations for the convenience of the government without regard to 

small businesses. 

Are these consolidations in large part the reason that the department cannot achieve its 23 percent small business goal? 

Mr. ALDRIDGE. I do not believe so. First of all, we have got to define the difference between consolidation and bundling. Consolidation clearly implies that we can consolidate small businesses and 

that consolidation can also be competed by small business. Bundling, I think, is when you try to—you bundle contracts to exclude 

small business. That is what we need to avoid. But when we have 

consolidation that permits small businesses to happen, I think that 

is okay. 

Now the—I forgot your question. I was getting into the definition 

rather than—— Ms. VELAZQUEZ. I asked you, first, are you telling me that the 

consolidation of contracts that displace small businesses because it 

is bundling according to statute is okay? 

Mr. ALDRIDGE. No, I am saying that we want to avoid bundling, 

but in some cases it may be justified. But in the case where it can 

be justified, there has to be analysis to prove it, and we have given 

them guidelines on how to prove that, if bundling is okay. I expect 

that to be a rare occasion, not a popular one. 

Ms. VELAZQUEZ. My previous question was, are not these consolidations in large part the reason that explains why your department 

did not achieve the 23 percent statutory goal? 

Mr. ALDRIDGE. No, I do not believe—I do not believe bundling is 

the reason we are not achieving the percentages for our goal, our 

total goal versus independent ones. 

I believe the reason is that we in the proper process of finding 

qualified small businesses, we have a problem that the pool size to 

allow us to achieve those goals is not large enough. So the combination of taxpayer cost effectiveness and the quality is the reason we 

are not achieving goals in many of those cases. 

Ms. VELAZQUEZ. So let us talk about consolidation. We are not 

taking here about bundling. 

6

Mr. ALDRIDGE. Consolidation—— Ms. VELAZQUEZ. So are you telling me that when you consolidate, 

just make contracts, that we do not—you cannot find qualified 

small businesses that cannot provide the products and services that 

are required? 

Mr. ALDRIDGE. No, no. No, I did not say that. You asked about 

bundling. Consolidation will permit small businesses to participate. 

If you consolidate contracts, small businesses can bid, but it is not 

consolidation nor bundling that I believe that causes the issue of 

not being able to achieve the goals precisely. 

Ms. VELAZQUEZ. Okay. 

Mr. ALDRIDGE. It is quality of control. 

Ms. VELAZQUEZ. Mr. Aldridge, would you please submit for the 

record within the next 10 days a listing of all consolidated contracts by the department and the cost savings that have accrued 

to the government as a result? 

Mr. ALDRIDGE. I will try to find that data, yes. 

Ms. VELAZQUEZ. I guess that if you cannot find it, then I will provide it to you. We have a list. 

Where is it? We can provide it. Here, maybe you can see it. 

Mr. ALDRIDGE. These are the Federal Watch List. Not all contracts which had been—and the cost savings for each of them. You 

had asked me for a much longer—— Ms. VELAZQUEZ. Sir, out of those 10, seven come from DoD. 

Mr. ALDRIDGE. Understand. 

Ms. VELAZQUEZ. Okay. 

Mr. ALDRIDGE. But I believe you asked me for all consolidated 

contracts and the cost savings across the Department of Defense. 

That would be a lot longer list than that. 

Ms. VELAZQUEZ. Okay. You could start with the seven that we 

have there. 

Mr. ALDRIDGE. Okay. Thank you. I will. 

Chairman MANZULLO. Mr. Hefley. 

Mr. HEFLEY. Thank you. 

Mr. Secretary, I am glad to hear you reiterate the policy again 

about bundling. Bundling has disturbed me for a long, long time, 

and partially because I started out in the construction business for 

a small contractor. And when I say I started out in the construction 

business, I do not want it to appear—I do not want it to be more 

grandized than it was. I drove a truck, and I was a carpenter’s apprentice for a small contractor who was doing small projects at Tinker Air Force Base in Oklahoma City. 

And he was able to get those small contracts. He was a new company and he was able to get those because he could bond for those. 

And we did the refurbishing of the officer’s club there, I remember. 

We did some shops in some of the hangars. 

Had they put those contracts together, we probably could not 

have qualified for it. By doing them separately, we were able to. 

Is that the kind of thing that you are trying to get to so that you 

can get it down to the size that a small business can bond for and 

can compete for, and then work it? We would like for all small 

businesses to become big businesses some time. 

Mr. ALDRIDGE. We hope that all small businesses started or all 

businesses have started out being small. I am sure many——

7

Mr. HEFLEY. Oh, sure. 

Mr. ALDRIDGE. Boeing started out in a back yard of a garage. 

Yes, sir, that is the idea. Look, as I said, a healthy industrial 

base for this country, for the Department of Defense is absolutely 

essential, and we are finding with over $50 billion of our procurement going to small businesses. These are people that have a lot 

to offer us in technology, agility of move, and to do things quickly. 

We need to encourage that, and that is what I am trying to do with 

the guidance that we have both in terms of avoiding the bundling 

as well as another memorandum that I issued that would try to get 

to get a better process by which we can follow, set goals for ourselves and follow them and make progress throughout the military 

departments. 

So the answer to your question is, yes, sir. Small businesses are 

valuable. They are part of our industrial base. We need to make 

them healthy, and hopefully get them to be big businesses some 

day in the future. 

Mr. HEFLEY. I am glad to hear you say that. I hope we continue 

to move in that direction. 

Another question I get an awful lot——

Ms. VELAZQUEZ. Will the gentleman yield? 

Mr. HEFLEY. Yes, ma’am. 

Ms. VELAZQUEZ. You see, Mr. Aldridge, the contact, the number 

two contract, it called for the construction of seven barracks. If you 

break them down, you are building seven, so you could break them 

down to have small businesses to compete and build at least one. 

Mr. ALDRIDGE. Mrs. Velazquez, I am not familiar with that contract. That contract level does not normally get to my attention. 

But it is clear that we also have a—I have an obligation to the 

taxpayers of the United States. We have to provide those taxpayers 

with the most efficient capabilities we can. And so there is a balancing act that goes on in everything we do between trying to support small business, which I clearly support, and I will continue to 

say that almost every time I talk before this committee, I support 

small business, but I also have the equally important obligation of 

ensuring the taxpayer is getting the maximum return for the dollar. 

Now, I am not familiar with that contract, so I do not know 

whether the two have been balanced in the right way. But certainly we will follow that to make sure that is going to occur, but 

I believe it is important to understand that saving taxpayers’ dollars is also important as well as trying to protect small businesses. 

Mr. HEFLEY. If I might, I have one other question. I get a question a lot of times from small majority business owners, I guess you 

would call them, that all of the set asides for small business are 

taken up by minority and women-owned businesses, and there is 

all kinds of shell games being played out there so they can qualify 

as a minority or a woman-owned business. 

And it is my experience that if you are a small business struggling to get started and to make it, it does not much matter what 

your color or what your gender is. I mean, you may need these set 

asides. 

8

Can you speak to that? Are all of these or the vast majority of 

these being taken up by special categories rather than small business in general? 

Mr. ALDRIDGE. Well, yes, sir. Not only do we have a small business goal across the department, but we have subcategories of 

small business goals within each of the categories, an 8(a) firm, minority-owned, women-owned firm, and of course there are HUB 

zone areas we also have goals set for. 

So yes, there are all types of different categories of goals. 

Do you want to say something about that, Frank? 

Mr. RAMOS. Yes. What I would like to do is kind of put this a 

little bit into perspective, and I would like to share with Congressman Velazquez. 

Clearly, we share your concern about the appearance of this bundling that has taken place within DoD. I told Mr. Aldridge, and believe me, I am not saying this just to be patronizing, I have been 

around town a little bit. I have Mr. Aldridge and Mr. Michael 

Winn, who are my immediate directors, they have given me a tremendous license to roam around the Department of Defense looking at these issues. 

I was just describing to Mr. Aldridge that if you look at the 

metrics, and go back 10 years if you will, and all of those statistics 

are up on the board, if you look at them almost like a heartbeat, 

that heartbeat is rather consistent, whether it had been the past 

administration, this current administration. They have all been 

fairly consistent. There has only been one blip in terms factor in 

terms of that metric performance, and that was the Persian Gulf 

War. 

I kind of expect we are going to have another impact in this next 

year. We do not know because the data is not there. So what I am 

saying and what I am describing here is that we have been rather 

consistent notwithstanding the different directions that they have 

had at the Department of Defense, so we are taking a look at that. 

With respect to the issue on bundling, if we saw a loss in there 

across the board generically speaking, then we can say it is pinned 

to that. But the slope of dollars and the slope of numbers of contracts that we see for small business is rather consistent. It is not 

where we want to be, clearly it is not where we want to be. 

However, when we look at the bundling aspect of it, we have had 

a series of reports, whether people agree to them or not, we have 

had the General Accounting Office, we have had an inside contractor take a look at them, and I guess you can arrive at a conclusion that it is not conclusive because of a lot of different factors. 

The President has currently put together a task group of all the 

federal agencies to examine this. It is our expectation that the Department of Defense will get some clarity of definition of what bundling is in the real sense, and we will also get some cross-cut from 

some of the other federal agencies to compare it to us, to see what 

it is that we can use as the best model to penetrate this issue of 

bundling. 

Is nagging at us, Congressman Velazquez? It tears at us in terms 

of having to be reactive to this. We have provided to the staff here 

on this committee a listing of all the bundled contracts that we 

have had, at least under the definition. 

9

We have not had a chance to analyze and do the analysis as you 

request, Congressman, and we are going to do this. 

Ms. VELAZQUEZ. Sir, when you said to me that you are working 

hard, that you are trying to do your best, and that you are doing 

better, look at the numbers. Last year your achievement in terms 

of your goal of 23 percent was 21 percent in the year 2000. In the 

year 2001, it dropped to 20 percent. That is a big drop. It represents a lot of money for small businesses. 

Mr. RAMOS. We are looking at a statistical issue, and I agree, 

there are some inferences there. But if you look again at the dollars, in terms of the units, if you will, they are consistent in terms 

of what I look at as the trend. We have to look at the trend in 

terms for us to analyze, and that is, I guess, my commitment to 

you, Congresswoman. When I first met you, I told you I am going 

to dig into it, and that is what we are going to do. That is the heart 

of it. 

Ms. VELAZQUEZ. Well, let me just say this is not a statistical 

issue. 

Mr. RAMOS. It is not. 

Ms. VELAZQUEZ. With all of these small businesses that are here 

and will be testifying, this is about money and this is about jobs, 

and when they are forced to shut down their business or fire their 

employees. 

Chairman MANZULLO. Okay, Mrs. Tubbs Jones. 

Ms. TUBBS JONES. Good afternoon, Secretary Aldridge, Mr. 

Ramos. Let me address my comments, first of all, or my questions 

to the Secretary, Mr. Aldridge. 

Mr. Aldridge, would you agree that as the leader of the Department of Defense it is you who sets the goals and objectives of your 

department. 

Mr. ALDRIDGE. We set the policy. We try to work closely with our 

service counterparts to make sure that——

Ms. TUBBS JONES. The short answer is yes. As the leader of the 

agency, it is your job to get the troops in line. Is that a fair statement? 

Mr. ALDRIDGE. The Secretary of Defense is the leader of the Department of Defense. 

Ms. TUBBS JONES. Right. 

Mr. ALDRIDGE. I simply——

Ms. TUBBS JONES. But the department for DoD, you are in 

charge of DoD; is that a fair statement? 

Mr. ALDRIDGE. No, the Secretary of Defense is in charge of the 

Department of Defense. 

Ms. TUBBS JONES. You are in charge of procurement, let me be 

a little clearer then. 

Mr. ALDRIDGE. That is right. 

Ms. TUBBS JONES. So as the leader of that division, whatever you 

do, whatever you say, the troops ought to get in line. Is that a fair 

statement? 

Mr. ALDRIDGE. That is the—we have set the policies for the small 

business goals. 

Ms. TUBBS JONES. I only have but five minutes. I need a yes or 

a no on some of these question, if you would help me, please. 

10

Mr. ALDRIDGE. Well, I am not sure I understand exactly what 

you are asking me to agree to. 

Ms. TUBBS JONES. In other words, whoever is in charge of procurement or whatever the division is sets the policy for the people 

who they lead. Is that a fair statement? 

Mr. ALDRIDGE. That is correct. 

Ms. TUBBS JONES. Okay. You have a statement that you gave to 

this committee this afternoon, sir, and nowhere in the statement 

do you mention 8(a) programs. 

Are you familiar with 8(a) programs, sir? 

Mr. ALDRIDGE. I am. 

Ms. TUBBS JONES. Can you tell me what they are? 

Mr. ALDRIDGE. They are—we set a goal for 8(a) programs that 

are at two percent, an internal function, for the—I think you are 

criticizing us for not having——

Ms. TUBBS JONES. I have not started criticizing yet. I asked you 

do you know what an 8(a) program is, sir. 

Mr. ALDRIDGE. Disadvantaged business; yes, ma’am. 

Ms. TUBBS JONES. And what is an 8(a) program? Excuse me? 

Mr. ALDRIDGE. It is a disadvantaged business. 

Ms. TUBBS JONES. There is a program called small and disadvantaged business, but there is also an 8(a) program that is for—ask 

Mr. Ramos what an 8(a) program is. 

Mr. RAMOS. The 8(a) program is a small and disadvantaged business who has suffered economic and social disadvantages that are 

certified by the Small Business Administration. 

Ms. TUBBS JONES. Included in those are minority businesses. Is 

that a fair statement? 

Mr. RAMOS. Minority business. It is certain protected groups. It 

could be anybody else, including a majority person showing economic disadvantage. 

Ms. TUBBS JONES. Let me back up. Mr. Aldridge, what is your 

policy as the leader of procurement with regard to minority businesses? 

Mr. ALDRIDGE. My policy with regard to—you mean my goal for 

how much business——

Ms. TUBBS JONES. I want your policy and your goal, sir. 

Mr. ALDRIDGE. My policy is I am supporting small business activities within the Department of Defense as a——

Ms. TUBBS JONES. And how do you represent that policy, sir? 

Mr. ALDRIDGE. I have issued guidance to the military departments regarding the goals that we set——

Ms. TUBBS JONES. Why do you not take a moment and read the 

memo that your staff just gave you, sir, so you know what it is? 

Chairman MANZULLO. You can tell that Congresswoman Tubbs 

Jones is a former——

Mr. ALDRIDGE. The policy, the policy that I have set forth for the 

military departments as to what goals they need to set, how they 

are going to measure their progress, and how do they report them 

back to us has been issued to each of the military departments. 

Ms. TUBBS JONES. Do you know the policy, sir? 

Mr. ALDRIDGE. Do I know the policy? 

I am searching for what——

11

Ms. TUBBS JONES. It is simple. Either you know it or you do not 

know it. The question is if you do not know it, how is the rest of 

your staff know it, and the goals and the percentages that are represented by how many minority persons have had an opportunity 

to do a DoD show that you do not know the policy, and therefore 

you have not been able to implement it. 

Mr. ALDRIDGE. No, if you are talking about the policy with regard to the goals we have set for 8(a) firms, I know that. That is 

two percent of our procurement. 

Ms. TUBBS JONES. Have you met that? 

Mr. ALDRIDGE. No, sir—ma’am. 

Ms. TUBBS JONES. And you do not have any problem figuring out 

whether I am male or female though, are you? [Laughter.] 

Ms. TUBBS JONES. And can you tell me why it is you think you 

have not met that goal, sir? 

Mr. ALDRIDGE. I think there is two reasons. One is we have to 

have people who are qualified to—we have to have a pool of people 

who are qualified to do the business and to compete in the business 

for in that goal, and we have not been able to do that. It does not 

mean—— Ms. TUBBS JONES. I did not invite any of these people. Will all 

the minority folks in this room stand up, please, that have been 

trying to do business with DoD, and they have been termed ‘‘not 

qualified’’ to do business? Is there anybody in the room? 

I guess they have not been invited to be here at this session. But 

let me assure you, Mr. Aldridge, Mr. Ramos, there are minority 

business people in the United States who are prepared and capable 

of doing business with you, and I would love to have an opportunity to present you a list of those so you do not have this question that everybody say we cannot find none, because I have got 

plenty for you. 

I yield the balance of my time. 

Mr. RAMOS. Madam Congressman, I have not heard the question 

from inside the Department of Defense that we cannot find minority contracts. 

Ms. TUBBS JONES. You may not have heard it but that is what 

your leader just said, so that is the point I am trying to make to 

you gentlemen, that whoever sits at the top sets policy and agenda. 

And if they cannot articulate it, if the people cannot see what they 

are doing, then the people who are doing the job cannot implement 

it, and that is solely my point. 

Mr. RAMOS. I carry out the policy for Mr. Aldridge. I know the 

policy, and we are endeavoring to carry it out. We do have the minority firms. We have small disadvantaged firms. 

Ms. TUBBS JONES. So you disagree with Mr. Aldridge that there 

are no minority firms qualified to do the job that he just said? 

Mr. RAMOS. We both are saying that there are minority firms 

that are qualified, and there are minority firms who work——

Ms. TUBBS JONES. But you cannot find them? 

Mr. RAMOS. I never said that. Never said—— Ms. TUBBS JONES. I am not going to go back through the record. 

The point that I am trying to make is, Mr. Aldridge, Mr. Ramos, 

we sit here representing people of all color, race, sex, religion, national origin in these United States. There is enough money at the 

12

governmental till for everybody to have an opportunity to step up 

to the plate, to participate, and we believe that DoD who does 65 

percent of the procurement for the United States has an obligation 

and a duty, a moral principled obligation to give minorities, women 

opportunities to do work with the federal government, no matter 

what it takes for you to do that. 

Can you agree with that? 

Mr. RAMOS. In principle, yes. 

Ms. TUBBS JONES. Thank you. So I am asking you to implement 

it. 

Mr. RAMOS. Okay, but there are some factors in implementing 

that we are trying to share with minority firms, and all small businesses, as far as that goes. 

Ms. TUBBS JONES. Would you send those to me so I can share 

them with the minority firms that I know are qualified to do work 

for the federal government? 

Mr. RAMOS. I would be glad to meet with them if you wish and 

explain what they are. 

Ms. TUBBS JONES. But I want you to send me what you—whatever those principles are so I can clearly give them an opportunity 

to be prepared to respond. Can you do that? 

Mr. RAMOS. Yes, ma’am. 

Ms. TUBBS JONES. Thank you. 

Chairman MANZULLO. How much time do you need for that, Mr. 

Ramos? 

Ms. TUBBS JONES. If they are already prepared, I could have 

them tomorrow. 

Mr. RAMOS. We could probably do it at the first of next week, if 

you wish. 

Ms. TUBBS JONES. Well, thank you very much. 

Chairman MANZULLO. Within 10 days.

Mr. RAMOS. Yes. 

Chairman MANZULLO. I am going to take my turn at this time. 

Mr. Secretary, the question was posed earlier as to meeting the 

small business goals. This is for all small businesses. In your response, and I heard it again, is that the pool is not large enough. 

We had a—Deedra Lee came out about five months ago, held a procurement conference in my district. Two hundred and forty people 

showed up. Several people have gone with the PTAC afterwards 

and signed up to qualify for the contracts. But I am finding your 

answer—maybe it is not clear. Maybe I misunderstood. I thought 

there were more than sufficient numbers of small businesspeople 

in line out there ready to get the contracts when they are being offered. 

But what did you mean by the pool is not large enough? Am I 

missing something here? 

Mr. ALDRIDGE. Perhaps I misspoke. The idea—we are after—the 

goal we have set for ourselves, this Committee and our office within the Pentagon are after the same objective. It is to increase the 

health of the small business community. We are trying to do that. 

We have set goals for—— Chairman MANZULLO. You have done that on FAST? 

Mr. ALDRIDGE. We did it on FAST. We are trying to do it on 

other things as quickly as we can, but——

13

Ms. TUBBS JONES. What, all those seven contracts? 

Mr. ALDRIDGE. Well, I hope we are. I hope we are. I am not familiar with them, but I hope we are. 

Chairman MANZULLO. But could you explain what you mean by 

the pool is not big enough? 

Mr. ALDRIDGE. Well, I think I probably misspoke about the pool. 

The question I am getting to is performance. We want to achieve 

the objective of the national security of the Department of Defense. 

And we are not—I could meet goals by just passing money out. 

That is not the intent in which we are trying to achieve. We just 

do not pass money out to achieve a goal. We have to get a return, 

a performance on that. And in the process we are not able to 

achieve the goal because for some reason we are not getting the 

ability——

Chairman MANZULLO. Are you saying that the small 

businesspeople are—the small businesspeople are not performing to 

standard enough? 

Mr. ALDRIDGE. No. It is when we go through the process of 

issuing the—for going through competition, we obviously are trying 

to—we are trying to achieve the goal all the time. We are not able 

to do it for some reason. 

Chairman MANZULLO. Then the problem has got to be an internal reason or the bidding process or something because we have got 

folks back home that are stacked up like train cars ready and 

itching to get those government contracts. 

Is there a disconnect somewhere here? Mr. Ramos, could you 

help us out? 

Mr. RAMOS. Let me tell you what—and this is pretty much generic across the Federal Government, but even more so at the Department of Defense because of the war fighter needs. 

What they are looking for is past performance; that is, the capability of being able to perform on a contract. 

Chairman MANZULLO. But that would hinder the start-up businesses, especially minority businesses. 

Mr. RAMOS. Well, there is——

Chairman MANZULLO. Is that not correct? 

Mr. RAMOS. There are some other factors that go along with that. 

The 8(a) firms are certified because of their managerial and technical competency, and they also have financial capability to perform. Those are factors that the contracting officers look at with respect to whether or not that firm can perform on the contract, and 

including past performance. 

We are suggesting and advocating for a lot of firms, particularly 

start-up ones, and I think those are the ones that are raising a lot 

of question. In my experience at the SBA, we had the same experience with small businesses. They want to get in the door. 

The way you get in and we are advocating this to help them 

move into the system is to partner in a joint venture so they get 

that past performance. 

Chairman MANZULLO. Joint venture. So the small business has 

a joint venture with a big business in——

Mr. RAMOS. They do it all the time, sir. 

Chairman MANZULLO. In order to get performance? 

14

I mean, let me give an example. I mean, say you need 100 of 

these made up, this object here. You put out RFPs for five of them, 

award one contract, one each to five small businesses and see how 

they perform on that. I mean cannot you do that as opposed to forcing a small business to form a partnership with a large business 

to get a performance contract? 

Mr. RAMOS. What I am saying is that it is relative in size based 

on the contract. That probably will not need a partnership. If you 

have that product and you are the only one that can produce it, 

that is not the issue. 

If you get into the more major issues and systems, that is where 

the small businesses have a harder time because of the managerial, 

technical and also the financial capabilities. 

Chairman MANZULLO. Okay. Okay. All right. 

Dr. Christian-Christensen. 

Ms. CHRISTIAN-CHRISTENSEN. Thank you, Mr. Chairman. Welcome, Secretary Aldridge, and Mr. Ramos. 

I want to go back to the 8(a) question for a minute. Can you tell 

me what specifically you are doing to increase the—you said you 

did not meet the goals. Our information is that the procurement, 

8(a) procurement has been steadily declining. 

Can either of you tell me what you are doing about that? What 

specific steps are you taking to increase 8(a) participation? 

Mr. RAMOS Well, first of all, Department of Defense did not participate in the 8(a) goaling in the past, and this is the first time 

that they have symmetrics in there. 

Ms. CHRISTIAN-CHRISTENSEN. Why? 

Mr. RAMOS. Why? I cannot answer it because I was not here. 

That was the past policy. Okay? All I know is from here on out. 

It is there. If you look at an 8(a) firm, that can also be a small 

and disadvantaged firm, so they kind of blend if you can. 

Now, what we are going to do with the 8(a)’s is we are going to 

try and address them as—because 8(a)’s are also women-owned 

business, service disabled veterans, Native Americans and others. 

Ms. CHRISTIAN-CHRISTENSEN. Right, and I see that you plan to 

focus on that. 

Mr. RAMOS. Yes. 

Ms. CHRISTIAN-CHRISTENSEN. I am impressed with that, but I 

want to make sure that we address this particular program which 

seems to be coming in conflict with some others. 

Mr. RAMOS. Well, 8(a)’s in some cases enjoy a preference because 

they are certified. Depending upon the offering, they can enjoy an 

advantage with respect to that offering that may come from any of 

the service branches. 

Now, the question is where can they best fit into those opportunities, and I think this is what Mrs. Velazquez is saying. 

Ms. CHRISTIAN-CHRISTENSEN. Can I just interrupt you to maybe 

fine tune your answer? 

Do the representatives from the agency meet the Small Business 

Administration on a regular basis to identify any specific projects 

that 8(a) program participants might be particularly well suited 

for? Do you ever meet—— Mr. RAMOS. Well, let me just tell you one of the initiatives that 

I have taken up since I have been there. 

15

We have set up with Fred Armandotiz, he is the associate administrator for contracting, we are setting up periodic meetings with 

them. We set up our first meeting a little over a month ago to talk 

about common issues like that, and including bundling. That was 

the last conversation with them. 

So our intentions and our commitments to agencies is to discuss 

that very subject. 

Ms. CHRISTIAN-CHRISTENSEN. Have you talked about HUB zone 

versus 8(a) because that is becoming an issue? 

Mr. RAMOS. We have not had the discussion with them about it, 

but we have some initiatives with respect to the HUB zones. 

Ms. CHRISTIAN-CHRISTENSEN. What are those initiatives? 

Mr. RAMOS. Well—— Ms. CHRISTIAN-CHRISTENSEN. Like using the—focusing on Native 

American reservations? 

Mr. RAMOS. In part. What we are developing right now is a strategy on how to approach HUB zones because what we have are 

urban HUB zones and we have rural, if you will, HUB zones, and 

then you have HUB zones by definition are all Native American 

reservations. 

I am a big advocate of partnering between the different disadvantaged groups. The Native Americans enjoy a certain priority 

with respect to contracting, particularly the Alaskan tribes. By definition, as I said earlier, reservations are HUB zones, and we are 

trying to encourage partnering with the Native Americans in those 

HUB zones so that they can have an advantage in the contracting 

to get them inside the door. So we are developing that strategy as 

we speak now. 

In fact, one of my special assistants is trying to develop that, and 

we have already talked to the Navajo and to the Hopis in Arizona 

to see how we can get in the door in that respect. 

Ms. CHRISTIAN-CHRISTENSEN. And other than that, are you finding that—who gets preference between a HUB zone and an 8(a)? 

Is there a priority one over the other? 

Mr. RAMOS. It depends on the set of circumstances on what you 

are trying to accomplish. They each have their own advantages. 

There are preferences in the HUB zones because of the economic 

benefits of a community that gives incentives to a business that 

starts up a business or has a business within the HUB zone. 

An 8(a) in itself does not enjoy that, but if you couple the two 

together you have a tremendous opportunity, and that is what we 

are trying to advocate, particularly with the Department of Defense. 

Ms. CHRISTIAN-CHRISTENSEN. Why would you have a difference 

in the goals for either one? 

It seems to me—and the reason I ask the question is because you 

have a higher goal for HUB zones than you have for 8(a). And 

given the fact that they come into conflict and given the fact that 

8(a) are largely disadvantaged or women-owned or minority-owned 

businesses where HUB zone businesses do not have to be, there is 

a discrepancy there just in looking at your goals. 

Mr. RAMOS. Unfortunately, I was not here when those goals were 

negotiated with the Small Business Administration. I do wish to— if we have another opportunity to discuss that, and hopefully beVerDate 0ct 09 2002 07:08 Oct 16, 2002 Jkt 080333 PO 00000 Frm 00019 Fmt 6633 Sfmt 6602 E:\HR\OC\C333A.XXX C333A
16

forehand to see how the—what the rationale was in establishing 

those goals were because as I alluded to earlier there is kind of a 

historical performance of all the federal agencies, and there is 

something that has to drive them to get over that hump, and that 

is what we are going to try and do. 

Ms. CHRISTIAN-CHRISTENSEN. There are so many questions. If I 

could get in one last question? 

The consolidated contract versus the bundled contract, when an 

organization combines requirements previously performed under 

separate contracts into a larger contract it is a consolidated contract. If the previous smaller contracts was suitable for award to 

small businesses, then the consolidated contract is unsuitable for 

award to small business, then it is a bundled contract. 

I am still not clear that a consolidated contract is not a nice word 

for a bundled contract. Can you help me out? 

Mr. RAMOS. I will speak from the street. If you want to manipulate the system, you can manipulate it by using the bundled processed. If you really want to help out the small businesses, you will 

segment those bundled agreements to benefit the small businesses 

that we are trying to grow. 

I think the big debate right now, and the President has taken 

the incentive here to address this issue because it has reached his 

administration’s attention, we have all federal agencies coming together, I will just say the majority, including the SBA, who are 

going to scrutinize this question because there is a lot of confusion 

with respect to definition. 

And I kind of agree with you. There is confusion. My role inside 

DoD is to attempt to diffuse and to clarify that confusion because 

we see segments that we just saw with Congresswoman Velazquez 

yesterday talking about some other circumstances, and you can see 

the lack of clarity, and that happens. 

Ms. CHRISTIAN-CHRISTENSEN. Thank you. When it is resolved the 

rate of that resolution is given towards small businesses. 

Mr. RAMOS. I am with you. 

Mr. ALDRIDGE. I think it is very clear what the President has 

told us to do. 

Chairman MANZULLO. Before I recognize Mr. Bartlett, I will state 

for the record that Minority and Majority staff members of this 

committee are meeting with Mr. Ramos on a periodic basis on 

those seven contracts that are with DoD. I appreciate the fact that 

the foot is in the door, and we are there to help, and we will give 

you lists of people back home that need contracts and things of 

that nature, but I just want to recognize that for the record. I appreciate the effort on it. 

Mr. RAMOS. Thank you, sir. 

Chairman MANZULLO. Mr. Bartlett. 

Mr. BARTLETT. Thank you very much. 

Our developing technology is presenting challenges for contracting with small business. Let me give you one example, and 

there are others. The procurement cycle in government is so long 

that by the time we procure the new information technology equipment it is pretty much obsolete. And so a number of our agencies, 

and one of the first that we had contact with was the Navy and 

Marine Corps, which were issuing a single contract, not to buy 

17

equipment, but to buy performance, so that the contractor could 

then always have the latest, best equipment available. 

We met with them, Mr. Crouth, and I met with them, and to 

their credit they withdrew their RFP and issued another RFP, assuring that 35 percent of all that business would go to small business and 10 percent of it would be direct pay. 

So some of the challenges we face in contracting with small businesses are a result of this developing technology, which makes it 

more desirable for us to go to these large contracts, call them consolidated or bundle, whatever you want to call them. In any event, 

you can provide opportunities for small business there if you wish. 

I was one of perhaps 35 people who came to this Congress from 

NFIB. I was a small businessperson in another life. I also worked 

for the government. About, I guess, 30 some years ago I left the 

government as a GS–15, and when I was in the government I was 

involved in issuing RFPs and reviewing the response from the business world. And then I became a small businessperson. First I 

worked for a big business like IBM, and responded to RFPs there, 

and then I had my own company. 

There are a couple of issues that I wanted to talk with you about 

very briefly that I think present challenges for better mobilizing 

the small business community so that we can capitalize on the 

greater creativity that you find in the small business community. 

One of those is the fact that contracting officers are graded on 

how well their contractors perform. And so when you get responses 

in a RFP and from a variety of contractors as a contracting officer 

you are very disposed to go with Joe because Joe has performed 

several times in the past. You know he will do a good job. Jim may 

have presented a response to the RFP that maybe looks at least as 

good, maybe a little better than Joe, but, gee, I never saw Jim before. I do not know whether he is for real, whether he can perform 

or not. And so the contract goes to Joe. 

It makes it very difficult—I have experienced this personally—for 

a new person to break in. Somehow we need to reward our contracting officers for reaching out. They are going to fail once in 

awhile. That should be okay. If they have not failed, they are not 

reaching out enough. And so you need to have some new performance guidelines, I think, that encourage our contracting officers to 

reach out and to cast a broader net. 

Another problem we have is that there are many small businesses out there that have solutions that you never issue an RFP 

for because you do not know that they are out there, so somehow 

you have to be able to issue RFPs that just say, you know, do you 

have an idea for doing something better than we are doing, and if 

you do, you respond. I know you have something that aims at that. 

But if you respond, you know, you have got the ball and you are 

going to carry it now, because if you can save us money and do it 

better we are going to give you the opportunity to do that. 

We have to do a better job of reaching out. I know we do it somewhat, but I think there are small businesses out there that still 

have ideas that we are not reaching with our request for proposals. 

And another very recent problem I have been introduced to that 

many of our contracts now provide security clearance. If you are a 

big business, it is easy to have some people around that you can 

18

pull together to perform on a classified job. If you are a small business, you cannot do that. So from the get-go you are excluded from 

that process. And I know that you are starting to do this, we need 

to do it better, and let small business know we are doing it. We 

need to prequalify. They need to know that they can have their 

people prequalified so that when they respond to an RFP that requires classified work, that they will be able to complete. 

These are several things that I think that we can do to cast a 

broader net, to encourage our contracting officers to reach out to 

these others, and to have more of our companies prepared because 

there are people for classified contract. 

Could you comment? 

Mr. ALDRIDGE. Yes, please. Let me talk about two of the—Frank 

will talk about the third one. The first one you are talking about 

getting contracting officers to go after small businesses. That is the 

value of setting goals, to try to encourage people to do this. If there 

is no goals set, they are not incentivized to go try this. And one 

of them, in fact, October 26 we issued the largest defense contract 

in the history of the Department of Defense called the Joint Strike 

Fighter. 

We have set goals for small businesses of the Joint Strike Fighter at a minimum of 20 percent for small business with a stretch 

goal of 30 percent. So we have incentivized the program manager, 

General Hudson, to go after and include small businesses in the 

Joint Strike Fighter Program, which is a very positive thing. 

The other part of that, of trying to encourage small businesses 

to get involved, we have a thing called a broad area announcement. 

These are ideas that we have—we have a need. We want to find 

out who has ideas to meet that need. And a good example of that 

is after September 11th we created a counterterrorism technology 

task force which identified some areas that we felt were important 

to fighting terror. And I had been receiving phone calls from industry and from people wanting to help. 

So what we did is we put out a broad area announcement by our 

office out to individuals, universities, small businesses, big businesses, whomever wanted to reply to ideas for how to fight terror, 

counterterrorism. And we got 13,500 inputs, most of which were 

from small businesses and people who had innovative ideas, individuals and so forth. 

We are now going through the process of evaluating those with 

a technology team. We have got it down to about 400, and we will 

probably even contract about 20 of these ideas. But this is a process by which I think we get to your problem of when we have an 

idea we need something, let us see who has got—who can respond 

to it as well as getting inputs in from other people. 

Mr. BARTLETT. What about technologies out there that are addressing problems that you do not even know can be addressed because you have no idea that technology is out there? 

Mr. ALDRIDGE. Well, I think in that case many of the laboratories 

and the various acquisition centers throughout the military departments have small business advocates in their facilities that small 

businesses can come to them and present ideas. I believe there is 

a process. I think the ideas, we have to make sure that the small 

businesses know where to go to get their ideas evaluated. 

19

Mr. BARTLETT. Thank you. 

We have one—I am sorry. 

Mr. RAMOS. I am sorry. I just wanted to clarify. We are doing 

something, and this is aimed at the veterans. You asked a question 

about security. The best people, the people that are best prepared 

to meet security requirements are veterans because of their background. We are starting a veteran initiative to explore, and we already had a brainstorming group with some veterans as to develop 

this program. And we have had the National Security Agency come 

in and give us an outline of how to do this. 

So we are moving in that direction, to try to use our resources 

inside of Department of Defense so that we can inform and instruction our small business how to get into the security areas, if you 

will, within the Department of Defense because you are correct, sir, 

they do not know at this time by and large, so we are going to try 

and help them get through that threshold. 

Chairman MANZULLO. Okay, thank you. Congressman.

Mr. VILA. Thank you, Mr. Chairman. 

I will yield my time to Congresswoman Velazquez. 

Ms. VELAZQUEZ. Thank you. 

Would you please get the memo up there? But let me just react 

to what Mr. Ramos just said. 

Chairman MANZULLO. Could you yield for just a second? 

Ms. VELAZQUEZ. Sure. 

Chairman MANZULLO. We have about a half a dozen seats over 

there for the first six that—look at this, look at this. Look at all 

the guys go and leave the ladies behind. Okay, there comes one 

lady. We have some more room over there. Please just help yourself 

to some seats over there. There you are. 

Ms. VELAZQUEZ. Mr. Ramos, you just said in response to the gentleman’s question that veterans are the best to handle security 

issues, right? That is what you just said? 

Mr. RAMOS. I am saying because of their veteran experience 

many of them have security clearances and experience in dealing 

in secured environments, and we are trying to reach out to those 

veterans. 

Ms. VELAZQUEZ. So reach out to them for what? 

Mr. RAMOS. So they can come in and have——

Ms. VELAZQUEZ. And that explains why you did not set any goals 

for veterans? 

Mr. RAMOS. Well, again, Congresswoman——

Ms. VELAZQUEZ. Thank you. Let me go to Mr. Aldridge. 

Mr. Aldridge, your memo of March 2001 clearly shows—do you 

remember that you issued a memo? Okay. That the department—

it clearly shows that the department does not plan on achieving its 

goals. In fact, the memo does not have the department meeting the 

small business goal until fiscal year 2003. 

Your memo does not have the department, right there, meeting 

the women-owned business goal even by 2006, does not even mention the service disabled veterans business goal and does not even 

mention the 8(a) program goal. 

Why did you issue a memo that shows such low goal achievement? 

20

Mr. ALDRIDGE. These are projections which we think we can 

achieve with a reasonable outreach program. We can set goals. 

Ms. VELAZQUEZ. Sir. 

Mr. ALDRIDGE. I could set a goal of 20 percent up there which 

I know I cannot achieve on any one of the smaller disadvantaged 

business. We are trying to put goals that we think we can stretch 

to, but that we can try to achieve. 

Ms. VELAZQUEZ. Sir, how can you explain, you control 65 percent 

of federal contracting dollars. When we look at other smaller federal agencies, they negotiate goals that are much higher than the 

one that you negotiated for your agency. 

Mr. ALDRIDGE. I think the issue is it is not just a percentage 

number that we have—— Ms. VELAZQUEZ [continuing]. It is not—the issue—— Mr. ALDRIDGE.—It is the amount of money. 

Ms. VELAZQUEZ [continuing]. Here are, sir, statutory goals set by 

Congress. That is the law. Twenty-three percent for small businesses, five percent for women-owned businesses. 

And then I will ask you, why did you take until 2003, until fiscal 

year 2002 to establish an 8(a) program goal when a presidential executive order dated October 6, 2000, required the establishment of 

one? 

You were the only agency in the federal government. Everybody 

else set a goal for the 8(a) program. What is it? Is it your attitude? 

Is the culture of the Department of Defense? 

And let me just react to something that you just said to the 

Chairman here. You said that you do not have a pool of qualified 

small businesses out there. 

I resent that statement, and it reflects your attitude toward 

small businesses. We are not asking here for handouts for small 

businesses. We are asking here for a level playing field that would 

allow for small businesses who can provide the hammer, that you 

pay $700, or maybe you can get it from a small business person 

for $50. 

Mr. ALDRIDGE. Madam—— Ms. VELAZQUEZ. Or the $7,000 that you pay for coffee makers. 

Mr. ALDRIDGE. I do not have to be here being insulted. 

Ms. VELAZQUEZ. No, I am not—I am not insulting you. 

Mr. ALDRIDGE. Yes, you are. 

Ms. VELAZQUEZ. I am saying it is your attitude. You were the one 

who said here that you do not have a pool of qualified small businesses. 

Chairman MANZULLO. Let us give——

Ms. VELAZQUEZ. I am telling you, Mr. Chairman——

Chairman MANZULLO. Would the Gentlewoman——

Ms. VELAZQUEZ [continuing]. This is my time here. 

Chairman MANZULLO. I understand. 

Ms. VELAZQUEZ. We have people, small business people that——

Chairman MANZULLO. Mrs. Velazquez—— Mr. VELAZQUEZ [continuing]. Can provide the products that you 

need. 

Chairman MANZULLO. Let us give the Secretary the opportunity 

to answer—— Mr. ALDRIDGE. I do not have to sit here——

21

Chairman MANZULLO. Mr. Secretary, the issue is very passionate 

with Mrs. Velazquez, and I could attest that she is not trying to 

be insulting. She is trying her best, and I am sorry if you took it 

that way. Please proceed. Thank you. 

Ms. VELAZQUEZ. What I am saying, sir, we are not here to jeopardize the national security or the Department of Defense. We are 

here to ask you that you comply with statutory goals that are set 

by Congress. 

I am asking you why, of all the Federal agencies, you were the 

only one who did not set a goal for the 8(a) program despite the 

fact that an executive order was issued by the president of the 

United States in the year 2000? 

Mr. ALDRIDGE. May I answer now? 

Ms. VELAZQUEZ. Sure. 

Mr. ALDRIDGE. We set a goal. We set our own self-imposed goal 

because internally I arrived here in the Department of Defense in 

May of 2001. Almost immediately I issued this memorandum to go 

out to the various departments setting goals, setting a process, and 

setting a way to report upon their achievement of the process. We 

set our own internal goal because there was not one, there was not 

one in the Department of Defense. 

Why it was not established by the time I got here, I have no idea. 

All right? 

What is interesting is that we had the same objective yet we 

seem to be fighting each other, trying to get to the same goal. I am 

here to try to achieve those goals. I have tried to tell you realistically what I think we can do, and we have an initiative underway 

to make that happen. I am not against small business. 

Chairman MANZULLO. Mr. Davis. 

Mr. DAVIS. Thank you very much, Mr. Chairman, and let me 

thank you for holding this hearing. And Mr. Secretary, Mr. Ramos, 

I want to thank you gentlemen for appearing. 

There is a common perception among most people that I know 

who monitor small business activity and who monitor the relationship of small minority, women-owned businesses to the federal government that the Department of Defense has the worst record of 

all agencies within the federal government, that there is none 

worse. 

How would you respond to that characterization? 

Mr. ALDRIDGE. In December of 2000, there was a women- and 

minority-owned businesses did a vote that considered the Department of Defense the premier government agency promoting multicultural business opportunity. So the perception apparently is different from many minority and women-owned businesses about the 

role of the department. 

This year, we achieved the most funding for small businesses in 

the history of the department, $51.8 billion went to small businesses, of which, as I mentioned before, 54 percent of those are 

prime contracts. That is not a record of somebody—of an agency 

that is against small business. We are promoting small business. 

We need small business. They are the innovative companies that 

we try to solicit. 

We have set goals, and like I said, in the Joint Strike Fighter, a program that could be as big as $200 billion of funding, for 20 

22

to 30 percent small businesses. All of the activities we have are 

aimed at trying to promote small businesses as an essential part 

of our industrial base. It is not that we are against small business. 

We are trying to do all we can, but we are trying to do it by setting 

realistic goals for ourselves. 

Percentages do not mean much to me up there. The dollars that 

go into the—how much money are we giving into the small business is the important part, and hopefully turning small businesses 

into big businesses some day. 

Mr. DAVIS. I agree with you that dollars certainly are a better 

barometer. But I mean, you could also look at it in terms of how 

many dollars or how much resource one would have at their disposal that would determine—I mean, if I am a small agency and 

I have only got a little bit to spend, and I spend a good amount 

of that, and somebody else got a great deal more to spend, they are 

going to spend more money than I do, but it does not mean that 

they are doing a better job of spending with certain entities than 

I am. 

But let me move, and I appreciate the fact that you would disagree with that characterization. Do you have a program—I come 

from a historically black college and university. I went to a little, 

small school in Arkansas, as a matter of fact. And many of these 

schools have had difficulty having access to government resources 

and doing business with government, doing research, building research capability, interacting. 

Do you have a program that reaches out to historically black colleges and universities? 

Mr. RAMOS. Yes, we do. Inside of Mr. Aldridge’s organization we 

have the research, technology and engineering side. There is a gentleman by the name of Dr. John Hops, the former provost of Morehouse University in Georgia that is heading that program. He has 

at his disposal a substantial, let us say a substantial amount of 

funds that he has engaged with HBCUs and MIs. 

He has taken a hard look at that, and we have collaborated on 

that very issue. We both agree that we need to do let us say a more 

intelligent way of distributing the money so that we can grow those 

universities. 

We are engaging again through some of the initiatives we have 

across the board the use of HBCs and MIs as a transfer of knowledge; that is, in one of our programs called Meter-Proge Program, 

we have a fund that we try to develop small businesses so that 

they can be more competitive within the Department of Defense. 

So we are looking at how to broadcast, if you will, that knowledge that we are investing into HBCs and MIs, and including the 

Native Americans. It is an asset that we are going to clearly go 

after, and we have engaged some discussions with them already. 

Mr. DAVIS Thank you very much. 

Mr. Chairman, I see that the red light is on, but could I conclude 

with this question? 

You mentioned earlier that if one really wanted to deal effectively with the whole business of contract bundling, and as far as 

I am concerned, it is a contradiction that that it is a policy that 

will never work in terms of trying to promote small business develVerDate 0ct 09 2002 07:08 Oct 16, 2002 Jkt 080333 PO 00000 Frm 00026 Fmt 6633 Sfmt 6602 E:\HR\OC\C333A.XXX C333A
23

opment. I mean, it is like saying to me if you want to promote iceboxes, go out and buy a refrigerator. 

But you did mention breaking contracts up into smaller segments, and dispersing those in a meaningful way throughout an industry rather than one of two entities being able to hog the whole 

show or get the whole thing. 

Are you having experience with doing that? I mean, is DoD attempting to do that in compliance at the same time with government policy and regulation? 

I am saying if the boss is telling you, I want you to bundle these 

contracts, and at the same time is telling you, I want you to promote small businesses, that sounds to me sort of like saying make 

bricks with no straw. 

Mr. ALDRIDGE Well, I think the boss has told us very clearly 

what the guidance is; the boss being President Bush. He says he 

is against bundling. I think that is a very clear guidance that is 

going to go down through the Department of Defense, that if somebody finds a reason to bundle, they better have a very, very good 

reason to go against what the President has told them to do. 

Mr. DAVIS Thank you, Mr. Chairman, for your—— Chairman MANZULLO. Thank you very much. 

Let me conclude this first panel with the statement that, Mr. 

Secretary, when you had just been sworn in the FAST contract was 

just coming into being at that time, and I remember calling you. 

Mr. ALDRIDGE. Yes. 

Chairman MANZULLO. We sent you a letter and said could you 

stop the contract. You said, ‘‘No, I cannot, but I would be glad to 

meet with a member of your staff.’’ And you did, you met with Nelson from my staff. And at that time you promised that you would 

work very diligently on making sure the small businesses were not 

ignored. You kept your word. The FAST contract, it is over 70 percent of small businesses. 

And also, you and Mr. Ramos have been of tremendous assistance in your openness of your department. There is a lot of work 

that has to be done, a lot of passion on both sides of the issue because we know this is extremely confusing. I do not know if I understand the difference between bundling and consolidation. But to 

the extent that it injures the small business person, there is no distinction on that. 

But again, I appreciate your coming here. Thank you for taking 

your time. 

Mr. Ramos, you are going to be sticking around for the rest of 

the hearing just in case there is some technical questions that come 

up you might be willing to help us out on. 

Mr. RAMOS. Yes, sir. 

Chairman MANZULLO. Okay, thank you, Mr. Secretary. 

Mr. ALDRIDGE. Thank you. 

Chairman MANZULLO. I appreciate that. 

[Pause.] 

Chairman MANZULLO. The Committee will come to order. We lost 

half of the audience here. That is why I asked how many had come 

with the Secretary, and three people raised their hands, and I did 

not think that was the case. I did not think we were that popular, 

did you? 

24

In any case, we welcome the second panel. The first witness, it 

is my pleasure to welcome John DiGiacomo. John is my constituent 

in charge of the Procurement Technical Assistance Center at Rock 

Valley College, a community college in Rockford, Illinois. And we 

look forward to your testimony. 

The purpose of the lights is to give you five minutes, and if you 

go over, it goes like this. If you go too much over, then I get more 

excited and I bang the gavel. 

All of your—procurement is a very complicated, a very emotional 

issue for all of us up here. Mrs. Velazquez and I have spent hundreds of hours working this issue, and I share her passion to make 

sure that the small business people get their share of it, get their 

share of the contracts. 

So, Mr. DiGiacomo, we look forward to your testimony. 

STATEMENT OF JOHN E. DiGIACOMO, PROGRAM DIRECTOR, 

PROCUREMENT TECHNICAL ASSISTANCE CENTER 

Mr. DIGIACOMO. Thank you. 

Chairman MANZULLO. You have to put the microphone real close 

to you, John. It has got to be closer than that. 

Mr. DIGIACOMO. Closer than that. 

Chairman MANZULLO. There you are. 

Mr. DIGIACOMO. Is that better? Thank you. 

Mr. Chairman, Ranking Member, Members of the Committee, my 

name is John DiGiacomo, and I am with the Procurement Technical Assistance Center at Rock Valley College. 

We assistant small business in doing business—— Chairman MANZULLO. Could you suspend a second? 

Phil, would you go get Mr. Ramos, maybe rescue him from outside so he can have the opportunity to sit and listen to the testimony? I think that was his plan. If you would suspend just a second. 

Mr. DIGIACOMO. Sure. 

[Pause.] 

Chairman MANZULLO. Please go ahead. 

Mr. DIGIACOMO. Myself and my other colleagues at the 88 other 

procurement programs around the country work closely with small. 

minority, women-owned and veteran-owned businesses to do business with the Department of Defense and other government agencies. We see on a daily basis all the obstacles, all the problems, and 

all the successes that small business has in doing business with the 

government. 

I am grateful for the opportunity to share our experience and our 

clients’ experiences with you today. 

How important are small businesses to our nation’s health and 

economic welfare? In 1984, Congress addressed this very issue that 

we are discussing today, how to expand small business participation, and created the PTAC Program. At that time—— Chairman MANZULLO. Hang on just a second. 

Mr. DIGIACOMO. Okay. 

[Pause.] 

Chairman MANZULLO. Would you proceed? 

Mr. DIGIACOMO. Thank you, Mr. Chairman. 

Chairman MANZULLO. I appreciate that. 

25

Mr. DIGIACOMO. We assist small businesses in doing business 

with the government. In 1999, the most recent year that we have 

procurement figures nationwide, we have assisted in bringing to 

the small businesses over $6.8 billion in contract awards. These 

award figures are based on letters that we have received from our 

clients voluntarily that they send to us on a monthly basis telling 

us what they are doing with the government from the assistance 

that we provide. 

I have here over 100 copies or 100 letters of—award letters from 

my clients that they have given to us, and this is just from my one 

small center. You can imagine the impact of the rest of the country 

with all 88 procurement centers. 

The PTAC continually draws new companies in. You mention the 

ProCon Conference. We had over 240 attendees to that conference. 

Over 100 of those companies signed up to do business with the government. Those were small minority, women-owned businesses that 

are in the process now of becoming qualified to do business with 

the government. 

The results that we have had with the Department of Defense 

have been mixed. For the most part in dealing with the government agencies, the contracting officers, they have been positive. 

But we have had some systematic problems: Contract bundling, 

there has been a sharp decrease in the amount of total contracts 

that we have seen going to our small business; rule manipulation 

that have eliminated small business from being able to bid on contract; credit card micro purchases where we cannot—we cannot get 

the list of credit card holders to be able to market to them. 

The procurement centers are there to assist small business. We 

have been around for about 17 years, and in my area alone I cover 

13 counties with over 6,000 businesses in it. We do this on a daily 

basis. We are professionals in doing business with the government, 

and we provide these services to our small businesses daily. We are 

there to help the Department of Defense and Congress to achieve 

the goals that they wish to achieve. 

If you have any questions, I would be more than happy to answer 

them. 

[Mr. DiGiacomo’s statement may be found in the appendix.] 

Chairman MANZULLO. Thank you for your testimony. 

Our next witness is Cathy Ritter representing the American 

Council of Engineering Companies. Look forward to your testimony. 

STATEMENT OF CATHY S. RITTER, PRESIDENT, THE 

CONSTELLATION DESIGN GROUP, INC. 

Ms. RITTER. Thank you. Good afternoon, Chairman Manzullo and 

Ranking Member Velazquez, and Member of the Committee. 

My name is Cathy Ritter, and I am a registered professional engineer, and president of The Constellation Design Group, a small 

woman-owned engineering firm in Maryland. Today, I come before 

the committee representing the American Council of Engineering 

Companies, which is a business association of America’s engineering industry, and we represent more than 5,800 private engineering firms. 

26

The ACED members deliver vital infrastructure services to the 

American public and to the military, including the design of roads, 

airports, power plants, waste water treatment facilities, the safe 

disposal of unexploded ordnance, the clean-up of Super Fund sites, 

and most recently, the clean-up of Anthrax from the Hart Senate 

Office Building. 

More than 60 percent of ACEC members, or 4,000 firms, are 

small businesses, and I mean very small businesses because we 

have fewer than 30 employees. The Department of Defense procures over $2.1 billion in engineering services annually, which is a significant potential market 

for our membership who operate as both primes and subconsultants. 

As a small business owner myself, I am extremely pleased with 

President Bush’s agenda for small business, which speaks to many 

of the obstacles that hinder us from contracting with federal agencies, and specifically, the Department of Defense. 

The firms of ACEC are pleased with the President’s comments on 

two matters that are of concern to small private engineering firms: 

contract bundling and the practice of government agencies performing work that is readily available in the private sector. 

The federal government’s practice of consolidating projects into 

one large contract, or contract bundling, is a major obstacle to 

small engineering firms attempting to do business with federal 

agencies. DoD’s practice of bundling or consolidating contracts 

makes it almost impossible for small business to compete as we 

often lack the range of disciplines and geographical reach which is 

necessary to successfully fulfill the parameters of these contracts. 

As a result, we believe that DoD is eliminating many of the most 

qualified competitors. 

In many cases the designer best qualified to handle a project is 

a firm that is located close to the project site. A local firm’s knowledge of such details as the soil characteristics, the climate, the permitting process and local construction practices results in the purchasing agent receiving the best quality service for the best value. 

Bundled projects, however, are often awarded to a firm which is 

half a continent away. At best, the local firm becomes a sub. DoD 

should not trade the quality and innovation of small businesses for 

administrative convenience. 

For similar reasons, ACEC is concerned about the increased use 

of large indefinite quantity contracts. Several years ago a number 

of federal agencies began to use ID/IQ contracts for a certain base 

period with an option of additional years. Specific projects are not 

identified, but are usually small and do not seem to the agency to 

warrant advertising and selection of a design firm on a specific 

project basis. 

However, DoD is increasingly relying on ID/IQs as a primary 

contract vehicle and is pricing these contracts in such a way that 

small firms cannot compete. We are effectively shut out from much 

of this work when the contracts call for multiple year, multi-million 

dollar awards with no specific projects or facilities in mind. 

One such example of an ID/IQ contract comes from a NAVFAC 

solicitation from 2001. The solicitation states, and I quote, ‘‘The 

majority of work will be located within the Commonwealth of VirVerDate 0ct 09 2002 07:08 Oct 16, 2002 Jkt 080333 PO 00000 Frm 00030 Fmt 6633 Sfmt 6602 E:\HR\OC\C333A.XXX C333A
27

ginia, the State of West Virginia, the Commonwealth of Puerto 

Rico, Western Europe, and may include the State of North Carolina, the States of Delaware, Pennsylvania, New Jersey, New York, 

Rhode Island, Massachusetts, Maine, Vermont, New Hampshire, 

Maryland, the District of Columbia, or at locations under the cognizance of engineering field activity in the Mediterranean——

Chairman MANZULLO. Could you suspend? 

Ms. RITTER. I sure will. 

Chairman MANZULLO. Is this type of contact language still going 

on? 

Ms. RITTER. This is from 2001. 

Chairman MANZULLO. If you have something that is more recent, 

could you get that to me personally? 

Ms. RITTER. Yes. 

Chairman MANZULLO. And I will talk to the Secretary personally 

and Mr. Ramos. 

Ms. RITTER. Be happy to. 

Chairman MANZULLO. And put an end to nonsense like this. I 

mean, I am serious. This is the reason—this is the reason we are 

having this hearing, because I want the exact, the right thing to 

do, and we will take small businessperson by small businessperson, 

clause by clause until we help the secretary stop the bundling that 

is going on. It is obvious that this clause is intended for big guys 

and to smoke the little people like yourself. 

So if you could give me something that is later than that, then 

I want to find out who got the contract, and maybe we will try to 

end the contract by saying it was illegal. 

Okay, go ahead. I took some of your time, but it is going to be 

yours. Thank you. 

Ms. RITTER. I am almost finished anyway. 

Well, my obvious next point is that such a large geographical region excludes all small engineering firms. 

It is ACEC’s hope that all DoD contracting agencies will properly 

evaluate proposed work associated with the ID/IQ contracts such as 

this, and refrain from bundling projects that span such a large geographical area, or entail numerous disciplines and solicit professional services based on the specific services required. 

The debate that is currently taking place regarding the 

outsourcing of government commercial activities occurs at a critical 

time. As federal agencies face tighter budgets and a looming 

human capital crisis, the need to efficiently allocate resources has 

become increasingly important. 

ACEC is pleased with DoD’s commitment to outsource work that 

is not inherently government, but is deeply concerned about several 

attempts by lawmakers to stop outsourcing in its tracks. 

Over the past two years amendments were offered to the DoD 

authorization bill that aimed to restrict DoD’s ability to contract 

services with private industry. These amendments would have required that all DoD contracts go through a lengthy public/private 

competition process commonly known as A–76. The amendments 

will increase the time and expense for design firms seeking to provide services to DoD, and would put many small firms out of business before they ever received the contract. 

28

Perhaps most importantly, these efforts tie the hands of the DoD 

and prevent it from procuring the best services available to fulfill 

its national security mission. We ask each member of this committee to oppose any type of amendment or bill that would seek to 

restrict the federal government from contracting with private industry. 

Finally, I would like to thank the committee for inviting ACEC 

to testify today. We appreciate your efforts on behalf of the small 

business community, and thanks again for this opportunity. 

[Ms. Ritter’s statement may be found in appendix.] 

Chairman MANZULLO. Thank you very much. 

The next witness is Ms. Pamela—is it Braden? 

Ms. BRADEN. Yes. 

Chairman MANZULLO. President of Gryphon Technologies in Arlington, and look forward to your testimony. 

STATEMENT OF PAMELA BRANDON, PRESIDENT, GRYPHON 

TECHNOLOGIES 

Ms. BRADEN. Thank you. Mr. Chairman, Ranking Member Velazquez, and Members of the Committee. 

My name is Pam Braden. I am the president of Gryphon Technologies, a woman-owned 8(a) certified small business. My firm 

performs a wide range of engineering services for the federal government, principally the Navy. Prior to forming Gryphon, I worked 

for over 20 years in marketing and contracts for three different 

government contractors. 

I am here today on behalf of the Professional Services Council. 

I serve on PSC’s board of directors, and PSC serves as a leading 

policy advocate for our industry, commenting on the impact of legislation and regulations on both our industry as a whole and on 

PSC members specifically. 

Some firms such as mine prefer to be prime contractors. Others 

prefer to be subcontractors. Still others prefer just to get business. 

Small business is getting a share of the federal government procurement market, although it is not clear that we are getting a fair 

share. I do not believe that the creation of additional small, minority, veteran and women-owned set asides would solve this problem. 

I believe we need to enforce the regulations that are currently in 

place. 

The federal procurement process is complex and is constantly 

evolving. There has been a significant growth in the use of large 

multiple award contracts, task orders and blanket purchase agreements, replacing the more traditional requests for proposal, the 

RFP process. 

These consolidated contracts, BPAs, have significantly higher 

ceiling values than the previous issued RFPs. In some instances 

the contract values are measured in billions rather than millions. 

When these contracts have been consolidated, the small business 

contracts, and sometimes the 8(a) contracts get rolled into the 

MAC/BPAs. When they are competed, it’s under an open MAC/BPA 

competition, and the quotas under prime/sub agreements are not 

enforced. 

In addition, in evaluating the proposals submitted, procurement 

officers are not required to give any preferential treatment to small 

29

or minority businesses. Therefore, we are forced to compete head 

to head against large contractors, such as Lockheed Martin and 

Northrop Grumman for these contracts, for the same contracts that 

were awarded to us previously as small business. 

Changes focusing on only one element of the procurement system 

often have unintended consequences in other areas. Therefore, it is 

appropriate that this committee and other specialists in the federal 

procurement process look carefully at how small businesses are approaching the federal marketplace, and how the federal government is responding to small business needs. 

I would like to focus my remarks on three major issues: federal 

sourcing policy, contract bundling and contract finances and payment. 

Over the past decade the government has made significant 

strides in sourcing policies. The advent of best value contracting 

and increasing awareness of and desire for innovative solutions 

have helped the government access cutting-edge capabilities to better serve its many constituents and customers. At the same time 

these and other trends have also helped hundreds of small businesses develop and thrive. 

Today, however, there are unprecedented threats to growth and 

development of small businesses in the federal marketplace, including H.R. 721, the so-called TRAC Act, a radical and devastating 

piece of legislation. It would do nothing to improve the quality of 

government contracting while forcing scores of companies, particularly small businesses, out of the federal marketplace. 

My messages to this committee is to do all you can to ensure that 

the TRAC Act, or any part of it, or any variation of it, never sees 

the light of day. 

There is no question that small businesses are deeply concerned 

about the impact of contract bundling for prime contract opportunities. This committee has initiated legislation that provides a solid 

foundation for addressing the issue in a balanced and fair manner. 

In the Small Business Reauthorization Act of 1997, Congress authorized contract bundling only if it is necessary and justified 

based on the benefit analysis. 

The PSC is concerned that precious little guidance or training 

has been provided to the acquisition workforce to enable them to 

understand and follow the bundling rules. We compliment the DoD 

Office of Small and Disadvantaged Business Utilization for its January 2002 benefit analysis guidebook. Acquisition teams can use 

this in assessing elements of bundling laws and regulations, analyzing the substantial benefits standards required by the law, and 

in describing ways to mitigate the impact of bundling on small 

businesses. 

Overall, the guidebook is reasonable, and will be useful to procurement officials, even though it does not address BPA contracts 

or small business set asides within the MAC and BPA process. 

However, it does not appear that procurement officials have had an 

opportunity to implement or enforce this since it was released in 

January of 2002. 

Therein lies what we believe to be the most important issue—the 

need for more aggressive and focused guidance and training so that 

the statutes are actually put into practice. 

30

Chairman MANZULLO. Conclusion. 

Ms. BRADEN. Contract financing and payment issues. Contractors 

should be paid on time for work performed according to a contract. 

All government service contractors face the issue of late payments, 

but for obvious reasons it is an issue of special concern to small 

businesses that do not have the resources and reserves to cover expenses when payments from government customers are late. 

Payment has improved because of the changes to the Prompt 

Payment Act. In addition, there have been special payment challenges for service contractors. 

The Department of Defense is now subject to interest under 

prompt payment rules. Businesses providing services to the civilian 

agencies do not receive the benefits of this law. PSC encourages 

Congress to extend government-wide the benefits of the interim 

payment provisions that are now applicable only to DoD. 

In conclusion, thank you again for the invitation to PSC and for 

myself, and allowing me to present my views in these important 

matters. Thanks. 

[Ms. Braden’s statement may be found in the appendix.] 

Chairman MANZULLO. Appreciate your comments. Thank you. 

Our next witness is Mike Tucker, owner of George W. Allen Company. Oh, okay, our next witness will be introduced by his Congressman, Mr. Bartlett. Forgive me. 

Mr. BARTLETT. Thank you very much. We have two Maryland 

witnesses here; one, my constituent; the other in the state that I 

represent. Welcome to both of you. 

Mike has a degree in business administration at the University 

of Maryland, 1972. That was exactly 20 years after I got my doctorate at the University of Maryland. Mike and his wife Cheryl are 

life-long residents of the State of Maryland, and have resided in 

Howard County in West Friendship for the past five years. Mike 

and Cheryl have five children: Kay is 23; Katie, 19; Haley, 16; 

Anna, 12; Brian, 6. 

His career in the office products industry spans 28 years with 15 

years spent with a manufacturer, one year with a national chain, 

and most recently 12 years as an independent dealer. Mike is the 

president and owner of GWA located in Beltsville, Maryland, and 

has a staff of 45 employees, a number of which also live in my district. Thank you very much. He has been a member of National Office Products Association board of directors for the past three years 

and has chaired the Government Advisory Council since its inception three years ago. Mike has been a member of the Independent 

Stationeries, a buying group supporting independent dealers all 

across the country for the past five years. Mike has been a member 

of the General Services Administration’s Vendor Steering Committee for the past two years, and currently serves as Chairman——

Chairman MANZULLO. Are you always——

Mr. BARTLETT [continuing]. Of its Small Business Committee. 

Chairman MANZULLO. Thank you very much. Well, we expect 

some great testimony from the introduction. 

Mr. TUCKER. I think I have been set up. [Laughter.] 

Chairman MANZULLO. If you want to flip the microphone around. 

Oh, you got it right there, okay. We look forward to your testimony. 

31

Mr. TUCKER. One is more than enough. Thank you. 

STATEMENT OF MIKE TUCKER, PRESIDENT, GEORGE W. 

ALLEN CO., INC. 

Mr. TUCKER. Well, thank you, Congressman, for that very kind 

introduction. 

Mr. Chairman, Ranking Member, and Members of the Committee, I appreciate the opportunity to testify before the committee 

today to address the issue of the procurement policy and its impact 

on small businesses. 

My name is Mike Tucker, and I am the owner of George Allen 

Company, an office supply dealership located in Beltsville, Maryland. 

George Allen is a family-owned business, and the company was 

founded in 1948 by a gentleman named George Allen, no relation 

to our former football coach. 

As an independent office supply dealer, this hearing is important 

because it will shed light, I hope, on the problems plaguing small 

businesses in their attempts to do business with the government. 

My company has gone from doing 80 percent of our business with 

the federal government to down to 65 percent just in the past three 

years. There is a reason for that. The federal government is simply 

failing to meet its small business contracting goals. This loss of 

business is significant to a company like mine. I estimate this loss cost my company in excess of $1 million annually. This is business that I once had with longtime government 

customers. 

During the six years since the Federal Acquisition Streamlining 

Act became law, my company has not been able to compete for contracts that we once successfully bid for. Big office supply companies, such as Office Depot and Boise-Cascade, have stepped in to 

take huge sole-source contracts mostly because of the desk-top delivery requirement which requires a company to provide overnight 

delivery to at least 90 percent of the country on one of these contracts. This requirement alone limits competition from local companies like mine. 

Agencies such as IRS, NASA Goddard, Harry Diamond Laboratories, and the U.S. Postal Service had been George Allen customers for years. Now the only time we get a call from these agencies is for something discontinued or back-ordered by one of their 

sole-source vendors. 

These blanket contracts are negotiated behind the scenes without 

any small business input or competition. The national chains have 

convinced many agencies that small office supply companies like 

mine are not competitive. We are even told by one official at the 

United States Postal Service, at a time when we were looking at 

one of their sole-source contracts that independent dealers were irrelevant. 

This is simply not true. We belong to buying cooperatives that 

allow us to leverage our purchasing with several thousand other 

independent dealers. With $12 billion in buying power, we certainly can compete on price. 

The federal government tells a good story of how they reach out 

to small businesses. Agencies host conferences and meetings where 

32

hopeful vendors are given lists of contracts and told how many millions and billions of dollars are spent on their products each year. 

Unfortunately, most of us find out the hard way, that the customers they are trying to land have already been told what large 

company they must buy from for the next several years. Prime contractors play the same game with their subcontracting plans. 

I had the opportunity to see a proposal sent to the Postal Service 

indicating that the prime contractor was a stocking dealer for 83 

small and minority companies. When the final catalogue was 

issued, only 11 small businesses and 34 items made the cut out of 

1500 items. Many of the items listed were products like thermal 

fax paper and spring-lock metal tab holders. These may be antiques, but they are certainly not big sellers. Again, the plan is designed to sound good but creates minuscule opportunity for small 

business. 

I use the Postal Service as an example, although they are quasigovernment entity, they exemplify the current problems we are facing with federal agencies, not just the Postal Service or the Department of Defense. 

Mr. Chairman, as you know, the Department of Army recently sent out a solicitation on a $100 million blanket purchase agreement for office products. Initially, independent dealers were not 

even considered in the bidding process even though some of us fit 

the criteria. It was only after you and Ms. Velazquez got involved 

that independent dealers were able to submit bids. 

Mr. Chairman, it took your help to make this happen, and at the 

end of the day I am told some nine to 10 independent dealers were 

able to meet the very short deadline and submitted bid. 

My company was one of them, and it is my hope that our bids 

will be reviewed and given the same consideration as our large corporate competitors. If they are, the Department of Army will find 

that our price is competitive, our service is very good, and our time 

of delivery will meet their needs. I am hopeful that at least a couple independent dealers will be awarded some of this business. 

If we get the opportunity, we can use this contract as a stepping 

stone to show other agencies that we can meet their needs. 

Let me state we appreciate the Army’s willingness to do what 

they did and hope the other branches of military will follow their 

lead. 

I have recently become aware that the Department of Air Force 

is also planning a similar procurement. Independent dealers would 

like the opportunity and we hope you will give us some help with 

that. We just want the same considerations. I am hoping this hearing will help change attitudes and agencies will begin to utilize 

more small business. Given the chance, we can compete. 

Mr. Chairman, to save on time, I have just given you a sampling 

of the real problems that exist for our industry and small businesses in general when trying to do business with our government. 

I’m hoping to have the opportunity during any questioning to delve 

deeper and in more detail to these problems. 

Thank you for the opportunity today, and I would be happy to 

answer any follow-up questions. 

[Mr. Tucker’s statement may be found in the appendix.]

Chairman MANZULLO. Thank you very much. 

33

Our next witness is Frederick Erwin who is an attorney, an expert on these affairs, and we look forward to your testimony. 

Thank you, Mr. Erwin. 

STATEMENT OF FREDERICK ERWIN, PROGRAM MANAGER, 

CAMP INC. 

Mr. ERWIN. Thank you, Chairman Manzullo, Ranking Member 

Velazquez, Member of the Committee. 

My name is Frederick Erwin, although my mother never used 

that unless was mad at me. She called me ‘‘Deane.’’ Thank you for 

giving me an opportunity not to talk so much about a procurement 

issue directly, but one that is involved with procurement, and that 

is electronic commerce training and assistance to the small business by the federal government. In doing so, I would like to discuss 

this important issue that you recognize by virtue of calling these 

hearings from the prospective of a program that provides invaluable assistance to small business. 

The program I am referring to is the recently suspended Electronic Commerce Resource Center Program, which was funded by 

Congress and operated under a contract through the Defense Logistics Agency. 

The ECRC Program was to provide education, training, technical 

support to small businesses and enable them to learn about and 

more effectively participate in e-government. I would like to acknowledge that small businesses do have greater visibility and access to some federal procurements since October of last year 

through the government-wide single point of entry called 

FedBizOpps, which I believe you were briefed on recently. 

However, as helpful as the FedBizOpps internet site is, it does 

not resolve all of the challenges facing small businesses today in 

the electronic business environment. This fact is highlighted by the 

recently released SCORECARD III, the GAO report to the Senate 

Small Business Committee which was issued last fall, and the University of Scranton survey conducted in January and April of this 

year. 

Such reports and surveys support the need for small businesses 

to become electronically enabled. It is critical not only to the success of the small business, but also the success of any e-government 

initiatives. Existing public resources should be leveraged to enable 

small businesses to seize their electronic commerce opportunities, 

meet the new generation of electronic challenges, and enable small 

businesses to participate in government contracting as stated by 

the President and members of this committee. 

The ECRC Program has assisted over 400,000 small businesses 

in the past five years, and only recently been discontinued. Many 

of the relationships, personnel, infrastructure, tools, training programs and support capabilities are still in place. This valuable resource represents many years of government investment and is still 

available to provide assistance to small businesses. However, urgent action is required as these resources will quickly erode, and 

are on the verge of being lost. We cannot and should not allow this 

resource to be obliterated. 

I am not proposing a continuation of the ECRC Program as they 

currently existed, but in its place I am recommending the estabVerDate 0ct 09 2002 07:08 Oct 16, 2002 Jkt 080333 PO 00000 Frm 00037 Fmt 6633 Sfmt 6602 E:\HR\OC\C333A.XXX C333A
34

lishment of a new program that uses the former ECRC Program as 

a springboard that will offer a more advanced level of assistance. 

I am proposing that you take action to leverage the infrastructure 

and knowledge gained through the ECRC Program and establish a 

program that focuses that knowledge towards serving the needs of 

small business through existing program such as the Procurement 

Technical Assistance Program mentioned earlier by another 

witnexx. 

The new program would focus on using contacts, skills and lessons learned to assist small businesses in becoming electronically 

enabled from an integrated business standpoint. No other program 

exists today that will meet the small business needs. Such a program would have the availability to build an ‘‘arcade’’ of small businesses to support many government procurement. More specifics 

are provided in my prepared statement, which I have provided to 

this Committee. 

In closing, I would like to urge you to recognize the valuable government assets that exists today in the ECRC Program and that 

is about to be disseminated. Small businesses have a need for such 

a program and these needs have been documented in several independent reports. Please do not let the needs of small businesses go 

unanswered. 

Again I wish to thank the Chairman and the members of the 

committee for permitting me to come before you today. I would be 

pleased to answer any questions the committee may have. 

[Mr. Erwin’s statement may be found in the appendix.] 

[Pause.] 

Chairman MANZULLO. Sorry about that; just got your testimony. 

Our next witness is Mr. Bill Cabrera, President of Lord and 

Company in Manassas, Virginia, and we look forward to your testimony. 

STATEMENT OF BILL CABRERA, LORD AND COMPANY 

Mr. CABRERA. Thank you, Mr. Chairman, and thank you, Ranking Member Velazquez, for the opportunity to testify before you 

today. 

My name is Bill Cabrera. I am president of Lord and Company, 

a graduated 8(a) construction firm out of Manassas, Virginia. I 

have worked in this industry for 28 years; 20 years with Lord and 

Company. I am pleased to share with you my experience as a contractor with one federal agency in order to bring awareness to some 

aspects of the procurement process which may need your attention. 

I would like to talk about two incidents which I believe are examples of how the government can unfairly harm small companies 

enough to put them out of business. 

First, through the ID/IQ, indefinite delivery/indefinite quantity 

procurement program: Under this program an agency often maintains a stable of three or four companies under contract with the 

flexibility to negotiate a project with one company or solicit bids 

from selected companies. When the contractor receives an order he 

is under increased pressure not to question or upset the government representative for if yogi do you will simply not get any additional opportunities to do work under the contract, and you face the 

35

strong probability of a bad past performance rating, which affects 

your entire future in government contracting. 

The threat of this occurring puts small companies practically at 

the mercy of government inspectors who are aware of their power 

over the small company who can then change requirements and 

conduct themselves in any manner whatsoever. 

This was my experience with an ID/IQ contract at Walter Reed 

Medical Center. Specifically, we received a fast-track delivery order 

to convert a large barn into a sports facility. Although we met 

about the project some four months before its completion, it took 

seven weeks to get us preliminary drawings and three additional 

weeks to give us pricing drawings. As required by contract, we 

priced the project in five days. After negotiating the price as much 

as they could, the government reduced the price even farther by deleting items from the scope of work. 

Within a week after negotiations and after receiving the firmfixed price delivery order, we were given a new set of drawings 

which not only included the items which they had deleted during 

the negotiations, but added a significant amount of work to the 

project. 

With six weeks left to complete the job and based on implied 

commitments made during a recent partnering session with the 

government, we proceeded with the work as required. During the 

course of the project we received several new directives and 

sketches to address unforeseen conditions, such as extensive termite damage, which required us to replace the siding and several 

structural members on the facility. The government representative 

insisted without flexibility in special order items like light fixtures 

would have to be imported from Denmark at a cost of $1800 each 

and 16-week delivery. 

Chairman MANZULLO. What was the name of that government 

officer? 

Mr. CABRERA. The government officer was—— Chairman MANZULLO. The person who wanted you to import that 

stuff from overseas? 

Mr. CABRERA It is Mr. Fleri, Mr. Neno Fleri. 

Chairman MANZULLO. Would you spell his name, last name, 

please? 

Mr. CABRERA F–L–E–R–I. 

Chairman MANZULLO. And what department is he with? 

Mr. CABRERA He’s with the JOC branch of the Walter Reed Army 

Medical Center. 

Chairman MANZULLO. What is the JOC branch? What is that? 

Mr. CABRERA Job Order Contract. 

Chairman MANZULLO. So he is an Army employee? 

Mr. CABRERA. He is a Walter Reed employee. 

Chairman MANZULLO. He is a Walter Reed employee? 

Mr. CABRERA. Which falls under the Army, yes, sir. 

Chairman MANZULLO. Is he still there at that position? 

Mr. CABRERA. Yes, sir. 

Chairman MANZULLO. Can you give me the purchase orders of 

the stuff coming in from overseas that go into American facilities? 

Mr. CABRERA I will be more than happy to. 

Chairman MANZULLO. Has it been delivered yet? 

36

Mr. CABRERA. It has been delivered and installed, sir. 

Chairman MANZULLO. And you installed it? 

Mr. CABRERA. Yes, sir. 

Chairman MANZULLO. Alright, because I want those orders. I am 

going to have him here before this Committee. He apparently is in 

violation of the Barry Act. I do not think the Barry Act applies to 

this, but I want to find out why he is buying stuff from foreign 

countries for installation in American facilities. 

Mr. CABRERA. These are light fixtures, very simple. 

Chairman MANZULLO. These are light fixtures. Would you work 

with Mrs. Velazquez and me in preparing the letter? 

Mr. CABRERA. I would be happy to. 

Chairman MANZULLO. Because we are going to prepare the letter, we are going to send it to him. We are going to ask him to 

meet with us in our office. If anybody is here that is in charge of 

him, if he does not meet with us, I am going to issue a subpoena 

duces tecum, take his testimony under oath. 

This stuff is going to stop. Anybody here in the service that does 

that, you will personally come into my office. I will put you under 

oath, and I will have your job if this nonsense continues in the 

United States of America.

Please continue, Mr. Cabrera. 

Mr. CABRERA. Thank you, Mr. Chairman, and thank you for your 

comments. 

They were not the only things we had to order. We ordered some 

thoracic shower basins, also high cost, long-lead item. 

The government representative also required us to change the 

color of bathroom tiles after we had already purchased and had the 

tile delivered and on site. He made us change the color of the ceiling paint after it had been painted, all the while we were denied 

a place to put a construction trailer or a storage trailer, having no 

place to store our material, having to store it outside under tarps 

where petty thefts would constantly run off with our material. 

Never did it occur to us that in the end of—at the end this new 

partner of ours would refuse to issue a change order to cover the 

cost of the new directives. 

In another delivery order under the same contract we were asked 

to revise our previously submitted quote for miscellaneous work at 

the commissary. We were to include a quote for automatic doors 

which the government had received from a contractor who had 

been servicing the old doors. We were just the middlemen. 

In September 2000, six months after we had revised our proposal, we were notified that they had received the funding for the 

project, and at a meeting with the client the door contractor and 

the job branch representative, we were told we were to complete 

the project prior to Thanksgiving. The door contractor felt he could 

meet this schedule if we ordered the doors immediately. 

So we issued him a purchase order. When the delivery order was 

received some six weeks later, it did not include the cost of the 

doors. Immediate inquiries led us to believe that this was being 

corrected, but it never happened. What followed was countless 

meetings, phone calls, letters, and over the next year twice we 

thought the problem was resolved, only to watch months go by 

without receiving a delivery order. 

37

In October 2001, I was sued by the door contractor which forced 

me to seek legal counsel and pursue a claim. Recently, as a result 

of the claim, the government has again committed to buy these 

doors. Maybe this time it will happen. 

In two and a half years at Walter Reed, we were always denied 

a place for office trailer and office to work out of, not a place to 

put a filing cabinet or a fax machine, no place for a dumpster to 

get rid of the trash or a place to store materials. Payment problems 

were endemic, taking as much as eight months to get paid, and 

often asked to resubmit invoices with new dates just so they will 

not have to pay the interest. Our award fees that were to be processed every six months were taking well over a year to process. 

Mr. Chairman, small companies like mine do not have the financial cushion that major corporations do that allow them to sit back 

and wait for federal checks, nor do we have the legal budget to 

challenge agencies on issues as they come up. These practices will 

continue to discourage, even bankrupt small businesses that do a 

good job and often cheaper than our large competition. 

I hope my testimony will give you a better idea of some of the 

serious problems that face small businesses, and, frankly, we have 

no place to go to. Legal action or elevating problems to this level 

cannot be the only way for a small company to be heard. We need 

to craft solutions so that small businesses are not sidelined or ruined by federal government. 

Thank you, Mr. Chairman. 

[Mr. Cabrera’s statement may be found in appendix.] 

Chairman MANZULLO. Mr. Cabrera, I want to work with you on 

this. I also want to know the name of the person that told you to 

submit new invoices so that they did not have to pay interest. I 

think that is fraudulent. That could be a criminal referral to the 

Department of Justice. I also want to let you know that in your 

continued dealings with the federal government that should you 

notice anything unusual that you are being punished for testifying 

here today, bring that to my attention immediately. 

Mr. CABRERA. Thank you, Mr. Chairman. 

Chairman MANZULLO. I will contact the Department of Justice, 

and that has happened in the past to people who have testified before this committee, that they have been punished. They have not 

been given contracts that should have happened, and I am just 

shocked at how far this has gotten out of control. 

Nydia, will you go first, give me an opportunity to have some 

water, please? 

Ms. VELAZQUEZ. Mr. Tucker, Ms. Braden testified in her remarks 

that there is no reason for new laws regarding contracting bundling. She states in her testimony that the problem is simply a lack 

of training and understanding by government acquisition personnel. 

Do you agree with this assessment? 

Mr. TUCKER. Not in our industry, that is not the case at all. 

Thank you. 

Before FASA was passed five—six years ago, small businesses 

like ours competed very successfully in the federal government 

market alongside large companies like Office Depot, and Staples. 

When FASA was passed, it created a couple of new legislative situVerDate 0ct 09 2002 07:08 Oct 16, 2002 Jkt 080333 PO 00000 Frm 00041 Fmt 6633 Sfmt 6602 E:\HR\OC\C333A.XXX C333A
38

ations, one in particular, the micro purchase procedures, which required no competition for orders under $2500. You did not have to 

do any type of formal procurement procedures. You could buy from 

a small business or a large business. For our industry that is probably 95 percent of the purchases, so it hurt us dramatically. 

And now instead of those procedures we have goals, and those 

goals, as we hear from DoD, can be arbitrary, may not be enforced. 

They change from agency to agency, year to year. And without 

some kind of consequence or accountability on these issues, I do not 

see how it is going to change. I think there needs to be some type 

of a legislative solution. 

Ms. VELAZQUEZ. Thank you, Mr. Tucker. 

Ms. DiGiacomo, in your testimony you state that there has been 

a sharp decrease in contract opportunities appropriate for small 

businesses as the department relies increasingly on consolidated 

mega-contracts. Yet Mr. Aldridge testified that bundling only accounts for .2 percent of defense contracts. 

How do you explain the differences in what you are seeing and 

what Mr. Aldridge has testified to? 

Mr. DIGIACOMO. Well, in the nineties, the federal government 

wrote approximately 15 to 18 million contracts per year. Last year 

our government wrote about 10.5 million. That is a significant decrease to me. I do not know if all of those are being bundled. We 

have no figures on that to be able to verify it. We know that some 

of these are being bundled, but there has been a decrease, and we 

are seeing it. Our small businesses are not able to compete. 

Ms. VELAZQUEZ. Thank you. 

Mr. Tucker, I would like to highlight a point you make in your 

testimony. Your government sales have gone done from 80 percent 

three years ago to 60 percent. That is not because your prices were 

not competitive, is it? 

Mr. TUCKER. No, not at all. As I mentioned, we belong to buying 

cooperatives that have enormous buying power, more than any of 

the large companies that I mentioned individually, and the contracts that we are not given the opportunity to quote on or the 

agencies were not allowed to sell, it has nothing to do with the 

price. They are awarding these blanket purchase agreements for 

convenience. I realize agencies have smaller procurement staffs and 

things like that, but they are using that as an excuse to bundle or 

consolidate the procurement process. You get into a situation where 

the pricing, the management level of these agencies is being shown 

is very low on high visibility items. Very much like a grocery store 

pricing, the lesser known items are priced much higher. And then 

when the contract is awarded, and most of these are five-year contracts with one year renewals, these contracts go on for a long, long 

time, and believe me, those preliminary low prices are made up 

long before those contracts are over. 

But it is not the pricing issue that is keeping us out at all. 

Ms. VELAZQUEZ. Thank you. 

Ms. Ritter, how do you believe that the President’s small business agenda will help small businesses? 

Ms. RITTER. Well, I think the words that he spoke and the directives that he gave to the federal agencies were that they needed 

to pay more attention to small businesses. I think that gives us an 

39

opportunity to come and speak. You know, there have been years 

in the past when we could not even get the opportunity to come in 

and speak. So I think at least attention has been focused on small 

businesses, and I think small businesses across the United States, 

small business owners feel—oh, gosh, I hate to use this word—empowered a little more to speak up and feel like that they can, and 

that they will finally make a difference. 

Ms. VELAZQUEZ. Ms. Braden, how many members of the Professional Services Council have less than 500 employees? 

Ms. BRADEN. Thirty-five, I think. 

Ms. VELAZQUEZ. Thirty-five. 

Ms. BRADEN. Yes. 

Ms. VELAZQUEZ. How many of those companies have contracts 

with the Department of Defense as prime contractors? 

Ms. BRADEN. A large number. 

Ms. VELAZQUEZ. Does the Professional Services Council support 

Representative Tom Davis’ service acquisition format? Do you have 

a position on that? You do? 

Ms. BRADEN. Yes. 

Ms. VELAZQUEZ. Thank you. 

Ms. BRADEN. We have been supportive. 

Ms. VELAZQUEZ. Thank you. No more questions, Mr. Chairman. 

Ms. BRADEN. Thank you. 

Mr. BARTLETT. Thank you very much. From the testimony of at 

least two of our witnesses, I gather that we have a problem with 

justify bundling or consolidation, and I agree that those two words 

might be interchanged. One person’s consolidation may be another 

person’s bundling. 

The example I referred to, I do not think you can criticize. When 

our agencies cannot procure up-to-date equipment because the government procurement cycle is so long that by the time we get the 

equipment it is already obsolete, that they are then forced to go to 

a performance contract. If you are going to do a performance contract, it is necessarily a big contract. But the Marine Corps and 

Navy did reissue the RFP, and giving 35 percent of all of those contract dollars to small business and 10 percent of it direct pay. 

We also had a similar discussion with the NSA, with reasonably 

the same outcome and expectations. NSA, exactly the same problem; they just could not keep current with their equipment because 

our procurement cycle is too long.

But other industries do not have that kind of a problem. For instance, Mike, your sales of office equipment reminded me very 

much of the problem that movers had when DoD decided to issue 

a single contract for moving household goods. Now, obviously, there 

is nobody in the world who can move all of the military’s household 

goods in the world. 

What we used to do is have an RFP and companies compete, and 

somebody won, and the person who won could deliver as many—

you know, could do as much as he could do, which obviously was 

a tiny percentage of the total work to be done. Then any other contractor could come in and deliver household goods at the same rate. 

I would think that that would be a reasonable analogy for the problem that you all have. 

40

Why do you think they have to go to these big single-source blanket contracts rather than doing what our moving people used to do? 

Simply issue an RFP, have a lot of people like you compete, somebody is going to win. They are going to, you know, bid to deliver 

it better and at lower cost. And then anybody else who wants to 

can compete at those same levels. Why would that not be a reasonable way to let small businesses participate here? 

Mr. TUCKER. I think it is a very reasonable way. I cannot answer 

a question why they would not pursue that path. But there seems 

to be a thing here where once a contract like this has been negotiated, there seems to be a need or a desire on the part of the people that negotiate it to defend their position, what they have done. 

They have done this to save the agency money and time and so on 

and so forth. 

And as I said before, if you ask people in some of these agencies 

at the headquarters level what they think of these new negotiated, 

sole-source contracts, the people at the management level will tell 

you this is great, it is saving us lots of time and money, and 

manhours, and all the rest of it. Then you talk to the people with 

the credit cards that are placing the small purchase orders, and 

they are just the opposite—they hate it. It is dreadful, they have 

service problems, they cannot get their bills straightened out, they 

get substitutions. 

So to address your point, I would love to see something along 

those lines offered. You know, that would certainly be a way to do 

it and to, you know, possibly break this up, or have it renegotiated. 

Mr. BARTLETT. Mr. DiGiacomo, do you think that there is a possibility of requiring a justification for these consolidated—I know 

that you now have to justify bundling. But you know, consolidation 

could be bundling. If we had to justify that, I do not think in the 

case of moving and in the case of office furniture that it is easy to 

justify a single contract for the whole world. I would think what 

we used to do for moving is a reasonable thing to do, because to 

make it more convenient for the government purchasers to just let 

a single contract, you know, that really now is denying access to 

many small businesses. 

If everybody had that kind of an attitude, Bill Gates, working out 

of his garage or was it his basement, would never have become 

Microsoft. You know, we just have to give an opportunity to these 

small businesses. We have to find a way to meet the government’s 

needs while still not excluding small businesses from competing. 

Do you think that by regulatory reform that we could reach this 

objective, or do we need some legislative reform from committees 

like this? 

Mr. DIGIACOMO. I firmly believe that there has to be some kind 

of justification for bundling contracts of any type. It hurts my small 

businesses. They are not able to compete. We have situations 

where small businesses just—they do not even bother to try anymore. 

We, in Rockford, are trying to set up a coalition of small businesses that can bid on some of the larger contracts, and it is very 

difficult to get these small businesses to work together because 

they are very entrepreneurial and independent-minded. I hope that 

answered your question. 

41

Mr. BARTLETT. Thank you, Mr. Chairman. Everybody is for efficiency, but when that efficiency eliminates competition that brings 

the skills and entrepreneurship to the government, you know, that 

is moving in the wrong direction, and maybe we can be a factor in 

changing these regulations so that small businesses can continue 

to contribute as they have in the past. 

Chairman MANZULLO. Well, I think we are making an impact. I 

think somebody at Walter Reed is not going to be very happy with 

me today, but that is tough. 

Congresswoman Millender-McDonald. 

Ms. MILLENDER-MCDONALD. That is alright, Mr. Chairman, we 

are happy with you, and you have my vote of confidence on your 

actions today. I agree with you that something needs to be done to 

get to the bottom of the inability for small businesses to have contracts by the federal government, and I am appalled at the inconsistency of the Department of Defense and their inability to meet 

the goals that are set forth through legislation. 

Mr. Tucker, as I read parts of your statement with some interest, 

and the others, you are all talking about the same thing that our 

congressional hearing that was held in my district just a couple of 

weeks ago spoke about. That is e-commerce. And it is so important 

for small businesses to get up and going, and get to be a part of 

this technology that is going to really drive the economy, so to 

speak. 

But you stated that the federal government is simply failing to 

meet its small business contracting goals. That is hurting to me sitting here representing the federal government. That particular 

statement goes through the veins of all of your statements that you 

have said today, in essence, and you have tried several times to try 

to seek these contracts. Some of you have gotten them. I have read 

where others have been met with subcontracting from an Army 

Corps of Engineer, which in fact that contractor did not pay, and 

so consequently you sued. 

But small businesses should not have to go through with that. 

Now, maybe that is not some of the statements that I have read 

here, but I have read it someplace else. 

Mr. Chairman, first of all, I would like to suggest to us as the 

small business committee, and I as a ranking member, that we call 

into play every department head, secretary, whatever, to this committee to see just how well they are faring on meeting the goals 

for small business contracts with them. 

The DoD was your first. I applaud you and the ranking member 

on this, but I think every department should come before us so that 

we can get a clear understanding of whether they are meeting the 

goals of small businesses, because we all know that small businesses are what make the economy really move. You are the ones 

who create the jobs, and you are the one that is really the engine. 

I would like for you to talk with me, some of you, to tell me just 

whether or not—how many DoD contracts do you have. I have not 

read all of your testimonies. And how many of you have sought to 

get the contracts of DoD and have not gotten them yet. 

So can I start from this gentleman here and go all the way 

down? 

Mr. DIGIACOMO. I am actually——

42

Ms. MILLENDER-MCDONALD. I am sorry. I was not here. I had 

other markups and other committee meetings I had to go to. 

Mr. DIGIACOMO. I assist businesses that want to do business 

with the government. I work under a Department of Defense grant 

to help small minority women-owned and veteran-owned businesses. I have a—— Ms. MILLENDER-MCDONALD. What success have you met with? 

Mr. DIGIACOMO. I have 741 clients at this time. Of them, about 

one-third of them actually bid on an ongoing basis, and about onethird of them have been awarded contracts. 

Ms. MILLENDER-MCDONALD. And that is with the DoD or with all 

of them across the board? 

Mr. DIGIACOMO. Actually, it is across all the agencies with the 

majority going to the Department of Defense. 

Ms. MILLENDER-MCDONALD. Okay. 

Mr. DIGIACOMO. I brought a sampling of 100 contract award letters that we received from our clients, and we do cover an extremely large area. I cover 13 counties or 6,000 businesses in my 

counties. That is a lot of businesses to be able to cover, and be able 

to do an adequate job. But we are doing that every day, and we 

do see a lot of success. And success to a small business is not just 

getting the million dollar contracts. Success to a lot of my clients 

is getting the $50,000 a year contract that keeps the environmental 

consultant working, or the technical writer. 

Ms. MILLENDER-MCDONALD. And how many of those have you 

been successful in getting? 

Mr. DIGIACOMO. A number of them. I have environmental consultants and technical writers who do get government awards. 

Ms. MILLENDER-MCDONALD. And the lady to your left? 

Ms. RITTER. At the present time I do not have any DoD work. 

I was trying to wrack my brain. I do not think I have any federal 

work right now, frankly, and that has been a decision, a business 

decision made over the last seven or eight years. The red tape got 

to be too much, and the difficulties in attempting to meet all of the 

parameters. I am a civil engineer by trade. We design roads and 

bridges, and that sort of thing, and we are able to keep ourselves 

busy without getting into the federal market. And to a certain extent, that is sad. 

I have been in business 20 years, and I just sort of—the last five 

or seven years, maybe in my old age I have just gotten tired of trying to do it, and I have kind of written it off. 

Ms. MILLENDER-MCDONALD. That speaks volumes of why we are 

here today. 

Ms. Braden, is it? 

Ms. BRADEN. Yes, Ms. Braden. 

I have—we are a $17 million company, five years old, and I 

would say 95 percent of our contracts come from the Navy. 

Ms. MILLENDER-MCDONALD. Okay. Mr. Chairman, I see the red 

light, but can we have Mr. Tucker speak? 

Chairman MANZULLO. Go ahead. 

Ms. MILLENDER-MCDONALD. Okay, fine. 

Mr. TUCKER. Mine requires a little explanation. The way the 

military used to buy their office products was at supply stores on 

military bases across the country. Even the Pentagon, used to its 

43

own large supply stores. With the company I used to work for, I 

traveled around the country and called on those bases, and had 

large opportunities to sell supplies. 

And then as the process the GSA was using changed, and the 

warehouses started to be eliminated or these stores started to close 

up, and they were buying more of these products from some of the 

big GSA warehouses. Our company was fortunate enough to have 

some GSA contracts to sell supplies to the warehouses, which in 

turn serviced the military bases. 

But since contract, bundling and federal acquisition streamlining 

happened, whole branches of the military are now being awarded 

to one company. The Department of Army is negotiating a contract 

right now, which I mentioned in my testimony, for $100 million to 

service all the Army bases in the country. The Department of Navy 

in San Diego for the last four or five years has had a bundled contract where that whole Southern California Navy complex is served 

by one dealer, Corporate Express. 

Ms. MILLENDER-MCDONALD. So you cannot get anything there 

through an RFP? 

Mr. TUCKER. No. I walk in and I might as well be selling cheese 

cakes. I mean, they do not want to—and now, as we understand, 

there is this same situation going on with the Air Force, and we 

have been trying to contact Wright-Patterson Air Force Base to get 

some insight on that, and we cannot get the rep to return our 

phone calls. 

Ms. MILLENDER-MCDONALD. So, in other words, the infrastructure that we—— Chairman MANZULLO. Excuse me. 

Ms. MILLENDER-MCDONALD [continuing]. Put into place for small 

businesses to go after contracts has been absolutely cut from under 

you, and a whole new dynamics has been put into place is what 

you are saying. 

Mr. TUCKER. Exactly. 

Chairman MANZULLO. Would you yield a second? 

Ms. MILLENDER-MCDONALD. Yes. Of course, Mr. Chairman. 

Chairman MANZULLO. What is the name of the person you are 

trying to call? What is his name? 

Mr. TUCKER. Well, I can get—— Chairman MANZULLO. Mr. Ramos said? 

Mr. RAMOS. Have him contact me. I will look into it. 

Chairman MANZULLO. Thank you. All right? 

Ms. MILLENDER-MCDONALD. Thank you, Mr. Ramos. 

Chairman MANZULLO. Thank you. 

Ms. MILLENDER-MCDONALD. Thank you, Mr. Chairman. 

Mr. TUCKER. Thank you. 

Ms. MILLENDER-MCDONALD. This is so telling, this is absolutely 

so telling. We tend to think that once we pass legislation things are 

in place. We have a lot to do here, folks, so we go on to the next 

hurtle, not knowing that some of these others that we put into 

place has absolutely been taken from under us, and from you. 

And so I am—I do not think I need to go to the other two. Mr. 

Cabrera, I certainly heard about—I heard from you. And it is true 

that you need to be electronically enabled, and yet you cannot even 

get to first base with that. 

44

Mr. Chairman, I will again ask that we bring every department 

head into accountability here by having them come before us to 

suggest what types of contracts, if any, they are awarding to small 

businesses, and I am very much interested in that. 

Again, thank you so much for this hearing. Though I have not 

been here on all of it, I have read little excerpts from all of the testimony to see that we are in a big problem. Thank you, Mr. Chairman. 

Chairman MANZULLO. Thank you. We have asked the GAO to do 

a study as to the contract bundling of Boise-Cascade. That is B-OI-S-E dash C-A-S-C-A-D-E, which is sort of a big company, as to the 

efficiency of it. 

And I guess what bothers me is why would the Department of 

Army want a $100 million blanket purchase agreement for office 

supplies. Why cannot they go to the local stores? I mean, this is—

Mr. Ramos, this is the policy issue. This is where we start. It is 

not a matter of just the big boys being able to bid on this and people like Mike Tucker and a few others who have nationwide catalogues are able to get into it. But what is going on here is this 

smokes hundreds, if not thousands, of small mom and pop stationery stores across the country. For years they supply office supplies to the Department of Army, and all of a sudden some lazy officer—whatever—procurement officer for a matter of convenience 

says, ‘‘Well, let us just have one big contract.’’ And, oh, that is a 

great idea. 

How many procurement office positions are eliminated at the Department of Army? I bet none are. I mean, this is a matter—if this 

is a matter of saving money, you can take a look at it. But there 

is a policy statement here that contracts for pencils and staples 

and things of that nature, there should not even be any consideration for a large contract. 

And what I would like to do, Mr. Ramos, is let us—has this contract been let out yet? 

Mike, it has not been let out yet? 

Mr. TUCKER. Not that I am aware of. 

Chairman MANZULLO. And you are bidding on it? 

Mr. TUCKER. Yes, they have had it in their hands for about six 

weeks now, and we have had a little dialogue, a couple of technical 

questions. 

Chairman MANZULLO. What I would like to do is I would like to 

write a letter and ask the Department of Army to justify before 

this contract is let out that it is going to be any cheaper to have 

a—now this is a bundle. This is a classic bundle, and this is how 

small people get mistreated in this country, because there are 

what, 17,000 procurement officers at DoD? Is there that many? 

Does anybody know? Is there more? More? Does anybody have a 

guess because I know there are folks here from DoD? 

Mr. RAMOS. I think it was around 15,000. 

Chairman MANZULLO. There are 15,000. 

Ms. RITTER. Fifty-eight thousand, 58,000. 

Chairman MANZULLO. Oh, 58,000? 

Mr. RAMOS. That is somewhere in terms of the acquisition staff 

broken down. 

45

Chairman MANZULLO. Okay. But in any case, and I think we 

have somebody here from Department of Army? Somebody here 

from Army? 

Mr. RAMOS. She just left. 

Chairman MANZULLO. She just left. What I would like to do is— perhaps this is interfering in the awarding of a contract. That is 

great. We are good at interference in this Committee. But I want 

to see, and I think the taxpayers have a right to know. There 

should be a letter in writing by the Army justifying this bungle— bundle—bungle. 

And Nelson, if you would prepare that letter immediately so that 

Mrs. Velazquez—yes. 

[Pause.] 

Chairman MANZULLO. All right, but in any case I understand 

where negotiations are, but I just do not think this contract should 

be awarded. 

Ms. VELAZQUEZ. Mr. Chairman? 

Chairman MANZULLO. Yes. 

Ms. VELAZQUEZ. I will propose that we send a letter to Secretary 

Aldridge, and I requested him, when I was questioning him, to 

send to us an analysis of the cost saving that the seven mega-contracts will represent. 

Chairman MANZULLO. Okay. Well, let us do this then. Let us do 

a separate letter for each contract. That way it is easier to get it 

through the agencies. And I think it is time we come to an understanding. 

This committee will not rest, we will not rest, we will continue 

with these hearings. I will do everything I can to bust up this contract bundling. 

Now, does anybody know, does it violate some law for this Committee to request the Department of Army to make a cost justification of the bundled contract? And is the Department of Army obligated by law to grant that contract? Can anybody answer me that? 

Would you know the answer to that, Mr. Ramos? That is a legal 

question. I do not know if you——

Mr. RAMOS. I would rather defer answering that. I would rather 

find out for you, sir. 

Chairman MANZULLO. Okay. 

Mr. RAMOS. Because we have been having some discussions with 

the Army on some of these issues, and I would rather prefer to get 

them to respond. 

Chairman MANZULLO. I appreciate that very much. So we will—

Mr. Crowther, if you could prepare that letter. Let us start with 

this one, okay? And we are going to make a statement of this committee that we are going to do everything we can to break this 

$100 million contract into as many pieces are there are stationery 

stores that surround every single Army base in the country. That 

is where we are going to start to unbundle. And I want, and I am 

going to instruct the Department of Army in a letter, and I want 

that answered within 10 days, to give a cost justification for this 

contract. 

If that cost justification is not here within 10 days, we will have 

another hearing here, and I will continue these hearings until we 

find out why somebody came up with that brilliant idea to bundle 

46

the contract to put thousands of small businesses out of business 

in this country. 

So we look forward to working with Mr. Ramos. I remember the 

conversation we had with Deedra Lee. ‘‘Mr. Chairman,’’ she said, ‘‘there is so much money involved in these contracts that we cannot 

stay on top of them, and we depend upon members of Congress to 

bring these abuses to our attention, so that we can move on them.’’ And I just want to again thank you, Mr. Ramos, for coming, for 

bringing your staff, listen to the testimony. I want to thank the 

witnesses for persevering. If anybody here, again, has any indication in your course of doing business with the federal government, 

if for some reason you are not getting the contracts because of your 

testimony here, you let me know about that immediately. 

Okay, this hearing is adjourned. 

[Whereupon, at 4:30 p.m., the committee was adjourned.]

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