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AVAILABILITY OF CAPITAL AND FEDERAL PROCUREMENT OPPORTUNITIES TO MINORITYOWNED BUSINESSES

FIELD HEARING

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

WASHINGTON, DC, FEBRUARY 17, 2004

Serial No. 108–53

Printed for the use of the Committee on Small Business

(

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

COMMITTEE ON SMALL BUSINESS 

DONALD A. MANZULLO, Illinois, Chairman 

ROSCOE BARTLETT, Maryland, Vice 

Chairman 

SUE KELLY, New York 

STEVE CHABOT, Ohio 

PATRICK J. TOOMEY, Pennsylvania 

JIM DEMINT, South Carolina 

SAM GRAVES, Missouri 

EDWARD SCHROCK, Virginia 

TODD AKIN, Missouri 

SHELLEY MOORE CAPITO, West Virginia 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

TRENT FRANKS, Arizona 

JIM GERLACH, Pennsylvania 

JEB BRADLEY, New Hampshire 

BOB BEAUPREZ, Colorado 

CHRIS CHOCOLA, Indiana 

STEVE KING, Iowa 

THADDEUS MCCOTTER, Michigan 

NYDIA VELA ́ ZQUEZ, New York 

JUANITA MILLENDER-MCDONALD, 

California 

TOM UDALL, New Mexico 

FRANK BALLANCE, North Carolina 

ENI FALEOMAVAEGA, American Samoa 

DONNA CHRISTENSEN, Virgin Islands 

DANNY DAVIS, Illinois 

GRACE NAPOLITANO, California 

ANI ́BAL ACEVEDO-VILA ́ , Puerto Rico 

ED CASE, Hawaii 

MADELEINE BORDALLO, Guam 

DENISE MAJETTE, Georgia 

JIM MARSHALL, Georgia 

MICHAEL MICHAUD, Maine 

LINDA SA ́ NCHEZ, California 

BRAD MILLER, North Carolina 

[VACANCY] 

J. MATTHEW SZYMANSKI, Chief of Staff and Chief Counsel 

PHIL ESKELAND, Policy Director 

MICHAEL DAY, Minority Staff Director

(II) 

C O N T E N T S 

WITNESSES

Page 

Wordlaw, Mr. Obie, Chairman & CEO, JERO Medical Equipment & Supplies 3

Vazquez-Rowland, Ms. Neli, Greater Illinois 8(a) Procurement Association ...... 6

Harrison, Ms. Charlotte, President & CEO, Millennium Data Services ............. 9

Redditt, Ms. Frankie J., President & CEO, Ashley’s Quality Care, Inc. ............ 12

Montgomery, Mr. Bruce, President, Montgomery & Company ............................ 13

Vaughn, Mr. Emmitt, National Diversity Sourcing Relations ............................. 16

Roussel, Ms. Judith, District Director, Small Business Administration (SBA) .. 23

Oliver, Ms. Linda, Deputy Director, Small and Disadvantaged Business Utilization, Office of Secretary of Defense ................................................................. 25

Moss, Mr. Sean M., Director, Small and Disadvantaged Business Utilization, 

Department of Transportation ............................................................................ 26

Bamford, Ms. Patricia, Chief of the Acquisition and Assistance Branch, Resource Management Division, Environmental Protection Agency (EPA) ........ 28

Denniston, Mr. Scott F., Director, Small and Disadvantaged Business Utilization, Department of Veteran Affairs ................................................................... 30

Smith, Mr. Tracye, Executive Director, Chicago Minority Business Development Council ........................................................................................................ 31

Dobyne, Mr. Eric, Regional Director, Minority Business Development Agency . 34

Handley, Mr. James, Regional Administrator, Government Services Administration (GSA) ........................................................................................................ 35

Leggett, Mr. William H., President, Collectors Training Institute, Inc. ............. 37

APPENDIX

Opening statements: 

Manzullo, Hon. Donald A. ................................................................................ 43

Davis, Hon. Danny ........................................................................................... 46

Prepared statements: 

Wordlaw, Mr. Obie, Chairman & CEO, JERO Medical Equipment & 

Supplies ......................................................................................................... 50

Vaughn, Mr. Emmitt, National Diversity Sourcing Relations ...................... 54

Roussel, Ms. Judith, District Director, Small Business Administration 

(SBA) .............................................................................................................. 57

Oliver, Ms. Linda, Deputy Director, Small and Disadvantaged Business 

Utilization, Office of Secretary of Defense .................................................. 64

Moss, Mr. Sean M., Director, Small and Disadvantaged Business Utilization, Department of Transportation ............................................................ 69

Bamford, Ms. Patricia, Chief of the Acquisition and Assistance Branch, 

Resource Management Division, Environmental Protection Agency 

(EPA) .............................................................................................................. 72

Denniston, Mr. Scott F., Director, Small and Disadvantaged Business 

Utilization, Department of Veteran Affairs ................................................ 76

Dobyne, Mr. Eric, Regional Director, Minority Business Development 

Agency ............................................................................................................ 80

Handley, Mr. James, Regional Administrator, Government Services Administration (GSA) ........................................................................................ 88

(III) 

(1)

HEARING ON AVAILABILITY OF CAPITAL AND 

FEDERAL PROCUREMENT OPPORTUNITIES 

TO MINORITY-OWNED SMALL BUSINESS 

TUESDAY, FEBRUARY 17, 2004

HOUSE OF REPRESENTATIVES

COMMITTEE ON SMALL BUSINESS

Washington, D.C. 

The Committee met, pursuant to call, at 9:40 a.m., at 3333 West 

Arthington Street, Chicago, Illinois, Hon. Donald A. Manzullo 

[chairman of the Committee] presiding. 

Members present: Representative Manzullo and Representative 

Davis. 

Chairman MANZULLO. Small businesses drive the economy. Small 

businesses have led the nation out of periods of recession, are far 

more innovative than large businesses producing more patents per 

employee than large businesses. Small businesses have generated 

60 to 80 percent of the net new jobs annually and employ more 

than half of all private sector employees. 

I’m telling you, what you already know, small business is where 

the action is. However, no business, large or small, can exist or 

grow without ready access to capital. One of our daily cash flow 

needs are for capital improvements. The small business community 

has resorted to a number of funding methods, such as savings and 

loans, credit cards, and bank lendings. 

The private sector has been the primary source of capital for the 

small business community. Venture capital programs administered 

by the Small Business Administration, supplement private sector 

financing. The Committee is holding this hearing today in Chicago 

to hear from you as to the availability of capital to small businesses 

for sustaining day-to-day operations and for growth. We welcome 

your suggestions for improving the present system. 

There’s also been concern in the past that the SBA and federal 

agencies have not provided enough assistance to small businesses 

that want to do business with the federal government for the first 

time or to increase their present sales. The hearing will provide 

overview as to the value of present programs to help small businesses successfully compete in the federal contract arena, taking 

advantage of domestic and export business opportunities. 

Your suggestions and ideas for improving contract opportunities 

for small businesses are most helpful to the Committee. 

We welcome your participation in the hearing. I’ll turn it over to 

Danny Davis for opening remarks, and then I’ll come back with a 

few of the rules on how we are going to run the hearing. 

2

Mr. DAVIS. Thank you very much, Mr. Chairman. 

Chairman MANZULLO. Oh, but before that, let me tell you why 

I’m here. We get invitations to have hearings all over the place. 

Now, we could have been in Las Vegas, or Florida, where it’s 

warm, or New Mexico, but all kidding aside, we are here because 

of Danny Davis. Danny has been—has become a very dear friend 

of mine. I don’t know of a person from this area that understands 

or works harder for small business people, and I talked to Danny 

a couple of months ago and said, ‘‘Danny, it’s time that we do a 

field hearing for the Full Committee out in your congressional district.’’

And, Danny said, ‘‘Let’s work on it.‘‘

And so, we are here today because we believe in what Danny is 

doing, and we believe in what you are doing. We are here to hear 

the pulse of the people you represent, Danny. 

[Chairman Manzullo’s statement may be found in the appendix] 

Mr. DAVIS. Well, thank you very much, Mr. Chairman, and let 

me first of all thank you, not only for bringing this hearing to Chicago, but I really want to thank you for the tremendous advocacy 

and leadership that you provide for small businesses as Chairman 

of the House Small Business Committee. It is one of the committees that is a truly bipartisan committee, one that I have enjoyed 

serving on, and continue to look forward to working with it and 

with you, as we struggle with questions of how we really handle 

a global economy. 

And so again, I thank you for coming and for bringing this hearing to Chicago. 

I also want to thank all of you, because even though wherever 

you would have been in Chicago it would have been cold, but there 

are other things that you could have been doing. 

And, although we’ve heard rosy reports recently about our country’s economic situation, local communities like this one, and others 

throughout the Nation, are still suffering. 

Right here in Illinois, there are over 400,000 individuals out of 

work, and we’ve lost more than 125,000 manufacturing jobs since 

the start of 2001. 

The one sector that can turn unemployment lines into job opportunities is small businesses. Small businesses, as you know, are the 

backbone of the American economy, and of the Illinois economy in 

particular. The more than 275,000 small businesses here employ 

almost 50 percent of our workforce. They provide the fuel and the 

jobs that drive our metropolitan area, our state, and yes, indeed, 

our country. 

The real trail blazers of small business growth are minorityowned firms. Across the country, minority-owned businesses are 

employing millions of people and contribute billions of dollars in 

revenue. In fact, Illinois is among the top five states that account 

for the majority of minority-owned businesses in the United States. 

Yet, given all their accomplishments and successes, minorityowned business firms in the Nation, and in Illinois, continue to face 

an array of barriers. These barriers impede their growth, preventing them from reaching their full potential and, ultimately, 

hinder the number of jobs they are able to create. That is where 

the Small Business Administration programs come in. 

3

The SBA’s programs fill an important gap providing small firms 

with assistance in gaining access to capital of federal contracts 

when they have often times no place else to turn. 

Given all these good programs, and all the good that they do for 

businesses, I’m sorry to say that the SBA was one of the hardest 

hit agencies by budget cuts in the proposed 2005 budget. The funding request for the agency declined by almost $120 million from 

last year’s request, and is less than half of what was requested 

during President Clinton’s last year in office. 

The SBA loan programs were among the most affected by the latest budget, but it is the SBA loan portfolio that provides small 

businesses in our area with the capital they need to start up and 

grow. These programs are especially important, since many traditional lending institutions are less likely to provide capital to minority-owned businesses. 

And so, Mr. Chairman, we thank you for bringing, again, this opportunity for those of us here in the metropolitan area of Chicago 

to analyze, discuss, and display what our experiences have been, 

with the idea that hopefully, even if it’s only one idea, if it’s only 

one approach, if it’s only one technique, that provides another level 

of opportunity for small businesses, then, not only will this day 

have been important and worthwhile, but all of the continued advocacy that you provide would have made tremendous sense. 

And so, I thank you again, thank all of those who have come to 

participate, and look forward to a very worthwhile hearing. Thank 

you very much. 

[Representative Davis’ statement may be found in the appendix] 

Chairman MANZULLO. Thank you, Danny. 

The, I don’t want to call it, ground rules, because that sounds 

like a football game, but what we are going to do is, we are going 

to have the hearing in two panels. We are going to combine the second and third panel so we have more time. Then I’m going to need 

somebody to help me keep time, but we are going to try to limit 

your testimony to five minutes. 

And now, when I sort of go like this, you know, that means 

you’ve got about 30 seconds left, or like this your time has expired. 

If I pick this up and get real excited, that means, you know, it’s 

time to sum up. 

I think what we’ll do is, I’m going to start with Obie. Obie 

Wordlaw, Chairman & CEO of the JERO Medical Equipment & 

Supplies, and, Mr. Wordlaw, we look forward to your testimony. 

STATEMENT OF OBIE WORDLAW, CHAIRMAN & CEO, JERO 

MEDICAL EQUIPMENT & SUPPLIES 

Mr. WORDLAW. Good morning, Mr. Chairman, and Members of 

the Small Business Committee. My name is Obie Wordlaw, CEO of 

JERO Medical Equipment & Supplies. Can everybody hear me? 

Okay. 

JERO is a manufacturer of disposable wearing apparel and a distributor of medical/surgical supplies and equipment. We were established in 1987, we’re certified with the City of Chicago, Cook 

County, State of Illinois and SBA, and we are also an MBE enterprise. We are also a small disadvantaged business. We are also a 

veteran-owned business, which is located in the Illinois medical 

4

district, and we are also in a HUBZone, Enterprise Zone, and 

Labor Surplus area, as do 95 percent of our employees, and we hire 

from our community. 

Today, we’d like to discuss the failure of the private and public 

sectors to meet the capital needs of African-American small businesses and their contracting opportunities. 

SBA was established to protect the small businesses, their mission: Maintaining and strengthening the Nation’s economy by aiding, counseling, assisting and protecting the interests of small businesses and by helping families and businesses recover from national disasters. 

SBA defines a small business as one that is independently owned 

and operated, and not dominant in its field, and meets the employment sales standard. I won’t list all of those, but I have down here 

wholesale, retail, it tells you what the criteria is within those 

guidelines for a small business, manufacturing, construction, et 

cetera. 

According to SBA, over the past ten years it has helped 435,000 small businesses to secure financing totaling over $94 billion. That 

is very impressive, however, in the African-American community 

we have not reaped any of those benefits. I think SBA’s definition 

should include the social and economic disadvantaged small business in its loan eligibility. 

The 7[a] Loan Guaranty serves as SBA’s primary business loan, 

their most flexible business loan program. The 7[a] Loan Guaranty 

Program is somewhat deceptive. It is called a Guaranty Loan Program, but if the lender is not willing to provide you the loan, even 

with SBA’s guaranty, you are out of luck. Then you ask yourself 

why would we ask the same lending institution that has been redlining the African-American communities for decades to be a participant? 

Solution—SBA should be able to make direct loans, if you can 

guarantee a loan, you should be able to make a loan. Access to capital is a direct link to contracting opportunities and growth. 

Jero is a recent graduate of the 8[a] program, I support the 8[a] 

program, the HUBZone program, the veteran-owned, and womenowned programs 100 percent. 

During my nine years as an 8[a] firm, a veteran-owned, 

HUBZone, and a Small Disadvantaged Business and a minorityowned business, Jero received excellent technical assistance, marketing plan, excellent technical assistance, which includes an array 

of things, from SBA. The contracting opportunities were not successful. Jero was awarded one 8[a] contract. Most recently awarded 

a HUBZsone contract. I would think that an 8[a] HUBZone, veteran-owned small business contract, SBA should be trying to determine my eligibility as a small company because of all my contracts. 

Instead, one 8[a] contract in nine years, and the most disturbing 

is that SBA had to do a Notice of Appeal on that one contract, not 

because the contract exceeded its threshold in dollar amount, it 

was a very small contract. The Agencies/contracting officers were 

not 8[a] friendly. 

When we were marketing the federal government prior to becoming an 8[a] company, we were told that from the government and 

agencies that we needed to be a 8[a] company. Then I was told that 

5

we needed to have a Federal Supply Schedule after we got the 8[a] 

designation. Then we were told we had to have a DAPA Agreement, so now we are told with the Federal Supply Schedule, the 

DAPA Agreement in hand, then we were told that if you had a 

standardized contract based on the products that you sell, that we 

would make sure that all the federal agencies would buy from the 

mandatory source, which would be us. Then once we got the standardized contract we were told that we needed to work closely with 

the prime vendors, which caused Jero an additional fee. 

I’m jumping around so I can stay within the five minutes. 

Chairman MANZULLO. Tell us your story. 

Mr. WORDLAW. Okay. 

Jero was awarded the 8[a] standardized contract and the compliance of a federal agency. We were awarded an 8[a] standardized 

contract. The compliance on that contract was only utilized by 20 

percent. 

After contracting with some of the VA mandatory contracts, and 

promised that we were told that we that they had to buy from us, 

we received several reasons why they could not buy from us. One 

being, and I’ll just quote one, my team is involved with open market procurements. We require over $25,000—we were advised up to 

$25,000, we are establishing a BPA on our own. Now, this is after 

we were told all these different things that we needed to have, 

standardized BPA, Federal Supply Schedule and the works. It is 

not according to Mr. Wordlaw, this is one of the reports from one 

of the businesses, which was specifically VISN 21, which is in this 

area. Mr. Wordlaw, according to the National Accusation Center 

that the isolation gowns are standardized under the specified contract, but for now we are not currently using your product, and we 

must go through the prime vendor. 

Chairman MANZULLO. Okay, now we are approaching the hand 

mark. 

Mr. WORDLAW. Okay. 

I got a call yesterday from Mr.—okay, let me jump over here 

then. 

In closing, SBA was very supportive of Jero during its nine years 

as an 8[a] and is still working with us as a HUBZone firm. Jero 

strongly supports SBA in its efforts to assist disadvantaged businesses with business development and contracting opportunities. I 

feel that they have no real authority in the lenders programs, or 

the contracting programs. I think the language is, ‘‘We can’t force 

the agencies [lending & contracting] to loan you money or give you 

a contract,’’ even if you meet all the qualifications. Instead of cutting SBA’s budget, it should be increased with some real authority. 

I shared the above stories to say that this isn’t SBA’s failure, but 

a failure of SBA’s procurement partners, the federal buying agencies. 

Mr. DAVIS. Okay, Obie, I don’t like to cut you off here, but Scott 

Denniston is here, and he’s the Director of the Department of Veterans Affairs. Scott, where are you? 

Mr. DENNISTON. Right here. 

Mr. WORDLAW. Okay, and we talk to Mr. Denniston on a regular 

basis. In fact, I make regular trips to Washington to meet with Mr. 

6

Denniston and to meet with his office, and I think I know just 

about everybody in his office. 

And, thanks to Congressman Davis, he allows me to come and 

sit down and get my tools ready to go and fight the battle. 

Chairman MANZULLO. All right. 

Mr. WORDLAW. So, I do know these people. But, what is happening, they don’t seem to have enough piece in the process to 

make the contracting agencies do what they say they are going to 

do. So, all the socioeconomic programs we run into obstacles on a 

continual basis, in terms of being able to receive contracts, or being 

able to get the funds necessary to do the business. 

Chairman MANZULLO. Okay, that’s it, Obie. You’ve made your 

point here. Okay? 

Mr. WORDLAW. Thank you very much. 

Chairman MANZULLO. You bet. 

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

Chairman MANZULLO. Now, Neli, you are substituting for———

. 

Ms. VASQUEZ-ROWLAND. Theresa Jamison. 

Chairman MANZULLO. Let’s see. 

Ms. VASQUEZ-ROWLAND. Theresa Jamison is from Smart Technology. 

Chairman MANZULLO. All right, why don’t you introduce yourself 

and your organization, and put forward your testimony. 

Ms. VASQUEZ-ROWLAND. Okay. 

Chairman MANZULLO. Are you going to give your own testimony 

or are you going to be working from hers? 

Ms. VASQUEZ-ROWLAND. No, no, I had the pleasure of having 

Theresa Jamison on my Board. 

Chairman MANZULLO. Okay. 

Ms. VASQUEZ-ROWLAND. Also Richard Jeffries. 

STATEMENT OF NELI VAZQUEZ-ROWLAND, GREATER ILLINOIS 

8(a) PROCUREMENT ASSOCIATION 

Ms. VASQUEZ-ROWLAND. We are an association called the Greater 

Illinois 8[a] Procurement Association. 

My theme is, basically, federal contracting with small business 

means big business for Illinois, and I thank you for inviting the 

Greater Illinois 8[a] Association, known as GIPA, to speak on behalf of the issues that impact small business, particularly, those in 

the 8[a] program. 

Not only do we represent the 8[a] issues in Illinois, but we are 

also part of a council that represents 8[a]s from coast to coast, encompassing over 5,000 8[a] companies in the U.S. GIPA also serves 

on your Small Business Task Force on the Small Business Committee in Washington, D.C. 

Mainly, there are two issues that we’re discussing today that affect 8[a], listed as access to capital and access to revenue. The obstacles that face small business today preclude small business from 

participating in the federal contracting arena. 

Not unlike Mr. Wordlaw’s story, it’s pretty common across 8[a] 

companies to find it very difficult to do contracting with federal 

agencies. This has basically been the result of the changes over the 

years that have diluted the 8[a] program’s effectiveness. 

7

Access to capital. The purpose of getting access to capital for 

small business is to provide a tool to finance small business and 

to increase capacity so that small business would qualify for contracting opportunities in both the private and public sectors. The 

SBA lending program allows companies who would otherwise not 

qualify for a typical loan to have access to capital. 

With the proposed budget cuts, and potential reduction in the 

SBA loan program, many small businesses will never get started. 

Already small businesses are reeling from years of a weak economy in the advent of 9/11, which has taken its toll on small business. Cutting funding programs will be a significant blow to the 

creative spirit of entrepreneurs in the U.S., who provide the majority, as you said, of job growth today. 

Historically, small business has led to growth in the economy 

whenever there’s been recessions. Without SBA bank loans the 

banking industry would be subject to potentially redlining small 

minority-owned businesses. 

Small business also faces the same obstacles in the areas of finding insurance. 

A solution? Well, ideally small business is given access to revenue in federal contracting, and small business is given firm payments, provisions that would minimize the risk and need for significant amounts of capital. The life’s blood of any business is cash 

flow. The cash flow created by prompt payment would provide the 

necessary requirement that allows small business to qualify for less 

costly conventional loans and will open up the arenas for insurance 

and bonding companies alike. 

Access to revenue. The SBA was created with a charge to develop 

small business in the U.S. Once successful, and credited with having originally funded many of our Fortune 500 companies, unfortunately, the climate has changed significantly for small business. 

For example, today the SBA is operating under a series of memoranda of understanding, otherwise known as MOUs, with other federal agencies. In our view, the SBA has antiquated its role with respect to business development for the firms participating in the 

8[a] program. Our understanding is the delegation of duty is in direct violation of the intent, as we understand the Small Business 

Act and as amended in Public Law 10656 that requires small business to enter into contracts on behalf of the subcontracts to 8[a] 

firms. 

Prior to the SBA entrance into these MOUs of the mid–1990s, 

SBA was involved in the 8[a] contracting process. The SBA accepted contracts under the program to be performed by 8[a] firms. The 

SBA assisted the firms with proposal preparation, contract negotiation, and contract administration. 

The SBA was even a party to the contract, as the SBA contracting officers were signatory to the contract. The SBA had the 

ability at the time to direct work to 8[a] programs that had not previously had contracts. 

The 8[a] firms knew then that the 8[a] program’s focus was on 

business development. The SBA is painfully aware that goal of the 

agency is to meet the equitable distribution of contracts requirement. Due to this, the SBA has implemented business matchmaking programs to introduce local 8[a]s to the agencies. It’s been 

8

stated by the SBA matchmaking programs that 80 percent of all 

federal contracts are awarded to firms within 50 miles of D.C. 

Their stated objective in this matchmaking program was to be able 

to distribute contracts throughout the states. 

The mission of the SBA is to develop small business, and these 

types of programs intend to meet their stated objectives. However, 

without the authority there’s virtually no possibility of success. 

Furthermore, without the authority, funding, and staff required to 

execute the mission of the SBA under the current structure of the 

MOU programs, the SBA is set up to fail. 

Consequently, under the MOU structure, small business, specifically 8{a]s, will continue to go without representation——

Chairman MANZULLO. How are you doing on time, Neli? 

Ms. VASQUEZ-ROWLAND [CONTINUING] Consequently, under MOU 

structure, small business, particularly 8[a]s, will continue to go 

without representation, contracting opportunities. The bottom line 

is that more business matchmaking programs will not work under 

the current MOU structure. There is an appeal process by the SBA 

that mainly questions contracting opportunities that could be directed to small business, yet there’s no enforcement. 

Alternatively, for example, the Office of Advocacy could be appointed as intermediary on issues between agencies and independent agencies alike, like this to resolve areas of disagreement. 

As a result, the MOU’s implementation and lack of SBA involvement in the contracting process, federal contracting is experiencing 

more instances of bundling of contracts, falling short of the small 

business utilization goals, bypassing local buys, a weak appeal 

process by the SBA, and lack of accountability on the part of agencies. 

The MOUs have been——

Chairman MANZULLO. We’ve got to be out of here by noon for a 

giant procurement conference, so I’m going to hold you to the clock. 

Ms. VASQUEZ-ROWLAND [CONTINUING] Okay. 

Chairman MANZULLO. All right, and the clock has ticked down. 

Ms. VASQUEZ-ROWLAND. Okay. 

Chairman MANZULLO. So, we’ll have time for some questions. 

Okay? 

Ms. VASQUEZ-ROWLAND. All right. Well, thank you, but in summary——

Chairman MANZULLO. What I would suggest, you guys have a 

story. You don’t have to read the script. 

Ms. VASQUEZ-ROWLAND [CONTINUING] Okay. 

Chairman MANZULLO. All right? You know, get right to it. You’ve 

got a problem, let’s get right to the problem. You got it? 

Ms. VASQUEZ-ROWLAND. Okay. 

Chairman MANZULLO. All right. It took over five minutes to get 

there, but at least somebody’s got to start. That’s all right. 

Ms. VASQUEZ-ROWLAND. Let me——

Chairman MANZULLO. Your time is done. Give it to Charlotte. 

We’ll get back to you. 

Ms. VASQUEZ-ROWLAND [CONTINUING] Okay. 

[Ms. Vasquez-Rowland’s statement may be found in the appendix.] 

9

STATEMENT OF CHARLOTTE HARRISON, PRESIDENT AND 

CEO, MILLENNIUM DATA SYSTEMS 

Ms. HARRISON. I wanted to express my thanks to Congressman 

Davis for his engagement in, support of, and sincere concern for the 

small business community, and I want to thank his office for its 

tireless efforts in support of the small businesses. 

I’m going to get to the meat of it right now. 

Chairman MANZULLO. Introduce yourself first, though. 

Ms. HARRISON. My name is Charlotte Harrison-Smith. I’m the 

President and CEO of Millennium Data Systems. 

This is the second time that I’ve been given an opportunity to 

testify. The first time that I testified I was really full of fire, trying 

to find a fair playing field. Since then I’ve mellowed, but the fight 

has grown much more intensive, and it is difficult to choose a topic 

today. 

We have pending litigation that I’m not able to speak on, so we 

chose a matter that was dear to our hearts. 

Since 1999, we provided temporary clerical support to a naval 

command in the Great Lakes Region. In 2003, this command underwent an 876 study. The 876 study was designated as a small 

business set aside. We spent countless hours screening, hiring, and 

developing an employee base at this location over the years. 

This contract represented a significant portion of our organization’s revenue. We thought that based upon our experience we 

would have an excellent opportunity to secure the business. We felt 

secure in our line of thought, because we had given our very best 

effort with this account. We worked tirelessly to raise the bar with 

regard to the skill level of our personnel, so much so that at each 

and every change of command the commanders received accolades 

for projects where our personnel had played a key role. 

So confident were we in our personnel’s ability that as they 

rolled off assignments from time to time, we promoted personnel to 

positions without our corporate office location. We truly worked 

hard, we believe in an honest day’s effort for an honest day’s pay, 

and we had every right to be excited about our chances in the 876. 

We even took the extra step of taking specific training on how to 

respond to an 876 RFP. We had 38 employees in every facet of the 

command performing clerical functions, and we were fully capable 

of running the entire command, and that’s why we were so feared. 

But, we couldn’t have been further from the reality on the 

ground. Certain individuals at the command, in very powerful positions, did everything in their control to prevent us from having a 

viable opportunity to bid and compete. They made every effort to 

intimidate us. 

One of the examples of this comes to mind, they refused to allow 

us to contact our employees, even after working hours, to update 

their resumes with the experience that they had earned over the 

past four years. We were threatened and told that if we did we 

would be changed immediately. We were told by the officer in 

charge that our Vice President could not visit the site without a 

military guard escorting him at all times, and his normal routine 

had been to visit the site twice a week for all the years that we 

managed those people without a military escort. 

10

At the same time, while we were under escort, the officer in 

charge granted full and unfettered access to the firm that eventually won the 876 competition. We felt overwhelmed by the very intense, concerted and obvious efforts to prevent us from competing 

fairly. 

More importantly, because this account represented a significant 

portion of our overall revenue, we needed to show caution with our 

most important customers. Without the ability to update our personnel’s resumes we knew that we could not submit a viable bid. 

Other firms vigorously protested the award because it was a wellknown fact that the company that apparently won the award had 

a parent relationship with a multi-billion dollar firm and did not 

qualify as a small business. In fact, the company that won has an 

estimated 3,000 employees with revenue of $225 million. A true 

small business could not weather the economic consequences of the 

unreasonably low bid that they submitted. And franchising has become a dirty little loophole that large businesses are using to masquerade within the small business community and win contracts. 

This needs to stop. 

The sad irony of it is that this billion dollar firm will inherit the 

people that we cultivated over the last five years, and what about 

the civil servants that have served their government for many 

years, do you think that they even had a fair shot at winning the 

876 study? 

Should base level commanders’ unusual interest in seeing a private sector firm win a particular contract be the overwhelming factor in awarding a contract funded by taxpayers? And why doesn’t 

the SBA have the authority to recommend cases to the GAO or the 

Inspector General of the command if it’s brought to their attention? 

There should be a policy implemented to allow the SBA to investigate a company if it is brought to their attention by any other 

means than a protest. 

We submitted a Freedom of Information request to gain the 

names of the parties to the protest, but we were told that the information could not be released until after the award. The awards 

were made, and we still don’t have the information. It’s a mockery 

of the system that a company with the strength of a large business 

behind them is allowed to compete as a small business and be misrepresented as a small business. 

Congress must give the SBA enforcement authority regarding 

small business procurements. I believe that once these matters are 

thoroughly examined, the shameful outcome will compel Congress 

to grant more resources, authority, and tools to the SBA, so that 

they can work with other agencies like the GAO to enforce the laws 

of fairness. 

Most small businesses are in this to make a difference. Some are 

greedy and will give the whole barrel a bad taste, but some of us 

still believe that the best way to show our patriotism is to help create jobs for those who are not so well connected. We believe that 

when prosperity grows and flourishes the members of the community feel a sense of worth that the Nation as a whole improves. The 

expansion of the tax base and the positive effects on the economy 

are just wonderful byproducts of doing the right thing. 

11

The men and women who work in the SBA and the GSA also 

care. It’s unfortunate that the SBA, as a whole, has received such 

a smear on their reputation over the years. I can tell you first hand 

that they are wonderful people who genuinely care about creating 

a fair playing field for small businesses, but like an electric lamp 

without a cord placed in a darkened room without a plug to provide 

light so, too, is the SBA in the procurement arena. They have no 

source from which to draw upon bringing in light. 

There are those of us who still believe that the system can work 

if we abide by the rule of law. We believe that if we strive to make 

a positive difference in the lives of others, our Nation and the 

world becomes a better place, but we are searching for the right 

word, the spark, the catalyst, that compels us to speak out and demand some change. 

I can only offer you this, when you look in the eyes of your loved 

ones, and your wives, and husbands, and daughters, and mothers, 

remember, they have to live here too, just like us, and this system 

needs to be fixed for the next generations. 

The abuse of the 8{a] businesses is in full bloom, from large businesses parading as small businesses, to the banks that refuse to 

lend even after receiving an SBA guarantee, only because they’d 

rather offer higher-priced terms to shamelessly enrich their bottom 

line. And, oh, yes, I was approved for a $250,000 loan by the SBA, 

but my bank preferred to keep me and my $3.6 million in a factoring arrangement so that they could make more than $100,000 

in loan fees. Thank God for the SBA and my business opportunity 

specialist, she certainly did a thorough job of making sure that I 

explained why I had never accepted a $250,000 loan. If it hadn’t 

been for her efforts I would have never even known that the bank 

had received the approval. 

To add injury to insult, they made up an ill-conceived story that 

I had asked for the funds for equipment financing, and they offered 

an alternative solution. The only problem with the explanation is 

that we had ceased equipment tax in September of 2002. Even now 

they continue with their bold behavior, miscalculating that we neither have the funds, nor the wherewithal, to fight them. 

And last, but not least, let me touch on MUCI. You’d think that 

since we were the incumbents of the command, with many detachments at Great Lakes Naval base, that EES would have responded 

to our efforts to become one of their subcontractors. Even they have 

a new winning strategy, promise the government they’ll take all 

the small business incumbents and just sit back and wait for the 

government to downsize. 

When the command closes, the computers still need to run, but 

because the head agency has technically closed, and their detachments are streamlined to another activity, they are not obligated 

to extend the subcontract to the previous small business incumbent. 

Everyone has the system wired to work according to their will, 

everyone except the small disadvantaged business. Never before 

have we needed your intervention more than now. 

Chairman MANZULLO. I’ve got to intervene on the time here. 

Ms. HARRISON. I only have one thing left, we need you to 

strengthen the SBA and the 8[a] program with greater vigilance, 

12

compliance support from all sides of the aisle. We hope and pray 

that you’ll heed the call. 

[Ms. Harrison’s statement may be found in the appendix.] 

Chairman MANZULLO. Thank you, Charlotte. 

Okay. Our next witness is Frankie, is it Redditt? 

Ms. REDDITT. Redditt, yes. 

Chairman MANZULLO. Redditt, President and CEO of Ashley’s 

Quality Care, Incorporated, and we look forward to your testimony. 

STATEMENT OF FRANKIE REDDITT, PRESIDENT AND CEO, 

ASHLEY’S QUALITY CARE, INC. 

Ms. REDDITT. Thank you. 

Chairman MANZULLO. You’ll have to pick up the mike there, 

speak from your heart. 

Ms. REDDITT. Okay. 

Chairman MANZULLO. Tell us about the nature of your business, 

and then speak from your heart. 

Ms. REDDITT. Okay, thank you. 

Ashley’s Quality Care provides in-home services to non-elderly, 

handicapped persons throughout the city and suburbs of Chicago. 

However, well, also, we have over 400 workers, and our workers 

come throughout the city and the suburbs, we have experienced in 

the last two years slow payments because our contracts come from 

the Department of Rehab through the State of Illinois. We have not 

been getting paid on time, so, therefore, I’ve been losing quite a few 

clients, quite a few homemakers, because if you cannot make your 

payroll you cannot pay, and the homemakers will not stay there. 

They take our clients away from us and take them back to the 

state where they will get $7.00 an hour. 

We have been fighting this for the last two years. Ashley’s was 

established in 1991, when we only had four workers, four homemakers, and two staff persons, now we have well over 400. 

We have experienced tremendous defeat from the banks. Banks 

would not give us a line of credit. I have to take my same contracts 

over to the banks in the minority communities, in order to get a 

line of credit, in order to pay. However, I still cannot get enough 

money to make payroll from month to month. Therefore, I’m going 

back and forth with the state, saying could you please release 

funds. I’m also asking them to-we must submit a letter, I believe 

that’s another grievance letter, we must submit a letter of where 

we actually need this money, and each month, each month we have 

to go through the same thing, sending out letters saying that we 

need money in order to make payroll, in order to pay our employees, and this has been going on since 9/11. 

We cannot grow, because there is no money to grow, there is no 

room to grow. We cannot accept other state contracts, because 

there is no money to pay the employees once we get a contract, so, 

therefore, we have to refuse contracts, and we cannot hire any 

more workers. 

Over the last ten years, we find that we are helping the state by 

keeping the clients in their homes and out of institutions, out of 

hospitals, and keeping them in a safe environment in their homes 

where they are familiar with. Therefore, the clients get better at 

13

a rapid rate, and they are able to function because they are familiar with their surroundings. 

We cannot pay our workers, we lose our clients, our clients are 

dissatisfied, and they are going without services, and this is due to 

the fact that the whole thing is not being paid in a timely manner. 

We have a lot of homemakers that have stuck with us down 

through the years, worked with us, continue to go to provide services for these clients. Some of our conditions, the conditions that 

the homemakers are actually going into are deplorable conditions. 

The clients cannot do for themselves, they cannot clean themselves, 

they cannot feed themselves, they cannot shop for themselves, they 

cannot cook, so our homemakers provide all of these services, and 

yet we cannot pay them in a timely manner. 

And, this is why we are coming—have gone to the Harris Bank, 

some of the large banks downtown, and they said we must have 

SBA backing. We get an SBA backing, and they still refuse to provide payments or provide us with a line of credit. We have to, 

therefore, take our business back into the community where they 

cannot afford to give us the line of credit that we need in order to 

grow, and, therefore, we are stuck with what we have. 

Our ambition is to grow. We want to grow. We want to provide 

services to more individuals who badly need the services, but we 

cannot do it because of lack of funds, and this is where we stand 

today. 

Thank you. 

[Ms. Redditt’s statement may be found in the appendix.] 

Chairman MANZULLO. Thank you, Frankie. 

Our next witness is Bruce Montgomery, President of Montgomery 

Company, and we look forward to your testimony. 

STATEMENT OF BRUCE MONTGOMERY, PRESIDENT, 

MONTGOMERY & COMPANY 

Mr. MONTGOMERY. Thank you, Chairman, and again, I’d like to 

thank Congressman Davis and you for holding this forum in our 

community. It is one that’s obviously necessary by the statements 

of the entrepreneurs that have spoken before me. 

My name is Bruce Montgomery, and I’m Founder and President 

of Montgomery & Company, which is an information technology 

and systems innovation company that I founded in 1989. My company was established to provide technology and information management services to business, education, government, and the nonprofit sector. The company manages IT projects and computer 

hardware and software systems design and implementation, local 

and wide area networking, mobile computing, document imaging 

systems, desktop graphics, multimedia applications, and Internet 

and e-commerce. 

Chairman MANZULLO. How many employees do you have, Bruce? 

Mr. MONTGOMERY. I have five. 

Chairman MANZULLO. Okay. 

Mr. MONTGOMERY. I am not going to talk today about my own 

trials and tribulations as an entrepreneur, that’s too much fun to 

talk about in five minutes, but what I will talk about, again, some 

ideas, and like you say, speak from the heart. Certainly it’s been 

a pleasure to work with Congressman Davis, to talk about ecoVerDate 0ct 09 2002 20:24 Jul 14, 2004 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 G:\HEARINGS\93500.TXT MIKEA
14

nomic revitalization and job creation in this community, and I 

think a lot of hard work was done by the Congressman and others 

when they established the plans called ‘‘New Market Initiatives.’’ 

They looked at the disparities of capital access and availability of 

capital markets. 

In the New Market plan some great ideas and concepts were 

raised. Unfortunately, they were not implemented to the full extent, because while the ideas and the plans were there, they 

weren’t given the money and teeth, as we’ve heard before, to make 

a difference in effecting change to solve some of the problems that 

have been previously stated. 

So, my first statement would be to blow the dust off of the ideas 

that were raised and well documented in New Market Initiatives, 

and it’s obvious that banks and the current institutions cannot be 

the only providers of capital that our businesses so sorely need. 

The Kaufman Foundation, the Ford Foundation, and so many 

others have well documented the need for equity capital, and the 

disparity, and the availability of equity capital to our businesses, 

and we’ve not even been allowed under the SBIC rules to be a part 

of that game. 

If you look at the SBA’s own records in regards to what’s going 

on in SBIC funding, small business investment corporations, there 

are some grave concerns about that program and the ability that 

minorities become certified as SBICs and do their job of providing 

equity capital to minority-owned businesses that will create jobs. 

Now, the truth is that once African Americans have been allowed 

to participate in the venture capital game, that they’ve been very 

successful. In fact, regardless of all the horror stories that we’ve 

heard, minorities, and women, and African Americans, have started businesses at a faster clip in the last ten years than ever before. 

They are creating jobs, despite all of the horror stories that we’ve 

previously heard. They are doing this with two arms tied behind 

their back because they haven’t been able to get equity capital, and 

have equity events, and do IPOs, and access the capital markets. 

The problem is, the best and the brightest in our financial institutions have moved from the banking community into the realm of 

investment banks, and that’s why a company like Comcast can 

make an untendered $50 billion offer to buy Disney. 

Chairman MANZULLO. $56 billion. 

Mr. MONTGOMERY. $56 billion, because all of the financial 

geniuses in America are more concerned about these mergers and 

acquisitions to provide capital, and schemes that allow them to 

have the capital to make these huge deals, but there’s no opportunity for minority businesses to get access to equity capital. So, 

I say we need to look at the disparities in the availability of equity 

capital, and the SBA, again, needs to be empowered to move quickly to make sure that minorities get a chance to be certified SBICs, 

we need new vehicles in our community. 

We have this idea of community development financial institutions. We need new vehicles. Again, I would say that the Black 

Caucus has had tremendous success with their WOW initiative, 

recognizing that home ownership is a key to wealth. Well, the next 

initiative ought to be one for small businesses, and just like we 

would not have the tremendous movement in home ownership 

15

without creating vehicles like Fannie Mae, that are allowed to 

securitize the great mortgage pools and make money available for 

people to own homes which are the number one asset in America 

that makes a difference in people’s wealth. 

We need to have that same type of availability that can 

securitize monies to really clean up this gobbledy-gook of weak programs that are under funding the opportunities for small businesses to grow and create jobs. So, we need to review how these 

securitization models can make a difference in capital available for 

minority businesses, and we need to do that right now. 

Your committee needs to hold their feet to the fire when somebody comes up with a scheme to create a new agency in the government, such as the Agency of Homeland Security, and say, hey, you 

know, we need to do this. We need to fund this. We need to move 

now, and we need to move quickly. 

Well, that agency, Tom Ridge needs to come before your department, and before he runs out and does whatever he feels he needs 

to tomorrow, he needs to show you how he’s going to include small 

business in the process. They can find a way to do everything, bend 

the rules, do it tomorrow when they want to do it, but then there’s 

no call to watch and monitor the contract, go think about what it 

needs to look like, they can give everybody else a contract to think 

about what needs to be done, there’s no way all of the desperate 

IT systems are going to be galvanized in one new agency. 

I’ll tell you this, though, they don’t have an effective model of 

how to include small business in the process, and they need to have 

one. 

Chairman MANZULLO. Bruce, it looks as though we are almost 

out of time here. 

Mr. MONTGOMERY. Well, I’ve just got two more comments to 

make. 

One, certainly you’ve heard the problems with contract bundling. 

This is a terrible problem and speaks to the issue that I’m talking 

about. 

And again, I’d just like to say that there is well documentation, 

again, Kaufman, the Milliken Foundation, Ford and others, have 

done study, after study, after study, to show that venture capital, 

equity capital, access to capital markets, and new thinking, needs 

to be brought into models to create capital, make a difference, so 

that our businesses can be engaged. 

And, I would also say that technology adoption by small businesses can make a very big difference in their ability to be effective, and also, we’ve been locked out of the ability to provide our 

services into the very agency that we are here to talk about today, 

and that’s the SBA. I would encourage the SBA to be very inclusive, to continue the SBIR program that allows small businesses to 

get innovation dollars to bring new ideas to the visibility of the 

United States, and again, I would encourage you to continue to 

hold these types of hearings all around Illinois, because Illinois is 

sending too many tax dollars to the federal government, we are not 

getting them back, and small businesses can make a big difference 

in our ability to employ and make a difference in our community. 

And again, I thank you. 

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

16

Chairman MANZULLO. Thank you, Bruce. 

Our next witness is Emmett Vaughn and—you’re not Emmett? 

Mr. VAUGHN. I am Emmett. 

Chairman MANZULLO. That’s right, you’re on this panel, here. 

Mr. VAUGHN. Change type———. 

Chairman MANZULLO. President and CEO of Diversity Supply 

Company. 

Mr. VAUGHN. No. I have no idea what that company is, but I am 

Emmett Vaughn. 

Chairman MANZULLO. You are Emmett Vaughn. Was that a 

typo? 

Mr. VAUGHN. It’s a large typo. 

Chairman MANZULLO. It’s just a $100 million company we 

thought that you were the President of. 

Mr. VAUGHN. What if that were true? 

Chairman MANZULLO. Well, Emmett, why don’t you tell us who 

you are and your company, if any, that you are representing. 

STATEMENT OF EMMETT VAUGHN, NATIONAL DIVERSITY 

SOURCING RELATIONS 

Mr. VAUGHN. Right. The other Congressman invited me as something of an independent subject matter expert. I am in charge of 

minority business development and ethnic marketing for 

Albertson’s, which is——

Chairman MANZULLO. Oh, a grocery store chain. 

Mr. VAUGHN [CONTINUING] Right, the second largest grocery retailer in the United States. 

The other thing, just by way of background and resume, in the 

past five years, I want to say I have probably been involved in just 

under a half a billion dollars of transactions from the private sector 

through corporate supply and grocery programs. I’ve been very involved with Congressman’s economic development initiatives. 

So, you know, the last guy on the panel is always the easiest guy 

to speak, because we can summarize all the fine commentary that’s 

gone on before now. 

Statistical growth of small business in urban and rural areas 

speaks for itself. I think also the downsizing of companies has been 

clearly offset by a lot of what has been done by small business 

growth, and that’s something that does not often get talked about, 

the relationship of small businesses to large businesses. 

The one thing that I’m clear on is that small businesses are 

among the best customers for large businesses. And, I think this 

Administration has clearly been very short sighted about what is 

going to happen to a minority customer base for some of its larger 

taxable agencies that are large corporations. Large corporations 

need to be further also incentivized to figure out ways to invest, 

and when we talk about access to capital, some of the largest holders of capital in the best pockets are clearly in the hands of Fortune 500s, and not nearly enough pressure has been put on Fortune 500s to get involved in the process, yet they are weakened——

Chairman MANZULLO. Emmett, would you tell us what your company is doing? Give us some life experiences as to what you are 

doing in these areas. 

17

Mr. VAUGHN [CONTINUED] Well, we are simply, traditional supply 

diversity programs. 

Chairman MANZULLO. Well, just explain. There are some folks 

who may be interested in working with Albertson’s. Some people 

are shaking their heads back there. They are looking for contracts. 

Tell us what you are doing, or tell us what Albertson’s is doing, obviously, a step ahead of other large corporations. 

Mr. VAUGHN. I would actually say just the opposite, Mr. Chairman. Albertson’s hired me a year ago to address this issue, so we 

are not a cutting-edge company. I think we’ve got a very forward 

thinking strategy, but candidly, I would say that if anything the 

company has taken a step to address its place in the economy, trying to create solutions. At this point, we are not the benchmark. 

Chairman MANZULLO. Okay, go ahead. 

Mr. VAUGHN. I think that a lot has been said about the banking 

environment, which is largely in favor of the small business. Private capital offerings are scarce for these enterprises, and I am so 

unclear, the one thing that I think as we talk about what banks 

have and have not done, I am not well versed on the Community 

Reinvestment Act, but the one thing that I do know is that the 

CRA is not—I think banks have mistaken supply diversity and diversity sourcing initiatives for fulfilling their commitments around 

community reinvestment. A lot of those things have been masked 

as being interchangeable, and they really are not. 

The SBA community is a significant contributor to the growth of 

small businesses has really just, in many ways, historically contributed to what little economic stability could really be claimed in 

urban areas, and I think that’s something that, again, when you 

talk about the total face of the sub-economy that belongs to Brown 

America or Urban America the SBA has been the prime investor, 

has been a key investor. And so, any slowdown, and we talk about 

the big economy, can only be felt probably three or fourfold in the 

sub-economy that belongs in our cities. 

The SBA, really, I don’t know, supply chains in corporate America, you want to talk about that or ask me about that. Supply 

chains in corporate America are being downsized even faster than 

corporate org charts. It is now a game of scale and now a game of 

big businesses trying to source to large companies, but small businesses are rapidly being cut out. 

In my mind, the SBA should not seek just to get back to a break 

even point, which would really only be still the tail sort of wagging 

the dog relative to what’s going on in the economy. The SBA has 

really got to think beyond break even and find its way into developing new tools, new products, really revitalize models that 

matches itself with the needs of the struggling part of the sub-economy that’s been affected by the SBA. 

I think that also given the fact that you’ve got more and more 

ethnic minorities that are finishing college education, pursuing corporate careers, getting downsized, and turning to entrepreneurship 

to maintain employment, there’s not a lot of statistical data that 

supports that. But, what you are also talking about is some of the 

best and brightest minds that are available that have been causal 

to this growth in small business also being shut out, not only shut 

out of mainstream employment, but now having the channel of 

18

small business start-up derail, and I just shudder to think, really, 

what type of potential economic ambience we are creating that 

have not been seen before by the short sightedness of how the SBA 

is being funded and also being strategized, not only around stabilization but towards growth. 

I would like the rest of the panels to encourage the body to explore rigorous exploration of how to accelerate this funding, encouraging more small business starts, encouraging overt inventions, for 

lack of a better term, to continue to develop brilliant ideas in inventions, and do anything that can help to sort of replenish and 

stabilize and grow communities that are struggling right now. 

Thank you. 

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

Chairman MANZULLO. Thank you for that excellent testimony. 

I’ve just got a couple comments and then I want to ask a couple 

of questions. 

First of all, there is a big problem. We have a manufacturer in 

our district that was bumped on a very important defense contract, 

because originally they were told that they were a large business. 

I’m sorry, the company that got the contract was told it was a 

small business. It was an office front, huge, multi-national. I call 

it multi-national. It’s the Alaskan Native Corporation, which carries out contracts in Guam, Florida, all over the country, and has 

been bumping small businesses. And the small business in our district appealed the size to the Native Alaskan Corporation. The appeal was carried out within the Small Business Administration, but 

there is no authority to impose that upon the Department of Defense. And really, that’s where SBA is really frustrated. 

There’s a bill, Congressman Velazquez and I are co-sponsors on 

it. In a situation like this, the Office of Management and Budget 

would be empowered to make a determination and take that contract out of the hands of somebody else if it’s found out that the 

small business has, in fact, been discriminated against. This is not 

even disadvantaged or 8[a]s but just regular small businesses. 

A second thing is, Emmett, you talked about what some of the 

large businesses are doing. We’ve held three hearings on 

outsourcing, and one of our witnesses was Natasha Humphreys, remember that, Danny? Natasha is from the West Coast, African 

American, exemplifies the upward mobility that is absolutely necessary in order for the spirit of entrepreneurship to flourish in this 

country. She was forced to go to India by Palm Corporation, to 

train her successors, and she and 12 of her colleagues we thought 

were laid off from Palm. I’m mentioning Palm because you need accountability. One has found a job, and ironically one of those that 

lost her job was born and raised in India, came to the United 

States and was 7 months pregnant at the time that she was terminated, so they could outsource some of that type of software work 

to India. 

With respect to the supply chains, we’ve been working with several minority business people who do business with large companies. What the large companies are doing now is that they want 

to narrow down the number of what they call manageable sources, 

and I can understand where they are coming from. So, instead of 

ordering from six or seven, or eight different people, they’ll order 

19

from one, and hire a new person to go ahead and make the component. 

What happens is, the little guy at the end of the line that ends 

up having a difficult time. We’ve asked for and got an investigation 

by the General Accounting Office of the Joint Strike Force fighter, 

to determine whether or not the small businesses were, in fact, 

being ordered to participate according to the projected goal of 29 

percent. They came up with a software program, I don’t know if 

you are aware of this, down to the third tier, for purposes of accountability. 

So, a lot has been going on. We’ve been working really hard. 

What you’ve been bringing to us is an example of the frustration 

that continues, but we’ve been working on this in cases—Bill, if you 

want to make a comment. 

Mr. LEGGETT. Well, the only comment that I’ll make is that there 

seems to be an overwhelming direction in terms of suggesting that 

SBA, as an advocate entity, needs to have more power. 

Chairman MANZULLO. Yes, it’s true. 

Mr. LEGGETT. I mean, it’s frustrating anyway for people to feel 

that they are going to get certain kinds of help, and they get the 

advocacy, but then those who can make the decisions often times 

discount or discard all of the work-up. And so, certainly there’s 

going to be a great deal of resistance, but resistance does not necessarily mean that there will not be movement in that direction, 

and I would assure those of you who have expressed that position 

and that point of view that at least I, as one member of the Small 

Business Committee, and one member of the Congress, will advocate your position and your point of view relative to this matter. 

And so, thank you, Mr. Chairman. 

Chairman MANZULLO. Yes, I’ve got a question, Emmett, to ask 

you. 

What does Albertson’s, and I don’t want you to get in trouble 

with your employer, because obviously there’s a vision of where you 

want to take it. 

Mr. VAUGHN. Thank you. 

Chairman MANZULLO. No, no, you are here because you are concerned about it, and, obviously, Albertson’s is concerned because 

they hired somebody of your competence, but what is it going to 

take for Albertson’s to become a benchmark? Where do you want 

to see them go and what is your vision? 

Mr. VAUGHN. Very good question. I think relative to what the 

body of the House of Representatives can do, I think there’s got to 

be more and more incentives that protect large corporations or encourage them to take some risk with some of the available capital 

that are ours that can be put back into—particularly, where companies have multiple markets where there is the need for economic 

catalysts to take place. 

Albertson’s serves probably 11 of the top U.S. 25 metropolitan 

markets, with Chicago being our—Chicago and Los Angeles being 

our two largest metropolitan markets. I mean, there is a tremendous amount of, perhaps, marketplace growth incentives for us to—

for a company like ours to do things relative to gaining market 

share, however, I think in some cases we buy on both the sellable 

goods side and on the non-sellable goods side, particularly, because 

20

I know there’s companies that are represented here on the sellable 

goods side, there’s a lot of capital needs because most of those companies are locked directly in with manufacturers. The relationships 

of some of our small vendors, relative to their manufacturers, is 

largely tainted because of the lack of capital that they have to create lines of credit and things with actual manufacturers of food 

services. 

So, there’s no reason to answer that, Mr. Chairman, I appreciate 

you asked, it’s just, I would say probably incentives for investment 

in a certain level of tier of our supply chain that’s occupied by minorities and small businesses. 

Chairman MANZULLO. Okay. 

Mr. WORDLAW. Mr. Chairman. 

Chairman MANZULLO. Go ahead, do you want to give him the 

mike? 

Mr. WORDLAW. Thank you. 

We went to the Iraqi Conference in Washington here last month, 

and one of the criteria that in order for the companies to bid on 

Iraqi contracts was that they should have at least 23 percent of all 

their purchases done through minority companies. That’s the criteria that we think should be put in place to make sure that African Americans and minority companies do that. 

I’d like to think that we are, I mean, maybe not necessarily, but 

we are in competition with a $55 billion corporation that literally 

tells all of its—they are the prime vendor for all the VA hospitals. 

They tell them that they are buying our products, so there’s no 

teeth in that process. So, we need you all to give a penalty or some 

kind of point system for the large corporations to suffer if they 

don’t include us. 

Chairman MANZULLO. Comment, Neli? 

Okay. 

Ms. HARRISON. I did have one comment. 

Chairman MANZULLO. Oh, I’m sorry, go ahead, Charlotte. 

Ms. HARRISON. Yes. I had a comment, too, that, you know, we’ve 

had several legal actions where we’ve protested and gone, you 

know, both the SBA and GAO route. 

Nobody has the power, even if you win, and the agencies don’t 

want to listen, you know, the SBA has no power. So, what good is 

it to fight? The SBA needs to have, they can, they fight with us 

side by side with all their heart, you know, and they are in it to 

win it, just like we are, but at the end of the day when they’ve 

done their duty, nobody has listened to them. 

Chairman MANZULLO. Charlotte, the problem is the politics of it. 

The small business people have various organizations in Washington, but none of them have the lobbying power of the big guys. 

If you think for one second the big guys are going to put us small 

people in a position where we could knock out one of the contracts, 

because they haven’t been following the rules on it, it’s extremely 

difficult. And the big problem with the Alaska Native Corporation, 

the purpose of which was, you know, to employ Alaskan Natives, 

excuse me, in Guam, and Florida. But, on comes their senator, and 

they just put provisions in the laws, and we find out six months 

later that somebody has done that. 

21

So, we’ve got an ongoing controversy with that particular corporation, because it does damage to all small businesses. 

Ms. HARRISON. Yes, and we have large businesses now, because 

of the economy, large businesses are coming down to the small 

business arena, taking work from small businesses, and parading 

as if they are a small business, knowing full well that they are not 

a small business, competing against us and winning, and being 

awarded, when the procurement is designated as a small business———. 

Chairman MANZULLO. Neli, let’s take your comment, we can finish the panel. 

Ms. VASQUEZ-ROWLAND. Well, I guess out of that comment that 

you said, the fact that we don’t have the lobbying power, is what 

spurred on the founding of the Greater Illinois Procurement Association, that we’re getting together with other associations around 

the country to represent 8[a] companies and support you and your 

efforts in trying to assist our businesses in participation with federal contracting. We truly appreciate that, and I just wanted to 

share a quick story. 

I attended one of your congressional meetings in Washington one 

day where a small group did organize, I believe it was an office 

products supply company. 

Chairman MANZULLO. Yes. 

Ms. VASQUEZ-ROWLAND. Where the Department of the Army, I 

believe, the U.S. Army Corps of Engineers, had decided they wanted to consolidate the procurement to these and direct all of their 

purchases to Boise Cascade. 

I was there to witness Chairman Manzullo, pretty much hearing 

out the U.S. Army Corps of Engineers, in terms of what study did 

they have that showed that they were saving money in terms of directing all of their purchases to Boise Cascade, they had no background, no support, to, I guess, support that decision. 

There was lobbying, or the Association of Office Practices organization got together and did indicate that they have the buying 

power and, you know, cost savings for the government. At that 

point, Chairman Manzullo offered the U.S. Army Corps of Engineers to reconsider their decision and to once again refer back to 

small business in buying their office supply products. 

Mr. DAVIS. Mr. Chairman, let me just note the presence of Cook 

County Commissioner Bobby Steele, who has joined us. The lady 

in the back who is very interested in these matters 

And also, the one point, Charlotte and Obie both have indicated 

a serious willingness to fight, I mean, they’ve protested, protested. 

There are more small businesses, though, that are fearful. I mean, 

people come to us all the time, and often they will weigh whether 

or not there should be a complaint or whether or not we should try 

and intercede on their behalf, because they are afraid that the 

agency that they are dealing with will retrench, and that they will 

suffer punishment, I mean, as a result. 

But, somebody will say, you know, the Congressman called up 

here on your behalf, and we don’t like that, or you can just about 

forget it. 

So, my question to both of them is, do you feel that you’ve had 

any backlash from agencies that you’ve attempted to do business 

22

with, as a result of your willingness to protest their inaction or inability to grant you business opportunity that you felt should rightfully have been yours? 

Ms. HARRISON. They are not paying me anyway, what do I have 

to lose? I mean, no, as long as there’s breath in my body, and I can 

feel, and think, and breathe, I’m going to go down fighting. I’m not 

going to—I’m not going out with a whimper. They are going to have 

to—you know, grind me into the ground, I’m fighting to the death, 

because this is our livelihood. This is what we do. I don’t know how 

to do anything else, and I know that I’m right, I’m not wrong, I 

have rightness behind me. So, I’m fighting to the end. 

You know, they are not going to like it, I’ve had comments, and 

you know some of the comments that they’ve said, yeah, they don’t 

like it. 

Unidentified. SPEAKER. She had the Congressman call, and they 

said that’s why we couldn’t do our work. 

Ms. HARRISON. They weren’t going to do their work anyway, you 

know, take them to the wall, that’s what I say. 

Mr. WORDLAW. Just briefly, I’ll say ditto, but in the meantime it 

feels good to battle. We are not getting anything anyway. 

Ms. HARRISON. That’s right. 

Mr. WORDLAW. So, let’s see where it takes us. 

Ms. HARRISON. I mean, and while we’re battling, you know, we 

are not making that our only work, we are still getting other business and diversifying, because we’ve got to eat. We have to eat, and 

pay our bills, and keep our employees paid, and do those things, 

but the fight is part of the job. 

Chairman MANZULLO. Okay. I want to get a second opinion 

Mr. DAVIS. I’m done, but since this is Black History Month, Frederick Douglass would be very proud of both of you, because one of 

his favorite comments was, ‘‘He who is whipped the easiest is 

whipped the most often,‘‘ and that if you find the level of oppression that a people or a person will accept, that is exactly what they 

will get. So, you are my Black History heroes. 

Chairman MANZULLO. Bruce, thank you for being up here on the 

panel. 

Mr. MONTGOMERY. And I would say that because it’s so hard to 

change the inherent behavior of organizations that have operated 

a certain way for a long time, that when there are opportunities 

where new entities are created, such as creating a so-called new 

Department of Homeland Security, and there’s an opportunity to 

include in these new processes new ways of doing business that are 

inclusive of minority business utilization, small business utilization, that you may ask some of these organizations at the outset 

of these things, when there’s a lot of fanfare, to create some goals 

and objectives that pass the muster of your panel, and then come 

back a year later and ask them, as they move to rebuild Iraq, and 

as they move to do things in the United States, have they met the 

goals that they told you when they wanted your support to move 

these things through very quickly. 

Sometimes it’s an opportunity, at the outset of establishing these 

new entities, that they can do business in a new way, and ultimately provide a benchmark that can show, as previous comments 

have been made, that there actually is some viability and cost savVerDate 0ct 09 2002 20:24 Jul 14, 2004 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 G:\HEARINGS\93500.TXT MIKEA
23

ings in doing business with small businesses that really bring the 

ideas and bring the productivity to the federal government. 

Chairman MANZULLO. Okay. 

Let’s thank the first panel here. 

[Recess.] 

Chairman MANZULLO. What I’d like you to do, since most of you 

are with government agencies, is in the course of your testimony 

to try to address, if you can, some of the questions and frustrations 

that were raised with regard to the first panel. 

Our first witness is Judy Roussel, District Director of the Small 

Business Administration, who had the pleasure of eating at our 

family restaurant in New Milford, Illinois, and, Judy, we had a 

great time there, didn’t we? 

Ms. ROUSSEL. We sure did. 

Chairman MANZULLO. The SBA doesn’t come anywhere near 

northern Illinois unless they build a family restaurant, so, Judy, 

we look forward to your testimony. I think your mike is live. 

STATEMENT OF JUDITH ROUSSEL, DISTRICT DIRECTOR, 

SMALL BUSINESS ADMINISTRATION 

Ms. ROUSSEL. Good morning, Mr. Chairman, Congressman Davis, 

thank you for inviting me today to discuss the U.S. Small Business 

Administration’s SBA programs to assist America’s small business 

communities with access to capital and finding federal procurement 

opportunities. 

The President’s Fiscal Year 2005 budget request for SBA reflects 

his commitment to maximizing opportunities for small businesses 

and the millions of people they employ. 

Last March, the President announced his Small Business Agenda 

to reduce regulations and taxes, and to expand opportunities for 

small business. A prominent feature of the President’s agenda is 

ensuring full and open competition in government contracts and 

avoiding unnecessary contract bundling. This measure will create 

opportunities for small businesses and save taxpayer dollars. 

As you know, SBA is submitting legislation that is a long-term 

solution for the 7[a] program and will have immediate benefits. 

Our proposal will put approximately $3 billion in additional loans 

into the economy and help more small businesses and create more 

jobs. We urge your support for this proposal. 

As announced by SBA Administrator, Hector Barreto recently, 

‘‘The SBA guaranteed a record number of loans last year, with double digit increases in the percentage of loans to women, Hispanics, 

African Americans and Asian Americans.’’ The Fiscal Year 2005 

budget request of $12.5 billion in loan guarantee authority for the 

7[a] program will allow the SBA to provide more businesses with 

the capital needed to start-up and to expand. With our proposal we 

intend to have another record-breaking year. 

The Agency’s main objectives related to Government Contracting 

are first to increase prime and subcontracting awards by securing 

top level commitment from the agencies to achieve their goals, to 

promote procurement opportunities through a Nationwide Matchmaking Event, and to improve customer service. Secondly, to modernize the 8[a] Business Development Program through restructuring, through the development of an automated on-line 8[a] apVerDate 0ct 09 2002 20:24 Jul 14, 2004 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 G:\HEARINGS\93500.TXT MIKEA
24

plication, and through implementation of a Procurement Academy, 

and thirdly, to facilitate community economic development and job 

creation through the HUBZone Program. 

I’ll talk a bit about access to capital. As you are aware, SBA submitted its 2005 budget request on February 2nd of this year. This 

budget will ensure continuity in SBA’s programs, while reducing 

SBA cost to the taxpayer by approximately $120 million. Through 

improved management and program reforms, SBA will better serve 

America’s small businesses by reaching the communities where our 

programs have had little market penetration. 

One of the most recognizable services SBA provides is financial 

assistance. Last year, a record number of small businesses turned 

for credit assistance to SBA, producing a 29 percent increase in the 

total number of loans backed by the Agency. Nationally, the increase in loan approvals under SBA’s three major loan programs 

came to 29.8 percent. This reflected a rise from 59,500 loans in 

2002 to 76,465 loans in Fiscal Year 2003. 

The loans demonstrate our commitment to meeting the unique financing needs of small businesses, and the impressive increase 

posted for the year validates our approach to making smaller loans 

more readily available to the real job creation engine of our economy. By focusing on a smaller average loan size, we are leveraging 

our resources to assist more small businesses and create more jobs. 

Based on statements from borrowers, our financial backing helped 

small businesses create or retain more than 526,000 jobs. 

Ironically, our success in promoting these programs hurt us earlier this year, as SBA was forced to suspend its operations of the 

7[a] program. Now, unprecedented demand and a series of shortterm continuing resolutions caused the program to run out of budget authority under the last Continuing Resolution. SBA reopened 

the program as quickly as possible, but we did place some restrictions on the program to keep it running until a more permanent 

solution can be reached. 

Chairman MANZULLO. You have one minute, Judy. 

Ms. ROUSSEL. In our 2005 budget, SBA requested a 30 percent 

increase for the program to $12.5 billion, and has proposed legislation to adopt a permanent zero subsidy rate for the program that 

will allow SBA to ensure that funds remain available for small 

businesses seeking financial backing. 

SBA has requested $4.5 billion in lending authorities for the 504 

loan program, which has no cost to the taxpayers. This program, 

of course, was established to increase small businesses’ access to 

real estate and other long-term fixed financing. 

[Ms. Judith Roussel’s statement may be found in the appendix.] 

Chairman MANZULLO. Now I’ve got a fixed clock here, so I’ve got 

to cut you off at that point. Thank you. 

Our next witness is Linda Oliver, Deputy Director, Small & Disadvantaged Business Utilization, of the Office of the Secretary of 

Defense, and, Linda, we look forward to your testimony. 

25

STATEMENT OF LINDA OLIVER, DEPUTY DIRECTOR, SMALL 

AND DISADVANTAGED BUSINESS UTILIZATION, SECRETARY 

OF DEFENSE 

Ms. OLIVER. Thank you. Thank you, Chairman Manzullo and Mr. 

Davis. It’s a pleasure to be here. 

I’ve heard what you have been saying, which is abbreviate, abbreviate, so I will do that. There are two things that I definitely 

want to say, more to the people who are here at the hearing than 

to you two, which is, to commend your good judgment for having 

two, from the same state, two such capable people so truly interested in small business. They are, both of them, so good, and they 

work so well together, that it’s been a pleasure for me to listen to 

them, to take their lessons. 

And, to my second point that I do insist on making is, how fortunate I feel to be coming to a hearing in Chicago. Chicago was the 

first big city I ever learned to love. I came here as a—I think I’m 

gone. 

Chairman MANZULLO. Hold on a second. 

For somebody who doesn’t like Chicago—hold on one second. 

Ms. OLIVER. Okay. 

Chairman MANZULLO. Well, Linda, just belt it out. 

Ms. OLIVER. Okay. I will just speak loudly. 

This is a wonderful city. I first came here when I was 16, to a 

big meeting which I had wanted to come to forever, and Chicago 

over the years has simply made me delight in this city more rather 

than less. There are so many wonderful things about Chicago, so 

it’s great to be here, even if it’s a cold day, and even if it’s for a 

brief amount of time. 

In my written testimony, which you can pick up and read so I 

will not go over it in any sort of detail, is a little discussion on 

what the Department of Defense is trying to do to better understand what we can do better for small business. This really has 

amounted to our trying to do analysis of what works and what 

doesn’t work. 

The first thing that’s worked is, we are surely understanding better what it is we are doing which we think is leading, hope is leading, to better decisions. 

The second thing I touch on in my testimony is, my written testimony, the service disabled veteran-owned small business goals. We 

have not done nearly as well as we had wanted, and we are very 

pleased that Congress has given us a tool, because it was clear to 

us that where we were heading was not working. We think—we appreciate Congress’ sensitivity, and we think that we will start to 

turn these numbers around. 

The next thing I touch on in my testimony is improved processing of small disadvantaged business certification. This has been 

a tremendous problem for small disadvantaged businesses, a requirement for certification came in after the Ataran decision, and 

it has caused small businesses, small disadvantaged businesses 

enormous problems for two reasons. One is because it’s a painful 

process to go through with, apparently, very little reward, while 

trying to solve this problem. And, I think that is particularly in 

keeping with both Congressman Davis and Congressman 

26

Manzullo’s direction to us, to make things easier, not harder, for 

small businesses. 

The next area that my testimony touches on is improved small 

business training, and that happens to fit with much of the testimony that we have heard this morning. 

We heard Mr. Wordlaw testify about contracting officers not 

being 8[a] friendly, and that we don’t seem to be able to make the 

contracting officers do what he believes, and I do too, needs to be 

done. 

Well, it’s really hard to push a noodle, but it isn’t so hard to pull 

a noodle, and we truly believe that more and better training will 

make a very big difference. We are excited——

Chairman MANZULLO. You have about 30 seconds. 

Ms. OLIVER[CONTINUING] Okay, thank you, I appreciate that. 

You can read the other things I have to say in my testimony. I 

appreciate being able to be here, and I wish I’d done it even more 

quickly, because what you say is more valuable than what I say. 

[Ms. Oliver’s statement may be found in the appendix.] 

Chairman MANZULLO. We appreciate it. The complete statements 

of all the witnesses will become part of the permanent record. 

Our next witness is Sean Moss, with the Department of Transportation, Director of Small and Disadvantaged Business Utilization. Sean, I look forward to your testimony. 

STATEMENT OF SEAN MOSS, DIRECTOR, SMALL AND DISADVANTAGED BUSINESS UTILIZATION, DEPARTMENT OF 

TRANSPORTATION 

Mr. MOSS. Thank you, Mr. Chairman, I might as well say thank 

you on behalf of Secretary Mineta that we can be here this morning to testify, and also, Mr. Davis, thank you so much. 

DOT is a lead in government procurement. It’s developed a culture, has demonstrated its commitment to small disadvantaged 

businesses. 

To give you an idea, over the last three years DOT has awarded 

$3.476 billion to small women and disadvantaged businesses, and 

represents about 42 percent of DOT’s total direct contracting dollars. 

Now, last year, nearly 20 percent of that went to women and disadvantaged businesses, that’s both SDB and 8[a]. 

Now, although we made some progress and advances in small 

business interests in the Department, there are a lot of obstacles 

we realize that still exist. So, we’ve defined those challenges as access to information, access to capital, and also access to advocacy. 

So, to better address those concerns, our office has been aligned to 

address those challenges. 

I’m just going to talk very quickly on these three issues. One is 

outreach. Now, obtaining information about how to be visible to 

government is very overwhelming, especially for a small business. 

So, we have three solutions in place. Firstly, we have what we call 

a National Information Clearinghouse, which really provides a single point of contact for all small businesses to reach us. 

Chairman MANZULLO. That’s the entire government, isn’t it, or 

just DOT? 

Mr. MOSS. This is DOT, sir. 

27

Chairman MANZULLO. Okay, go ahead. 

Mr. MOSS. We have customer service reps that respond to inquiries, and questions, through a dedicated toll free line, e-mail and 

written correspondence. Also, our NIC, as we call it, is equipped 

with a state-of-the-art web site that provides small businesses 

about information about how to do business with us. Just to give 

you an idea, we have about 750,000 hits per month. 

Secondly, we’ve established 13 cooperative agreements with business organizations and minority-serving institutions across the 

country to assist small business. Now, these partners are responsible for increasing the number of small disadvantaged businesses 

that enter into both direct and federally-assisted transportation-related contracts. 

Now, right here in Chicago, we have one of our partners, it’s the 

Business Resource Group, and what they are doing currently is 

helping small disadvantaged firms on projects like the Dan Ryan 

Expressway rehab, and also the CTA Greenline Project. So, without 

their involvement, many of these firms would not have the opportunity to compete. 

And, the third area that we outreach is that we sponsor and attend a variety of conferences that teach how to do business with 

DOT. Last year, we attended 46 of these conferences. Last month, 

we held a conference in D.C., that targeted HUBZone companies, 

and next month we will go to Oakland, California, and focus on 

federal highway contracting opportunities in that area. And also, 

our procurement office is very involved, too, and they work with organizations like AEA, that train our memberships, including small 

businesses, on how to gain access to federal procurement. 

The second area I want to talk about is financial services. You’ve 

heard a lot about that this morning. We at DOT are very sensitive 

to the challenges that exist within the credit and capital markets 

for small businesses. It’s even more acute for minority firms. So, 

we support and applaud the efforts of the U.S. Department of Commerce and other organizations that, the research that shows that 

it’s not fair out here. 

So, in order to increase participation for all firms, the Department provides two credit programs to address the capital issues. 

The first one is called the Short-term Loan Program, and basically 

what it is, it’s an accounts receivable finance program where credit 

lines are provided by banks that we select to assist these companies to finance these contracts. And, we’ve partly had success with 

providing working capital financing for firms that otherwise would 

not receive it from a bank. Approximately 35 percent of our loans 

have been made to African American firms over the last two years. 

The second program is called our Bonding Assistance Program. 

Again, it’s for certified minority disadvantaged firms that participate on our transportation projects. This is a real issue in the 

bonding community, the inability to access surety bonding is often 

a primary factor that keeps these small and minority firms from 

our public projects. So, even as subcontractors, minority firms need 

bonding. 

The last area is the area of advocacy, and our office is dedicated 

to supporting legislation that reflects the interests of small minority firms. Now, our efforts range from supporting a governmentVerDate 0ct 09 2002 20:24 Jul 14, 2004 Jkt 000000 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 G:\HEARINGS\93500.TXT MIKEA
28

wide initiative to unbundle contracts, that was talked about earlier 

today, and also subcontracting. 

And also, our Department supports our own disadvantaged business enterprise program, which was first enacted in 1983 as part 

of the Highway Bill, and what it does, it encourages the participation of disadvantaged businesses in highway and federal transit 

projects. 

Just to give you an idea, in Fiscal Year 2003 we awarded $3.16 

billion to DBE firms, which represent about 10 percent of our total 

federal dollars. 

So, I’d like to conclude my remarks and I’ll be happy to answer 

any questions later on. 

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

Chairman MANZULLO. Thank you very much. 

The next witness is Patricia Bamford, Chief of Acquisition and 

Assistance Branch, Resources Management Division, with the Environmental Protection Agency, and, Patricia, we look forward to 

your testimony. 

STATEMENT OF PATRICIA BAMFORD, CHIEF OF THE ACQUISITION AND ASSISTANCE BRANCH, RESOURCE MANAGEMENT 

DIVISION, ENVIRONMENTAL PROTECTION AGENCY 

Ms. BAMFORD. Good morning, Chairman Manzullo and Congressman Davis. I want to thank you for the opportunity to appear 

today to discuss the work of the Agency in assisting small business 

enterprises in our region. 

I want to take this opportunity to highlight EPA’s efforts to include small businesses in the procurement process. 

The Office of Small and Disadvantaged Business Utilization partners with the Agency’s contracting activities to support the protection of the environment and human health by fostering opportunities for small and economically-disadvantaged concerns. 

Small businesses play an important role in helping the Agency 

to protect human health and the environment. 

In Region 5, we have awarded three major emergency and rapid 

response services contracts, also known as ERRS contracts. Two of 

these contracts have been awarded to small business concerns. In 

Fiscal Year 2003, small businesses received 71 percent of the total 

dollars obligated for ERRS contracts. If we include the subcontracts 

awarded by the large business contractor, small businesses received 83 percent of the total dollars obligated under the ERRS 

contracts. Small businesses supply us with many of the items needed to carry out our environmental and counter-terrorism missions 

on a daily basis. 

Over the last few years, we have tried to develop a good understanding of the major problems facing small businesses in their efforts to obtain contracts with the Agency. We have worked hard to 

increase the number of procurement opportunities available to 

small businesses. In Fiscal Year 2003, the Agency’s small business 

goal was 23.5 percent. The Agency awarded over 31 percent of our 

net obligations to small business concerns. In the same year, Region 5 awarded over 34 percent of our net obligations to small businesses. EPA’s goal for Fiscal Year 2004 is to award 27 percent of 

29

the available procurement dollars to small businesses. We are confident we will continue to surpass that goal. 

The President’s Small Business Initiative calls for the Agency to 

improve small business access to government contracts. The Agency is taking several steps to address this initiative. We are reviewing acquisitions in excess of $2 million to determine if our needs 

are being bundled. This also includes reviewing proposed orders to 

be placed against other Agency contracts, including multiple award 

schedules. These reviews will enable our small and disadvantaged 

business utilization specialists to propose alternative contract strategies to ensure that small businesses are considered. We are also 

working with our program offices to break out work that is suitable 

for small businesses. For example, in Region 5 we have broken out 

Superfund sampling work from our Remedial Action Contracts. 

Weston Solutions, one of our prime Remedial Action Contractors, 

has a Mentor-Protege agreement with Environmental Design International, EDI, a Chicago firm. EDI is participating in the SBA’s 

8[a] program and has been certified as a small, disadvantaged, 

woman-owned business that is located in a HUBZone. When Region 5 was reviewing environmental work that would be suitable 

for small business participation, environmental sampling was chosen as a candidate. We developed a requirement and were able to 

negotiate and award a new contract to EDI because of the experience and knowledge they had gained under their Mentor-Protege 

relationship with Weston. This contract is currently being utilized 

by our Superfund program personnel and is a great success. 

Headquarters, along with our regional offices, have Small and 

Disadvantaged Business Utilization Representatives assigned to assist small businesses in their pursuit of Agency contracts. These 

specialists coordinate business presentations with our procurement 

and program personnel. They conduct on-site business fairs and are 

the advocates for small businesses in the Agency. We have worked 

hard to ensure that small businesses have the opportunity to contribute their skills, talents, and expertise to furthering our mission 

to protect human health and the environment, and we are pleased 

to report that we have exceeded our small business goals in recent 

years. Moreover, we expect our recently implemented programs to 

help us achieve even greater participation by small businesses in 

EPA’s procurement process in the years to come. 

I want to reiterate EPA’s commitment to ensuring that small 

businesses have equal opportunities to participate in the Agency’s 

procurement process. I look forward to playing a key role in working with the small business community in Region 5, to ensure that 

they become active participants in assisting us to fulfill our environmental mission. 

Thank you for the opportunity to speak today. I will be pleased 

to answer any questions you may have. 

[Ms. Bamford’s statement may be found in the appendix.] 

Chairman MANZULLO. Thank you very much. 

Our next witness is Scott Denniston, Director of Small and Disadvantaged Business Utilization, Department of Veterans Affairs, 

look forward to your testimony, Scott. 

30

STATEMENT OF SCOTT DENNISTON, DIRECTOR, SMALL AND 

DISADVANTAGED BUSINESS UTILIZATION, DEPARTMENT OF 

VETERANS AFFAIRS 

Mr. DENNISTON. Mr. Chairman, thank you, and, Congressman 

Davis, thank you for the opportunity to be here today. 

On behalf of Secretary Principi I bring you greetings from the 

Department of Veterans Affairs. VA has a long history of supporting small business programs. We consistently meet our goals 

for awards to small business, to small disadvantaged business, and 

we’re one of the few agencies that meets the HUBZone 3 percent 

goal. Last year, over $2.6 billion, a little over 30 percent, went to 

small business. 

You asked that we address two issues today, one being access to 

capital. That is not our field of expertise. VA does not do small 

business loans. Anecdotally we hear from veteran small businesses 

all the time the difficulty of obtaining capital and equity financing 

to grow businesses. 

The other area that I’d like to address is the area of contracting, 

federal procurement opportunities, and I’d like to digress, if I can, 

from my testimony, as you suggested. 

We, as a number of agencies, are in the process of changing the 

way that we do business. As an example, when Secretary Principi 

came on board, realizing that we were having an exponential 

growth in our veteran populations coming to the VA for healthcare 

services, but yet we were doing it at the same budget, there was 

a realization that we had to improve our processes. 

One of the things that we did as a way of improving was we said 

that we need to standardize, and we need to be more efficient and 

effective in the way that we buy the products and services that we 

need to treat veterans. And, to some extent we’ve been successful 

in doing that. You heard testimony this morning from Obie 

Wordlaw of JERO Medical, and Obie is absolutely correct, he did 

all of the steps that we asked him to do, to do business with the 

Department of Veterans Affairs. He got his 8[a] certification, he got 

his Federal Supply Schedule contract, and then he became one of 

our standardized vendors. 

One of the dilemmas that we have faced in this transformation 

of the way that we do business is that we were very good at putting out front the tools necessary, but what we lacked was the back 

end compliance and review, how we make sure that all the 5,000 

contracting officers that we have in VA at the 200 facilities actually 

do what we wanted them to do. 

And, we are getting better at that. Congressman Davis, you 

asked Obie about being a fighter. Obie is a fighter, but compared 

to some of the businesses that we do business with he’s a wimp. 

And, we are having some successes. As an example, as you know, 

the Federal Supply Schedules are a preferred way of doing business right now with the federal government. We, at the VA, run 

the Federal Supply Schedules for healthcare government-wide, and, 

currently, 72 percent of all of the businesses that are on Federal 

Supply Schedule are small businesses. 

Now, the dollars that they get don’t equate to those numbers, but 

we’ve got to get the companies on the Federal Supply Schedule in 

order to do business with them first. 

31

We are in the process now of establishing a new Federal Supply 

Schedule for healthcare and allied services. As you know, small 

businesses are very much engaged in the industry of services, and 

we have great hopes that we are going to be in a position to even 

improve our small business numbers even greater. 

The next thing that we’ve done, our folks here in Chicago at the 

National Acquisition Center, have established an online computerized database, so that contracting officers throughout the government can go on to this database, identify all Federal Supply Schedule holders for different products and services, and identify those 

by small and socioeconomic disadvantaged category. So now, we’ve 

given contracting officers around the country a tool. 

Linda Oliver mentioned it’s a lot easier to pull a noodle than 

push it, this is one of the ways that we think that we can help pull 

those noodles, by giving them the tools necessary to identify the 

small businesses and the minority-owned small businesses that 

we’re all trying to help. 

And, it’s having some effect. If we look at the total sales under 

the Federal Supply Schedule to small businesses, they’ve more 

than doubled in the last two years. We think that process will continue. Now what we have to do is, we have to continue to bring 

more discipline to the system, so that when companies like JERO 

Medical do what we ask them to do, get the certifications, get the 

tools that we ask them to get. Now, we can have an opportunity 

to make sure that the sales that they get are commiserate with the 

effort that they put forth. 

We have realized that that’s an issue within the VA. We now 

have a management team that’s addressing that issue. I meet with 

them on a monthly basis to review the accomplishments, and I 

work with a lot of small businesses, like JERO, through their sales 

reports to actually identify what the sales are that they are getting, 

and who are the facilities that are buying and consequently who 

are those that aren’t, and then go and try to identify those that 

aren’t, why not, what are the impediments that are still there in 

the process that we need to break down in order to make them 

more successful. 

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

Chairman MANZULLO. Okay, thank you. 

The next witness is Tracye Smith. Tracye Smith is the Executive 

Director of the Chicago Minority Business Development Council, 

we look forward to your testimony, Tracye. 

STATEMENT OF TRACYE SMITH, EXECUTIVE DIRECTOR, 

CHICAGO MINORITY BUSINESS DEVELOPMENT COUNCIL 

Ms. SMITH. Thank you, Chairman, and thank you, Congressman 

Davis, for inviting me to speak today. 

The Chicago Minority Business Development Council is part of 

39 councils nationally dedicated to creating buying opportunities 

for minority-owned businesses and major buyers in corporate 

America and in government, and we do that, primarily, through 

supply diversity programs. In Chicago, we have over 100 corporate 

members and over 1,000 minority business affiliates. 

I’d like to get right into the commentary of both capital assets 

to minorities, as well as access to government contracting, and this 

32

is a particular critical issue as minorities continue to become a 

greater percentage of the American population. It’s projected to be 

over 50 percent by 2050, so I believe it’s critical to our Country’s 

economic stability, job creation and global competitiveness that we 

really address these issues effectively. 

The SBA 7[a] and 504 loan programs are working fine. I think 

the government should stop trying to change them and reduce the 

funds available under them. However, what is needed and is not 

currently being provided is working capital for ongoing operations. 

Businesses need cash to grow their businesses. Private banking 

is not actually filling that need either. And, what’s happening is, 

minority-owned firms are turning to factoring and other high-cost 

methods of financing just to grow their businesses and finance 

their receivables. And, a lot of businesses go out of business because of the lack of cash, and otherwise that business would have 

been successful. 

We also need more structured professional technical assistance 

offered by the SBA. The Small Business Development Centers are, 

while helpful, the technical assistance provided on a volunteer 

basis really does not get at the critical needs of cash management 

advice and other strategic management consultants that businesses 

need, particularly, in the first one to five years of operation. 

Chicago Community Ventures, this is a non-profit operating in Chicago, has a $2 million loan fund with an average loan size of 

$250,000. They have a zero percent default rate, which is unheard 

of. I’m a former banker, too. And, that’s because they provide management consulting to all of their borrowers. 

Chairman MANZULLO. Tracye, could you go into that? 

Ms. SMITH. The loan fund? 

Chairman MANZULLO. Yes, with the zero default rate. 

Ms. SMITH. Yes. Basically, they have former bankers and very 

qualified technical assistants on their staff, that provide strategic 

management consulting to growth-oriented companies. Their services are targeted towards companies in the Empowerment Zone, as 

well as minority-owned businesses. 

Chairman MANZULLO. And, how many loans are out there? 

Ms. SMITH. The loan fund is fully depleted, all $2 million are out, 

although one loan has been repaid already. 

Chairman MANZULLO. Okay. 

Ms. SMITH. And, they have been—they restructured from the one 

stop just capital shots, they were one of the ones that survived. 

And, in the past, the loan fund has been operating for about two 

years, and it’s been very successful. 

Chairman MANZULLO. Let me interrupt you here and I’ll give you 

more time on it. 

Ms. SMITH. Okay. 

Chairman MANZULLO. We’ve got a group of business people back 

in Rockford, thank you, that are interested in putting together—

thank you—a company to make PA systems, that’s right, that want 

to do it on an informal basis, and where is Brian. Brian, would you 

stand up, Brian Davis. Tracye, if you could work with Brian to get 

that information to him, to help serve as a model. 

Ms. SMITH. Sure. 

Chairman MANZULLO. Thank you, go ahead. 

33

Ms. SMITH. Our solution, one proposed solution is that a new 

form of financing should be offered by the SBA, in addition to the 

7[a] and the 504 term loans, there should be a revolving line of 

credit instrument offered by the SBA, financing between $100,000 

and $500,000. 

And, to help fund this loan, it should be offered to community 

banks or organizations like Chicago Community Ventures, that 

have more expertise and success in lending to entrepreneurs. 

Also, in the private venue streams, we’ve heard that is not being 

made available, lines of credit like that, revolving lines of credit, 

but I think those banks should contribute to a loan fund that 

makes these kinds of loans to non-profit organizations or community banks that have a proven track record of lending successfully 

to entrepreneurs, and they can get CRA credit for that. And, they 

talk about they confuse CRA with the supplier diversity programs, 

they are totally different. So, they should be required to do that. 

And, the banks that receive funds to lend in this manner should 

be held accountable also for fair lending practices, which is still a 

problem for minority-owned businesses. And particularly those 

banks that have branches in minority communities and take their 

deposits. 

Now, let’s move into government contracting. There are four critical areas that have adversely impacted access to government contracting by African American and other minority-owned businesses. 

One would be the size standard contract bundling, flow down or 

second tier programs, and the dilution or elimination of NBE as the 

Federal stand alone classification. 

The minority firms are required to remain small in order to be 

certified as a small, disadvantaged business. This practice completely eliminates their ability to compete for contracts that have 

been bundled. They are competing against multi-million dollar 

companies and multi-billion dollar firms for the same contracts. 

They don’t have the size or the scope to be able to compete on a 

national basis, and they certainly don’t have the economies of scale 

to price their contracts competitively in that environment. 

Also, the size limitation in no way allows them to grow. Corporate America has a very effective contract bundling or national 

account strategy that includes and, in fact, requires diverse suppliers, because they don’t have a size standard. NBEs are able to 

grow, and, in fact, if they had that size standard they would not 

be able to integrate them into their supply chain. They have a 

problem as a prior contract in doing that. 

Chairman MANZULLO. I took some of your time, but how are you? 

Ms. SMITH. Okay, I can just skip, we know the problem of contract bundling. 

Chairman MANZULLO. All right. 

Ms. SMITH. Flow down has the same problem. 

Chairman MANZULLO. Money, it’s about money. 

Ms. SMITH. It’s about money, but then you have to decide, limitation limits companies from being able to grow, so the very—they 

still have the same problem with discrimination, but they can’t 

grow enough to be able to service the contracts. So, the solution is, 

break some of those contracts down, you know, don’t bundle them 

all. 

34

And the other issue, even the $2 million low bid contracts, just 

because they are on the Federal Registry doesn’t mean they’ll be 

invited to bid. So, you still have that relationship ongoing. 

Chairman MANZULLO. Let’s go on to Eric. 

Ms. SMITH. Okay. 

[Ms. Smith’s statement may be found in the appendix.] 

Chairman MANZULLO. Eric, how do you pronounce the last name? 

Mr. DOBYNE. Dobyne. 

Chairman MANZULLO. Dobyne? 

Mr. DOBYNE. Yes. 

Chairman MANZULLO. Eric Dobyne is the Regional Director of 

Minority Business Development Agency, Eric, we look forward to 

your testimony. You know you can take your coats off if you want, 

I mean, that’s fine. 

STATEMENT OF ERIC DOBYNE, REGIONAL DIRECTOR, 

MINORITY BUSINESS DEVELOPMENT AGENCY 

Mr. DOBYNE. Thank you, Chairman. Thank you, Congressman 

Davis, for the opportunity to speak here. 

The Minority Business Development Agency was established in 

1969. We are part of the U.S. Department of Commerce. We are 

actually the only Federal agency that was created specifically to 

foster the establishment and growth of minority-owned businesses 

in America. 

The Agency’s mission is to actively promote the growth and competitiveness of large, medium, and small minority businesses. Our 

target minority groups include American Indian, Asian, African 

American, Hispanic, Pacific Islander, and Hasidic Jew. 

MBDA actively coordinates and leverages public and private sector resources that facilitate strategic alliances in support of this 

mission. We are set up such that we are headquartered in Washington, D.C. We have five national enterprise centers, those are in 

Atlanta, Chicago, Dallas, New York, and San Francisco. 

One of the big pushes for our Agency now is to move from an administrative agency to more of an entrepreneurial focused and innovative organization, so we’ve developed programs around just 

that aspect of our organization. 

We provide funding for a network of minority business development centers, Native American business development centers, and 

minority business opportunity committees. 

The business development centers offer a wide range of business 

services to minority entrepreneurs. The centers are staffed by business specialists, who have the knowledge and practical experience 

needed to run successful and profitable businesses. Their main 

focus as the business development centers is helping minority businesses secure contracts and/or financing. 

The MBOCs are designed to coordinate Federal, state, and local 

business resources to benefit minority business development. They 

identify business and economic opportunities in the community, 

and leverage those opportunities to meet the needs of the minority 

business enterprises. 

These are the two main programs that we utilize, and both of 

them are measured by amount of financial 

35

transactions, as well as contracts that are verified that they created for minority businesses. 

Another tool that we use that’s critical in support of minority 

businesses is our internet portal. The portal has several tools that 

are very useful for MBEs in helping them secure contracts, as well 

as financial assistance. There is a Phoenix Database of minorityowned businesses, which allows large contractors to come onto our 

portal and identify minority businesses in the areas where they are 

looking to contract. 

We also have an opportunity contract matching system, which 

matches MBEs to contract opportunities, and actually forwards 

those opportunities to them on a regular basis. 

We have a resource locator, which allows MBEs to locate financial and contract resources in their general area of expertise. 

There’s a business plan ladder that helps small or minority businesses to construct business plans, so that they can efficiently locate contract opportunities, as well as financing opportunities. 

We provide a GIAS software as well for a system of funded 

projects, which actually provides valuable marketing information 

for MBEs that are going to banks for financing or putting together 

business plans. 

As part of MBDA’s strategic growth initiative, we shifted the 

focus of our organization. We are now focused more on high growth 

MBEs, or MBEs that are in high growth industries, generally 

MBEs with $500,000 in revenue and above. They are not necessarily $500,00 and above, but more of the focus is on, if it’s startup, just high growth companies. We are looking for an opportunity 

to make the biggest impact, and we felt like traditionally we’ve had 

some of our focus on large-style businesses, and we felt that moving to high-growth industries and companies in high-growth industries could generate more of an impact. 

The Chicago center is responsible for a ten-state region, which 

includes the entire Midwest. There are four business development 

centers and three MBOCs located in this area. Currently, we fund 

both MBDC and MBOC in the Chicago area. Over the past three 

years, they’ve generated over $148 million in verified contracts and 

financial transactions for minority businesses, and over $17 million 

of this has come in financial assistance packages. 

And, as part of our move to become more of an entrepreneurial 

type organization, we’ve also now assigned a regional goal to our 

regional staff to create $36 million transactions in financial. 

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

Chairman MANZULLO. Very good, great timing. 

Our next and last witness, James has been very patient down 

there, is Jim Handley. Jim is the Regional Administrator for the 

General Services Administration, which is one of the largest utilizers of small business procurement. Jim, look forward to your testimony. 

STATEMENT OF JAMES HANDLEY, REGIONAL 

ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION 

Mr. HANDLEY. Thank you, Mr. Chairman, Congressman Davis. 

We appreciate the opportunity to speak to you today. 

36

As you mentioned, I am Jim Handley, the Regional Administrator for the General Services Great Lakes Region. With me today 

is Mary Kennedy. Mary is a Procurement Manager of our Public 

Building Service. 

Let me begin by saying that this Administration remains committed to the health of our Nation’s small businesses. The prosperity of the Nation’s 25 million small businesses, including nearly 

700,000 in this region, is a top priority of the Bush Administration. 

As mandated by Federal law, GSA ensures that Federal procurement opportunities are available to small businesses. According to 

preliminary figures for Fiscal Year 2003, $6 billion of the $15 billion GSA spent in procuring goods and services went to small businesses. This meets our internal Agency goal of 40 percent, and 

nearly doubles the government-wide goal of 23 percent. 

As part of this effort, the Great Lakes Region awarded small business contracts representing more than $271 million worth of 

goods and services. 

In addition to our own procurement opportunities, GSA establishes contracts with suppliers of commonly used goods and services through the Multiple Award Schedules Program. This program 

offers small businesses another avenue of potential work with the 

Federal Government. Of the 14,700 contracts currently on the GSA 

schedules, nearly 12,000, or 80 percent, have been awarded to 

small businesses. 

Outreach programs established by GSA, SBA and other agencies, 

enable the small business community to meet key contracting officials, and receive one-on-one counseling from a team of business 

specialists. 

In Fiscal Year 2003 alone, the Great Lakes Region conducted 21 

such outreach events, including two here in the 7th District, the 

2003 Business Procurement Expo, and the 7th District Town Hall 

meeting, and one in the 16th District for the new Rockford Courthouse. These 21 events drew over 8,500 participants. 

A special note, the Chicago Business Matchmaking Event, jointly 

sponsored by the U.S. Chamber of Commerce in June of 2003, attempted to match up 1,300 small businesses with counselors and 

potential customers. 

We also conduct workshops at conferences to teach small business owners how to do business with GSA, and we encourage these 

businesses to come to talk with our contracting officers, allowing 

them to learn more about possible opportunities with our Agency, 

and allowing us to learn more about those companies. 

GSA offers many resources to provide small businesses with useful information. One such resource, a booklet entitled, ‘‘Doing Business With GSA,‘‘ gives practical advice and helpful websites, including the redesigned gsa.gov site. The GSA website provides 

points of contact, information on upcoming conferences, and links 

that help small businesses get started on government contracts. 

One such link, fedbizopps, lists federal and military procurement 

opportunities larger than $25,000. 

Finally, we distribute a local procurement directory and a list of 

toll free telephone numbers so small businesses can contact us with 

questions. These efforts have led to many small business success 

stories, including our efforts on five recent construction projects in 

37

the Great Lakes Region. Of nearly $260 million in contracts for 

these projects since 1998, we have awarded or targeted nearly $70 

million to small businesses. 

Current renovation work at 536 South Clark here in Chicago, for example, has targeted nearly $11 million of the $54 million in projected contracts. 

In our experiences with small business procurements, we have 

designed several programs that we believe can improve the procurement process. One initiative involves changing the turnaround 

time for paying small contractors from 23 days to within 14 days 

of completion. Potentially, this can provide contractors with more 

on-hand capital. 

Other ideas that help small businesses include encouraging small 

contractors to join a mentoring program and dissecting large 

projects to see what smaller portions of the work can be contracted 

out to small businesses. 

Mr. Chairman, the General Services Administration, and specifically, the Great Lakes Region that I oversee, are proud of our relationship with small businesses. We share President Bush’s view 

that a healthy small business community contributes mightily to 

the Nation’s economy. 

We thank you for this opportunity and would be happy to answer 

any questions you might have. 

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

Chairman MANZULLO. Who is Bill Leggett? You came in late? 

Bill, come on up here, I’m going to give you two minutes. 

Mr. LEGGETT. Two minutes? 

Chairman MANZULLO. Yes, we are running late. 

Just come up here. Bill, start talking, you’ve got two minutes, because we are running out of time. 

Go ahead. 

Mr. LEGGETT. Okay. 

STATEMENT OF WILLIAM LEGGETT, PRESIDENT, COLLECTORS 

TRAINING INSTITUTE 

Mr. LEGGETT. I’d like to thank you, Mr. Chairman 

I’d like to thank you, Mr. Chairman, and Danny Davis, and this 

fine panel. My name again is Bill Leggett, and I know I’m tardy, 

and I’m a small business owner. I started out, my partner and I 

started out, in his living room. We started out with two people, we 

had just a table in the middle of his living room floor, and we started collecting money, because that’s what we do, we started a collection agency. 

The reason we started a collection agency was to give people the 

opportunity that were unemployed, under-employed, people who 

were displaced, an opportunity to make some money. People laugh 

at collection agencies, but one thing about it, they are making 

money. They are hiring people right now today, and we knew that 

we could employ people that make an average of $28,000. You 

won’t be rich. However, you can make a decent living. 

Chairman MANZULLO. How many employees do you have, Bill? 

Mr. LEGGETT. Right now we have 60, and that’s in this building. 

Chairman MANZULLO. Oh, this building? 

Mr. LEGGETT. Yes. 

38

Chairman MANZULLO. And, you were late. 

Mr. LEGGETT. Yes, that’s the truth. 

One of the problems we have, and this is—now, we both live in 

the suburbs, he lived in Oak Park, I lived in Downing Road, we applied for an SBA loan, $50,000. He had excellent credit, I had excellent credit. We both were making above $56,000. We were rejected. We were rejected. 

They told us to go to South Shore Bank, and it just so happened 

we were living in the far-western suburbs, why would we go to 

South Shore Bank? Unfortunately, they didn’t know that my partner was an ex-banker, so we realized that that was redlining. So, 

what we did, we approached—the next day we approached, contacted the company, wrote a letter. The next thing we know we got 

the loan, and we got another loan. Okay? 

But, what has happened is, since that time we’re in the midst 

of growing. We’ve obtained probably about three Fortune 500 companies. We can grow. The current clients have access to expand our 

business double, and we can do it, but we don’t have the capital, 

we can’t get the capital. It’s not reality that we can possibly get the 

capital, because the industry itself says that you don’t have a lot 

of assets. We have a computer, okay. And, you don’t have——

Chairman MANZULLO. Human assets. 

Mr. LEGGETT[CONTINUING] Yes, human assets. I mean, most of 

our employees are local employees from the community, and we 

just don’t have those assets. Accounts receivable, delinquent debts, 

we tried that. The bankers laughed us out the door. Would you finance these delinquent debts, no. Would you loan anything on a delinquent debt? 

Chairman MANZULLO. You are probably collecting on their debts. 

Mr. LEGGETT. Right, but it doesn’t work, I mean, you know, and 

it’s unfortunate because like, you know, the spirit was right to employ people—we moved along there because of the mere fact that, 

number one, we wanted to give people in Londale an opportunity 

to gain some type of employment, and we have done that, and we 

are going to continue to do that, but we have to be very, very creative, and, you know, as far as privatizing, the government possibility, they are going to privatize the IRS, they are still privatizing 

the Department of Education, but the possibility of me getting one 

of those contracts is one in 10 million, it won’t happen, because, 

number one, if I’m in business and I grow, I still don’t have the 

assets and the capital that I would need in order to be considered 

for that type of loan. 

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

Chairman MANZULLO. Okay, thank you. 

One question, and this is—Judy, if a small business person 

wants to do business with Defense, EPA, Transportation, GSA, Veterans, i.e., small businesses want to do business with the government, what do you tell them, the Small Business Development 

Center, what’s available? 

Ms. ROUSSEL. Well, if they go to a PTAC, which, you know, are 

part of the Small Business Development Center——

Chairman MANZULLO. Procurement Technical Assistance Center. 

Ms. ROUSSEL[CONTINUING] Absolutely. 

Chairman MANZULLO. All right. 

39

Ms. ROUSSEL. And, they can provide assistance in terms of taking them through the process. 

Chairman MANZULLO. For all the agencies? 

Ms. ROUSSEL. That is correct. 

Also, I might mention to you sitting behind me, this gentleman, 

Bob Murphy, runs our Government Contracting Office in SBA, and 

we also have people who will work with the small business to help 

them get a foot in the door, figure out who buys what they are trying to sell, and assists them in approaching Federal agencies for 

Federal procurement. 

Chairman MANZULLO. First level, would that be the SBDC, or 

would it be the SBIC? 

Ms. ROUSSEL. I would say that is a viable approach. 

Chairman MANZULLO. All right. 

Ms. ROUSSEL. Because there are various——

Chairman MANZULLO. I want to do business, I want to go to one 

live body, and say, help us to access all the different portals. 

Ms. ROUSSEL[CONTINUING] Sure, and they want to go to where 

that’s convenient to them. 

Chairman MANZULLO. Well, Mark, where is the nearest SBDC in 

this area, do you know? 

MARK. [Off mike.] We have an SBDC up at the Latin American 

Chamber of Commerce. We also have one at the Greater Northern 

Pulaski Development Council. We also have one at the Hispanic 

Chamber of Commerce on Western, and we have several, you know, 

in the surrounding area. There’s one a little bit to the west at 

Titan College, and we also have them up on the north side. We 

have a couple as well down——

Chairman MANZULLO. So, we just go to small business development centers, SBDCs? 

MARK[CONTINUING] [Off mike.] They could go either to the 

sba.gov site, or to our Agency’s site, illinoisbiz.biz. (Ph.). I mean, 

you can go to just about any of those sites and you can get linked 

up to the nearest——

Chairman MANZULLO. Sba.gov will tie people into getting the resources. 

MARK[CONTINUING] [Off mike.] Right, right. There’s an 800 number they can also call and get information on all the resources. 

Chairman MANZULLO. All right. 

Ms. ROUSSEL. And, if they contact us directly we’ll get them to 

the assistance that they need. 

Mr. DAVIS. Eric, you mentioned your Agency’s coordinated efforts. If I was a small business person and came to you, what could 

you do for me? 

Mr. DOBYNE. Well, we service small businesses, typically, 

through our minority business development centers. I think we provide a couple things. We can provide you with technical assistance, 

so that you are prepared to enter into the Federal contracting 

arena, as well as we have minority business opportunity committees that will provide you with the contacts and the resources that 

you need in order to be successful. 

We find that with our focus on MBEs and high growth industries, that we find that the contacts and the brokering services that 

we provide are more valuable than even the technical assistance. 

40

Mr. DAVIS. Pam, as I listened to your testimony, I was reminded 

of Abraham Lincoln and Ulysses Grant, that when Grant was in 

charge of the Army he got a lot of criticism, and people would come 

to Lincoln and would tell him all kinds of things. And finally, you 

know, he drinks a lot of whiskey, he’s an alcoholic, but he kept 

winning wars, I mean battles. 

Chairman MANZULLO. I think he was from my District. 

Mr. DAVIS. Yes, well, they are both, so he says—finally, Lincoln 

says, ‘‘Well, tell me what brand of liquor does he drink?‘‘

And, I wanted to know, what makes the Environmental Protection Agency seemingly so good, in terms of what you are doing that 

others can easily. I mean, it seems like EPA has a great record. 

Ms. BAMFORD. Well, we have a lot of people that are dedicated 

to this mission, but there’s always further to go. And, you know, 

thinking about the testimony here today, and some of the impediments that I heard something just occurred to me as we were talking about getting contracting officers to buy into this and support 

the program. I actually come from a contracting background, I’ve 

done Federal procurement for more than a quarter of a century, believe it or not, and I started thinking about a situation that rose 

to my level earlier in the summer. There are sometimes conflicts 

in the Federal Acquisition Regulation. For instance, we read Part 

19 with the Small Business Programs, and they say these program 

don’t apply to Part 8, which is the General Services Administration 

guidance on how to use multiple award schedules. You know, I was 

amazed to find out that I couldn’t have a contracting officer set 

aside a procurement under multiple award schedules. 

Somebody needs to take a look at that and make those parts of 

the FAR coincide so that contracting officers have good tools to support this program better. 

I know I’ve deviated from your question here, but I think one of 

the things we need to do is give our contracting officers tools. 

Mr. DAVIS. Well, she didn’t have to drink as long as she—Thank 

you very much. 

One other question. Tracye, the Federal government, obviously, 

guarantees to lenders that they are going to recoup their resources, 

and it would seem as though that would be stimulation, you know, 

in a sense, to them. Is there something else that we need to do to 

try and make resources available to small businesses? 

Ms. SMITH. Yes, two things. I think all banks are not created 

equal. I don’t think SBA loans should not go to all banks, because 

all banks are not interested in lending to entrepreneurs of small 

businesses. You find the most effective lenders, he mentioned Shore 

Bank, I used to actually work for Shore Bank, but they do—they 

focus on entrepreneurs, Cole Taylor, you know, the smaller banks, 

and their loan appetites are smaller, so they may have more experience lending to entrepreneurs different than lending to a major 

corporation or middle market company. 

I think, though, that large banks should contribute money, because, apparently, I know that SBA, in general, does a grand job 

when you talk about the funding issue. They should contribute 

money to loan funds to make available to lend to entrepreneurs in 

many minority-owned businesses and small businesses. 

Chairman MANZULLO. As part of the CRA? 

41

Ms. SMITH. Yes, yes, and hold them accountable, because we 

talked about the issue being money, the money should come from 

them. They take deposits from everybody, you know, so I think the 

CRA, that would be one way to utilize it, and then I think one 

thing that’s critical, as the gentleman talked about his collection 

company, is cash, but cash for ongoing operations in a firm with 

a revolving line of credit, as you grow you are going to continue to 

need more cash, and that’s not currently available. 

Chairman MANZULLO. Thank you. 

Sean, can we go to you? Your organization has a revolving line 

of credit. 

Mr. MOSS. Yes, that’s true, Chairman. 

Chairman MANZULLO. Can you explain that, how that works? 

Mr. MOSS. Absolutely. 

We have six banks across the country. Hopefully, by the end of 

the year we’ll have 12. Basically, the bank does the analysis, they 

do the underwriting, and what they do is, the government will 

come in and provide the guarantee. DOT will guarantee to 75 percent of the value of the contract. And again, it’s accounts receivable 

financing. 

You know, a lot of the small banks just don’t have the labor and 

the wherewithal to really do that, so it’s been a challenge for us 

to find the right banks. But it works perfectly well for us. But for 

this kind of program a lot of these small minority contractors, you 

know, that work on large public works projects, would not be able 

to pay the payroll. 

I heard that, that was the issue earlier, you’ve got to meet payroll. Every thirty days these contractors have to lay out the cash, 

so, but for our program, the contractors are able to do that. 

Just to give you an idea. You know, we guaranteed about $9 million last year, and the average size of our transactions is about 

$300,000, and we’ll support up to three quarters of a million. So, 

it works. 

Chairman MANZULLO. Sean, could you see Nelson when we, before we leave here? 

Mr. MOSS. Sure. 

Chairman MANZULLO. And then you’re the Washington office, 

aren’t you? 

Mr. MOSS. Yes, sir. 

Chairman MANZULLO. Well, listen, thank you for the invitation 

to come up to Chicago. I don’t know who thought it was cold here 

now. Oh, my gosh, what was it, close to thirty degrees? There’s a 

heat wave going on here. 

But, the testimony has just been stunning, both from the folks 

that are out there fighting for whatever dollars are possible, and 

then the second panel here, with the folks from the government 

agencies that are working very, very hard on it. This is my 11th 

year in Congress, and I can tell you, even in the past three years 

since I’ve been Chairman, there’s been a tremendous improvement 

in terms of the tremendous outreach to the community, trying to 

coordinate people doing business with the Federal Government. It’s 

not where we want it to be yet, but you folks agree also. I mean, 

obviously, it’s not by way of criticism, but simply by way of getting 

everybody involved in the process. 

42

So, again, I want to thank you all for coming, and, Danny, if you 

have any concluding remarks, and then we can go ahead and adjourn the hearing. 

Mr. DAVIS. The only thing, Mr. Chairman, and I agree with you 

that there has been tremendous progress. One of the reasons has 

been because of your stewardship, and I make no bones in saying 

that, because of your willingness to take positions that are sometimes contrary. 

Chairman MANZULLO. I used a subpoena a couple times. 

Mr. DAVIS. Yes, many of your colleagues in your party on your 

side of the aisle. As a matter of fact, you will even disagree with 

the President. 

And, I think that’s the true mark of a public servant, that is, one 

who advocates a cause based upon what they have taken as their 

responsibility. And, one of the responsibilities of the Small Business Committee, no matter who sits in the White House, no matter 

who sits in the Senate, no matter who sits wherever, is to advocate 

on behalf of small businesses, and you have done that. 

And so, I thank you very much, and I thank you for bringing this 

hearing to Chicago, and thank all of the witnesses who have come 

to testify, and those who have come to participate. 

Chairman MANZULLO. Thank you, Danny. 

The hearing is adjourned. 

[Whereupon, at 12:03 p.m., the committee was adjourned.]

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