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SEQUESTRATION: SMALL BUSINESS CONTRACTORS 

WEATHERING THE STORM IN A CLIMATE 

OF FISCAL UNCERTAINTY 

ROUNDTABLE 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

AND ENTREPRENEURSHIP 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

JUNE 20, 2013 

Printed for the Committee on Small Business and Entrepreneurship 

( 

Available via the World Wide Web: http://www.fdsys.gov 
(II) 

COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP 

ONE HUNDRED THIRTEENTH CONGRESS 

MARY L. LANDRIEU, Louisiana, Chair 

JAMES E. RISCH, Idaho, Ranking Member 

CARL LEVIN, Michigan 

TOM HARKIN, Iowa 

MARIA CANTWELL, Washington 

MARK L. PRYOR, Arkansas 

BENJAMIN L. CARDIN, Maryland 

JEANNE SHAHEEN, New Hampshire 

KAY R. HAGAN, North Carolina 

HEIDI HEITKAMP, North Dakota 

EDWARD J. MARKEY, Massachusetts 

DAVID VITTER, Louisiana 

MARCO RUBIO, Florida 

RAND PAUL, Kentucky 

TIM SCOTT, South Caarolina 

DEB FISCHER, Nebraska 

MICHAEL B. ENZI, Wyoming 

RON JOHNSON, Wisconsin 

JEFFREY S. CHIESA, New Jersey 

JANE CAMPBELL, Democratic Staff Director 

SKIFFINGTON HOLDERNESS, Republican Staff Director 
(III) 

C O N T E N T S 

OPENING STATEMENTS

Page 

Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana .................. 1 

Shaheen, Hon. Jeanne, a U.S. Senator from New Hampshire ............................ 4 

Heitkamp, Heidi, a U.S. Senator from North Dakota .......................................... 12 

WITNESS TESTIMONY

Antoinette, Peter, President and CEO, Nanocomp Technologies, Inc. ................ 1 

Ford, Antwanye, President and CEO, Enlightened, Inc. ...................................... 2 

Misanin, Joseph, Deputy Director for Technology and Innovation, Office of 

Small Business Programs, Department of Defense ........................................... 2 

Park, Jiyoung, Associate Administrator, Office of Small Business Utilization, 

General Services Administration ........................................................................ 2 

Boshears, Kevin, Director, Office of Small and Disadvantaged Business Utilization, Department of Homeland Security ......................................................... 3 

Jenkins, Calvin, Deputy Associate Administrator, Office of Government Contracts and Business Development, Small Business Administration ................ 3 

Jordan, Joe, Administrator, Office of Federal Procurement Policy, Office of 

Management and Budget .................................................................................... 3 

Harris, Dot, Director, Office of Small and Disadvantaged Business Utilization, 

Department of Energy ......................................................................................... 3 

Vera, Mauricio, Director, Office of Small and Disadvantaged Business Utilization, U.S. Agency for International Development ............................................. 3 

Smith, Willie H., Senior Procurement Executive, Department of Transportation ..................................................................................................................... 3 

Neal, Brandon, Director, Office of Small and Disadvantaged Business Utilization, Department of Transportation ................................................................... 4 

Jordan, Roger, Vice President of Government Relations, Professional Services 

Council .................................................................................................................. 4 

Priester, Nicole, President and CEO, Encore Solutions, Inc. ............................... 4 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Antoinette, Peter 

Testimony .......................................................................................................... 1 

Prepared statement .......................................................................................... 26 

Boshears, Kevin 

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

Ford, Antwanye 

Testimony .......................................................................................................... 2 

Prepared statement .......................................................................................... 29 

Harris, Dot 

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

Prepared statement .......................................................................................... 40 

Heitkamp, Heidi 

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

Jenkins, Calvin 

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

Prepared statement .......................................................................................... 36 

Jordan, Joe 

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

Jordan, Roger 

Testimony .......................................................................................................... 4 
Page

IV 

—Continued 

Prepared statement .......................................................................................... 50 

Landrieu, Hon. Mary L. 

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

Responses to post-hearing questions from: 

Joseph Misanin .......................................................................................... 63 

Jiyoung Park .............................................................................................. 64 

Calvin Jenkins ........................................................................................... 68 

Dot Harris .................................................................................................. 71 

Mauricio Vera ............................................................................................ 74 

Willie H. Smith .......................................................................................... 77 

Letter dated April 1, 2013, to Seth D. Harris ................................................ 95 

Letter dated April 1, 2013, to Allison Macfarlane ......................................... 125 

Letter dated April 10, 2013, to Subra Suresh ................................................ 129 

Misanin, Joseph 

Testimony .......................................................................................................... 2 

Neal, Brandon 

Testimony .......................................................................................................... 4 

Park, Jiyoung 

Testimony .......................................................................................................... 2 

Prepared statement .......................................................................................... 33 

Priester, Nicole 

Testimony .......................................................................................................... 4 

Prepared statement .......................................................................................... 53 

Shaheen, Hon. Jeanne 

Opening statement ........................................................................................... 8 

Responses to post-hearing questions from: 

Jiyoung Park .............................................................................................. 80 

Calvin Jenkins ........................................................................................... 85 

Dot Harris .................................................................................................. 87 

Willie H. Smith .......................................................................................... 92 

Smith, Willie H. 

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

Prepared statement .......................................................................................... 47 

USAID 

Responses to post-hearing questions for the record ...................................... 57 

Letter to contractor dated March 12, 2013 ..................................................... 140 

Letter to recipient dated March 12, 2013 ....................................................... 141 

Letter dated May 2, 2013 ................................................................................. 142 

Vera, Mauricio 

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

Prepared statement .......................................................................................... 44 

Letters and additional material submitted: 

U.S. Department of the Interior 

Letter dated June 13, 2013 ...................................................................... 97 

U.S. Department of State 

Letter dated April 13, 2013 ...................................................................... 99 

U.S. Department of Homeland Security 

Letter dated March 5, 2013 ...................................................................... 102 

Letter dated April 30, 2013 ...................................................................... 103 

Defense Information Systems Agency 

Letter dated April 22, 2013 ...................................................................... 106 

The Under Secretary of Defense 

Letter dated May 10, 2013 ....................................................................... 107 

U.S. Department of Justice 

Letter dated May 29, 2013 ....................................................................... 110 

U.S. Department of Labor 

Letter dated June 11, 2013 ...................................................................... 112 

The Secretary of Transportation 

Letter dated June 3, 2013 ........................................................................ 114 

U.S. Department of Education 

Letter dated April 22, 2013 ...................................................................... 115 

U.S. Environmental Protection Agency 

Letter dated May 22, 2013 ....................................................................... 118 

Federal Deposit Insurance Corporation 

Letter dated April 30, 2013 ...................................................................... 120 

General Services Administration 
Page

V 

—Continued 

—Continued 

Letter dated June 14, 2013 ...................................................................... 122 

U.S. Nuclear Regulatory Commission 

Letter dated May 13, 2013 ....................................................................... 124 

National Science Foundation 

Letter dated April 30, 2013 ...................................................................... 127 

U.S. Office of Personnel Management 

Letter dated June 13, 2013 ...................................................................... 131 

U.S. Small Business Administration 

Letter dated May 15, 2013 ....................................................................... 132 

Smithsonian Institution 

Letter dated April 19, 2013 ...................................................................... 135 

Social Security Administration 

Letter dated April 29, 2013 ...................................................................... 137 

Department of the Treasury 

Letter dated May 23, 2013 ....................................................................... 138 

U.S. Department of Agriculture 

Letter dated June 12, 2013 ...................................................................... 143 

Department of Veterans Affairs 

Letter dated April 30, 2013 ...................................................................... 146 

Mid-Tier Advocacy 

Letter dated April 15, 2013 ...................................................................... 147 

Chart titled ‘‘Small Business Prime Contracting’’ 148 

The Retired Military Officers Association 

Letter dated June 7, 2013 ........................................................................ 149 

U.S. Department of Transportation 

Small Business Goaling Report ................................................................ 152 

(1) 

SEQUESTRATION: SMALL BUSINESS CONTRACTORS WEATHERING THE STORM IN A 

CLIMATE OF FISCAL UNCERTAINTY 

THURSDAY, JUNE 20, 2013 

UNITED STATES SENATE, 

COMMITTEE ON SMALL BUSINESS

AND ENTREPRENEURSHIP, 

Washington, DC. 

The committee met, pursuant to notice, at 10:04 a.m., in Room 

428, Russell Senate Office Building, Hon. Mary L. Landrieu (Chair 

of the Committee) presiding. 

Present: Senators Landrieu, Shaheen, and Heitkamp. 

INTRODUCTORY REMARKS OF HON. MARY L. LANDRIEU, 

CHAIR, AND A U.S. SENATOR FROM LOUISIANA 

Chair LANDRIEU. Good morning, everyone. And, if you would find 

your seats—and welcome. 

I am happy to call this Small Business Roundtable together this 

morning, which is one of our traditional and very popular 

roundtables on a variety of subjects that we believe help to give 

voice to small business in America. I want to thank all of you for 

participating. 

And the subject of this roundtable is Small Business Contractors 

Weathering the Storm of Fiscal Uncertainty. In other words, sequestration is happening as we speak—across-the-board cuts to a 

variety of different agencies. 

Of course, my position is that I hope we can move past sequestration to a more organized and orderly budget process for our 

agencies, departments and the Nation, but we have not gotten to 

that point yet. 

And so we have had many, many questions that I thought could 

be answered by this such roundtable—how is sequestration affecting small business, particularly those businesses that contract with 

the Federal Government—and that is why you all have been invited today. 

So I would like to start with Peter, and I would like you to introduce yourself. You have like 45 seconds. Say who you are, what you 

do and one sentence about why you are happy to be here. 

And you have got to press the button, talk, and you have to kind 

of lean into the microphone to be picked up. 

Mr. ANTOINETTE. Peter Antoinette, Nanocomp Technologies in 

Merrimack, New Hampshire. Ninety-five percent of our business 

comes from the Department of Defense. We make advanced mate-
2 

rials to lighten body armor, to reduce the weight of satellites and 

aircraft through carbon nanotechnology. 

And I am happy to be here because sequestration is hammering 

us right now as a small business and is hammering others in the 

greater New Hampshire area. As a member and as the director of 

the High Tech Council, I am seeing that too. 

Chair LANDRIEU. Thank you. 

Mr. Ford. 

Mr. FORD. Good morning. My name is Antwanye Ford, President 

and CEO of Enlightened, Inc. I am also the Chair of the Board for 

the D.C. Chamber of Commerce as well as the Presidential Council 

for the Black Chamber of Commerce. 

Enlightened, Inc. is a firm founded in 1999. We do cyber security, 

a lot of system integration work, as well as management consulting. 

I am very happy to be here to talk about sequestration. We are 

also being hammered in some of the work that we are doing across 

both DOD and civilian agencies, but we are also getting a little bit 

hammered on some of the local work we are doing in Washington, 

D.C. because some of the work we do at the local levels is grants— 

as you know, some of the work that is being passed down. So we 

are being hammered across the board. 

So I am happy to have a voice here and would love to be able 

to add some value where we can. 

Chair LANDRIEU. Mr. Misanin. 

Mr. MISANIN. Good morning. My name is Joe Misanin. I am the 

Deputy Director for Technology and Innovation at the Department 

of Defense with responsibility for Small Business Innovation Research, Small Business Technology Transfer, Indian Incentive and 

the various funded programs. 

The department’s commitment to maximizing opportunities for 

small business in DOD procurements remains stronger than ever, 

and I am looking forward to this discussion about the impacts of 

the sequester on small business performance within the agencies 

and what we can do about it. 

Thank you. 

Chair LANDRIEU. Thank you. 

Ms. Park. 

Ms. PARK. Good morning. I am Jan Park with the General Services Administration. 

Chair LANDRIEU. Is your button pressed? And pull the mic closer 

to you, please. 

Ms. PARK. Good morning. Jan Park with the General Services 

Administration. I oversee the Small Business Utilization Program 

at GSA. We really advocate for small business opportunity in Federal contracting through our agency, and our Acting Administrator 

testified earlier this week about GSA’s commitment to small business. 

So I am pleased to be here. We have a strong record of contracting with small businesses, and I am happy to be here to hear 

how we can do even better. 

Chair LANDRIEU. Thank you. 

Go ahead. 
3 

Mr. BOSHEARS. Good morning. Kevin Boshears with the Department of Homeland Security, Director of the Office of Small and Disadvantaged Business Utilization. We are pleased to be here as well 

to talk about, despite the challenging environment, how we can 

continue to promote small businesses’ participation in our department. 

Thank you for inviting me. 

Chair LANDRIEU. Thank you. 

Mr. Jenkins. 

Mr. JENKINS. Good morning. My name is Calvin Jenkins. I am 

the Deputy Associate Administrator for SBA’s Office of Government 

Contracts and Business Development. Pretty much all of the small 

business set-aside programs are within our authority. 

Certainly, I am happy to be here, to look forward to the discussion on the impact of sequester on small businesses and talk about 

SBA’s efforts to maximize opportunities during this trying time. 

Mr. JOE JORDAN. Thank you, Madam Chair. 

Chair LANDRIEU. Mr. Jordan. 

Mr. JOE JORDAN. I am Joe Jordan, Administrator for Federal 

Procurement Policy at the Office of Management and Budget, also 

formerly Associate Administrator for Government Contracting and 

Business Development at the Small Business Administration. 

I am happy to be here because it is always great to talk about 

the opportunities and challenges faced by small businesses with so 

many people in our community and also because sequestration is 

a bad policy and it will negatively impact small businesses, and I 

hope it is replaced with balanced deficit reduction. 

Chair LANDRIEU. Thank you, Mr. Jordan. 

Ms. Harris. 

Ms. HARRIS. Good morning. My name is Dot Harris. I am an assistant secretary at the Department of Energy with responsibility 

for economic impact and diversity for the agency. I am also Director of the OSDBU. 

I am happy to be here this morning because small business is 

important. I have been a previous small business owner myself. I 

understand the need and the support—that the agencies have to 

stand up to support small businesses. 

Glad to be here. Thank you. 

Chair LANDRIEU. Mr. Vera. 

Mr. VERA. Good morning. My name is Mauricio Vera. I am the 

Director of the Office of Small Business at the U.S. Agency for 

International Development. 

I am very happy to be here to discuss how we have improved at 

our agency with working with small businesses and to discuss what 

we see as the significant impact moving forward, beyond this year 

in particular, should the sequester situation continue. 

So I am happy to be here, and thank you very much for inviting 

me. 

Chair LANDRIEU. Thank you. 

Mr. Smith. 

Mr. SMITH. Good morning. I am Willie Smith. I am the Senior 

Procurement Executive with the Department of Transportation. 

And one of my most important functions as Senior Procurement 

Executive is to facilitate an acquisition environment that supports 
4 

the timely delivery and cost-effective delivery of goods and services 

to support our mission. Certainly, small businesses play a very important role in that. 

And bringing together the acquisition forces (contracting, program management, and technical) within the Department of Transportation to facilitate that goal is something that I spend a lot of 

time doing. So it is certainly good to be here to talk with you and 

explore ideas about how we can continue to operate effectively in 

sequestration and other austere budget environments. 

Chair LANDRIEU. Mr. Jordan. I mean Mr. Neal. 

Mr. NEAL. Good morning. Brandon Neal on behalf of the U.S. Department of Transportation, Director of the Office of Small and Disadvantaged Business Utilization. I am here today to share some of 

our best practices across the agency, from the top-down, on how we 

are achieving our small business goals during the sequestration period. 

Chair LANDRIEU. Thank you. 

Mr. Jordan. 

Mr. ROGER JORDAN. Chairwoman, thank you. 

I am Roger Jordan with the Professional Services Council. We 

are a national trade association that represents Federal contractors 

that provide professional and technical services across all the government agencies. 

Pleased to be here this morning to talk about sequestration but 

also, more importantly, the broader impact of budget uncertainty 

and the impact that it is having on not just the agencies but also 

on contractors’ ability to plan. 

Chair LANDRIEU. Ms. Priester. 

Ms. PRIESTER. Good morning. My name is Nicole Priester, and I 

am the President and CEO of Encore Solutions, Inc., a womanowned 8(a) small business headquartered in Rockville, Maryland. 

And I am very happy to be here today to discuss how small businesses like my own have been negatively impacted by sequestration. 

Chair LANDRIEU. Well, as you can see, we have a very distinguished and knowledgeable panel, and I think this will be a very 

helpful and robust and informal discussion, which is the purpose 

of a roundtable as opposed to a formal hearing—to get actually 

more on the record that might be helpful as we explore this challenge. 

Let me recognize Senator Shaheen who is with us today. She 

wants to give brief opening remarks and introduce, I think, someone from New Hampshire. 

OPENING STATEMENT OF HON. JEANNE SHAHEEN, A U.S. 

SENATOR FROM NEW HAMPSHIRE 

Senator SHAHEEN. Well, I just want to first thank Chair 

Landrieu and the Ranking Member for having this roundtable discussion. 

As you all know because you have been dealing with the issues 

of sequestration—these automatic cuts that have gone into effect— 

they are creating real uncertainty and challenges for not just government agencies but for the small businesses who work for the 
5 

government. So I think this is a very timely discussion, and hopefully, it will help spur some action here in Congress. 

I also wanted to thank Peter Antoinette, who is with a New 

Hampshire company, Nanocomp, for coming down and for sharing 

the challenges that you are facing. 

Peter’s company is using very innovative technology. Having to 

deal with the kinds of impacts from sequestration right now can 

have a huge negative effect on potential for small companies like 

Peter’s and others that are really innovative—I mean all of you 

who are on the panel can speak to this—as they are trying to get 

off the ground. 

So I especially appreciate your coming and for sharing your insights. Thank you all very much. 

OPENING STATEMENT OF CHAIR LANDRIEU 

Chair LANDRIEU. I am going to keep my opening remarks very 

brief for a couple of reasons. Our time, unfortunately for Senator 

Shaheen and I, is short because we have a markup on the Appropriations Committee that starts shortly. But the good news is Senator Heitkamp will be here—a member of our Committee—to continue to conduct. Both minority and majority staff are present. So 

this will continue to be in the record. 

Let me just acknowledge that this week, Senator, is the 50th National Small Business Week that we have recognized at the Federal 

Government. And, of course, all over the country, states and jurisdictions acknowledge Small Business Week. It gives us an opportunity to really shine the spotlight on the great entrepreneurial 

spirit of America, which is a model for the world. 

We have 27 million small businesses in America, defined as anywhere from 1 to 500 employees, but most importantly, 35 percent 

of all the patents across the board are held by small businesses. As 

you know, some of the most cutting-edge technology is being developed by small businesses in America. 

And they are absolutely the job creators of our economy. Sixty to 

sixty-five percent of all new jobs have been created by start-up 

small businesses. 

And, particularly in times of challenge, small businesses are 

more agile, quicker to be able sometimes to respond to very difficult, changing market situations. 

So the purpose of this hearing this morning—and we are joined 

by Senator Heitkamp. 

The purpose of this roundtable is to really hear from small businesses themselves that contract with the Federal Government and 

potentially, as you said, Mr. Ford, other governments—the District 

of Columbia—and the impact that sequestration is having on them 

because the last thing we want, I think in our view, or my view— 

let me just speak for myself, not for the entire Committee—is to 

stop job creation in America. We need to be promoting job creation. 

We need to be creating jobs. 

So I sent a letter, which prompted this hearing, at the request 

of several of my members, to the Federal agencies, asking for that 

information—how is sequester to your agency or your department 

affecting your small business goals as required by Federal law? 
6 

And we wanted to hear not just from the agencies but from some 

small businesses to really test and trust what is truly going on, not 

that we do not believe our agencies, but we like to trust and verify 

on this Committee. 

So that is what this roundtable is about. 

To save time, I am going to submit the rest of my statement for 

the record, and I would like to begin the discussion. 

And, again, to our member, this is very free-wielding. I am going 

to start with one or two questions. 

If you want to respond, raise your placard like this. I will do my 

best to call on you. 

And, if the members have a question, they can just signal to me, 

or if they have a comment they would like to make. 

And we will take all of this information and have it for a good 

congressional record and share it with our counterpart on the 

House side as well. 

So let me just start, Mr. Jordan and Mr. Jenkins, with you. For 

just each of you, a two-minute sort of opening, or two or three minutes opening—from your positions as—Mr. Jordan, you are Office 

of Federal Procurement, Office of OMB. Mr. Jenkins, you are the 

Office of Government Contracting with the small business development. 

My question would be: How are your offices focused on this question? 

Are you or are you not? 

And, if you are, what are you doing? 

And if you are not, what should you be doing? 

Go ahead, Mr. Jordan. 

Mr. JOE JORDAN. Absolutely, Madam Chair, and thank you again 

for holding this very important conversation. 

As I said, and as you said, sequester is bad policy. It absolutely 

will have negative impacts on businesses of all types, and that includes the job creating, innovative, entrepreneurial small businesses. 

The President—you mentioned this in your opening too—called 

repeatedly for balanced deficit reduction to turn off the sequester. 

Small businesses are not immune from the negative effects of the 

sequester. That being said, there is a lot we are doing in general 

to promote small businesses, specifically small business contracts— 

obviously, a passion of mine coming from SBA to OMB. 

The President and the Administration have really been 

unwaivering in their commitment to small businesses in maximizing the utilization of small business contractors. If you look at 

what we did, not just what we are saying, the goal achievement 

against small business contracting goals has gone up repeatedly— 

the largest two-year increase in more than a decade. It looks like 

it is on a good upward track, and we will not declare victory until 

we meet or exceed the 23 percent. 

But we are doing a number of things. We are convening the 

White House Small Business Procurement Group. This brings the 

Deputy Secretary’s real high-level folks within the agencies to the 

White House to discuss the challenges and, again, opportunities for 

small business contractors, share best practices and tools they can 
7 

use—so just tools given to agencies by this Committee in Congress 

through the Small Business Jobs Act. 

My very first memo after getting confirmed at OFPP was to cosign with Karen Mills and send out to all the agencies, saying here 

are three specific things we would like you to do to help increase 

small business utilization. And we are reconvening that group, in 

fact, next week. 

Chair LANDRIEU. Do you mind saying what those three things 

are? 

Mr. JOE JORDAN. Absolutely. It was, first of all, looking for opportunities below the Simplified Acquisition Threshold—the 

$150,000 level below which it is presumed that contracts will go to 

small businesses. And you really need to step up your utilization 

of small business there. 

Secondly, using Section 1331 of the Small Business Jobs Act that 

this Committee was incredibly helpful in passing, which allows setasides on these multiple award contracts. Set-asides are the task 

orders for small businesses. So you can restrict that competition to 

just small businesses or the socioeconomic groups. 

And then, third, ensuring that at each agency there is high-level 

accountability to achieving that agency’s goals. SBA sets specific 

goals for each agency that roll up to that 23 percent for the government, and we need agency leadership really focused on meeting or 

exceeding there. 

We then set up a cross-agency performance goal for the government overall, both in meeting those numerical statutory goals but 

also in driving more innovative contracting methods—finding new 

ways to get the dollars to small businesses. 

And then we have held a number of sessions with the Office of 

Science and Technology Policy, figuring out that piece. 

At the end of the day, a lot of this is awareness-building, both 

among the agencies and the contracting officer workforce, which I 

try to help promote through my office, through the Federal Acquisition Institute trainings and some of the memos and guidance documents that we issue. 

And then I know all the agencies do a tremendous amount of 

outreach to the small businesses. In fact, my boss, Sylvia Burwell, 

just spoke yesterday at the New Hampshire Business Day Luncheon with a number of great New Hampshire businesses. 

So those are some of the types of things we are trying to do. 

But, again, sequester is bad policy, and it is going to have a negative impact. 

Chair LANDRIEU. Mr. Jenkins. 

Mr. JENKINS. Thank you. 

Certainly, the SBA is clearly focused on the impact of sequester 

on small business and procurement opportunities. In fact, just yesterday I received an email about a small business who indicated 

how at a particular buying activity they lost an opportunity and 

the contracting officer indicated it was because of the sequestration, and so that was a key part of their procurement opportunity. 

But we are focused. As Joe mentioned, one of the things we do 

is negotiate goals with the 24 top contracting agencies—the 24 

CFO agencies. We negotiate very strict goals with them in order to 

set the governmentwide goal. 
8 

We also have proactive engagement in the sense that we have 

procurement center representatives who are assigned to the various buying activities throughout the country, looking for opportunities. 

We have worked with our data folks, and we have developed 

some additional tools. One tool, in particular, is called the Procurement Opportunity Tool. We now can see all the procurements 

across the board that have gone to small business in a particular 

industry and then have a conversation or discussion with the agencies to find out why other procurements in those same industries 

are not going to small business. And we have made those tools 

available to each of the agencies, which is really critical. 

Also, accountability has been a key part for us, and we have developed a scorecard. Joe, when he was at the SBA, helped us redefine that and put a lot of methodology behind that scorecard. So 

now we can evaluate not just whether or not an agency has met 

or did not meet the goals but what effort the agency is actually 

putting forth. 

In a lot of cases, we are seeing a lot of good best practices that 

we can share across the various agencies, which have been tremendously helpful. 

So I think those are the three approaches—negotiate good, solid 

goals with the agencies; proactively engage the agencies; and also 

accountability in terms of a scorecarding of the agencies and finding out exactly where they stand at the end of the day. 

Chair LANDRIEU. Okay. I would like to ask you to submit that 

letter you referred to, to the record, and if any others have letters 

that they have received from small businesses, if you want to submit them to the record of this hearing. 

Mr. JENKINS. Sure. 

Chair LANDRIEU. Let me ask the agencies present—and we have 

the Department of Homeland Security, Department of Defense, Department of Transportation, Department of Small Business—to respond to what you heard from Mr. Jordan and Mr. Jenkins. Have 

any of the actions that they have taken been helpful to you all? 

And I would really like to hear from the Department of Defense 

since you have the largest amount. 

You can refer to this chart back here, members—the prime contracting for small businesses. 

And I do not know if the staff can pass these out to the members 

or push this up. 

But the Department of Defense has $57 billion that is directed 

by our law to direct to small business contracts. Now it is a small 

portion of their overall budget, but $57 billion is a big number, and 

it can have a major impact on companies and communities everywhere. 

We have—the next largest is the Department of Homeland Security, which I actually chair—$4.2 billion. 

Then we have General Services Administration—$1.4 billion. 

The Department of Energy is $1.3 billion. 

Department of Transportation is about $.73 billion. 

And then USAID is $.18 billion—$180 million. 

And others are much smaller. 
9 

So let’s start with the Department of Defense because this is 

where the impacts are probably going to be felt most broadly, most 

deeply and particularly because of just the geography of the Defense Department. Although it is broadly all over our country, I 

think we will feel some real effects here in Virginia and in Maryland among some of the businesses that are really within driving 

distance of this capital. 

So, go ahead. 

Mr. MISANIN. Yes. Thank you. 

First, let me echo what Mr. Joe Jordan said—that the impact of 

the sequestration is bad, and it is accumulating, and the effects are 

going to get worse as we get closer to the end of the fiscal year. 

Let me first say that as a combination of having been impacted 

by the continuing resolution at the beginning of the year and then 

the sequester on the back end, it is really hurting small business 

performance. 

Just to give you an example, with the SBIR program, which I am 

familiar with, under a continuing resolution, budget allocations are 

not made under a continuing resolution. There is a delay until the 

final budget is enacted. So that hampers our ability to award SBIR 

contracts during the course of the year, or to get money to allocate 

to contracts. 

And then once the money was released, we got hit by the sequester. Well, the sequestration in the RDT&E account—there is going 

to be about an 8.6 percent reduction in available RDT&E. And if 

you go through the numbers, it is approximately 100 SBIR Phase 

II Awards that we will not be able to accomplish this year. 

Chair LANDRIEU. Let’s just explain what SBIR is for people that 

may not be familiar. 

Mr. MISANIN. Okay. I am sorry. 

The Small Business Innovation Research Program is a program 

that is invoked by statute. It is funded through a set-aside procedure where you calculate a percentage of your extramural research 

and development budget, and there are thresholds for Agency participation. Your Agency budget has to exceed a certain threshold 

before you are required to participate in the program. 

And the focus of the program is to really unlock and leverage the 

innovation capacity of small businesses, especially in the technology spaces. The Department of Defense has been using it very 

successfully over the past 30 years of the program’s existence, and 

my earlier discussion with some of the roundtable participants revealed they had started their companies with SBIR funding. 

But it is a very important program—it is a small percentage of 

the total RDT&E—extramural RDT&E—but it is important because of the emphasis and the focus on innovation and technology. 

And we have been able to link it up with other programs, such 

as the Rapid Innovation Fund, which provides similar funding to 

help bridge the so-called ‘‘valley of death,’’ to help these small business technologies get commercialized so that we can deploy them 

out into the field, on programs of record and into the hands of the 

warfighter. 

Chair LANDRIEU. I am going to recognize Senator Shaheen right 

now. 
10 

Not only does this program take the best ideas that our small 

businesses and universities and others are coming up with, but 

they help to not only save taxpayers money because of the disruptive technology and innovation and efficiencies that they cause but, 

when spun out commercially, are some of the really bases of job 

creation in America. 

And this program—I am very happy. Our Committee led the reauthorization of the SBIR program. For seven years, it was stuck. 

We could not find a path forward. With the help of my staff, we 

found a path forward as a seven-year, I think—a six-year authorization or seven? 

Six. Six-year authorization of this program. 

But now some of this good work is in jeopardy. 

And Senator Shaheen, I think you had a question or comment. 

Senator SHAHEEN. Well, as you are talking about the innovation 

that goes on in small businesses, I thought it would be interesting 

to hear from Mr. Antoinette, who is working with DOD and doing 

some of that innovation on what you are seeing as the result of the 

cutbacks. 

Mr. ANTOINETTE. Yeah, I would say that this is the area that is 

getting most hit right now. Discretionary funds are being hit first. 

R&D is being sacrificed right now amongst the program people 

at the highest level, from the intelligence community all the way 

down into the everyday Armed Forces. 

Every one of the program managers we have worked with in 

science and technology, which is what it is given the acronym for, 

is getting the biggest hit right now. 

So we are actually going to be less innovative, with companies 

that are less able to absorb that, and so you are going to depend 

upon the primes who, because they report on an earnings per share 

of public basis, they cannot afford to be quite as innovative. 

So we are actually choking down some of these engines of innovation. 

For ourselves, we actually saw this start in last August. We had 

to go and lay off 15 percent of our force at year-end of last year 

as the—this is a perfect storm for us. This is not just a storm. This 

is a perfect storm. 

So the impacts we are seeing directly in Joe’s world are the biggest programs that are getting hit are R&D. 

Chair LANDRIEU. Anybody else want to comment on anything 

similar—go ahead, Mr. Jordan. 

Mr. ROGER JORDAN. Yeah, I think Mr. Antoinette is absolutely 

right. 

As we have gone through this process, one of the things that we 

have been advocating for is not just attention to what the government buys, but it is how it buys it and how that affects innovation. 

And one of the trends that we have seen, as there is downward 

pressure on budgets, is this move towards lowest price, technically 

acceptable source selections. In essence, that drives towards the 

lowest cost solution and drives innovation out of the process. There 

is an appropriate place for LPTA in the acquisition tool box, but 

we are seeing it being used more inappropriately these days because of the budget pressures, and it is driving the innovative-type 

work out of acquisitions. 
11 

Chair LANDRIEU. Okay. Help me understand a little bit about 

this lowest price mandate. Where is that coming from? 

Mr. ROGER JORDAN. It is not necessarily a mandate, but—well, 

one of the places that it first appeared was in the Department of 

Defense’s Better Buying Power 1.0 initiative where there was an 

indication for a preference towards lowest price, technically acceptable. 

They have since, and more recently, come out with a Better Buying 2.0 initiative that seeks to offer some clarification, and it says, 

look, you have got to make sure you are using this appropriately. 

I think that the original message was use LPTA, and now they 

have walked back from that and said, make sure that you are only 

using it in the right cases, where innovation is not the desired outcome. 

Chair LANDRIEU. Okay. So we have self-corrected that, Department of Defense? 

It is not buying the cheapest item; it is buying the lowest cost 

item that actually is good and works? 

Mr. ROGER JORDAN. With regard to Better Buying Power (BBP), 

that is correct. 

[Laughter.] 

Chair LANDRIEU. Yes, because we would not want to buy something that is just cheap, but it does not—like the missile does not 

fire. That would not be good. 

So we have corrected that? 

Okay. 

Mr. ROGER JORDAN. Yes, in revised BBP guidance. 

Chair LANDRIEU. Okay. All right. Anybody else? 

Mr. Smith—and just put your cards up. Really, do not be shy. I 

know you all do not look like a shy group to me. 

So go ahead, Mr. Smith. 

Mr. SMITH. Yes. I tend to focus more from an acquisition standpoint within the Department of Transportation on the overarching 

best value. Of course, lowest price, technically acceptable falls within the category of thinking through that, but your comments with 

regards to source selection and how that works, and the shared responsibility within the procurement and contracting community is 

something that is certainly important. 

Mr. Jordan talked—Joe Jordan talked about simplified acquisition and some of the set-asides for multiple awards. 

One of the things that we focus on at a more specific level within 

the departments, within the acquisition community, is understanding that shared responsibility between the requirements offices that identify what it is we buy and how much we buy, the 

contracts community, and making sure that we identify how to buy 

smarter and how to do all the kinds of things that you talked about 

with regards to source selection and identifying those requirements—more specifically to satisfy any number of agency objectives, to include socioeconomic programs. And then we all get involved in the process of making sure that we are administering 

those contracts. 

One of the best practices that we have put into place over the 

last three years that has worked quite effectively in helping us at 

least identify those kinds of opportunities is our Strategic Acquisi-
12 

tion Council. We have 10 operating administrations that cover any 

number of transportation-related areas, from aviation to highways 

to bridges and all of the infrastructure kinds of things, or many of 

the infrastructure kinds of things, that we are focusing on across 

the country today. 

And, within that environment, each of those 10 operating administrations, the Chief Contracting Office as well as the Office of 

Small and Disadvantaged Business Utilization meet on a monthly 

basis, at least, to talk specifically about the kinds of strategies, the 

kinds of opportunities, the kinds of things that we can do to continue to ensure that we invest properly and focus on our small 

business community. 

So that is certainly a best practice for us that has been quite effective. 

Senator HEITKAMP [presiding]. I think that we are hearing over 

and over again—and I am sorry you have got the rookie now. Mary 

had very important business. 

I think what we are hearing over and over again—because we always talk about small business in the realm of job creators, and 

this is the cutting edge. But we also know they are the innovators; 

they are the creators and they are people who help move along a 

whole lot of agendas. 

And, when we do not reward and when we do not honor those 

programs, we are not only squelching job creation, but we are also 

mortgaging the future on a lot of things that should be done right 

now that are not going to be done and will not be tried by much 

larger organizations. 

And I think that is a really important point to be making during 

this whole discussion because I think a lot of people think this 

about preferences and this is just about job creation, but it also is 

about the future. 

We know there are so many great small businesses that have 

grown into incredible enterprises for America. They start small, 

and because maybe they have been given a little opportunity, they 

then can jumpstart the future. 

Mr. Ford. 

Mr. FORD. Two points—one on SBIR programs. We were meeting 

with several companies that had done Phase I SBIRs, and we 

wanted to help them leverage the SBIRs in the DOD world. Sometimes what happened was when we wanted to leverage the programs we had program officers being concerned about the future of 

the SBIR program. So they were concerned about leveraging a 

Phase II SBIR because they did not know if they could get the 

Phase III because of funding. 

And so concerns occurred when we were looking to leverage that. 

On the second point, of lowest cost, technically acceptable, we 

have recently been hurt when we knew we had the right innovation and we knew we had the right solution. But the government 

was sort of pinned in with what they had to do, and they could not 

take advantage of some of the innovations that we had. And so we 

were looking for almost some way of logically determining when it 

is the right thing to do. 

Certainly, if it is a commodity or something like that, it makes 

sense. Certainly, if you are looking to move the bar and you are 
13 

trying to leverage and do more with less and you need innovation 

to do something, it is something non-intuitive about lowest cost, 

technically acceptable if you are trying to push the bar and be more 

efficient via technology. 

So, if there is some way of getting a standard that I think the 

government could use to be able to say this makes sense to do lowest cost, technically acceptable in these types of venues—I think 

some of the strategies Mr. Smith talked about. I am assuming that 

is some of the conversations you guys are talking about. 

Senator HEITKAMP. Yes. 

Joe. 

Mr. MISANIN. Yes. I just want to follow up on my earlier remarks. 

So the direct impacts of the sequester can be measured and calculated and determined. However, we are about to be hit by the 

secondary and tertiary effects. 

Right now, we have had restrictions on travel, on training—and 

we have not been able to hold outreach events. We are canceling 

our Beyond Phase II SBIR event for the end of the year, normally 

held at the end of the year. We have over 1,200 matchmaking sessions normally set up with Phase II awardees, with their industry 

primes, so they can find opportunities for commercialization. Our 

annual training for the workforce had to be cancelled. 

So all these things are having a ripple effect on our ability to 

find opportunities, do market research and just do a better job of 

assisting small business—— 

Senator HEITKAMP. Can I just ask a question? 

Mr. MISANIN. Yes. 

Senator HEITKAMP. Which is we understand those effects. 

But what did the agency do, or what did DOD do, to mitigate 

those effects—look at lower cost options, look at ways to do outreach that may not be consistent with the traditional programs 

that you would use to do the outreach? 

Mr. MISANIN. Yes. Whenever there is a request now—we can still 

request outreach events and things of that nature, but the emphasis is more on doing things through web-based tools and virtual 

type meetings. 

Senator HEITKAMP. And how have you found in comparison with 

traditional outreach versus how you are doing it now? 

What is the damage? 

Mr. MISANIN. With the SBIR Beyond Phase II event, I mentioned 

1,200 face-to-face meetings with the technologists at the companies 

that need the technology and the small businesses. That is not 

going to happen over the internet over a three-day period that we 

have the event. So I do not think you can compare the two, and 

the effectiveness is going to be much reduced. 

Senator HEITKAMP. Okay. Mr. Antoinette. 

Mr. ANTOINETTE. The impact that we are seeing directly is twofold. One is paperwork, contracts and payments are beginning to 

slow. And a small company lives on very narrow margins of cash 

flow. So, as those get choked a bit or delayed a bit, the impact is 

direct. 

You are trying to figure out then payroll, trying to figure out 

what you are going to invest in. Are you overstaffed? 
14 

Unfortunately, we would have to say goodbye to people, and we 

do not like doing that. 

My entire company would fit in this room, and if I have to say 

goodbye to 15 people, I know each and every one of them. That is 

not what you want to do, ever. 

You want to double it. You want to make this room smaller. 

So our concern is the way the actual wheels are going to be impacted, by the cash flow situations out of the government and the 

processing of this. And we already know that you folks are under 

pressure in contracts and contracting. 

We are really concerned when they say, well, you have not seen 

anything yet; wait until July. It does give us a little bit of pause. 

Senator HEITKAMP. I want to comment because I think one of the 

things that we are seeing over and over again is baseline functions 

that will have to be performed are being delayed or are being done 

very inefficiently. And so somebody is going to have to cut the 

check. Somebody is going to have to do that work. 

When we lose the ability to efficiently pay the bills or do what 

we are supposed to be doing, there is a direct casualty to especially 

a small business who operates on a much lower cash flow function. 

Mr. Jordan. 

Mr. ROGER JORDAN. Yeah, again, I think that is absolutely right. 

One of the first comments I made in my written statement was 

that it is the delays that we saw leading up to sequestration which 

was really a killer for small businesses. 

Small business do not have the capability to maintain a bench 

of staff that they anticipate they will need as they wait for an 

award to come out, and we saw them, therefore, having to cut staff. 

Where the department would normally have made an award, they 

just were not confident doing so because they were not sure that 

the funding stream was going to be there. 

I think the flipside of this is that withholding or delaying those 

decisions even further has an impact on the government in that a 

lot of times, just by making awards, there are savings built in to 

new acquisitions over the long run. So, in a sense, the government 

is also robbing itself by making those delays at the same time it 

is hurting small businesses. 

Senator HEITKAMP. Well, I would make the point that any good 

business charges you a little extra if you do not pay your bills on 

time. So how is this actually helping the government to save money 

when they are operating kind of basic functions inefficiently? 

I guess, Mr. Jordan, I see you nodding and, obviously, very concerned from a perspective of OMB when you are not able to do 

baseline functions efficiently as a result of not having adequate 

staff. 

Mr. JOE JORDAN. Yeah, absolutely. I would both point to the fact 

that due to the sequester and its meat-axe, across-the-board cut, 

and the devastating effects we have, ensure that agencies are focused on mission-critical needs and have that mission first of all, 

but there is no doubt that you have these negative ancillary effects. 

We certainly keep small businesses top of mind at all times, and 

we think about the intersection of some of the negative consequences of sequester and small businesses. 
15 

You mentioned payment, and we have heard that. We had 

worked quite hard as a community to institute what is called Quick 

Pay, where small business prime contractors got paid in half the 

time of typical contractors, and that was a big success. 

So we expanded it and said we are going to pay all contractors 

quickly, and then they have the responsibility to pay their small 

business subcontractors in half the time. And we heard great response to that. 

But, unfortunately, due to the cash flow crunch of sequester, as 

Joe mentioned, the Defense Department had to turn off the quick 

pay for the larger primes, and therefore, that has a deleterious effect on the small business subs. 

So we are very hopeful that we can move beyond the sequester 

and reinstitute some of those sorts of policies and continue our firm 

commitment to maximizing our utilization of small businesses, both 

at the prime and subcontracting level. 

Senator HEITKAMP. And the interesting thing is that in all of 

this, when you look at sequester, I think some people think there 

are functions that are not going to be done, that there are opportunities that will not be realized. But what people do not realize is 

that baseline functions that have to be performed by any large organizations are not getting done efficiently. Therefore, we are kind 

of robbing Peter to pay Paul because there is not net financial gain 

on behalf of the government. 

And I will call on Mr. Ford, but I want to talk about this from 

two standpoints, which is, one, the disruption of expectations under 

current contracts. This is where we are right now. This is the uncertainty. We are not getting paid on time. 

But the concern that I also have, for small business in particular, 

is the lack of predictability into the future. So what you might be 

doing to prepare for a new contract, what you might be doing to 

prepare for new innovation, new thinking, you have now tapped 

down. 

And the time value of money, the value of time in all of this, in 

getting this innovation—how have we delayed and how have we 

troughed that innovation and for what period of time? 

I would like comments on that as well. 

Mr. Ford. 

Mr. FORD. I think I am glad you brought those up. Those are the 

points I was really looking to make. 

One of the things that has affected us was project delays due to 

funding uncertainty on projects that we were tracking for over a 

year, and almost two years, where we have put in the research; we 

put in the time. 

I know Mr. Neal and Mr. Vera and Mr. Boshears have said: Get 

there two years ahead of time. Put in the time. Make sure you get 

to know folks. Make sure they understand who you are. 

And then that particular opportunity never comes out. So that 

time was wasted. 

As a small business, we do not have that type of time to invest 

that effort. 

Another opportunity is potential cuts. 

I mean we do some work for the Department of Justice. There 

were significant cuts in that area, and so we had layoffs also, 
16 

where we had people that were doing the job; the customer was 

satisfied; yet, the cuts had to occur. Options had to not be renewed 

because of the uncertainty of that particular budget cut. 

And so that uncertainty has affected us even as much as, interesting enough, an unanticipated competitor in our market now is 

large businesses. So the impact to some of the large businesses 

around the Beltway have made them all of a sudden enter into opportunities that they previously would not have looked at. So now, all of a sudden, if there is a $20 million or $30 millionopportunity—— 

Senator HEITKAMP. You are saying it used to be small potatoes 

to them—— 

Mr. FORD. Yes. 

Senator HEITKAMP [continuing]. And now it may be the gravy? 

Mr. FORD. Now this is good meat for them. 

[Laughter.] 

And I am showing up, and all of a sudden, my mentors and partners are now my competitors. 

To government agencies, if they can get Large Business X versus 

Enlightened for the same price, it is a comfort for them. And that 

was unanticipated from a competitive analysis perspective. 

Senator HEITKAMP. Mr. Antoinette. 

Mr. ANTOINETTE. Well, obviously, when you do not have predictability, you really have to be very cautious, especially when you do 

not have a lot of big cash reserves. So that impacts us as a small 

business and most of the small businesses I am aware of. 

Unfortunately, it has also impacted capital markets, and the 

availability of capital in general has been impacted. Venture capitalists will not talk to you about defense-style businesses. They 

were always skeptical. Now it is like you are laughed out of the 

room. 

Banks—so you say go get a bank. Find a bank. Well, if you are 

bankable, then the banks are looking at the same types of uncertainties and say, well, you know, we are not certain that you are 

a good risk either. 

So it is a two-fold impact. Not only is it an impact on the businesses directly. It is an impact on capital markets, the availability 

of capital for growth companies which is often equity-based, venture-type, or it is on traditional banking where you are just not 

going to get a hearing. 

So, there, where are you? You are between a real rock and a 

hard place. 

Senator HEITKAMP. I think that this is such a great point about 

doing things in Congress in regular order, which means that you 

know basically what the amounts are. Even if these sequestration 

dollar amounts had been built into regular order, you would know 

where it is. 

I think this uncertainty of knowing where these cuts are coming 

from and the uncertainty of knowing how the agencies are going 

to apply the cuts have created tremendous uncertainty for small 

business, tremendous uncertainty for our contractors. And, as a result we are going to narrow the number of organizations who will 

be competing for this business and, as a result long-term, will not 

have the options that businesses have. 
17 

And, Kevin, I cannot see the bottom of your name, so you are 

just going to get called Kevin. 

[Laughter.] 

Mr. BOSHEARS. Thank you. 

Kevin is what everyone calls me anyway. 

Senator HEITKAMP. Okay. 

Mr. BOSHEARS. Last week I met with a small business who does 

business with Homeland Security, and he described our current environment as a dark cloud hanging over his head. And that stuck 

in my mind because I think that is the way it feels to many of us, 

certainly him. 

And I asked him, well, how are you going to handle it? What are 

you going to do? 

And he said, well, I am going to focus on my customers. I am 

going to focus on my employees. And I am going to try to ride out 

the storm. 

The conversation was telling, and I am glad I had it. And I have 

not had that descriptive, but I have had similar conversations with 

many other contractors, like even Mr. Ford. 

Senator HEITKAMP. I think—and, Mr. Jenkins or Jordan, if you 

want to comment on this. 

But it just seems to me that it is not just the reduction in expenditures. It is the uncertainty of where these are coming from 

and what is going to happen long-term. 

You do not want to make the adjustments if you think that those 

dollars are going to be reinstated when we do get back to regular 

order. We know we have taken a double whammy, and there may 

be additional dollars. 

So how do you weather the storm in the meantime, especially 

when you are no longer bankable or venture capitalists will no 

longer look at your innovations? 

So I would appreciate your comment. 

Mr. JOE JORDAN. I would say three things, Senator, in full agreement. 

The first is, yes, there is a reduction. But that is likely, given our 

fiscal environment, to happen anyway. 

But it is the second piece where it is across the board and indiscriminate in the way that the sequester works—the meat-axe that 

it takes to the budget—as opposed to targeted and focused reductions which we have already done good things around, like reducing management support services by 15 percent—a place where we 

saw some overspending and we said we are going to focus on that— 

or strategic sourcing where we can simultaneously increase small 

business utilization but get some of the same goods and services for 

lower prices. That is not the way the sequester works. 

And then the third piece is just like you said; it causes a lot of 

this uncertainty. And when we are pushing agencies to do really 

robust acquisition planning, the market research required to go out 

and find all of these great small businesses—some of that—you 

know, there is certainly an impact there both in terms of the resources the agencies have and then the behaviors driven by uncertainty in either acquisition or just budgetary environments at 

large. 

I absolutely agree with you. 
18 

Senator HEITKAMP. Mr. Jenkins. 

Mr. JENKINS. Yeah, I think—— 

Senator HEITKAMP. I guess my direct question to you is: What 

advice do you give small business owners in terms of how to weather this storm or whether there is a light at the end of the tunnel 

and it is not the train? 

Mr. JENKINS. Yes, it is really a tough question. 

I mean, one of the things that we certainly look at is how you 

can enter into strategic alliances and partnerships because as the 

number of procurement opportunities is dwindling sometimes there 

could be opportunities to team up with other firms. And so we, as 

part of the Jobs Act and as part of the National Defense Authorization Act, have put a few things in place. 

We have a pilot under the Jobs Act in which we awarded grants 

to 11 organizations around the country to figure out how they can 

bring groups of small businesses together that can potentially go 

after some of the larger procurements—procurements that they 

may not be able to get because of sequestration. 

And also, we are looking at, under the National Defense Authorization Act, a new mentor-prote ́ge ́ program that will affect all small 

businesses, not just the three that were added under the Jobs Act. 

Again, we believe that will be critical. 

Teaming, joint venturing, strategic alliances—I think are the 

way to go. 

And you mentioned also the lending side. SBA’s loan portfolio 

was affected—affected to the point of over $900 million that will 

not be made available to small businesses; over 22,000 jobs. 

So we really have some challenges in front of us, and we do have 

to come up with some great ideas. 

Senator HEITKAMP. Yes, and I will tell you this; in North Dakota, 

we have a Bank of North Dakota. You may be familiar with that. 

It is the only one in the country. 

I cannot begin to tell you the significance of the SBA loan guarantees in terms of innovation in our state. We do not shove off all 

the risk to you all, but sharing that risk on innovation is absolutely 

critical. 

And you can only imagine, I mean, because we will never be able 

to document the great ideas and the great innovations that might 

have come had we been able to finance that innovation in a climate 

that is very difficult given the contraction of capital in the post-financial crisis era, along with banks looking at—especially your 

local community bank looking at—increased pressure from regulators on excessive risk. 

And so this is very concerning to me—that we are contracting 

capital. 

There are number of folks here we have not—oh, Mr. Vera? 

Mr. VERA. Yes. Thank you. 

I just wanted to echo what some of my colleagues have stated. 

At USAID, we have improved significantly over the last few years 

in how we work with small businesses, and we feel we have built 

some momentum there. 

And the sequester, along with the CR and some of the delays, 

have caused us to pause, and reconsider some of our projected new 
19 

procurements because of the budget uncertainty coming down the 

line. 

And so I think what has happened in result is that a lot of our 

large operations and maintenance contracts, which are generally 

large business, are continuing, but our new smaller, more innovative types of requirements are being reconsidered, or maybe they 

are being cut back in scope. 

And, secondly, I also wanted to echo what Mr. Ford has said 

about competition from the larger businesses. We specialize in 

international development—which is a niche market. That is, we 

work with many large and small businesses that specialize in this 

area. Over the past couple of years we have seen a lot more new 

entries into this market from DOD-type contractors, and so that 

has caused additional competition for our small business partners. 

Senator HEITKAMP. I applaud the Chairwoman for bringing you 

all together and listening to this discussion because it is so critical 

in terms of not hitting a trough that is going to go on for four years 

before we kind of climb out of it. We are doing great work. We are 

being collaborative. 

And so I guess my question is, especially for the agencies, beyond 

this kind of hearing, have you all kind of gotten together and said 

let’s strategize, in an era of sequestration for the next how many 

months that we are in this? 

And I would like to tell you that I believe that we could fix this 

tomorrow. 

It is not going to get fixed tomorrow. I can guarantee you that, 

if there is one thing I can guarantee—that the fix is not going to 

come anytime soon. 

So, in that environment, what are you all doing collaboratively 

among the agencies to begin to address kind of a holding or hovering pattern that could, in fact, sustain the good work you have 

already done and maintain that until we work our way out of this? 

Mr. JOE JORDAN. Well, if I may, you are absolutely right that 

these types of collaborative discussions are so important, not just 

during these periods—— 

Senator HEITKAMP. Right. 

Mr. JOE JORDAN [continuing]. But also just to maximize utilization. 

So I mentioned in my opening about the White House Small 

Business Procurement Group, which is something that we started 

back when I was at SBA. You know, the President cares a lot about 

this issue, and so he has brought the deputy secretaries of every 

agency, along with the OSDBUs and sometimes the senior procurement executives, together over at the White House. 

And SBA Administrator, Karen Mills, and I are actually cochairing the next meeting of this just next week. We have kept it 

going to ensure that whatever the fiscal circumstances, we have a 

chance to maximize small businesses’ utilization. 

And then it is really important to hear from folks, not just the 

agencies but from all around. I had a chance, luckily, to go to 

Jamestown, North Dakota and engage with a lot of the small businesses there and both the lending and the contracting officers. I 

will tell you the story about almost getting stranded at Devil’s 

Lake Airport. 
20 

But it is really important because we have got a number of viewpoints—— 

Senator HEITKAMP. Could you share that with FAA and the Central Air—— 

[Laughter.] 

Mr. JOE JORDAN. A number of really tremendous viewpoints from 

the contractors who do not—right now, we are doing a lot more 

convening here in town, given the travel restrictions, and yet, our 

need to make sure that we engage with all these vendors—but it 

is really important that we continue to figure out ways to collaborate with everyone, both from the agencies and the great firms outside the Beltway. 

Senator HEITKAMP. Well—and I think it is very important that— 

you know, I look at this sometimes from the standpoint of somebody out there who is, obviously, a citizen, a taxpayer, deeply concerned about our deficit, deeply concerned about our opportunity. 

What are the discussions that we need to have with taxpayers 

about the effects of something like this that we know long-term will 

cost us money? 

They understand maintenance. They understand that they need 

to keep things in good working order in order to avoid a catastrophe down the line. And I think that we have not done a very 

good job talking about how sequestration has resulted, in a very 

real way, delayed maintenance that is going to cost us money. 

And I am not just talking about buildings and machinery. I am 

talking about this kind of effort, this kind of collaboration, which 

gets stalled out because we do not nurture it; we do not maintain 

it. 

There was another question? 

Oh, there you go, Mr. Jenkins. 

Mr. JENKINS. Yes, I just want to add on to what Joe has mentioned. 

In addition to the White House Small Business Group—working 

group—we also have what is called the Small Business Procurement Advisory Council. We meet monthly with all of the 24 CFO 

agencies. We talk about best practices. They discuss some of the 

challenges that they are having, and we try to work through some 

of those issues and talk about some of those policy changes we can 

make, some regulatory changes we can make that can make it easier for them. 

We bring them up to speed on all of the changes. As I mentioned 

before, the Small Business Jobs Act had 19 changes in it that affect 

small business, and we are implementing those regulations. 

And then NDA, which was signed this year by the President, has 

a number of new regulations and tools that will hopefully help 

them going forward. 

But the idea is to constantly have that collaboration with them. 

Senator HEITKAMP. I guess I applaud all those efforts, but my 

question is, what more could you be doing to help small business 

weather this storm, working together or working within your own 

agency? 

And I would be curious about some of the folks who—Ms. Harris? 

Ms. HARRIS. Good morning. 

Senator HEITKAMP. Good morning. 
21 

Ms. HARRIS. When it comes to us working with other agencies, 

the Department of Energy signed an MOU with the Minority Business Development Agency, a part of the Department of Commerce, 

specifically for us to focus more on some of the socioeconomic classes that we have not fared well in. 

So that is one area that we are working with David Hinson and 

his team. We are touching a lot of women-owned business, veterans, HUBZones and minority-owned businesses to focus and partner more together. 

We have worked not only—after the MOU has been signed, we 

have done a collaborations between listening sessions for small 

businesses all across the country. So we have partnered together 

on a number of other events as well. 

So that is helping us to really not only look at, specifically, small 

businesses in general but look at some of those areas across agencies we should not need to improve, and that is socioeconomic classes. 

Senator HEITKAMP. Any of the other agencies want to comment 

about additional—yes, Mr. Neal. 

Mr. NEAL. Sure. The Department of Transportation—one of the 

ways we look to collaborate is we invite the other agencies to participate in our Small Business Days, which essentially are vending/ 

matchmaking sessions. And so I can say at least every agency who 

is in this room has participated and been a part of our matchmaking session, in addition to some small business owners—Mr. 

Ford and Ms. Priester, who have also attended. 

And we seem to see a long-term effect in terms of helping businesses grow with that matchmaking session we have at the headquarters. And, of course, it is free of charge. 

And so we invite small businesses from all over the country. We 

tend to have at least 400 to 500 small businesses come to be a part 

of this opportunity. 

Another way to collaborate is we have 11 cooperative agreements 

through our field offices that are in 11 major cities across the country, and I know they work directly with the agencies too on some 

of our programming aspects. 

And so we have two main programs—one, the bonding education 

program in which we have a partnership with Surety and Fidelity 

Association of America, and also, we have a short-term lending program. 

And a lot of our lenders work directly with SBA and other agencies as well too. 

So we seem to find that working pretty well. 

Senator HEITKAMP. Mr. Neal, have you changed anything since 

sequestration in terms of your outreach or how you look at it? 

Mr. NEAL. A lot of our outreach now is web-based. 

Senator HEITKAMP. And are you experiencing the same outcome 

that there is less contact, and it is less efficient and effective contact? 

Mr. NEAL. Yes. 

Senator HEITKAMP. Okay. 

Mr. NEAL. Yes. 

Senator HEITKAMP. So sometimes that handshake and that sitting in the room together can really make a difference. 
22 

Mr. NEAL. Absolutely. Absolutely. We are always looking for 

ways to think outside the box, but, yes. 

Senator HEITKAMP. Yes. I mean, I think anybody who has done 

a substantial amount of business will tell you, you can do a lot 

web-based, but somehow sitting down and having that face-to-face 

conversation can be much more effective. 

So, Joe. 

Mr. MISANIN. Thank you. 

The importance of the agencies getting together to share best 

practices cannot be overemphasized because even within the department we have a lot of initiatives that are ongoing and they will 

not be completed for a while yet. So it is good that we get together, 

status these things and determine what we can do. 

One of the things we recently thought about is the Undersecretary is interacting with the prime contractors and industry to establish kind of a board to monitor the impacts of the sequester on 

the supplier base, on small businesses in particular, so that we can 

develop a quick reaction capability. When we see it, we will do 

something about it. 

Senator HEITKAMP. Is there going to be an opportunity to basically document those impacts and then share those impacts, particularly with this Committee? 

Mr. MISANIN. Oh, absolutely, once the formal body and process 

is established. The interagency process is how we will share that 

information. 

Senator HEITKAMP. Right. I mean, I guess when you look at all 

of the work that is being done kind of piece-mealed, the need to 

kind of appreciate and understand the innovation that these agencies have taken to try and respond to some of these concerns—that 

is all good work. 

But, for policy purposes, you need it at the mile-high look-down 

level so you can see the true impact, not just in Transportation or 

in DOD or in Energy. You can see the true impact on innovation 

that could be kind of encouraging economic growth that is not 

being done because of this meat-cleaver approach to budgeting. 

I am going to have to go. 

And I really just so appreciate this discussion because I think it 

is critical. 

It is critical that the American public understand that what 

small business does is not just create jobs. But it is innovative. It 

is creative. It is cutting-edge. It is the places where people think 

and have a unique relationship to survival that can really drive 

true opportunity into the future. 

The record will be open for another two weeks. 

I know that from my standpoint—and the Chairwoman can also 

share any additional questions that she has—I am very interested 

in what the agencies are doing to collaborate on how they can minimize the impact, both from the standpoint of current contracts and 

current obligations, but also future predictability for small business 

and minimize the impact of the sequester on small business. 

Like you said, the large organizations have figured out a way to, 

all of a sudden, become very interested in what you are doing, and 

they have a few more people to be reading the Federal Register, 
23 

right? They have a few more people to be watching the opportunities than what you do. 

So I really want to thank the small business folks who have been 

here, who have shared their ideas and their thoughts with us. 

I want to applaud the agencies who seem genuinely very committed to small business and small business development. 

And we look forward to continuing this dialogue as we go 

through this process. 

And I will adjourn the hearing. 

[Whereupon, at 11:06 a.m., the hearing was adjourned.] 

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